management group called a Board of Directors which was charged with the responsibility of managing the bank. It is significant that in a banking statute such as this, the powers and limitations of these three groups were not defined, except in a very general way, leaving confusion as to which body was the policy making authority.

It is also worthy of note that in this banking statute reorganizing the ExportImport Bank of 1945 the declaration of policy and purpose by the Congress, was void of direction upon the types of loans which the agency might undertake. It only denominated that they be for the purpose of aiding in the financing and facilitating of exports and imports and the exchange of commodities between the United States and any of its Territories or insular possessions and any foreign country or the agencies or nationals thereof. Because of its importance a substantial portion of the Export-Import Bank Act of 1945 is presented:

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "ExportImport Bank Act of 1945".

"SEC. 2. (a) The Export-Import Bank of Washington, District of Columbia, a banking corporation organized under the laws of the District of Columbia as an agency of the United States, is continued as an agency of the United States, and in addition to existing charter powers, and without limitation as to the total amount of obligations thereto of any borrower, endorser, acceptor, obligor, or guarantor at any time outstanding, it is hereby authorized and empowered to make loans, to discount, rediscount or guarantee notes, drafts, bills of exchange, and other evidence of debt, or participate in the same, for the purpose of aiding in the financing and facilitating of exports and imports and the exchange of commodities between the United States or any of its Territories or insular possessions and any foreign country or the agencies or nationals thereof. The Bank is hereby authorized to use all its assets, including capital and net earnings therefrom, and to use all moneys which have been or may hereafter be allocated to or borrowed by it, in the exercise of its functions as such agency.

"(b) It is the policy of the Congress that the Bank in the exercise of its functions should supplement and encourage and not compete with private capital, and that loans, so far as possible consistently with carrying out the purposes of subsection (a), shall generally be for specific purposes, and, in the judgment of the Board of Directors, offer reasonable assurance of repayment.

"SEC. 3. (a) (1) The management of the Export-Import Bank of Washington shall be vested in a Board of Directors consisting of the Administrator of the Foreign Economic Administration, who shall serve as Chairman, the Secretary of State, and three persons appointed by the President of the United States by and with the advice and consent of the Senate. The Secretary of State, to such extent as he deems it advisable, may designate to act for him in the discharge of his duties as a member of the Board of Directors any officer of the Department of State who shall have been appointed by and with the advice and consent of the Senate.

"(2) If the Foreign Economic Administration ceases to exist in the Office for Emergency Management in the Executive Office of the President, the President of the United States shall appoint by and with the advice and consent of the Senate another member of the Board of Directors. The member so appointed shall serve for the remainder of the existing terms of the other three appointed members but successors shall be appointed for terms of five years. After the Foreign Economic Administrator ceases to be a member of the Board of Directors the President of the United States shall, from time to time, designate one of the members of the Board to serve as Chairman.

(3) Of the five members of the Board, not more than three shall be members of any one political party. Each of the appointed directors shall devote his time not otherwise required by the business of the United States principally to the business of the Bank. Before entering upon his duties each of the directors so appointed and each officer of the Bank shall take an oath faithfully to discharge the duties of his office. The terms of the appointed directors shall be five years, except that the terms of the directors first appointed shall run from the date of appointment until June 30, 1950. Whenever a vacancy occurs among the directors so appointed, the person appointed to fill such vacancy shall hold office for the unexpired portion of the term of the director whose place he is selected to fill. Each of the appointed directors shall receive a salary at the rate of $12,000 per annum, unless he is an officer of the Bank, in which event he may elect to receive the salary of such officer. No director, officer, attorney, agent, or employee of the Bank shall in any manner, directly or indirectly, participate in the deliberation upon or the determination of any question affecting his personal interests, or the

interests of any corporation, partnership, or association in which he is directly or indirectly personally interested.

"(b) A majority of the Board of Directors shall constitute a quorum.

"(c) The Board of Directors shall adopt such bylaws as are necessary for the proper management and functioning of the Export-Import Bank of Washington, and may amend the same.

"(d) There shall be an Advisory Board consisting of the Chairman of the Export-Import Bank of Washington, who shall serve as Chairman, the Secretary of State, the Secretary of the Treasury, the Secretary of Commerce, and the Chairman of the Board of Governors of the Federal Reserve System, which shall meet at the call of the Chairman. The Advisory Board may make such recommendations to the Board of Directors as it deems advisable, and the Board of Directors shall consult the Advisory Board on major questions of policy..

"(e) Until October 31, 1945, or until at least two of the members of the Board of Directors to be appointed have qualified as such directors, whichever is the earlier, the affairs of the Bank shall continue to be managed by the existing Board of Trustees.

"(f) The Export-Import Bank of Washington shall constitute an independent agency of the United States and neither the Bank nor any of its functions, powers, or duties shall be transferred to or consolidated with any other department, agency, or corporation of the Government unless the Congress shall otherwise by law provide.

"SEC. 4. ***

"SEC. 5. (a) The Secretary of the Treasury shall pay to the Reconstruction Finance Corporation the par value of the preferred stock upon its surrender to the Bank for cancellation. For the purpose of making such payments to the Reconstruction Finance Corporation the Secretary of the Treasury is authorized to use as a public-debt transaction the proceeds of any securities hereafter issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may by issued under that Act are extended to include such purpose. Payment under this subsection to the Reconstruction Finance Corporation shall be treated as public-debt transactions of the United States.

"(b) Any dividends on the preferred stock accumulated and unpaid to the date of its surrender for cancellation shall be paid to the Reconstruction Finance Corporation by the Bank.

"SEC. 6. * * *

"SEC. 7. ***

"SEC. 8. The provisions of the existing charter of the Bank relating to the term of its existence, to the management of its affairs, and to its capital stock are superseded by the provisions of this Act and the Bank shall be exempt from compliance with any provisions of law relating to the amendment of certificates of incorporation or to the retirement or increase of stock of District of Columbia corporations and from the payment of any fee or tax to the Recorder of Deeds of the District of Columbia determined upon the value or amount of capital stock of the Bank or any increase thereof.

"SEC. 9. The Export-Import Bank of Washington shall transmit to the Congress semiannually a complete and detailed report of its operations. The report shall be as of the close of business on June 30 and December 31 of each year.

"SEC. 10. Section 9 of the Act of January 31, 1935 (49 Stat. 4, ch. 2), as amended, is repealed.

"SEC. 11. Notwithstanding the provisions of the Act of April 13, 1934 (48 Stat., ch. 112, p. 574), any person, including any individual, partnership, corporation, or association, may act for or participate with the Export-Import Bank of Washington in any operation or transaction, or may acquire any obligation issued in connection with any operation or transaction, engaged in by the Bank.

"Approved July 31, 1945." [Export-Import Bank Act of 1945, Puble Law 173, 79th Cong. (59 Stat. 526-529).]

The same date that Congress enacted the above legislation it also passed the Bretton Woods Agreement Act, which further complicated the question of policy determination for the Export-Import Bank. This act provided for creation of a National Advisory Council which was to coordinate, as far as practicable, policies and operations of the representatives of the United States on the fund and International Bank and the Export-Import Bank of Washington, and all other agencies of the Government to the extent that they participated in making foreign loans or engaged in foreign financial transactions. The pertinent sections of that act are set out:

c. 4. (a) In order to coordinate the policies and operations of the representathe United States on the Fund and the Bank and of all agencies of the

Government which make or participate in making foreign loans or which engage in foreign financial, exchange or monetary transactions, there is hereby established the National Advisory Council on International Monetary and Financial Problems (hereinafter referred to as the 'Council'), consisting of the Secretary of the Treasury, as Chairman, the Secretary of State, the Secretary of Commerce, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Board of Trustees of the Export-Import Bank of Washington. "(b) (1) The Council, after consultation with the representatives of the United States on the Fund and the Bank, shall recommend to the President general policy directives for the guidance of the representatives of the United States on the Fund and the Bank.

"(2) The Council shall advise and consult with the President and the representatives of the United States on the Fund and the Bank on major problems arising in the administration of the Fund and the Bank.

"(3) The Council shall coordinate, by consultation or otherwise, so far as is practicable, the policies and operations of the representatives of the United States on the Fund and the Bank, the Export-Import Bank of Washington and all other agencies of the Government to the extent that they make or participate in the making of foreign loans or engage in foreign financial, exchange or monetary transactions ***.

"SEC. 14. In the realization that additional measures of international economic cooperation are necessary to facilitate the expansion and balanced growth of international trade and render most effective the operations of the Fund and the Bank, it is hereby declared to be the policy of the United States to seek to bring about further agreement and cooperation among nations and international bodies, as soon as possible, on ways and means which will best reduce obstacles to and restrictions upon international trade, eliminate unfair trade practices, promote mutually advantageous commercial relations, and otherwise facilitate the expansion and balanced growth of international trade and promote the stability of international economic relations. In considering the policies of the United States in foreign lending and the policies of the Fund and the Bank, particularly in conducting exchange transactions, the Council and the United States representatives on the Fund and the Bank shall give careful consideration to the progress which has been made in achieving such agreement and cooperation.

"Approved July 31, 1945." [Bretton Woods Agreements Act, Public Law 171, 79th Cong. (59 Stat. 512-513 and 517).]

As may be seen from a careful examination of section 3d of the Export-Import Bank Act of 1945 and section 4a of the Bretton Woods Agreements Act, the membership of the Advisory Board to the Export-Import Bank and the National Advisory Council charged with the responsibility of coordinating the activities of those engaged in foreign financial transactions, are identical. Integrating these two acts especially with reference to the above sections, presents a hybrid policymaking hierarchy of a strange sort. First, policy of Congress is stated in sections 2a and b of the Export-Import Bank Act of 1945 and section 14 of the Bretton Woods Agreements Act and the language connotes a variance of policy. Section 14 of the Bretton Woods Agreements Act is much more expansive. Next, by integrating the 2 acts, in addition to the 2 policy statements, a National Advisory Council is charged with the responsibility of coordinating activities which in all likelihood must take on a flavor of policymaking. In addition, the Export-Import Bank has a Board of Advisers for policymaking and, finally, it has a Board of Directors who are responsible for the management of the bank, which management almost certainly implies a certain degree of policy determination.

Later in 1945 authorization was given to the bank to finance trade with the Philippine Islands (Public Law 282, 79th Cong. (59 Stat. 666)). This amendment was designed to cover an area of financing which had been omitted by the ExportImport Bank Act of 1945.

Reincorporation under Federal charter

On June 9, 1947, the bank was reincorporated under a Federal charter and the lending authority was limited to June 30, 1953 (Public Law 130, 80th Cong. (61 Stat. 130)). The need for reincorporation was created due to the passage of the Government Corporation Control Act, passed in 1945, which provided that wholly owned Government corporations should not continue after June 30, 1948, as an agency or instrumentality of the United States but that prior to that date any such corporation might be reincorporated by Congress for such pruposes and term of existence as its predecessor corporation (Government Corporation Control Act, Public Law 248, 79th Cong. (59 Stat. 602)). Under the reincorporation,

the Export-Import Bank Act of 1945, was left intact except that provision was made for payment of dividends on capital stock (House hearings on S. 993, dated May 8 and 12, 1947, pp. 1 and 2).

The bank as processing agent

During 1948, legislation was enacted by Congress requiring the Export-Import Bank of Washington to serve as a processing agent for certain financial transactions. The Economic Cooperation Administration was established and the Administrator was added as a member of the National Advisory Council, thus amending the Bretton Woods Agreements Act (Economic Cooperation Act of 1948, Public Law 472, 80th Cong. (62 Stat. 141)). Under the act the Administrator was authorized to direct the bank to make and administer credit on such terms and conditions as he might specify after consultation with the National Advisory Council. Section 111, subsection (c) 2, provided for the allocation of funds to the bank for carrying out the direction of the Economic Cooperation Administrator. Funds were to be raised by the sale of notes to the Treasury (ante, Economic Cooperation Act of 1948, Public Law 472, 80th Cong. (62 Stat. 146)).

In 1951 the Economic Cooperation Administration was abolished and its powers, functions, and responsibilities were transferred to the Mutual Security Agency (Mutual Security Act of 1951, Public Law 165, 82d Cong. (65 Stat. 378)). Provision was also made for the transfer of personnel from the Economic Cooperation Administration to the newly created Mutual Security Agency. Mutual Security Agency was continued in 1953 (Public Law 118, 83d Cong. (67 Stat. 141)). Political considerations

During 1951 the Export-Import Bank again received an increase in its lending authority from $3.5 billion to $4.5 billion, and the life of the bank was extended to June 30, 1958 (Public Law 158, 82d Cong. (65 Stat. 367)). Testimony at the hearings on the measure to increase the lending authority illustrated one type of loan which the bank had undertaken in recent years. The excerpt below is typical:

"Senator DOUGLAS. I do not want to ask a question, the reply to which might be embarrassing to the national interest of the country, but when you make your loans do you consider purely the economic purposes for which the loan is made, or do you also consider the political advantages of the loan?

"Mr. GASTON. We consider both. Obviously, we don't follow the same policy in making loans to a country that is pursuing generally a policy hostile to the interest of the United States as we do in making a loan to a country which is pursuing a policy friendly to the United States.

*

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"Senator DOUGLAS. From whom do you get advice as to the political aspects of your loans? From the State Department?

"Mr. GASTON. From the State Department; yes, sir.

"Senator DOUGLAS. Can you make the loans conditional upon the institution by the Government of the reforms?

"Mr. GASTON. We can make our loans conditional upon the administration of the loans in such a way that they will in themselves constitute a considerable degree of domestic reform. I wouldn't say that we could take extraneous matters and bring them in. I don't think we can trade like that, but I think we can make contracts for land cultivation

"Senator DOUGLAS. In other words, if it were for irrigation, you would require wide land ownership?

"Mr. GASTON. That is right, which would permit a breaking up of these large estates and break up this system, this ancient system of landlordism and serfdom which they have all over the Middle East and which I think is a serious menace to the United States" (Senate subcommittee hearings on S. 2006, dated Aug. 28, 1951, pp. 14-16 and 20-21).

From the above testimony it may be seen that though the loans were given political consideration, the primary concern was economic. Obviously, the political consideration was important, because if loans were made in countries hostile to the United States Government, there would be little protection for the loans. This in turn, was the application of sound business judgment. Venture into insurance

In May 1953 the Export-Import Bank of Washington ventured into the insurance business. The need for insurance arose because of the inability of American exporters, particularly of such commodities as cotton, to arrange United States

commercial-bank financing for their sales abroad without the risks being covered by insurance. Where a commodity is sold on terms calling for payment on arrival, many banks will not finance the transaction without the risks being insured against because of the fear that losses may occur as a result of such risks between the time of arrival of the ship in port and the time at which the foreign purchaser ultimately takes title on shore (Rept. No. 320, House Banking and Currency Committee, on H. R. 4465, p. 5).

Under this amendment to the Export-Import Bank Act of 1945, the bank was authorized to provide insurance in an aggregate amount not in excess of $100 million outstanding at any one time for the benefit of citizens of the United States, including corporations, partnerships, and associations organized and existing under the laws of the United States or any State, District, Territory, or possession thereof against the risks of losses of and damage to property of United States origin exported from the United States in commercial intercourse, and is located in any friendly foreign country. The measure further provided that insurance of this type was to be available only to the extent that it could not be obtained on reasonable terms and conditions from companies authorized to do an insurance business in any State of the United States and to the extent that it could not be obtained from any agency of the United States Government providing marine or air warrisk insurance. Under the powers granted the bank is authorized to reinsure in whole or in part and is empowered to use those companies as underwriting agents. Finally, Congress granted the bank power to determine the terms and conditions under which it will provide insurance, with the two restrictions, however, that such insurance shall be based upon consideration of the risk involved and that the term of coverage shall not exceed 1 year, subject to renewal or extension for periods not exceeding 1 year (Public Law 30, 83d Cong. (67 Stat. 28)).

Presidential reorganization

On April 30, 1953, the President of the United States sent to Congress a plan for reorganizing the Export-Import Banks of Washington. The purpose of the reorganization plan was stated in the President's message as being to simplify the organization of the Export-Import Bank of Washington by providing for a managing director at the head of the bank. In the words of the Chief Executive: "Experience has demonstrated that the most effective performance of executive functions is more likely to be obtained under a single administrator than under a board (Reorganization Plan No. 5 of 1953, H. Doc. No. 135, pp. 1 and 2)."

The President's message to Congress stated as authority for his action the provisions of the Reorganization Act of 1949, as amended. Pertinent portions of that Reorganization Act of 1949 are here stated:

"SEC. 3. Whenever the President, after investigation, finds that

(1) the transfer of the whole or any part of any agency, or of the whole or any part of the functions thereof, to the jurisdiction and control of any other agency; or

"(2) the abolition of all or any part of the functions of any agency; or

"(3) the consolidation or coordination of the whole or any part of any agency, or of the whole or any part of the functions thereof, with the whole or any part of any other agency or the functions thereof; or

"(4) the consolidation or coordination of any part of any agency or the functions thereof with any other part of the same agency or the functions thereof; or

"(5) the authorization of any officer to delegate any of his functions; or "(6) the abolition of the whole or any part of any agency which agency or part does not have, or upon the taking effect of the reorganization plan will not have any functions,

is necessary to accomplish one or more of the purposes of section 2 (a), he shall prepare a reorganization plan for the making of the reorganizations as to which he has made findings and which he includes in the plan, and transmit such plan (bearing an identifying number) to the Congress, together with a declaration that, with respect to each reorganization included in the plan, he has found that such reorganization is necessary to accomplish one or more of the purposes of section 2 (a) *** "SEC. 4. Any reorganization plan transmitted by the President under section 3

"(1) shall change, in such cases as he deems necessary, the name of any agency affected by a reorganization, and the title of its head; and shall designate the name of any agency resulting from a reorganization and the title of its head;

42493-54-pt. 1-3