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,...
...exports -- raw materials, components, spare parts and replacements -to support the enterprise...
...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...
...corporate investments...
...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...
...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...
...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...
...cit., pp...
...2 1 The advantages for the private banks under Participation Financing are extensive...
...76,512 General Motors...
...In the 1950's, the Eximbank assisted U.S...
...For capitalist nations, exports play an extremely crucial role...
...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...
...the creation of the Eximbank in 1934 was partly designed to facilitate the opening of the vast Soviet markets for U.S...
...15* In the American drive to dominate the avenues of world trade, the Eximbank has worked closely with the nation's private commercial banks...
...Vesco, of course, had a case pending before the SEC...
...As part of the American overture to Egypt, Bechtel put together an agreement that involved the Sadat government the U.S...
...Founded in 1934, the Bank has helped guide the United States through a number of challenges and crises in the international market...
...825.6325/103...
...served as primary contractors in fulfilling the machinery and equipment orders placed with Eximbank loans...
...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...
...In its purchase of the Hartford Insurance Company, ITT engaged in illegal stock practices which the SEC was in charge of prosecuting...
...13-14...
...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...
...V, 1939, p. 322...
...May 3, 1972...
...Copies of the Statement of Active Loans are available at the regional offices of the Federal Reserve System...
...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...
...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...
...With American corporations making direct investments to virtually every corner of the globe, the government relied upon these business emissaries to increase exports...
...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...
...in Chile the Bank moved directly to defend American corporations against expropriation threats...
...The aircraft industry is the leading example of a "necessary-but-unsuited-industry...
...industry imports such essential inputs as steel and chrome, while consumers enjoy Brazilian coffee, Japanese Toyotas, and German Volkswagens...
...Boeing and McDonnell Douglas are important units in the military-industrial complex...
...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...
...Lectures and proceedings at the 25th International Banking Sumer School (Washington, D.C.: The American Bankers Association, 1972), p. 51...
...Wall Street Journal, Dec...
...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...
...The drive for export markets is inherent to a capitalist system...
...The Eximbank could have chosen to provide loans and credits directly to the exporters, thereby bypassing the commercial banks...
...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...
...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...
...At the Eximbank Kearns bestowed favors upon both companies...
...FINANCING% iri W II1 orV I1AN In FY 1973 the Shah of Iran ranked as the largest recipient of Eximbank loans...
...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...
...Congress, House, Committee on Banking and Currency, Increasing the Lending Authority of the Export-import Bank of Washington, Hearings, on H.R...
...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...
...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...
...The petroleum corporations proved to be especially sacred investment cows, requiring frequent assistance from the Eximbank to protect their foreign interests...
...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...
...Export Import Bank, Eximbank Programs, p. 21-32...
...The nuclear reactor industry also falls into the category of the necessary-but-unsuited industry...
...Balance of Trade Surplus," May 17, 1973...
...In 1972 and 1973, the 25 largest corporations accounted for $2.9 billion, or 83 percent of the Eximbank loans...
...goods and investments...
...23, 1969, "Evolution is not Only for Monkeys...
...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...
...government has been promoting exports of nuclear plants for some time...
...of History, Univ...
...In 1971 (for the first time since 1888), the United States imported more goods and commodities than it sold abroad...
...Kearns, in a 1973 speech, noted that "200 companies do 52 percent of our exporting...
...government exerted pressure upon the Popular Front...
...Although giants in the corporate world, many of these exporting industries rely heavily on state assistance to compete in foreign markets...
...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...
...Pacific Basin Reports, Jan...
...When in 1939 the Bolivian foreign minister made known his government's interest in securing a loan from the Eximbank, the U.S...
...The Cooperative Financing Facility, established in 1970, attracts overseas banking facilities to the financing of American exports...
...during the last two years...
...20,115 Bucyrus-Erie...
...The Bank has thus helped to preserve and increase markets for U.S...
...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...
...The study went on to state that "the U.S...
...The recent debate surrounding the Eximbank is only one of the many controversies that are engulfing the institutions and leaders of the corporate world...
...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...
...2 6 (The breakdown for recent years is not reported by the Bank...
...banks through their branch banks are major beneficiaries...
...It is Eximbank's function to provide the aircraft industry with the required large, certain, and expanding market...
...economy, the country's corporate leaders are looking to the Eximbank for help in alleviating some of the problems they face...
...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...
...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...
...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...
...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...
...Statement of Active Loans, op...
...Within a month after the Popular Unity government, backed by the Chilean Congress, officially expropriated the U.S...
...Report of the Committee on Banking, Housing & Urban Affairs, U.S...
...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...
...President Roosevelt stated that Eximbank credits to the Soviet Union would "result in immediate orders for American goods...
...Financing Corporations Monopoly, rather than free enterprise, is the dominant characteristic of the American economy...
...4 828 Faced with these threats, the U.S...
...In the midst of this imperial crisis, U.S...
...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...
...Finally, the study looks at how the Eximbank has waged economic war in some countries to protect U.S...
...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...
...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...
...In Mexico, the Eximbank tried to help American interests breach the 1938 decree expropriating all foreign-owned petroleum companies...
...According to the U.S...
...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...
...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...
...One other factor also contributed to the adverse trade situation for the United States -the increased need for raw materials from abroad...
...150-53, 194...
...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...
...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...
...Department of Planning, Finance and Sales...
...In 1933, a popular revolt in Cuba overthrew a military dictatorship and installed Ramon Grau San Martin as President...
...Seeing the stiff competition faced by U.S...
...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...
...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...
...An immediate cause was the Vietnam war...
...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...
...The composition of the company's stockholders in 1973 had not changed since its foundation...
...business leaders are again turning to their state trading bank for timely medicine...
...As seen above, through its credit subsidies to the nation's bankers, the Eximbank assists the general flow of American exports...
...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...
...loans to Latin America...
...Although the project ultimately fell through, the State Department's use of the Eximbank to manipulate Egypt raised more than a few eyebrows...
...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...
...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...
...See National Chamber Task Force Report, Competitive Export financing for the Seventies...
...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...
...loans...
...industry at home and operate subsidiaries abroad...
...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...
...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...
...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...
...32,856 Eastern Airlines...
...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...
...Domestic demand is insufficient to absorb production...
...6 6 While in Chile the Eximbank acted to defend existing U.S...
...the Eximbank must also be called upon to help mold the economies of other countries into forms complimentary to U.S...
...Refineries, pipelines and ports also are in an advance stage of consideration...
...The phrase "export or die" 1 reflects this imperative...
...corporation is eli- gible for a loan because it is purchasing plant equip- ment from the United States...
...32 In sum, PEFCO is one more credit mechanism through which the Eximbank serves the nation's largest banking interests...
...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...
...economy is the rising cost and potential scarcity of essential raw materials...
...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...
...As the 1940's ended, the United States turned to other institutions to assume some of the Eximbank's tasks...
...Through these operations and others, Chemtex Fibers has gained control of stock in over a dozen textile plants abroad...
...History of Operations, op...
...As a precondition for Eximbank credits, the Roosevelt administration demanded that the Soviet Union agree to repay the debts of Tsatist Russia...
...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...
...5 2 In 1942, however, the issue surfaced again...
...system as a whole, it was only one of several factors that contributed to the decline of the country's trading position...
...17,128 General Tire...
...25,444 Lockheed Aircraft Corp...
...Like their retired leader in San Clemente, Kearns and Casey know that corruption in high places goes unpunished...
...Of course, the privileged position of the aircraft industry must also be viewed in the "national security" and political context...
...1 1 What accounted for this trade crisis...
...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...
...commercial interests...
...Export Import Bank, 1972 & 1973 Annual Reports...
...When Henry Kearns resigned as Eximbank president in August 1973 to return to private business, Nixon nominated William J. Casey to replace him...
...In these times of stress banks are reluctant to tie up scarce funds in foreign trade...
...rather than German capital goods...
...42 The Export Import Bank argues that the flow of plant equipment abroad will lead to even more exports...
...Casey did all he could to assist ITT...
...3 6 Like jet airliners, nuclear reactors are very large and expensive items that require long-term financing...
...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...
...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...
...February, 1973, pp...
...The five members on the Bank's board of directors combined receive almost a quarter of a million dollars in annual salaries...
...government...
...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...
...Internews, Aug...
...XI, 1946, p. 624...
...Nixon's two appointees follow this pattern...
...17,280 McKee, Arthur G., & Co...
...Chemtex Fibers, Inc...
...that will lend to him...
...Although the Bank does not require large annual outlays from the U.S...
...The Eximbank even began to compete with these international lending agencies...
...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...
...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...
...Like many other Nixon appointees, Casey comes from a background of shady and corrupt business practices...
...As a reward for services rendered, Mitsui in 1973 bought up Kearns' stock in the Siam Kraft Paper Co...
...30,300 Koppers Company...
...34,650 Chemtex Fibers, Inc...
...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...
...exporters...
...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...
...This reluctance results in a reduced flow of exports as credit becomes tighter...
...See also Hearing before the Committee on Banking and Currency U.S...
...Further, Casey assisted ITT by hiding its activities from Congressional committees...
...He was finally confirmed when Special Watergate prosecutor Leon Jarworski told a Senate subcommittee that he did not have enough evidence to prosecute Casey...
...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...
...Ibid...
...trade...
...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...
...corporate and commercial penetration...
...Export Import Bank, Advance Releasq May 17, 1973...
...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...
...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...
...petroleum companies, in effect hindered the immediate growth of exports...
...Sources: Eximbank Annual Reports...
...Composed of a consortium of private in*Mr...
...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...
...Although Bechtel is not on the list of the 25 largest contractors for Eximbank loans, it did rank 27th...
...company...
...FCIA (New York: Foreign Credit Insurance Association, 1962...
...Many of these controversies reflect the deeper ills that are afflicting the entire corporate system...
...Negotiations between the two countries bogged down over this point...
...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...
...interests, in the Soviet Union and Egypt it is striving to open up state-controlled economies to U.S...
...The answer varies from industry to industry...
...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...
...industries most active in production abroad also are the heaviest contributors to U.S...
...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...
...military equipment...
...The most immediate reason stems from the Bank's role in detente with the Soviet Union...
...III, P. 7. 23...
...Senate...
...Jerome Levinson & Juan de Onis, The Alliance that Lost Its Way (Chicago: Quadrangle Books, 1970), p. 1;4...
...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...
...Recent developments at the Eximbank reflect this economic imperative.24 III...
...1. The title of this section comes from a book written in 1967 for U.S...
...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...
...The 1929 crash precipitated a drastic cutback of investment in new plants and machines, and industrial production plummetted...
...Who are the major U.S...
...4 3 By pushing the exportation of plants, the Eximbank helps the multinationals capture control of local manufacturing markets...
...Egypt then turned to Italian construction firms...
...as resources grow scarcer, and as market outlets become more limited, the corporations are forced to turn upon each other...
...15, 1974...
...5 With the outbreak of hostilities in Europe, German commerical competition in Latin America subsided...
...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...
...government and the business interests that it serves...
...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...
...2 3 * Another major advantage for the private banks under Participation Financing lies in the "blended" interest rates...
...These, however, are only the most striking instances of controversy over 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...
...3 3 Many of these same companies, through foreign subsidiaries, shape the destinies of countries around the world...
...Why then is this usually inconspicuous institution now in the limelight...
...However, the United States suspended the surplus property credit when Poland failed to publicize its trade laws...
...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...
...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...
...equipment...
...businessmen with an introduction by John T. Connors, Secretary of Commerce under President Johnson...
...3 0 The Eximbank works closely with PEFCO in all its operations...
...VI, 1942, p. 530...
...A number of them can be described as "necessary-but-unsuited-industries...
...Changes were occuring in the world economy, changes that the United States fully recognized only in the late 1960's...
...72-85...
...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...
...Throughout its forty years of existence, the Bank has wielded a big credit stick on behalf of the 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...
...leaders turned to an old, time-tested institution of the empire -- the Eximbank...
...Infrastructure projects undertaken by the construction companies also draw Eximbank financing...
...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...
...The bulk of these loans were tied to the use of American equipment and machinery...
...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...
...See Statement of Active Loans, op...
...History of Operations, op...
...4. 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...
...Thus when Richard Nixon assumed office in 1969, the trade crisis had reached new proportions...
...This program seeks to involve foreign-based lenders in the drive to augment American exports...
...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...
...imperium, the growth and recent activities of the Eximbank reveal a great deal about the needs and structure of U.S...
...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...
...After Poland nationalized its industry in January of 1946, Washington halted all credit negotiations with the country...
...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...
...522,338 Westinghouse...
...Expo-t Import Bank, 1971 Annual Report, p. 39...
...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...
...The recent cry over Nixon's promise of nuclear power to Egypt is rather belated...
...825.602/14 and 825.5151/502...
...In Czechoslovakia in late 1945 and 1946 an elected coalition of leftist political parties nationalized the country's largest industries...
...In Chile the Bank initiated the economic assault on the socialist government of Salvador Allende...
...Congress, Senate, Committee on Banking and Currency, Works Financing Act of 1939, Hearings, on S. 2759, 76th Cong., 1st sess., 1939, p. 219...
...History of Operations, p. 122...
...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...
...17 The mid-1960's found the private bankers beating on the doors of the Eximbank for additional assistance...
...goods, including capital goods, influenced the Roosevelt Administration's decision to recognize the Soviet Union...
...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...
...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...
...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...
...This study places the Eximbank in the context of the country's economic structure...
...18,695 Mitsubishi...
...2 However, the dream of Soviet markets for depression-idled industries never materialized...
...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...
...9. Carl Parrini, "The Export Import Bank and United States Government Foreign Investment," M.A...
...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...
...yet the large commercial jets must be produced in quantity if the benefits of the industry's size of scale are to be realized...
...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...
...goods and services developed as a by-product of AID operations...
...Furthermore, increased domestic deficit spending due to the Vietnam war touched off a domestic inflationary spiral...
...the financing of its empire is heavily reliant on large trade surpluses...
...28,682 Lang Engineering Corp...
...industrial corporations...
...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...
...In Latin America in the late 1930's, Germany tried to usurp U.S...
...of Wisconsin, 1957, p. 104...
...response: the United States demanded $30-50 million in compensation for American private investments, and fearing the closing of Czechoslovakian markets to U.S...
...Ibid., Vol...
...The Eximbank, by denying loans to foreign governments in disputes over U.S...
...Moreover, the costliness of the product demands more secure sales than the free market will guarantee...
...Thanks to the huge increment in Iranian oil revenues, the Shah is now becoming an international investor...
...PEFCO, 2nd Annual Report, 1972, p. 5. 33...
...33-35...
...16,274 Continental Airlines...
...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...
...In 1969, the Eximbank moved determinedly to increase its assistance to American exporters...
...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...
...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...
...Responding to these pressures, the Polish government hastily agreed to U.S...
...What Simon neglected to note is that the militaristic interests of the "Nut" of Iran have been carefully nurtured by U.S...
...4 1 In the textile industry, the Eximbank is also financing the export of plant equipment...
...Barron's, May 20, 1974...
...Due to the tremendous increase in productive capacity during the war, peace brought the threat of overstocked domestic markets and insufficient demand...
...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...
...In 1938, Chile elected a Popular Front government under Pedro Aguirre Cerda which was committed to socio-economic reforms...
...government, refrained from nationalizing the oil companies or taking control of the electric power company...
...But for the American commercial system, the threat of war brought forth a new ser*The U.S...
...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...
...strategy to turn Iran into a sub-imperial power to serve as a regional bulwark against challenges to U.S...
...Eximbank Advance Release, Oct...
...See Peter G. Peterson, The United States in a Changing World Economy...
...In its early years, Congress appropriated a total of $1 billion for the Eximbank...
...The problems of financing the empire are not new to the Eximbank...
...Only the products produced in U.S...
...Thus a subsidiary of a U.S...
...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...
...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...
...Report to the President, Dec...
...2 5 This is not the only Eximbank program developed by Henry Kearns to assist the private banks...
...Perhaps he will soon lend money to the Eximbank so it can finance the arming of new sub-imperial powers...
...Export Import Bank, 1971 Annual Report, p. 5, "The Chairman's Statement on FY '71...
...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...
...Maintaining the Open Veins The latest threat to the well-being of the U.S...
...in Thailand, and worked as an adviser to Mitsui & Co., a large multinational Japanese firm...
...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...
...10361, 76th Cong., 3rd seas., 1940, p. 30...
...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...
...Incapable of adjusting to the new realities of mineral scarcity through private initiative alone, U.S...
...See Charles J. Olson & Ray C. Ellis, Export or Die (Chicago: 1966...
...For description of Participation Financing, see Export Import Bank, 1973 Annual Report, p. 8. 22...
...Commercial jet aircraft are more a spin-off of military hardware than of consumers' preferences...
...Ibid., p. 188...
...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...
...The continued socialization of the region, plus the growth of Soviet power, effectively closed the area to U.S...
...exports...
...In some cases, the borrower has to put down as much as 15% of the cost of the project...
...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...
...cit., p. 71...
...The Eximbank's recent involvement in Egypt also drew public attention...
...cit., p. 119...
...economic involvement in the world economy...
...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...
...Ibid...
...These loans are an integral part of the U.S...
...Most obviously, to accumulate the funds needed to import items either unavailable or too expensive to produce domestically...
...5 7 Conversely, the Bank sometimes goes out of its way to make loans at the suggestion of the State Department...
...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...
...The fulfillment of this goal, however, has caused the Bank to serve as an overseer for various aspects of U.S...
...Department of State, Foreign Relations Papers, Vol...
...markets...
...2 2 Furthermore, the private banks enjoy the indirect backing of the U.S...
...As American industry expanded, so did its thirst for raw material imports due to the limits of domestic mineral supplies...
...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...
...for half a million dollars -- ten times the stock's value in 1969 before the company ran into severe financial problems...
...The textile manufacturers for example demanded higher tariff barriers and special protective measures to keep out foreign imports...
...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...
...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...
...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...
...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...
...During 1972 and 1973, the Eximbank made a number of loans to the subsidiaries of U.S...
...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...
...Traditionally eschewing public notice, the Eximbank prefers to work quietly with the country's business community to finance the flow of U.S...
...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...
...capitalism.18 I. Export or Die Why must all nations export...
...Without credits the costs of the gigantic jet lines might be prohibitive, even for some European purchasers...
...Its raison d'etre is to encourage exports...
...strategy was to deny the loan to PEMEX unless American petroleum companies "could participate in the development of the Mexican oil company...
...By financing these large projects, the Eximbank helps the multinational construction firms capture some of the most lucrative projects for American exporting interests...
...He helped found the Siam Kraft Paper Co...
...in the end the Eximbank failed in its first quest for foreign markets...
...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...
...manufacturing exports in 1970...
...Even more important, Western Europe, and especially Japan, penetrated the large consumer markets of the United States...
...Sources: Poor's Register of Corporations, Directors and Executives...
...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...
...The Senate held up Casey's confirmation as Eximbank president for several months because of the Vesco and ITT affairs...
...Like PEMEX, ENAP hoped to obtain Eximbank financing to develop its oil reserves...
...interests...
...In the export trade, this concept of "private enterprise" brought about a close intermeshing of the operations of the Eximbank and the private banks...
...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...
...Welfare for the Bankers Credit is the basis for international trade...
...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...
...economic system and in the activities of the Eximbank...
...While unable to comprehend the complexity of the Depression, businessmen did recognize the desperate need to reactivate sales...
...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...
...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...
...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...
...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...
...The four principal recipients -- Boeing, McDonnell Douglas, Westinghouse, and G.E...
...Defending Corporations The Credit Stick The Eximbank acts as an important economic lever for manipulating foreign states...
...The country enjoyed large trade surpluses, and the spread of the multinational corporations insured the United States of a large role in foreign markets...
...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...
...See Export Import Bank of the United States, Statement of Active Loans, and Journal of Commerce, August 22, 1973, p. 5. 43...
...20,101 Fuller Company...
...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...
...Foremost among these changes was the resurgence of Western Europe and Japan...
...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...
...investments abroad...
...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...
...Gabriel Hauge, "Some Aspects of Banking in Transition," The World Banking Challenge...
...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...
...News & World Report, "Helping U.S...
...Casey avoided conviction in the first two cases, but the third is still pending in the courts...
...A20 The creation of other lending institutions also alleviated the need for a strong Eximbank...
...Strategists for the empire realized that long-range imperial goals sometimes require the sacrificing of short-term interests...
...projects for building petroleum refineries, oil pipelines, and ore crushing plants received sizeable Eximbank credits...
...6 4 Although ultimately unsuccessful, the move reflected the need of U.S...
...In 1972 and 1973, the Eximbank financed over $350 million in sales by Westinghouse and General Electric of nuclear power plant equipment...
...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...
...Massive iron ore projects are contemplated in Brazil and Mexico...
...Altogether, PEFCO's stock is owned by 55 banks, 7 industrial corporations and one investment banking firm...
...Ibid...
...economy at an early date...
...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...
...President appoints the president and the board of directors of the Eximbank...
...Ibid., pp...
...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...
...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...
...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...
...leaders adopted several different policies in the late 1960's and the early 1970's...
...Construction companies received the primary contracts for all of these Eximbank-financed projects in 1972 and 1973...
...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...
...6. U.S...
...In Cuba the Eximbank had acted mainly to buoy up a new regime friendly to the United States...
...11, 1967...
...The Eximbank entered the Cuban picture by making its first loan to help stabilize the Batista government...
...Prior to 1969, all of Eximbank's long term loans were made without the involvement of the commercial banks...
...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...
...Eximbank Amendments of 1974...
...An additional 10 percent of the loans are not included because the Bank failed to list the principal contractor for the project...
...As chairman of the SEC, he is connected with two different scandals: ITT and Robert Vesco...
...government agency...
...The table on this page shows the leading 25 corporations that benefited from long term Eximbank loans in 1972 and 1973...
...No limits are placed on the size of loans: the financial needs of each project determine the amount.27 States...
...Ibid., p. 625...
...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...
...In these instances the Eximbank provides 42.5% of the loan, and the private banks the same amount...
...Archives of the Department of State, Internal Affairs Reports, Decimal File no...
...businessmen in the region, the Eximbank extended large loans to Latin American countries to purchase U.S...
...exports and investments...
...Kearns has also come under fire for aiding Mitsui & Co...
...Sources: Eximbank 1973 Annual Report...
...trade by involving foreign-based financial institutions, the U.S...
...Developments in Latin America in the 1960's illustrate this trend...
...Export Import Bank of the United States, Statement of Active Loans...
...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...
...The Chilean request for a $21 million credit to purchase three Boeing passenger jets was quickly rejected...
...but in a series of maneuvers Casey let ITT off with an injunction making the corporation promise not to do it again...
...The resulting increase in the prices of American commodities made them less competitive in world markets...
...It is perhaps a fitting speculation that America may have been discovered on credit...
...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...
...Recipients of nuclear reactors with Eximbank financing include Spain, South Korea, Japan, Taiwan, Brazil, and Mexico...
...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...
...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...
...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...
...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...
...PEFCO, 1st Annual Report 1971, p. 5. 30...
...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...
...received over 60 percent of the total...
...However, a recent Tariff Commission study concluded that multinational corporations accounted for 62 percent of U.S...
...Department of State, Foreign Relations Papers, Vol...
...35,000 Foster Wheeler Corp...
...balance of payments throughout most of the 1960's...
...commercial expansion but on a reduced scale...
...AID alone cannot provide all the infrastructure assistance needed by business interests...
...And 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...
...Ibid., Decimal File no...
...10212 superseded by H.R...
...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...
...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...
...Armed with increased financial powers, the Eximbank once again became a major diplomatic instrument for defending American corporate interests abroad...
...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...
...Report to the Committee of Finance of the U.S...
...No multinational corporation or capitalist nation-state could long survive in the international market place without the use of credit...
...plants by Mitsubishi are eligible for Eximbank financing...
...Possessing insufficient capital to meet the demands for credit, the private banks faced a "liquidity crisis...
...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...
...25,086 Dravo Corp...
...With the inauguration of the Alliance for Progress in 1961, the U.S...
...Moreover, the technology is government-developed and war-related...
...State Department, the First National City Bank, the Eximbank1and U.S...
...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...
...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...
...16,250 *figures in 1,000's of dollars This list was compiled from Export-Import Bank, Statement of Active Loans, March 31, 1974...
...Accordingly, when Chile began to consider carrying out its projected measures against foreign capital, U.S...
...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...
...1 9 Although important, these early activities pale next to the series of programs that the Nixon Administration created to subsidize the private banks...
...taxpayer, a close scrutiny of its sources of funds reveals that it is heavily dependent upon the public for support...
...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...
...Senate, Committee on Banking and Currency, ExportImport Bank Act Amendments, Hearings, S. 2005, 82nd Cong., let seas., 1951, p. 16...
...But although non-U.S...
...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...
...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...
...Fortune, April, 1974...
...Ibid., Vol...
...2. Lloyd C. Gardner, Economic Aspects of New Deal Diplomacy (Madison: Univ...
...20,397 Allis Chalmers...
...Because the government does not publish the names of corporations in its trade data, the answers to these questions are not easy to obtain...
...Among those now under active consideration are copper development projects in Poland, Panama, Iran and Zaire...
...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...
...this sum provides the basis for the Bank's credit...
...Why then do they need Eximbank financing in their drive for foreign markets...
...Business Sell More Abroad," Interview with Henry Kearns, July 19, 1971...
...Ibid...
...And even more importantly, are the leading exporters also multinational corporations...
...Empire...
...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...
...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...
...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...
...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...
...Staff members at the SEC prepared the case for prosecution...
...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...
...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...
...Senate, 83rd Congress, 2nd Session on Senate Resolutions 25 and 183, June 14, 1954...
...36,068 Ford Motor Company...
...The Several Roads to a U.S...
...Moody's Industrial Manual...
...Senate and its subcommittee on International Trade by the Tariff Commission, "Implications of Multinational Firms for World Trade and Investments for U.S...
...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...
...Accordingly, AID and the IDB served as the main economic instruments for pressuring the countries of the region...
...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...
...cit., p. 122...
...21...
...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...
...These firms EXIMBANK'S TOP 25* Boeing..............................677,977 General Electric....................588,136 McDonnell Douglas...
...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...
...Beginning in 1969 and 1970, however, the Eximbank moved to involve private banks...
...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...
...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 the end the project fell through, mainly because rising costs for construction materials forced Bechtel to request an increase in the projected budget...
...A similar situation emerged in Chile in 1945 when a publicly owned company, ENAP, discovered oil...
...copper companies, the Eximbank notified Chile that a) it would no longer be eligible for loans, b) Eximbank loan guarantees to U.S...
...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...
...5 9 Poland also felt the brunt of the Eximbank's financial weight in 1946...
...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...
...commercial interests...
...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...
...A private bank can also take out insurance on its portion of a loan through the Eximbank...
...Even when private lenders are interested in financing exports, the uncertainties of trade create the desire to pass the risk onto someone else...
...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...
...Aside from the private money market, the Eximbank often turns to the Treasury Department for loans...
...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...
...Capital shortages are inherent in capitalism due to cyclical instabilities, temporary declines in profits, and the system's insatiable drive to expand...
...Export Import Bank, Eximbank Programs, Vol...
...But although the Vietnam war undermined the 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...
...History of Operations, op...
...Ibid., pp...
...In sum, the Eximbank is one more government program subsidized by the public for the benefit of the corporate elite...
...In most cases, the private bank is repaid before the Eximbank, thereby limiting the period that its funds are outstanding...
...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...
...Wall Street Journal, April 2, 1968...
...Beginning in the early 1960's, the Eximbank moved into a much closer relationship with the private banks...
...The list of the top 25 was obtained by adding together the loans according to the principal contractors for the years 1972 and 1973...
...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...
...New mining and processing undertakings are identified with increasing frequency...
...Do they display the same degree of concentration that characterizes the American economy as a whole...
...commerce, the State Department employed the credit lever to exert pressure...
...banks and their subsidiaries abroad...
...And in 1949, in an *Of course the Eximbank was careful to send to Europe only those goods in oversupply in the United States...
...But because of the very malaise affecting the system, it becomes increasingly difficult for the corporate community to act in concert...
...Confronted by a world increasingly hostile to U.S...
...William Appleman Williams, The Tragedy of American Diplomacy (New York: Dell Publishing Company, 1962), p. 174 47...
...5 5 The U.S...
...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...
...commercial hegemony: balance of payment figures moved increasingly into the red year after year...
...cit., p. 6.32 48...
...investments abroad, and the closing of the world economy to United States expansion...
...As Eximbank president Henry Kearns declared, if a borrower "is in trouble with us, there's literally no private institution in the U.S...
...The Eximbank's policies greatly hampered Chile's ability to deal with the American private banking community...
...60,195 Bethlehem Steel...
...Pedro Aguirre Cerda had already indicated a strong interest in obtaining funds from the Eximbank to help implement his government's development plans...
...And the Eximbank, while not a formal "development" agency, is certainly interested in the development of environments receptive to U.S...
...Trade and Labor...
...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...
...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...
...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...
...825.5151/502...
...government...
...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...
...For if a borrower defaults, it is defaulting not only against the private bank but also against a U.S...
...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...
...The International Economic Policy Association, The United States Balance of Payments: From Crisis to Controversy (Washington, D.C., 1972), p. 21...
...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...
...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...
...Export Import Bank, 1973 Annual Report, p. 3. 45...
...33,517 Epstein, A. Companies...
...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...
...The six leading shareholders mentioned all own equal blocs of shares...
...As the National Export Expansion Council noted, "exports move on credit...
...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...
...In the end, the Popular Front, rather than face the retaliatory actions of the Eximbank and the U.S...
...332, 338...
...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...
...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...
...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...
...Although not an exceptionally visible institution in the U.S...
...Chamber of Commerce of the United States, 1970...
...commercial expansion...
...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...
...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...
...Thus even in a program which is supposed to promote U.S...
...We look at it hopefully...
...On the other hand, their prime rating as borrowers, their intimacy with the major international banks, indicate the accessibility of private loans...
...The search for overseas markets for U.S...
...This precipitated a quick U.S...
...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...
...History of Operations, op...
...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...
...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...
...Facing suck a situation, the private banks in 1966 worked out an agreement for obtaining funds directly from the Eximbank...
...See also Wall Street Journal, August 27, 1973...
...Export Import Bank, 1973 Annual Report, p. 19...
...exports...
...372,663 Chemical Construction Corp..........157,410 Morrison-Knudsen....................102,240 Fluor-Ocean...
...Based on information obtained in interviews in Washington, D.C...
...5. National Archives of the United States, Internal Affairs Reports, Decimal File no...
...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...
...of Wisconsin Press, 1964) 3. Ibid., pp...
...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...
...Many of the loans made in 1972 and 1973 reveal that the Eximbank was aware of this threat to the U.S...
...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...
...44...
...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...
...Beyond the need for export markets, the United States has a special stake in a healthy trade sector...
...Ibid...
...Thesis, Dept...
...In similar situations, individuals generally spread the risks among themselves...
...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...
...27, 1971...
...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...
...Thus, the borrowing party is not paying 10 percent, but rather a blended interest rate of around 8 percent for the entire loan package...
...ambassador to Cuba, Sumner Wells, "our own commercial and export interests in Cuba cannot be revived under this government...
...Ibid., p. 3. 32...
...6 5 These measures had an immediate impact on Chile...
...Agency for International Development (AID) and the Inter-American Development Bank (IDB) became the main institutions for U.S...
...The Discount loan program, mentioned above, grew dramatically unaer the Nixon admi'nistration...
...But the Eximbank, under the guidance of an old Nixon associate, Henry Kearns, instead decided to work through the private bankers...
...Fora more complete discussion of this debate, see Carl Parrini, op...
...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...
...The European nations, with their war-decimated economies, and their need for capital goods and food, provided an outlet for the surplus...
Vol. 8 • September 1974 • No. 7
