850.33/3–1654
No. 204
Memorandum of Conversation, by
Douglas B. Smith of the Investment and
Economic Development Staff1
Subject:
- Proposed Coal and Steel Community Loan
Participants:
- Mr. Glendinning—Treasury
- Mr. Bitterman—Treasury
- Mr. Bennett—FOA
- Mr. Richardson—FOA
- Mr. Smith—ED
Jack Bennett arranged the meeting with Mr. Glendinning to explore Treasury’s views regarding the proposed coal and steel community loan. At his suggestion I went along as an observer.
Mr. Glendinning said that it was his understanding that Monnet would prefer a local currency loan primarily to avoid the problems of servicing a dollar debt. At the present time the Treasury has scheduled uses for all local currency holdings which could be used in a CSC loan. However, the Treasury would be willing to extend a loan to CSC on terms permitting disbursements by the U.S. either in local currencies or dollars at our option. Local currencies would be released if and when Monnet needed them and if the Treasury had adequate holdings of the specific currencies required. Such loans would be repaid in the currency disbursed. In the case of dollar disbursements the Treasury would want repayment in dollars but does not feel it would be necessary for us to get involved in the guarantees which might be secured from local governments to assure that Monnet would have the means to service such loans. This would more properly be a matter between Monnet and the governments involved. The loan agreement should contain exchange guarantees for any local currency disbursements which are made under the loan. Probably the best way of doing this would be to have a dollar equivalent clause in the agreement for those parts of the loan advanced in local currencies. Mr. Glendinning indicated in negotiating with Monnet we ought to make an honest effort to get exchange guarantees but that the Treasury position was not adamant.
Mr. Glendinning said that the Treasury was quite firm on the position that we should have the right to scrutinize individual projects financed under the loan. He said that Burgess feels very strongly on this point and that he understands Humphrey had some views on it too. When asked about the administration of the loan Glendinning felt that perhaps the Eximbank instead of Treasury should act as FOA’s agent. He added that this is not properly an Eximbank type loan because it doesn’t involve the financing of U.S. exports. The Eximbank has indicated that before it could even consider undertaking the loan as an Eximbank loan it would have to get further authorization from Congress.
Glendinning felt that one aspect that should be explored with Monnet is if CSC would reloan the funds on the same terms available in European markets or on more liberal terms. He expressed no particular view on this one way or the other. As to the question of whether or not this $100 million would be a first installment on [Page 370] a larger loan, he indicated that Humphrey was probably thinking of a one shot affair.
- Copies were sent to Boochever, Corbett, and Ross.↩