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OCR Page 1 of 14EXECUTIVE OFFICE OF THE PRESIDENT
for
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON 25, D. C.
IV
September 30, 1949.
To:
David D. Lloyd
From:
Walter S. Salant
was
Subject: Your Comments on My Memorandum
1. I have not been in touch with the State Department on the ques--
tion of loans to the Near and Far East and I realize that the political
aspects of this suggestion is extremely important. So far as India is
concerned I believe my suggestions would be acceptable to them. I agree
with you that Nehru's visit makes it more urgent to get the suggestion
to somebody who can make a decision. Unfortunately, I neglected to call
the Council's attention to this when I sent them the memo this morning.
2. I haven't recently discussed with the port-Import Bank the
question of whether they are authorized to purchase long-ter securities,
but I had this general idea in mind when we discussed the investment
guaranty legislation with them. I think it was in a meeting that you and
I both attended with Walter Sauer and Bernie Bell in the Budget Bureau's
office that I asked them whether the words of the statute permitted them
to buy bonds. It authorizes them to "purchase, discount, rediscount, sell,
and negotiate
and to guarantee notes, drafts. checks, bills of ex-
change, etc., and other evidences of indebtedness".) They said they could
buy bonds. As to custom approved by Congress, I don't know.
3. The International Bank cannot require that a borrower scale
down or defer its claims upon its debtors as a condition precedent to a
loan, but, to the extent that the sterling balance problem was to be
handled in connection with a loan from the International Bank, the U. S.
Executive Director could make it clear that the U. S. would vote for bet-
ter terms if these claims were scaled down. More important, the ster-
ling balance problem need not be tied to a loan from the International
Bank but can be handled in connection with a loan from the Export-Import
Bank.
As to disposition of the memo, I have now revised it and sent it
to the Council. I am sending you a copy of the final version.
Attachment.
NARA