Banker Uncle Sam

Latin Americans who look north to the U.S. for the funds that they need to build their way out of backwardness inevitably focus on the U.S. Government's biggest single source of foreign-development capital, the Export-Import Bank of Washington. What they find is a bank that this year is lending seven times as much development capital as it did a decade ago, a bank that takes the risks that Wall Street shuns--yet a businesslike bank that holds to hard-loan standards.

The Export-Import Bank was chartered in Depression-struck 1934 to help finance U.S. exports, and a provision was included that all loans to foreign nations must be spent on U.S. exports. Franklin D. Roosevelt and Bank Founder Jesse Jones primarily intended that the bank should finance trade with the Soviet Union, but this deal fell through when Russia refused to refinance its public and private debts to the U.S. The first Ex-Im loan then went to Cuba to finance the minting of Cuban silver coins in the U.S.

Ups & Downs. From the start, the bank lived up to the letter of its charter requirement to make loans only if there was a "reasonable" chance of repayment. It grew from an initial lending capacity of $11 million to today's $7 billion. After World War II, when the Marshall Plan took over the rebuilding of Europe, Ex-Im concentrated on Latin America. Of the $7.3 billion it has lent so far, $2.6 billion has gone to Latin America--more than to any other region of the world, and far more than the total $430 million lent to Latin America by the other major, official U.S. lending institutions, i.e., the International Cooperation Administration and the Development Loan Fund.

The bank kept on growing until 1953, when economy-minded Treasury Secretary George Humphrey tried to liquidate it in order to get the Government out of the banking business. After 1954 loan disbursements dropped rapidly. By 1956 Indiana's Republican Senator Homer Capehart had managed to convince Secretary Humphrey that Ex-Im's soundness and buy-U.S. policy helped U.S. industry without being a giveaway, and disbursements began a new climb.

The Charter Stretcher. Ex-Im's current president is Samuel Clark Waugh, 70, a Lincoln, Neb. banker who took over in 1955. Under Waugh, loans last year hit a record $535.9 million. Waugh has stretched his charter a bit to keep Ex-Im operations flexible. Sample: massive stabilization loans ($100 million to Mexico, $25 million to Chile) are not meant to be spent but to give a psychological lift to a currency threatened by inflation or devaluation. But further than that Waugh will not go, or even look. "I'm a lender, not a giver," he says, and he proudly claims a default rate of less than 1%. The bank has reserves of over $600 million, and an uncommitted lending balance of more than $2 billion.

Through the hemisphere, those nation builders who have managed to get their economies into the sound shape that meets Ex-Im's approval call the bank "one of the most successful instruments of U.S. foreign policy." Typical accomplishments include Brazil's Volta Redonda steel plant, an overhaul of the Mexican Railways, and, currently, a pair of Boeing 707s for Brazil's Varig Airlines. Other voices complain that Ex-Im's hard-loan policies represent a disregard for the risks that ought to be run and the money that ought to be spent in a massive effort to confront Latin American problems. Waugh himself is ardently convinced that slow, sound and bankable is the way to build.

This file is automatically generated by a robot program, so reader's discretion is required.