Bank. Disbursements under the credit were to be completed by November 30, 1952.

Belgium

During April, the Bank authorized a credit of $50 million to the Kingdom of Belgium to permit the expansion of imports of materials and equipment from the United States. Extension of the credit was made contingent upon the condition that participation by commercial banks and trust companies in the United States would be permitted. Accordingly, 32 United States commercial banks purchased at par promissory notes of the Kingdom of Belgium, unconditionally endorsed by the National Bank of Belgium, and without recourse to the Export-Import Bank, in the amount of $45 million. The remaining $5 million was taken by the Export-Import Bank. The notes carry an interest rate of 4 percent and repayments are to be made semiannually beginning June 15, 1953, and ending December 15, 1957.

France

On May 12, 1952, the Bank announced authorization of a credit of $45 million to Groupement d'Importation et de Repartition du Coton-an association of French cotton importers. The credit, to finance the purchase of United States raw cotton, is subject to guaranty by a consortium of French banks, headed by Lazard Freres of Paris, and transactions will be conducted through United States commercial banks.

The extension of a $200 million credit to the Republic of France was announced on June 25, 1952. Under this credit France would be able to receive immediately dollar proceeds of Defense Department contracts placed in that country for the production of military end items to be delivered and paid for at later dates. Disbursements are limited to the dollar amount of contracts placed under the Mutual Security Program during the fiscal year ended June 30, 1952, and the Bank will be reimbursed as deliveries under the contracts are accepted by the Defense Department. The credit, which bears interest at 2 percent, has a final maturity of June 30, 1954.

Germany

The Bank, on June 6, 1952, announced authorization of a $10 million credit in favor of the Bank Deutscher Laender for the purpose of financing shipments of United States tobacco to Western Germany. Advances under the credit are to be repaid in 15 months from their respective dates, with an interst rate of 2% percent per annum, and letters of credit issued thereunder were to expire not later than September 15, 1952.

Brazil

During the period under review, the Board of Directors of the Bank authorized credits amounting to $61,740,000 for three development projects in Brazil. These projects were recommended or endorsed by the Joint Brazil-United States Economic Development Commission.

(1) In June, the Bank authorized loans aggregating $15.6 million to two important Brazilian railroads, one of $8.6 million, to the Government-owned Santos a Jundiai Railway, and the other, in the amount of

$7.0 million, to the privately owned Paulista Railway. The two loans will finance the purchase in the United States of brake and coupler equipment, to be installed on existing rolling stock, as well as new freight cars. It is expected that the completion of these two related and concurrent projects will solve one of the basic railway transport problems of Brazil.

The loans to both companies are to be repaid in 14 approximately equal semiannual installments beginning in mid-1955. Funds advanced under the credits will carry an interest rate of 4 percent in the case of Santos a Jundiai, whose notes are to be unconditionally guaranteed by the Government of Brazil, and 41⁄2 percent for the Paulista Railway Co., whose notes will have no Government guaranty.

(2) At the same time, the Bank authorized a credit of $41,140,000 to seven electric utility operating companies in Brazil. These companies are subsidiaries of the Brazilian Electric Power Co. which, in turn, is a subsidiary of the American & Foreign Power Co., a United States company. The loan, which is unconditionally guaranteed by the Brazilian Electric Power Co., will assist in financing the purchase of United States material, equipment, and services for an electric expansion program, with a total cost equivalent to over $98 million, designed to increase the present generating capacity of the seven companies by about 90 percent. The credits will carry an interest rate of 4% percent, with repayment to be made in semiannual installments over a 20-year period beginning in 1956.

(3) Additional financing was extended to Brazil during the period under review when the Bank, on July 3, 1952, announced a credit of $5 million to the State of Minas Gerais to finance the purchase in the United States of agricultural equipment. The resale of this. equipment to farmers on favorable terms is expected to stimulate greatly the introduction of modern agricultural methods. The credit, which is unconditionally guaranteed by the Government of Brazil, bears an interest rate of 4 percent and is to be repaid in ten semiannual installments.

Italy

A line of credit of $4,720,500 in favor of Istituto Mobiliare Italiano was authorized by the Board of Directors of the Bank in June, to assist in financing the purchase of four DC-6B aircraft and related equipment. The planes and equipment are to be manufactured for the privately owned Aerolinee Italiane Internazionali, S. p. A. (Alitalia) by the Douglas Aircraft Co., Inc., at a cost of about $6,294,000. A down payment of 25 percent will be made by Alitalia and the Bank will make cash advances of not to exceed 75 percent of the financed portion of the purchase price. The remaining portion will be carried without recourse by the Douglas Aircraft Co. The credit, available until June 30, 1954, is to be repaid in 10 semiannual installments, beginning September 15, 1954, with an interest rate of 3% percent. Obligations issued by Istituto Mobiliare Italiano will carry the unconditional guaranty of the Italian Government.

Union of South Africa

The credit to the Electricity Supply Commission of South Africa in the amount of $19.6 million, announced by the Bank on July 11, 1952, is closely related to the requirements of the defense program.

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While the credit was authorized for the expansion of steam electric power facilities, its purpose is to enable the Electricity Supply Commission to provide additional electric power needed to operate uranium separation plants in connection with South African gold mines. The uranium plants were financed earlier by the Bank to the extent of $35.0 million. The credit bears an interest rate of 4 percent and is repayable over a period of 181⁄2 years.

Defense loans

During the period under review, the Bank authorized the establishment of credits totaling $142,937,500 to assist in financing the production abroad of strategic materials. The largest of these was a credit of $67.5 million to a Brazilian mining company, in which a United States steel company has a very substantial interest, for the development of manganese production.

Of the nearly $143 million of loans in this category, $99.1 million represented commitments under the provisions of the Export-Import Bank Act of 1945, as amended, and included loans to assist in financing the production abroad of manganese and uranium ores. (As noted

above, a $200.0 million credit to the Republic of France also was authorized during the period under review to facilitate the production of military end items.)

The remaining $43,837,500 of loans for strategic materials were authorized by the Bank following receipt by it of individual certificates of essentiality issued for this purpose by appropriate defense agencies. Under Executive Order 10281 of August 28, 1951, the Bank may make loans pursuant to the provisions of and with funds provided by section 302 of the Defense Production Act of 1950, as amended, to finance strategic material production projects abroad which involve risks so great as to preclude loans by the Bank under provisions of its own Act. Commitments so made include $337,500 to assist in financing erection in Mexico of a plant to process low-grade zinc ores for sale to the United States, $15.0 million to assist in financing the production in Brazil of manganese ore for sale in the United States, and two credits of $7.5 million and $21.0 million to assist in financing the production in Uganda Protectorate and Northern Rhodesia, respectively, of copper and cobalt for sale in part to the United States.

Operations under the Mutual Security Act of 1951, as amended

The Mutual Security Act of 1951 transferred to the Director for Mutual Security all of the powers, functions, and responsibilities conferred upon the former Administrator for Economic Cooperation by the Economic Cooperation Act of 1948, as amended. Credits authorized under the Mutual Security Act, as amended, are established and administered by the Export-Import Bank as determined by the Director for Mutual Security in consultation with the National Advisory Council. For the 6-month period ended September 30, 1952, the total of such credits amounted to $84.5 million and are reflected in table IX on MSA/ECA allotments.

Under authority of the Foreign Assistance Act of 1948 and section 520 of the Mutual Security Act of 1951, the Bank, as agent for and upon terms specified by the Director for Mutual Security, also issues both currency transfer guaranties and guaranties against loss from expropriation or confiscation by governments with respect to approved

United States industrial investments abroad. During the period covered by this Report, the Bank issued new guaranties and modified the amounts of previously issued guaranties which resulted in a net addition of $2.0 million for the period. The maximum liability under the Bank's guaranty operations amounted to $33.6 million as of September 30, 1952, of which total $32.3 million represented currency transfer guaranties and $1.3 million covered guaranties against loss from expropriation or confiscation. A more detailed account of the MSA/ECA guaranty program, including data on informational media guaranties, may be found earlier in this chapter.

Fiscal operations

For the fiscal year ended June 30, 1952, net earnings of the ExportImport Bank amounted to $51.8 million, representing the difference between gross earnings from interest and commissions, and operating expenses plus interest payments on funds borrowed from the United States Treasury. During this period, the Bank authorized new credits of $550.9 million, disbursed $243,478,577 and received principal repayments of $169,194,850 and interest payments of $69,743,385. Following the close of the fiscal year on June 30, the Bank declared its second dividend, amounting to 2 percent on its outstanding capital stock of $1 billion, all of which is held by the Secretary of the Treasury. This dividend of $20.0 million was paid out of the Bank's net earnings of $51.8 million for fiscal 1952. The first such dividend payment was made by the Bank from fiscal 1951 net earnings. The balance of net earnings for fiscal 1952, amounting to $31.8 million, was reserved against possible future losses, bringing the total earned surplus so reserved to $266.6 million.

Status of Bank resources

Under the Export-Import Bank Act of 1945, as amended, the Bank is authorized to have outstanding loans and commitments in an amount not in excess of $4.5 billion. As of September 30, 1952, the status of Bank resources was as follows:

Total Lending Authority____.

Loans outstanding,

Undisbursed commitments..

Uncommitted lending authority.

Millions $4,500. 0

2, 545.9 751.9

1, 202. 2

The distribution of Export-Import Bank credits (less cancellations and expirations) authorized by area, country, and purpose of financing for the postwar period through June 30, 1950, and from July 1, 1950, through September 30, 1952-is shown in table XIV. Information with respect to actual utilization of these credits through June 30, 1952, may be found in appendix B, table 9.

TABLE XIV.-Net credits authorized by the Export-Import Bank, July 1, 1945, to June 30, 1950, and July 1, 1950, to Sept. 30, 1952, by area and country

1 Credits authorized in the period from July 1, 1950, to Sept. 30, 1952, inclusive, less cancellations and expirations and participations by other banks.

iCredits authorized in the period from July 1, 1945, to June 30, 1950, inclusive, less cancellations and expirations applicable thereto through Sept. 30, 1952, and participations by other banks.

Source: Export-Import Bank.