The Role of Governmental Credit in Hemispheric Trade

Abstract

A recent development in the economic relations between the United States and Latin America has been the financing of trade by various agencies of the American government. This began on a modest scale in I934, but assumed importance only after the outbreak of the European War in September, I939. At present writingDecember i, I941-as a result both of new legislation and of developments in American foreign policy, this government credit seems likely to be a major factor in our economic relations with the republics of Latin America for some time to come. The Export-Import Bank, as of August 15, I941-the latest date for which full information is available-had outstanding in Latin America loans of nearly $37 million, and commitments to loan an additional $229 million,' and has Congressional authorization to advance a total of $700 million. The American Treasury has agreed to supply from the Stabilization Fund, $50 million to the Central Bank of Argentina and $40 million to the Bank of Mexico, to aid in stabilizing their currencies. The extensive purchase of silver by the Treasury under the Silver Purchase Act of I934, and the operations of three subsidiaries of the Reconstruction Finance Corporation in purchasing and making commitments to purchase Latin American products, although perhaps not generally thought of as credit operations, by making available to Latin America several hundred million dollars have had substantially the same effect as credit operations. Before 1934 credit had played an important role in our economic relations with Latin America, but with the exception of two transactions in 1917 and 1918 the American government had never extended credit in Latin America. In I917, out of the proceeds of the Liberty Loans, $io million were loaned to Cuba, and later a small credit was granted to Nicaragua in connection with the sale of surplus war