MINUTES OF MONTHLY ROUND TABLE CONFERENCE FOREIGN CREDIT INTERCHANGE BUREAU

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00926A000200010035-2
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 53
• Document Creation Date: December 14, 2016
• Document Release Date: February 27, 2002
• Sequence Number: 35
• Publication Date: February 16, 1948
• Content Type: REPORT

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Approv ctI_ pC Refiease 2002/OT/2~ZfA-RDP80-00926A000200010035-2
C_R H, E E
00926A000200010035-2
25X1A
SUBJECT
 25X1A
Fred R. Pinter, Vice Pres. Goor e E.iisenberry, Vice-Pres,
CorneliussEn & Stakgold, Inc. Tic Tr'tw-111i11 International Corp.
Monthlyx'Round T -able Conference
F- I
Foreign Finance
co
CPYRGH
T
February Lt, 191j.8
Hotel Pennsylvania, Tlew York
Ralph Y. Binney, Asst. Vice-Pres.
The First N? tonal Bank of Boston
DISCU aSICN PANEL
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Credit, Collection and Exchange Problems
HELD ON
Sponsored by
THE FOREIGN CREDIT INTERCHANGE BUREAU
NATIONAL ASSOCIATION OF CREDIT MEN
One Park Avenue, New York 16, N. Y.
PHILIP J. GRAY, Manager
This information is for your confidential use and must
not be reproduced either whole or in pat without the
written consent of the Foreign Credit Interchange Bureau.
SUBSCRIPTION RATE
$1.00 Per Copy
$10. Per Annum
NEXT
ROUND TABLE - 2:00 P,M. - WENT.ESDAY, MARCH 3, 1948 - HOTEL PaMSYLVANIA,NEVV YORK
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I N D E X.
Page
EXPORT CONTROL AND LICENSING POLICY - - - - - - - - 1
COUNTRY QUESTIONS
ARGENTINA - - - - - - - - - - - - - - - - - - - - - - - - -
20
AUSTRALIA and NEW ZEALAND - - - - - - - - - - - - - - - - .>
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BELGIUM
- - - - - - - - - - - -- - - - - - - - - - - - -
23
BOLIVIA
- - - - - - - -------------------
24
BRAZIL
- - - - - - - - - - - - - - - - - - - - - - - - -
24
CHILE
---- -- _ _ r ----------------
40
2
COSTA RICA
- - - - - - - - - - - - - - - - - - - - - - - -
9
30
CUBA
----- -
_ -
- -
30
.
- - -
NICARAGUA - _ - - - - - - - - - - - - - - - - - - - - - - -
32
PERU
- - - - - - - - - - - - - - - - - - - - - - - r _
33
StlYE'DE
- - - - - - - - - - - - - - - - - - - - - - - -
35
TRINIDAD
- - - - - - - - - - - - - - - - - - - - - -
35
TURKEY
--- -------------- ------
36
URUGUAY
- -----_--------___----__..
37
BANKS REPRESENTED - - - - - - - _ _ - - - - - - - - - -
38
GENERAL QUESTIONS
W . Do REPORTS --- -- ---------------
LETTERS OF CREDIT
QUOTAS ---- - - - - - - - - - - - --- ------
E.R.P. EXCHANGE GUARANTY ---- -----------
BANK CHARGES --- --- ------- ---------
EXPORT CONTROL - - - - - -- - - - - - - - - - - - -
HOLDING DOLLAR BALANCES - - - - - - - - .- - - -
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The Round Table Conference for February on Foreign Finance,
Credit, Collection and Exchange Problems was held on Wednes-
day, February 4th, 1948, at the Hotel Pennsylvania, New York
City, under the auspices of the FoiWeF;ir Credit Interchange
Bureau of the National Association of Credit Men.
Chairman: Ralph M. Binney, Assistant Vice-President, The
First National Bank of Boston.
Discussion Panel: Fred R. Pinter, Vice-President, Corneliussen
& Stakgold, Inc.; George E. Quisenberry, Vice-President,
McGraw-Hill International Corporation.
Time of Meeting: 2:00 p.m. Approximately 150 were present.
(Mr. Gray opened the meeting, welcomed the members and guests,
and presented the Chairman and the Discussion Panel).
ROUND TABLE CONFERENCE EXPORT CONTROL AND FC IB 2L4/
EXPORT LICENSING
POLIOY
CHAIRMAN: I am going to ask Fred Pinter as one of the Panel
Members whether he does not want to say something about this
export control situation to perhaps start a little contro--
versy, or start something, and give us any ideas he may have.
MR. PINTER: Sitting between Mr. Mack and Mr. Binney, per-
haps I should be better off in Vermont, which summarizes my
outlook on the new export controls which have been imposed
on us, and which will come upon us on the lst of March, as
we all know.
I have been in the export business for 22 years, and, obvious-
ly, I resent it whenever new restrictions are imposed upon us,
because I know how detrimental they are to the free flow of
international trade.
Trade, today, is alread)~ handicapped by import regulations in
practically all foreign countries. Maybe there is one or two,.--
I think Switzerland is one -- which has no stringent import
regulations. All other markets are not accessible to our
merchandise except under import licenses. So if the Govern-
ment now comes and tell us there are new regulations putting
all exports to Europe under license as of March 1st, I can
only ask myself why this should be done right now. The
war is over and instead of spurring our efforts to sell
merchandise, we get new regulations placed before us and new
handicaps which must slow up our activities and increase our
expenses.
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I have never yet seen any guided economy where that is
successful in the eca2Cniic sense. Russia and Hitler Germany,
and Spain -- the governments there run the business, and I
think from an economic angle they show very poor results.
Before the war Great Britain was perhaps the freest country
in Europe, and the change there since the Socialist Govern-
ment has been trying to rule their economy is very apprehen-
sive, to my way of feeling.
I have just cut out a notice from an English paper that I
received today, and I would like to read it to you because
I think it is quite significant. It says:
"Export Army Doubled. Manpower statistics just issued by the
Ministry of Labor showed that 1,911,000 workers were engaged
In manufacture for export Then the November figures were
compiled. Before the war, the,number of workers producing
for export was 990,000. Thus we now have very nearly twice
as many workers for export. But our exports, according to
Mr. Harold Wilson, President of the Board of Trade, are now
running at the rate of no more than 20 per cent above pre-
war. So far, no Government Department has cleared up the
mystery of why nearly twice as many workers are producing
only a fifth more goods for export."
I think that is a very good example of how business looks
and how exports are defined under Government control.
One of the reasons why the regulations are supposed to have
been reinstated is, as far as I know, the dwindling amount
of dollar exchange in European countries. This is quite
true, but any one who has tried to do business with Europe
in the last five or six months will know, and if there is a
different experience, I would like to know it myself, that
exports to Europe have already been very much restricted.
We have the volume of incoming orders from European countries,
very much below what it was a year ago. All these countries
are very anxious to import only merchandise which they
actually must have. Holland, Sweden, France -- all those
countries are very severe in their restrictions. They know
exactly what they want. They know what they are allowed to
export, and I think we get only about 10 per cent of orders
of all the inquiries that we get from these countries. Why
there should be a new control interposed on the control
which those people have applied, I don't know. It is a puzzle
to me.
The second point that we must not overlook is the increase of
the availal i -ity- of merchandise in this country. We represent
about 24 factories. Some of them we have represented since
1922 and 1923. Out of these 24, 20 today are anxious for us
to get as much business as we can possibly get for them.
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Deliveries that were a year ago six and eight and ten months
are now cut to 30 and 60 days. In some instances, I get the
merchandise so fast that they cannot cancel the order two or
three days after I get it. The merchandise is on its way.
So we have to recognize that. Besides we must also be aware
of the fact that there is foreign production. We are getting
increasing production from Italy, France, Belgium, Switzerland;
they all do a tremendous inter--country commerce.. We find we
are out in regard to deliveries, and out in regard to prices,
very often. We have now started at the request of our
factories in many industries to offer our customers abroad
credit terms. We used to sit back in our chairs and say,
"We would not look at the order before you have the money
here." Today we take our hats in our hands again, and we
write the customers nice letters"why have you forgotten
all about us? And if you do not want to pick up the credit,
I would not mind giving you 30 and 60 days," and so on.
We do this because welnow our factories need the business, and
so do we.
So if the Government now says that we must renew licenses,
there must be another reason in my opinion than an economic
one. I do not profess to understand too much about the
laws working in Washington, but the economic law, I think is
the same all over, and from a purely commercial standpoint,
I do not understand these regulations. I don't understand
them also as applying only to Europe. This will open the way
to all those little sly foxes who will say, "I want to get the
merchandise over there, why not ship it to Canada or Egypt or
Cuba and transship there?"
In other words, if the Goverment has reasons -- and they must
have reasons (I hope they must have) -- reasons to impose
those licenses, then it is bound to come to the point where it
covers all countries, because ucannot exclude one Continent
and leave the rest of the world open. I don't see how it can
be done in a practical way. So if I assume that the Govern-
ment has such reasons, I can only assume that they are
political and there, of course, I don't know what it is, or
what it can be.
In France, they used to have an expression, in the diplomatic
language, whenever there is something done by the Government,
which nobody understood, they put their fingers on their lips
and said "Raison d'etat." That means "state reasons." That
explained everything. It was whispered and it was whispered
in your ear, and you had to make a very surprised face, and
then, of course, shake your head and say, "Under these condi-
tions, there is nothing we can do about it."
As far as I em concerned, I would say that if the reasons of
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the Government are political then I can only say "Raison
d'etat," and I will have to resign myself. And I would say
we have to do our very best to understand what the Government
wants and to cooperate with them, provided they do their
very best to understand what the legitimate export trade
needs and cooperate with us.
On that basis, I would say looking at the regulations as they
are, I do not see how they can work. We are supposed to apply
for an export license. Business today is done in the follow-
ing way: The customer in Holland, who wants to place an order
with us, sends us his specifications, and asks for pro forma
invoices, and I don't know how many copies. We write up the
copies and send them to the customer. The customer applies
for his import license. The import license may be given within
four weeks or may be within eight weeks, or I don't know how
many weeks. After he gets the license, he cables us and
says, "Here is the number, now get busy and rush the goods,
because my license expires on the 15th of the very next month or
the 30th of the same month," whatever it is. So we all
get in a huddle and we figure out, "I have to telephone
Vancouver, and Mr. Snyder has to telephone San Francisco,"
and we cannot get the boat out of there, and all that sort of
thing, which you know.
If I assume that we have to apply for a license, after the
customer cables me his import license number, I have to apply
to Washington for a license. This may take two days or two
weeks or four months. I don' t ],"now how long. We have -a
license back two weeks ago which we submitted to Washington
in October. And it said, "No action can be taken before the
first of March." In the meantime the business has gone to hell.
We have letters of credit in the house for orders that we took
in October and November. We applied for the `licenses on the
23rd or 22nd of December. Now we get back a card saying this
license cannot be processed before the 1st of March. How
can we do business under such conditions? I don't know.
This is whyI say the license procedure has to be modified so
as to help as and to enable us to maintain some sort of a
business if we wish to maintain our factories and keep them
working.
There is one more point I would like to bring out here, namely,
that these licenses, somehow have put the onus of increased
pressure and scarcity of material on the export trade. Maybe
not directly, but impliedly, and I want to refute this and
repudiate this implication very strongly.
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Many people Italk with say, "If you fellows did not export
all the food we wouod not have to pay a dollar for eggs or
95 cents for butter." That is not true. The fact is that
the critical material like steel, coal, food, and certain
chemicals have been under export license for a long time.
If the Government does not want these goods to go out, they
have the full approval of all legitimate exporters to put an
embargo on those critical items, or if they do not want to
put an embargo, at least, ceiling prices. Let them tell us
from the beginning, this and this merchandise has this and
this ceiling price, and don't even apply for a license if your
price is higher. I think that would be a practical procedure,
and it would eliminate a lot of dead wood, and it would
eliminate a great deal of specious remarks that are made
about export being the big bad wolf in our economic field.
Actually, I wish we were as big as they say we are.
CHAIHM.AN: Thank you, Fred. I am going to ask George
Quisenberry if he wants to comment on the subject before
we get you fellows on the floor warmed up.
(Continued on page 6).
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MR. QUISENBERRY: Mr. Pinter has made st.oh a fine statement,
he has covered about the whole th.ng. He has made, however,
a much more tempered statement than I think I would have
made. Some of you folks have probably heard me expatiate
about the Government before. The one point, or a point --
this just covers on what Fred has been saying -- that I object
to about this whole thing is the example that Uncle Sam is
now setting to the rest of the world. There are very few
countries other than the United States that have any export
controls. Practically every country has import controls, but
very few have export controls.
Now, Uncle Sam is showing the way. I was fortunate enough to
make a trip to parts of Europe last fall, and I discovered
there, and I related it to us just as well, that one of the
great problems of the world today, as much in the United
States as it is in Europe, is the problem of too much
government.
Too much government: And here Uncle Sam comes out and he does
not control exports merely on the basis of short supply to
areas which do not have their own license control, but he
takes it from all of Europe on all products. I went through
the war period on a lot of committees in Washington, and
participated in a lot of export activities during the war,
and with the best will '.n the world, during wartime, when
Washington could practically commandeer any person or any
group of people that they wanted to work for patriotic reasons,
they were never able to lick these things and get a quick
flow of licenses in and out without problems and troubles.
Now we come along, almost three years after the end of the
European War, which was in May of 1945, and this is February
and March of 1948, and we go back to licensing controls on
products that are already on the downhill in volume, that are
already in over-supply in the United States, and we present
that as the example of the United States to the rest of the
world.
Now I think you all know that wandering around in the legis-
lative halls of Brazil at this moment is a bill to create
license control in Brazil. Brazil has had some, but here is
a new step. That has not been finalized yet, but do you
think there is any chance for the Brazilians to stop it after
Uncle Sam comes out and says, "We have got to have export
controls"? I do not thank there is a chance. I have really
believed and do believe (you will say I am a NAM, but I am
not) -- but I think it is true -- that this country has been
built up on people goirj out and going to work, and finding
ways of doing this and Ding that.
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I think license control on unnecessary products, which are
already screened in Europe, is a negation of all that we stand
for, all that the country has stood for, and while I am sure
there are political reasons, I suspect -- I am quite definite
in my own mind -- that the damage that is going to be caused
by the continuation, by the imposition of license controls
over our whole foreign commerce to Europe -- and presumably
later to the rest of the world -- is going to do far more harm
to recovery than any good that will come out of people in
Washington at the moment saying, "Look, we are controling
exports."
I have heard very little criteria, little reason as to how
the thing will work, and I may say this: That I am quite
certain in my own mind that there will not be one iota
difference in the amount of goods going to Europe under export
control. I think the essential products will go to Europe the
rest of this year in just as great volume as they would
without export control, except that there may be, instead of
the volume in March and April, the volume may be put over to
May and June and July, until this thing gets working. But you
have put in there all these problems of paper work, all the
things that come out of a control, and with the best will in
.the world, and the people who are going to actually handle
these licenses down there, I am sure we should credit them
with all the will in the world, and all the desire to make
this thing work, with the least harm, with the least delay,
with the least trouble and the least additional expenditures
caused by it. They can't make it work.
I am quite sure of that, but I do not believe that in rushing
into this thing, the people in Washington have the slightest
comprehension or have a real comprehension of what an intricate
thing this matter of international business is; and how much,
when they stick their fingers in the wheels of progress, they
are going to slow it down, and how much actual harm they are
going to do to it. And I submit, finally, and I will sit
down now, that the export control is going to do far more
damage than the good it will accomplish. Thank you.
CHAIRMAN: Thank you George. I will not put our friend
Joe Mack on the spot, here, but I will ask him if he wants
to make any comments, and let him give us any information he
may have. He may want to p zs along a little resume of
what happened at last Thursday's meeting, if some of you were
not present there.
MR. MACK: There have been two recent major changes in
export control policy (1)? a new policy under which price will
be an important criterion in the distribution of export
of
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licensing controls to shipments of all commodities to Europe.
We discussed the details of the first change of policy as
covered in Current Export Bulletin No. 431 at our meting in
January, but for those who were not present at the all day
meeting we had at the New Yorker Hotel last Thursday I should
like to summarize the statement of Mr. Thomas C. Blaisdell,
Jr., Assistant to the Secretary of Commerce and Director of
the Office of International Trade, first covering the basic
reasons for the adoption of the policies enunciated in Current
Export Bulletin k31.
There are two outstanding reasons which have always been
regarded as basic policy on export control, one, is the
protection of our own economy. This was written into the
legislation extending the authority to control exports to
February 28, 1949, which was signed by the President in
December 30, 191+7, in the following language:
Section 1. The purposes of this joint resolution are to aid
in stabilizing the economy of the United States, to aid in
curbing inflationary tendencies, to promote the orderly and
equitable distribution of goods and facilities, and to aid in
preventing maldistribution of goods and facilities which
basically affect the cost of living or industrial production."
Secondly, the carrying out of the foreign policy of the United
States. Both of these major factors run through all of our
controls.
The adoption of the policy announced in Current Export Bulletin
431 was a shift away from the historical basis of issuing
licenses to individual exporters and moving on to a basis of
competition. Anyone who has worked with export control at all
recognizes that export control and the granting of licenses
was, in effect, a grant of privilege under the circumstances.
In one way it was and is a grant of monopoly. It is like a
patent, or any other piece of particular favor which is sup-
ported by government. So that the export license became a
privilege, and there is no way under a licensing system that
you can get rid of it. Any export license does consist of a
favor of greater or less value. That is evidenced by the
fact that these pieces of paper actually have a sales value
in the market.
The use of the historic position became more of a grant of
privilege than it seemed wise to continue indefinitely. For
a reasonably short time, historic position does give a real
recognition of the play of competitive forces and the ability
of individual businessmen to hold their place in the business
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world. But over a long period all that it does is to continue
the test of privilege, rather than the test of business
competition and efficiency.
The decision to mo a from a historical basis over to a business
basis, namely, a basis of competition on the price criterion,
was taken with full recognition of the difficulties in
administration, even though there were great difficulties
in the administering of the historic position, because the
ability to demonstrate historic position was anything but
easy.
So we have had then the decisions that have to be made, the
attempt to introduce the competitive principle, and the
recognition of the businessman's right to make his own decision
in competition with other people, rather than to have the
decision made simply by a licensing officer.
As indicated, the second basic policy on export control is the
carrying out of the foreign policy of the United States.
On this point it is recognized that it is just as difficult to
define the carrying out of the foreign policy of the United
States in sharp, clear terms as is the concept of the protec-
tion of the domestic economy. Different people have different
ideas of what these two things mean. We have different ideas
about what our foreign policies ought to be. Nevertheless,
it is necessary and we do come to a conclusion as a result of
our discussions and as a result of our polittcal life, we
make the decisions as to what these things really are. Export
control has been used for the carrying out of our foreign
policies in many cases, as well as in the protection of the
domestic economy. Thus we have used export control as a
method of implementing foreign policy. In itself it does not
constitute foreign policy. It can only be used to implement
foreign policy.
Now as to the requirement that all commercial shipments to
Europe, after March lst, must be covered by the individual
license, as announced in Current Export Bulletin 434. This
must be viewed in the light of the foreign policy which we
have been pursuing as well as in the light of the policy of
protecting the American economy.
The foreign policy which we have been pursuing, namely, one of
endeavoring to promote through the wise use of the commodities
which have gone to Europe, for the recovery of Europe, was one
of the s9veral factors which was influential in this
determination being made.
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The problem was essentially one of carrying out two things: one
was the protection of the resources which were being put in
Europe, the programs which were being planned, country by
country; and the second was assuring the American public that
the funds which were made available, as far as the U. S. is
concerned, were adequately and wisely spepnt.
These two policies, or these two objectives apply particularly
to "Western Europe," without drawing any particular line
between countries, namely, those countries to which aid has
been extended in one form or another.
The basic problems there were two: The implementation of
program, namely, seeing that goods flowed to the points where
they were needed; and as long as goods were in short supply,
they were directed to the countries that they should continue
to go to. This is the policy we have been carrying out, as
you all know, through the use of the Positive List, particu-
larly on short supply commodities. The restrictions applied
under the new policy are those which require advance knowledge,
insofar as we can have it, and this is secured at least in
part through the submission by the various countries of their
programs as to what is to go in what directions.
The second part of that, the export licensing feature, is to
insure that those programs are carried out. In this case there
is no limitation involved. It is a carrying out of the direc-
tion of movement of goods.
The second feature which I want to call your attention to is
the implications of the policy, as far as Eastern Europe is
concerned. You know that many questions have been raised
about the continuation of any trading with Eastern Europe.
The policy which has been stated clearly -- and I think has
been accepted by Congress as well as the Administration -- has
been one that we wish to continue trading with Eastern Europe.
Again, we do not wish to go onto an embargo basis. Embargoes
are of no great help to anyone. However, there have been,
as you know, suggestions that all trade with Eastern Europe be
embargoed; and as I have indicated, that policy has not been
accepted either in the Congress or in the Executive Branches.
However, it is also no secret, and it is just as well that we
face the situation frankly; problems do arise, and the
problems of dealing tradewise with the countries of Eastern
Europe can be carried out with greater or less degrees of
stringency, and the export control is an instrument which can
be used in that direction.
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This is a particularly practical question for a great many
manufacturers who have been supplying goods to Eastern Europe.
We receive letters of inquiry as to whether the Department of
Commerce or the State Department will indicate to a particular
manufacturer that, if he accepts a particular contract for
delivery of goods into Eastern Europe, there will be no embargo
or no restriction placed on carrying out that contract. Some
of these contracts-are of very considerable value.
Up to the present time we have been unable to state at all
"Yes, this is an item which we do approve, a contract which
it is sound policy to carry out."
All we can say to you is, "Use your best judgment; go ahead,
and you take the responsibility."
The extension of this policy, then, is one of the acceptances
of governmental responsibility for those cases. We will either
say "Yes, it is regarded as sound policy to move this equip-
ment, to accept these contracts and carry out the suggestions"
and the other half of that can also be dealt with; in other
words, we have insisted continuously that trade is a two-way
street. It is now possible under this regulation to use the
control of exports as part of the story in dealing with state
training governments, and we will avoid, just as far as we
possibly can, the introduction of that factor intb the dealing.
However, we do feel that we owe it to the business community
to either say "Go ahead, and barring intervention of events
over which no one has control, at least as far as this
government is concerned, there can be no criticism of you for
accepting this or that contract. You need have no fear that
if there should be an interruption there will not be adequate
recourse."
Now, I am stating this very frankly, not in terms of predic-
tions, but in terms of the necessities which may arise in
economic fields; and it is essential that as far as the
machinery is concerned, we be in a position to handle those
things and to handle them directly.
There is nothing further that I can add. We all know that there
has been opposition to the policy. A lot of resolutions have
been passed to the policy. The only statement I would like
to make is that the Government is doing its best to make this
thing work, with the least harm and detriment to business.
I have just spent two days in Washington and they have
assured me down there that steps are being taken to process
these applications promptly. I hope that is true. Thank you.
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CHAIRMAN: Does anybody from the audience want to comment
on this question?
MEMBER: I would like to say that I agree with what the first
two speakers had to say, but that there is one thing that is
far more important to me than anything that has been said
previously. The difference between France and other countries,
and this country in the past, has always been that if our
Government said HAS a reason of state," we asked them what
it was. We just did not take their word. Nowadays they do
not. I would like to read a small paragraph from a publica-
tion put out by the Royal Bank of Canada. They discuss civil
liberty. What is civil liberty, and they say: "There is an
important protecting factor. One liberty preserved under the
democratic form of Government is the right to complain about
violations of one's liberty.
So long as citizens have the right to make complaints, and the
complaints are freely heard and fu33y considered, and so long
as indicated reforms are speedily made, then citizens have
the utmost of civil liberty that wisemen look for." Now,
we are still complaining. They have not taken away our right
to complaint, but are those complaints being fully considered
and are the indicated reforms speedily made? The arrogance
with which this whole thing has been thrown into our faces by
Washington would indicate that our civil liberties are being
violated. If we go out to protect our civil liberties, we
will also protect our other liberties such as indicated by the
first two gentlemen.
I just want to make that short comment so that the people will
think of what this is really leading to. It is leading to
something far more important than putting us out of the export
business.
CHAIRMAN: Thank you. I feel that a lot of us think that
from a public relations point of view, this has not been
handled as delicately as it might have been by Washington.
MEMBER: one reason has been given for the Government
policy of export licensing and that was that the Government
looks out upon the fact that European countries are very
short in dollar exchange, so that they will get as much value
for their dollar as possible. In other words, that is one
reason. But I think it is an economical reason. An economical
reason would say that an exporting country should get as much
value for the export goods as possible, and if we try to settle
as cheaply as possible, I think that is a very noble gesture,
and perhaps we should call it noblesse oblige.
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There is another worry which we small exporters always have.
There were two points outlined for the policy of export
licensing. One was that it should be prevented -- the goods
were sold to Europe for three or four times their value, of
the manufacturer's value. That is, of course, quite reasonable.
But in another place, there was a report about the Washington
meeting which I believe most of you have read. It was said
that the cheapest offer would obtain the export license. That
is not the worry of the small exporter: The manufacturer
always gets the license and not the chief exporter. So I
would like to point out these two differences in policies,
which, in my opinion, are very important. As a whole, I think
we cannot do much against it.
There was one very important question in the meeting at the
New Yorker. I t was whether this policy could be repealed, and
the answer was yes, it could be repealed by legislation. And
I hope we will form a resolution that we are in favor of such
a repeal.
MEMBER: In connection with price criteria, I should like to
bring out that the Board of Directors of the Export Managers
Club has introduced a bulletin, which leads me to believe, as
far as manufacturers are concerned, they are not going to be
affected by the proposal.
PANEL MEMBER: If the manufacturers are not going to be affected,
then why put it in anyhow? What is the reason for putting it in
if you are not going to affect somebody, just to present an
example to the rest of the world?
I am not talking about short supply items, and as I understand
it price criteria are going to app=ly only to certain short supply
items. The majority of items that are making up commerce are
essential products that today are no longer in short supply,
and in which full competition rules and in which the price will
be determined in the market place, and not by what somebody
thinks here,gray marketeer or manufacturer or what. But if
it is not going to affect manufacturers, why make manufacturers
and exporters go through all this paper work. I am in the
publishing business. We have a shortage of paper, immediately.
I would like to see that paper saved and used for something
useful.
CHAIRMAN: Does anybody else want to comment on this. If not,
I will move along.
gEWBER; :. I think it would be constructive if we took the
-,?:t:.ncensus of the meeting, and I would like to suggest that Mr.
Pinter phrase a resolution. And we can ask thos present if they
agree with that resolution. I think we should have something
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PANEL MEMBER: I would like to make one other point, a
practical point for my own clarification. Perhaps Mr. Mack
knows the answer,and perhaps we can get it somewheres. If I
apply for a license on the strength of an order for which my
customer got his import license and his.exchange allocation,
and my license is rejected by the Government for some reason
or other, what happens to the order which the customer placed
with me?
In many countries -- for example, Sweden and Holland --
licenses cannot be transferred, amounts cannot be calculated.
The fellow who get A.... say a thousand dollars allocated for
my order has no control over them unless he pays -- he only
has to pay them to me. He cannot pay it to anyone else. The
only thing he has to do is to go back to his Government. and
say "Here is the thousand dollars again, because my firm did
not get the license in Washington. This will only happen
once because that customer will have been my customer for the
longest time the day this happens, because he would lose his
allocation, and he would lose the profit he can make on his
order; but he would have had the pleasure of going through
all the rigamarole of applying for his license, and I would
have had the pleasure of going through all the motions of
getting my export license. Now, I believe this is a fundament-
ally important question to every exporter, and we should get
an answer to that detail.
I do not know if Mack can comment on it.
MR. MACK: Quite candidly, I do not know what happens to the
order except that it does not exist any more.
MR. PINTER: But we have to consider that in export we just
depend on the good will of our customers abroad, otherwise
we drive them away. It took us years to build up good will
with our customers, and we have to just protect them in a
way which will be possible to handle for them and for us. If
we do not protect them, if we simply advise them, "I am sorry
you got your import license and dollar exchange, but I cannot
get my export license," that would put me out of business.
The customers abroad look at every quotation you make, and they
write us, "You offered us merchandise for $15,000, but one
item I can get from Chicago two cents cheaper. So you will
have to reduce your price on this one item. Otherwise, I
cannot give you the order." I wish to assure you that they
are just as economical abroad with dollars as we are, or as
Washington can be.
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MEMBER: On that same line, in some countries isn't there a
penalty for an import license not being used?
CHAIRMAN: There is in the Argentine.
MR. PINTER: That is in Latin America. But in Europe, the
penalty is that they lose their license and lose their
business, and they cannot make the sale. We are penalized,
too.
MR. QUISENBERRY: I wonder if Washington will agree to pay
the cost of the letters of credit that they turn down.
MEMBER: I would like to add something to my former remarks.
This policy of export licenses has found it difficult in one
country. That country is giving an import license to the
lowest offer. If that happens with all the countries with
which we are doing business, I ask you what will happen? It
is very important.
MR. PINTER: I must say in regard to the lowest offer, we
should be competitive, and I am not afraid of that angle at
all. If it is workable, I am going out to sell my goods;
and when I am right, I will sell them. And when I am not
right, I will be taught a lesson. I would not be afraid of the
angle of competition, but as George Quisenberry said, this
country built its export trade on freedom and personal
initiative, and fellows like Franklin Johnston and all the
fellows who went out to sell American ability and American
products and American services, have done so without govern-
ment restrictions, and I think without government support.
So if we do not get any support, at least let us have the
restrictions that they must impose upon us in a form which
keeps us going and which does not make it impossible for us
to perform on the commercially sound basis.
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MR. MACK: The only statement I can make in that respect is
the statement made by Mr. Blaisdell the other day that they
plan to conduct this operation in a goldfish bowl. Any time
that anybody comes across any crooked work, both in your own
interest and in the interest of your Government, you should
bring those facts to the attention of the people in Washington.
MEMBER: We cannot prove the facts. The crook does not
operate in a goldfish bowl.
MEMBER: Mr. Chairman, we are running out of statements and
I think we should move on to that resolution.
MR. PINTER: I would recommend that the grave apprehension
of the export trade in regard to consequences of new restric-
tions on the free flow of trade through established trade
channels be registered. Furthermore, that as long as the
Government insists that these restrictions are unavoidably
necessary, close cooperation between Government and the
export trade be maintained in order to synchronize export
controls with legitimate needs of export trade; with the
definite understanding that all controls will be relinquished
and eliminated as soon as the present reasons for reinstat-
ing them will have disappeared.
MEMBER: Demand the reasons at the same time.
MR. PINTER: I will be glad to incorporate that. That the
reasons be made known to us.
CHAIRMAN: Do you want to take a vote on the resolution as
it stands?
MR. GRAY: Unless somebody adds to it.
MEMBER: I would request that definite price ceilings be
.established for export on commodities in short supply so that
people do not go around guessing, and that this market
will not be referred to the arbitrary decision of the
licensing officers.
MEMBER: A variation of that: That the exporter be permitted
a fair profit on his cost.
MR. QUISENBERRY Of course this whole price thing on short
supply items, I do not think, is workable at all because as
long as there is no censorship of the mail, nobody can trace
the undercover payments that are made. So again, I think
the whole thing will cause more trouble than the good it
does.
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MR. PINTER: We complicate the whole thing by asking for
more regulation. Let us ask for less regulation. As far
as I am concerned, I have not been able to get any steel from
any source during the last two years, although I have tried
hard. So why should I worry about the ceiling if I cannot
get it? I think the fewer regulations we request, the better
off we are.
CHAIRMAN: I think this resolution, perhaps, at least will
reflect the attitude of this audience. For the record, let
us have a show of hands as to how many are in favor of this
resolution as it was hastily drawn up this afternoon.
(Unanimous response.)
CHAIRMAN: How many agree with the attitude of the Export
Managers Club that the Government is all right in what they
have done and the way they have done it?
(No response.)
CHAIRMAN: Nobody seems to agree with that.
MR. GRAY: We quote for the record the following bulletin
issued January 26, 194+8 by the National Foreign Trade
Council: "The National Foreign Trade Council views with
utmost concern the position taken by the Office of Internationr-
al Trade of the Department of Commerce in connection with the
export licensing procedure affecting goods in short supply
presently subject to export licensing, and the announcement
that, as of March 1st, shipments of all commodities to Europe
will require individual export licenses. Unless immediate
modification is made in these regulations, serious delays will
result in production, shipment and use of goods urgently
required for European recovery, and important existing commit-
ments of American manufacturers and exporters cannot be ful-
filled.
'the new licensing policy with its restrictions, uncertainties,
arbitrary administrative procedure and interference with busi-
ness operations does not follow the announced policy of the
United States t to coster a healthy and stable trade relation-
ship which can contribute to a balanced and expanding world
economy.?
"The overall requirement for individual export licenses on all
shipments to Continental Europe and adjacent countries,
including some Asiatic possessions, is not the method 'to
insure a careful programming of the supply of essential goods
to areas of greatest needs as indicated by the government
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announcement. If special areas are a matter of concern, they
should be specifically designated and the essential goods
to be supplied should be specified.
't'he American public has a right to know all the reasons for
the reimposition of such drastic all-inclusive wartime regu-
lations, and why all shipments to a wide area need be af-
fected.
"The suddenly announced expansion of export control, providing
for the licensing of commercial shipments to Europe of all
commodities by individual validated licenses as of March 1st
imposes a tremendous burden and expense upon American business
and upon government. The intended additions to government
personnel will be substantial. It is not reasonable to
expect that several hundreds of experienced, capable govern-
ment employees can be recruited to set up operations, or that
American exporters will be able to make out the thousands of
license applications, clear them with Washington, and have
action taken before the announced effective date of March 1st.
"The-requirement for individual licenses on all shipments to
Europe, irrespective of the availability of the goods, makes
it probable that many essential shipments will be delayed
because of the uncertainties as to which licenses will be
granted and the time lag in the granting of those approved.
Furthermore, if this overall license policy is necessary for
Europe, it is only natural to assume that if carried to its
logical conclusion, it will have to be extended to cover
goods destined for all world markets to prevent trans-shipment
arrangements.
"All manufacturers and exporters of goods for Europe are
placed in an uncertain position on shipments scheduled after
March lst until licenses can be obtained. Financial arrange-
ments, including specific requirements under letters of
credit, shipment dates, foreign import licenses, and other
matters of vital concern to American exporters are placed in
jeopardy by such a procedure.
"Many commodities, including those listed as urgently needed
by countries expecting to participate in the European Recovery
Program, must be scheduled for production following a normal
pattern. If the production and shipment of such goods is
delayed by licensing procedure or the uncertainties of bureau-
cratic decisions, they may not be available for Europe.
Such commodities are in great demand and, unless permitted to
flow without the interruption of licensing, will be diverted
from destinations where urgently required, to domestic or
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other areas.
"The export licensing policy on goods in short supply need not
set up new criteria in licensing procedure whereby the tradi-
tional, historical basis of licensing would be superseded and
price would become a major consideration, nor do importing
governments or their embassies need be consulted in regard to
decisions as to what American exporters would receive approved
licenses and other factors affecting the issuance of licenses.
"Everyone should be opposed to exorbitant gray and black market
prices for export. However, export licensing authority, as
it existed on articles in short supply, afforded ample op-
portunity, if properly exercised, to control shipments that
,Tould impose severe inflationary factors on the domestic
economy or excessive drains on available foreign-held dollar
resources. There is no necessity for the additonal paper work,
delays and serious interference with business which results
from the new procedure.
"This export licensing procedure imposes serious delays and
interferes greatly with the recognized practice of American
private trade in dealing with customers abroad. The new
procedure would require administrative decisions by employees
of the Office of International Trade to determine 'the lowest
price contracts for comparable material under comparable
conditions of supply.' Employees of a government department
are not in a position to judge all of the various factors
affecting the individual contracts of American private
exporters with their customers. American exporters should be
in a position to conduct their business without such inter-
ference.
"As American exporters must comply with the import license
regulations of foreign governments, there is no need to inject
a further check and separate consultation with them. There
is no reason why, by action of an American government
official, the opinions of foreign governments should be in-
jected into the business arrangements of American exporters
after foreign import licenses have been issued.
"While the Office of International Trade indicates that it is
its intention to protect private foreign trade channels and
to reduce the operations of foreign government purchasing
missions, the new licensing procedure for goods in short
supply on the Positive List would impose restrictions and
regulations on American business which could have an
opposite effect.
"The National Foreign Trade Council urges that this whole
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matter be reconsidered by the administrative officials of
government. Pending thorough consultation with industry,
the licensing procedure in effect prior to December 31, 1947
for goods in short supply on the Positive List should be
reinstated, and the announcement regarding the overall
licensing of shipments to Europe should be rescinded."
COUNTRY QUESTIONS
ROUND TABLE CONFERENCE ARGENTINA
FCIB 2-4-48
CHAIRMAN: QUESTION -- "I have not seen much commentary
recently in the press regarding the present status of the
so-called Argentine Insurance Law. Can you enlighten me as
to its present status, and how should exporters proceed,
in view of its possible implications? What quotation policies
do you recommend?"
Who wants to comment on the present status of the law?
BANKER: First of Boston put out a circular on the subject
on January 22nd.
MEMBER: I understand that the President of the Argentine
Insurance Institute resigned, so that there may be a question
of policy involved.
CHAIRMAN: Does anybody want to comment on your present
quotation policies?
MEMBER: I just want to comment that previously CIF sales were
omitted, but I saw something recently to the effect that CIF
sales will hereafter be included within the operation of the
call.
MR. MACK: On Noviember 19, 1947, the Argentine Government
issued regulations to implement the Insurance Decree Law
passed in June, 1947. Articles 44 through 52, taken from the
November 19th implementing regulations; appear to ate to
Article 14 of the June 1947 Law regarding marine insurance.
Article 14 requires that the marine insurance policy be taken
out in an Argentine company where the risk of transportation
rests on the Argentine exporter or importer, as the case may
be. Little light seems. to have been shed thus far on the
actual practice to be adopted by way of implementation of
Article 14 of the June 1947 Law.
There has been no clarification to the problem as to the
circumstances under which the risk of transportation will be
treApP& & F $ e e4D0 /b /24 t P 0 ~$ ter .
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Article 46 requires that Argentine Consuls and Vice Consuls
shall legalize only those consular invoices which list
separately cost of merchandise, insurance, freight, and
other charges. We do not know the extent to which the
Argentine authorities are applying this marine insurance re-
quirement at the present time. We are informed that trade
circles believe that the authorities will interpret CIF risk
shipments from this country to Argentina as placing the r
of transportation on the Argentine importer, thereby requiring
that the insurance be placed in an Argentine company.
CHAIRMAN: I think everyone is waiting for further clari-
fication from the Argentine authorities.
MEMBER: Meanwhile, may we find out how many are shipping on
FOB basis?
CHAIRMAN: Let us take a show of hands.
(10.)
CHAIRMAN: How many areshipping on CIF Basis.
(None.)
MEMBER: All those FOB are placing the insurance here?
PANEL MEMBER: No.
CHAIRMAN: One yes.
MEMBER: We have seen some insurance go through with the
insurance placed here.
MEMBER: We had a comment from our branch down there. They
interviewed someone in the Insurance Institute, and were
informed that their interpretation was that any shipment made
on other than a consignment basis, the risk of transportation
was for the account of the Argentine importer and therefore
had to be covered by an Argentine insurance company.
MEMBER: Perhaps these gentlemen do not know a similar law
is in effect in the Netherlands, and that under the import
and exchange regulations of practically every country in
Europe, limitations are placed upon the importations in which
the insurance is covered abroad.
PANEL MEMBER: I think you have to point out quite a bit
of difference in these two things. The fact that you just
said is correct. But there is very little business going
to Europe except on a letter of credit basis or some other
coPpca~d rye 20a2/~Tria9911~$$~914~~{~01~~ to
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22-
Argentina on time credit or something like that. So, where
you are already paid, you do not have to worry about the
insurance. Where you still have a part of it, that you have
not gotten your money, you have to worry about your insurance,
and I am quite sure, I have heard this thing discussed at a
number of meetings, I would think that a great majority of
the export shipments going from the United States are being
sold to Argentina on an FOB basis, with the exporter, our
manufacturer, placing the insurance here, and that while a
good many are now going down with Argentine insurance, I do
not think they represent anything like a majority as yet.
MEMBER: I think if we are protesting at what is going on
in Argentina, we should protest at what is going on elsewhere,
because sooner or later we will get to the basis as Mr. Pinter
pointed out of shipping to these other countries on credit
terms, and if we are going to put up a fight against these
restrictions, let us put it up for all restrictions of that
sort and not just limit it to the one country.
ROUND TABLE CONFERENCE AUSTREIA & NEW ZEALAND FCIB 2-4-48
CHAIRMAN: 'QUESTION -- 'All 1947 import permits for
merchandise from the United States had to be presented for
revalidation in October of last year. We have encountered
several cases where the revalidation was refused even though
the goods were actually in the process of manufacture here.
What steps can United States exporters take to protect them-
selves in a case of this kind?"
Does anybody want to comment?
MEMBER: Letter- of credit terms to these questions.
PANEL MEMBER: Could I ask you a question? You come from
a wool center. Now we have reduced the duty on Australian
wool, and other do ninr_on wool and hig].-,.-grade clothing wool
by 25 per cent. Is it having any effect on the market, and
is it likely to make any more dollars available this year
or next year to Australia?
CHAIRI' AN; We have not seen an indication of it yet, because
the prices on the auction sales that have been held recently
were very high and the Continent has been paying higher prices
than our American importers. As a matter of fact, with the
recent change in the French rate, the feeling seemed to be
that some of those French mills would probably be paying
even higher prices than a lot of the other European consumers.
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So far, the Continent has been bidding higher than the American
importers for the Australian wool.
ROUND TABLE CONFERENCE BELGIUM
FCIB 2-4-48
CHAIRMAN: QUESTION -- "I have just received an interesting
order from a company of standing in Belgium. The order states
that a confirmed irrevocable letter of credit will be opened
in our favor upon acceptance of the order. To my surprise,
I am told that the credit, in accordance with Belgian exchange
control regulations, can only be opened for a maximum period
of 30 days. First, I should like to know if this is true.
Second, if so, what is the procedure being followed by U. S.
exporters in scheduling shipments under letters of credit
so as to get under the wire? Third, what has been the
experience of U. S. exporters in shipping to Belgium under
these arrangements?"
Anybody want to comment on how they are handling the Belgian
orders?
PANEL MEMBER: It is not true, according to my information.
CHAIRMAN: How many have been able to get their shipments off
to Belgium satisfactorily under these requirements? May we
have a show of hands on that?
6)
CHAIRMAN: How many have had any difficulty because of these
Belgian requirements?
(1)
PANEL MEMBER: Belgium was a very good market, but now since
the 1st of January, there are no import restrictions there,
and I believe all shipments under $500 can safely be made,
assuming that the customer is automatically getting his ex-
change. But all shipments of a value over $500, it should be
made certain by the exporter that the customer gets his import
license and dollar exchange allocated.
MEMBER: That is correct.
PANEL MEMBER: Because I believe there is now an increasing
difficulty for certain goods to be imported, and it would
be unwise to ship without knowing that the customer has his
dollars.
CHAIRMAN: Do you want to comment?
BANKER: I would like to say that before I left the bank I
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looked up letters of credit and very few letters of credit
show date of expiration of only 30 days. A great majority
show 60 and 90, which means March and April deliveries.
BANKER: I did the same thing in our bank and every credit
was 30 days.
BANKER: Most of ours were 60, with an occasional 90-day
letter.
PANEL MEMBER: I'think the customers tried to expedite our
shipments by giving us shorter terms and I welcome that if I
can comply with it because it gives us a chance to make a
faster turn-over.
CHAIRMAN: I know that in our case we have seen credits for
60 and 90 days. They are not confined to 30 days.
MEMBER: I have seen a number of credits where they give
the shipper the option of an additional 30 days extension
upon request.
CHAIRMAN: That is a way of getting it to 60.
ROUND TALE CONFERENCE BOLIVIA
FCIB 2-4-48
CHAIRMAN: QUESTION -- "Do Bolivian import licenses offer
prompt allotment of dollars for payment against sight draft
on arrival of merchandise?"
How many ship to Bolivia?
(10 or 15.)
CHAIRMAN: Who wants to answer the question?
MEMBER: I would say no.
MEMBER: We are only shipping on letter of credit terms.
MEMBER: It does not guarantee the dollar exchange.
ROOR TARO CONFERENCE - BRAZIL FCIB 2-4-48
CHAIRMAN: QUESTION -- "We would like to have the opinion of
members attending the next meeting, as to what will be the
effect of the regulation of the Superintendency of Currency
and Credit requiring banks in Brazil dealing in foreign
exchange, to sell 75i% of all exchange acquired to the Banco
do Brazil. Will this in any manner improve the availability
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-25-
of dollar exchange for sight draft shipments of items in the
prefrred category?
"2. What is the current collection experience of other
members in Brazil? Please ask for terms, products and
experience?
"3. We are selling a customer in Brazil terms of sight draft.
They have requested terms of 15 day sight draft giving the
explanation that it enables us to receive payment quicker
than by ordinary S/D. This is due to the fact that applicants
awaiting permission from bank to make deposit in local
currency against the S/D, it takes 30-45 days, plus usual
period before exchange can be closed. On the other hand
upon receipt of so-man-day S/D, the bank presents immediately
for acceptance and deposit. Is this so?"
BANKER: In answer to the first question, it will slow up
collections all the way around.
BANKER: I think it might be important to point out that the
Banco do Brazil is highly unionized and they do not pay as much
attention as the other banks are trying to.
MEMBER: The answer there is very obvious, that the grel.ter
part of all exchange created is going into the Bank of
Brazil. As a matter of fact, we have already had three or
four letters from outside banks there saying that they were
going to have very little exchange by reason of this new
regulation, and. two of them indicated to us that perhaps it
might be advisable not to send them further bills. I would
like to know what the opinion of someone here is who knows
that situation as to the reasons for this. Is it because the
Banco do Brazil wants a greater share of the dollars to allo-
cate for purposes other than commercial operations, or is it
that there has been a concentration of bills through them so
that they need more dollars to pay them, or what is the reason?
CHAIRMAN: Speaking for our own bank, we have not seen the
answer to that yet. It has had three effects, however. One
is it has slowed up the liquidation of collections because
there ale less dollars available. Two ; it has made the opening
of. import credits in Brazil much more difficult, again
because of the scarcity of dollars; and three, it has made
it more difficult to make remittances either by check or by
draft. But we have not had the answer from Rio as to what
is back of the whole move, and what they will do with this
75/0o.
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MEMBER: We understand that the Bank of Brazil had the
greatest backlog of outstanding checks of all the banks in
Brazil, and that was created by the fact that any seller of
dollar exchange had to take 20 per cent of the value of the
draft in Brazilian Treasury Bills were a three months'
maturity. The Bank of Brazil would not discount that. They
are not allowed to do it by law, whereas other commercial
banks could.
During the 70-30 era, where the purchasing bank could retain
70 per cent of the exchange, of course they were very anxious
to take on these Treasury Bills. They would be willing to
discount them. Now, since they can retain only 25 per cent,
there is no longer any inducement on their part. On the
other hand, exporters to sell their drafts to the Banco do
Brazil still cannot get those Treasury Bills discounted, and
there is a reluctance on their part to sell them there. So
there is a stalemate. Something has to burst at the seam
somewhere. Just how soon that will be, nobody seems to know.
Of course the immediate reaction, naturally, is to send more
dollar exchange to the Banco do Brazil where exporters are
willing to take 20 per cent in Treasury Bills and have that
much capital tied up that way for three months.
MEMBER: I wondered if there had been any indication that
this policy of Banco do Brazil might be intended to build up
a backlog of dollar exchange in anticipation of licensing
so that if and when this licensing is made effective by law,
they would have dollar exchange available for any import
licenses that are granted.
MEMBER: In that respect and in answer to this question:
"Will this in any manner improve the availability of dollar
exchange for. sight draft shipments of items in the preferred
category," there won't be any more dollar exchange, and our
understanding is that the Banco do Brazil's backlog of unpaid
collections was somewhere in the neighborhood of $30,000,000
which means a lot, before they begin to build up anything
covering the future situation.
PANEL MEMBER: Mr. Chairman, could you find out what the
experience of present members is in regard to collections
against sight drafts in Brazil now, because I am rather
intrigued by the banker's opinion on that question. I thought
that the concentration of the larger amount of dollars
in the hands of the Banco do Brazil should give us a quicker
return for our money on sight drafts, because I believe a
lot of,,dollars that were paid to other banks did not find the
way back to us. But the Banco do Brazil may have a larger
amount of dollars available now, and I find that collections
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on sight draft of Brazil, have rather improved in the last
five or six weeks .
CHAIRMAN: I think we can take a quick census on that.
How many are shipping to Brazil?
(A good majority of the members.)
CHAIRMAN: What are your delays on sight draft terms?
MEMBER: Six months.
CHAIRMAN: How many are shorter than that?
MEMBER: I would like to qualify the question on first or
fourth categories,
CHAIRMAN: That is a good point. First categories; what is
the delay?
(4 months; 2 to 4 months; 4 to 5 months; 3 to 4 months.)
CHAIRMAN: Any improvement in the last few weeks? Has
anybody seen any improvement?
MEMBER: Decline.
CHAIRMAN: How about fourth category shipments? What are
the average delays running now?
MEMBER: Six months.
MEMBER: Four to five months.
MEMBER: Four to five months; others very prompt, and
others four months. And some are longer.
MEMBER: Notwithstanding the experience of shippers here,
I think it might be pointed out that the last report of the
Federal Reserve Bank of the 12 large city banks show that
62 per cent of all Brazilian items have paid within a
ten weeks period.
MEMBER: That was before the new decree went through.
MEMBER: Announcement was made recently that Argentina insis-
ted on being paid in American dollars for wheat sales, which
may account in part for this concentration.
CHAIRMAN: That could account for it to some extent.
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 MEMBA-ft-PproveAF - Reftas@ 4PI/Of/20biCOA- 912gA?Od2 b3g 2
consignees who make the excuse that they cannot get the
dollars from the bank and take advantage of the fact. We
wedraft
had toathone was
made two shipmentdays simultaneously
reaten
follawingeight
paid in 15or20
a protest and finally after 45 days we received a payment.
We have had that experience in other countries, too.
MEMBER: Would the bankers here
instruct them to put
Brazil?
BANKER: We had a letter from one of the large corporations
in Brazil, and their own opinion is whereas the Banco do against
it, nevertheless might are
it, never
amongst the banks.
MEMBER: Our agent was up in Brazil and he said by no means
send any collections through the Banco do Brazil. He is a
native Brazilian. They won't follow aBnytinstructions
ns idl?
won't protest when you tell them to.
CHAIRMAN: I have another question on Brazil which is not
on the agenda. "We are selling a customer in Brazil terms of
sight draft. They have requested terms of 15 day sight dpaft
giving the explanation that it enables us to receive payment
quicker than by ordinary S/D. This is due to the fact that
applicants awaiting permission from bank to make deposit in
local currency against /DanibetclosedO-4Ondthe,otplus
her
usual period before bank presents
hand upon receipt of so-many-day S/D, the
immediately for acceptance and deposit. Is this so?"
Who knows that collection procedure well enough to comment
upon it?
MEMBER: My understanding is that they cannot apply for
exchange until maturity.
MEMBER: They are not required to put up a deposit until
maturity.
MEMBER: I have vea ry further question
over rthelsituationyin
We are becoming v y
Brazil. As this meeting has shown, ' mean there a of
uncertainty. What does 75-25 thousands and thousands of dollars deposited in cruzeros to
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our order. What is the future course of the cruzeiro going
to be? Is it apt to be devalued? There is also underlying
the whole thing this question: What is going to be the future
course of the coffee market? Coffee, I understand, is not
moving down there now. I mention all this because our policy
for the time being is to sit tight and to lay off Brazil
except in a few urgent cases. I wonder if anyone is feeling
the way we are, and if anyone is pulling in their horns.
CHAIRMAN: How many are curtailing shipments to Brazil right
now, just because of general conditions?
7
MEMBER: Fourth category only.
CHAIRMAN: How many first categories are shortening up?
(6 first categories.)
MEMBER: I would like to say that I don't think there is any
cause for alarm becausefor instance with Argentina for years
the exporters have sold their dollars at the official rate
of exchange, which has been very much against their own
interests. This situation in Brazil should not have any
ill effects. The exchange still remains in the country.
CHAIRMAN: It does not affect the total overall dollar
picture but it does affect the allocation of those dollars.
I t is the question of how they can be doled out.
MEMBER: It does have some effect because it seems to me
one reason for the 75-25 ruling is that the Brazilian
Government itself has a considerable backlog of exchange.
The Brazilian Government, like all other governments, is
stockpiling. You recall in the past of the 30 per cent
bought by the Banco do Brazil, a certain percentage was for
the use of the government.
It is my feeling that of the 75 per cent even a larger portion
will be used by the Government, which will mean less and
less dollars for the normal collection.
CHAIRMAN: I have a question on Costa Rica, not on our
agenda.
MOUND TABLE CONFERENCE COSTA RICA FCIB 2-4-48
CHAIRMAN: QUESTION -- We have an outstanding sight draft for
$2,600.00 which we anticipate will require from 12 to 18
months to collect. This is not a credit but an exchange
problem. The Banco National de Costa Rica has just advised
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that after the Board has given the exchange number, close to a
year will be necessary to secure dollar payments. Is this a
common experience? How soon do Bureau members collect now-
a-days? What is the forecast?"
What is your experience in collecting down there?
MEMBER: It depends on the merchandise.
MEMBER: Six to eight months.
MEMBER: Twelve to fourteen months.
CHAIRMAN: Does anybody want to make a forecast as to the
Costa Rican dollar exchange position?
MEMBER: Awful.
MEMBER: Get out of Costa Rica.
MEMBER: No improvement.
ROUND TABLE CONFERENCE CUBA
FCIB 2-4-48
CHAIRMAN: Q.UESTION -- "A decree wad passed and put into
effect on December 18th by the Cuban Government making it
extremely difficult for foreign nationals to fire their
sales agents or distributors in Cuba. Certain 'just reasons'
for firing are specified. The State Department is making
protests. Whatis the opinion as to the possibility of the
Cuban Government relenting, and how do members feel about this
decree?"
What is the opinion of the members as to the relenting of the
Cuban Government? It has been protested by the Department of
State and by other groups; I know.
MEMBER: I have discussed it with a number of Cuban distribu-
tors and they expect a modification of the law.
CHAIRMAN: Any other comment?
(No response.)
ROUND TABLE CONFERENCE ECUADOR FCIB 2-4-48
CHAIRMAN: I see that there is no question on England, I
am rather surprised because the situation is erywtough.hiI
read where a man had triplets and the Government to keep two and export one, or export two and keep one, rather.
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QUESTION -- "I did not raise the question at last month's
Round Table relative to Letters of Guaranty, but the answers
thereto have left me somewhat befuddled. I always have
received payment in New York under these Letters of Guaranty,
and therefore, do not understand the statement that 'a
Letter of Credit will be paid in New York and a Letter of
Guaranty will be paid in Ecuador'. Now I'll ask a question --
What risk am I taking when I accept such Letters of Guaranty?"
BANKER: To answer that question categorically, the letter of
guaranty this party has in mind is a guaranty given by a bank
in Ecuador and it is as good as a bank is. That is about
all. The draft in that case would be payable in Ecuador by
that bank, giving the guaranty.
BANKER: I take issue on that. I think you have got that
confused. A letter of guaranty is given by the commercial
banks in Ecuador because of the fact that they cannot issue
letters of credit. The letter of credit is centralized with
the Banca de Central of Ecuador. So that the banks issue
the letters of guaranty instead. What happens is that two
drafts are drawn. One draft is drawn on the consignee. The
other draft is drawn on the New York bank advising or confirm-
ing the letter of guaranty. And so long as you have a New
York bank confirming the letter of guaranty, you get paid
in New York as a New York bank obligation. Otherwise, it
is the same as an unconfirmed letter of credit.
PREVIOUS BANKER: Actually that is what I. said here. The
letter of guaranty is issued by a commercial bank in Ecuador.
MEMBER: But you are paid up here in New York.
MEMBER: The bank here can negotiate it.
CHAIRMAN: Doesn't the responsibility continue until the
bank in Ecuador finally pays the draft?
MEMBER: If you get paid right here, you do not have to
worry about it.
MEMBER: That is one step further than an ordinary bank
guaranty. It is an authority to. purchase. When the New York
bank confirms, you do not have to worry about it.
MEMBER: But this letter of guaranty does not speak of
confirmation, and ordinarily they are not confirmed by a
New York bank.
MEMBER: Most of ours are.
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MEMBER: You take the good name of the bank in Ecuador, and
it can be drawn either on them or their customer in Ecuador
for account of the guaranty bank.
CHAIRMAN: Al, didn't you write a thesis on letters of
guaranty once?
MEMBER: My comment on it is that they are both right, depend-
ing on what they are talking about.
MEMBER: Very diplomatic.
MEMBER: If you merely get a letter of guaranty from an
Ecuadorian bank, without a confirmation from the New York bank,
in the event of non-payment you have the privilege of going
down to Ecuador and suing the bank. That is about what it
amounts to.
CHAIRMAN: I think you will find most of them are issued
without a conformation and you are dealing with the responsi-
bility of the local bank in Ecuador. And your liability
continues until that bank makes the final payment.
MR. GRAY: We quote for the record a letter received from the
New York Agency of the Bank of London & South America, Ltd.:
"We would advise that there seems to be some confusion with
respect to the value to your members of Irrevocable Letters
of Guarantee emanating from Ecuador. The information given
in the minutes of the Round Table Conference of the 7th
January 1948 appears to be misleading. On behalf of our
Guayaquil Branch, we issue a considerable volume of Irrevocable
Letters of Guarantee, all of which are payable in New York in
U. S. Dollars against documents as required by the terms of
the respective Guarantees.
"It is, therefore, evident that in so far as the American
exporter is concerned such Irrevocable Letters of Guarantee
serve precisely the same function as would Irrevocable Letters
of Credit, at least in so far as this bank is concerned."
SOUND TABLE CONFER NICARAGUA FCIB -2-4-48
CHAIRMAN: QUESTION -- "In past meetings, the problem of
shipping to Nicaragua on a 90-day basis was discussed, and
it was learned that many of the members contemplated shipping
under these terms. We should like to know what their
experience h s been as far as collections are concerned for
their 90-day draft shipments. More than the regular credit
problems involved, we should like some idea of the coopera-
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local currency after payment has been made by importers against
90-day drafts. "
Anybody wish to comment on their experiences?
MEMBER: I think it is still too early because the decree
only went into effect around the beginning of December or
ti late November.
CHAIRMAN: How many of the group that are shipping are
complying with this 90-day draft business?
(Show of hands.)
CHAIRMAN: Just about the same amount.
the Unitedleading
MEMBER: I would like r~veadollarcomment.
accountsWinfind
importers in Nicaragua
States that paid us in advance, asked us to draw against them,
and when the draft is paid, we merely remit the funds into
their American dollar account.
CHAIRMAN: That is being done, I think, with a good many
countries today. I have another question on Nicaragua not
on the record. It came in this morning.
"We are only able to get import-exchange permits on the
basis of 90-120 days, with draft attached. Is this long
wait out of line with the current experience of others? What
is the forecast?"
Apparently from the show of hands that we just had, it not.
Does anyone want to prognosticate the outlook in
(No comment.)
FGiB 2-4-48
ROUND TABLE CONFERENCE PERU
CHAIRMAN: QUESTION -- "We have noticed that many of our
drafts on Peru are outstanding for longer periods. Will you
comment briefly on any factors that are involved, including
the exchange situation and the internal credit situation, and
give your opinion on the prospects for improvement?
"In the middle of 1947 Peru tried
an import permit providedin
non-essential merchandise without it with his own funds in
that the importer agreed to pay for
eled
the open market. This was not asortssnvw requireairoport
after about three months. All imP
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permits. However, there is still a quantity of merchandise
in the Custom House imported under the temporary arrangement
where import permits are unlikely to be granted. Are United
States exporters with goods in this category allowing them
to remain there in the hope that they will eventually be paid
for with free exchange or are they having them returned to
this country?"
MEMBER: I have some trade figures. Foreign trade figures
for the period of January to September, 1947 show an un-
favorable balance of $0,000,000 Soles as compared with a
favorable balance of 162,000,000 Soles for the same period of
1946. However, at the end of November, gold in the
country and gold in foreign currency balance abroad were
reported as 154,000,000 soles as compared with 141,000,000
for a similar period in 1946. But I do not have a breakdown
as far dollars and other currencies are concerned. There
may be a lot of sterling there.
CHAIRMAN: As to the second part of this question dealing
with the experiment of letting-- in non-essential merchandise
without an import permit.
What are our exporters doing who are caught in that trap? Do
they expect to be paid or are they having the goods returned
and trans-shipped elsewhere?
How many have been caught in that experience of shipping
down during the period when funds could be bought in the
open market to pay for such goods?
(4)
CHAIRMAN: Are you hoping to re-exchange?
MEMBER: There is no re-exchange. Where we have no import
license, we have to take the books back.
MEMBER: 20 per cent of our goods are still open.
MEMBER: The way our shipments were made last summer, and
I expect there will be a free exchange.
MEMBER: As I understand, you can only get a free exchange
in the free market for that type of goods and a maximum has
been set of 10 soles to the dollar. The rate is still 14, or
above 14. So you have to wait until the free market goes
down to 10 or below.
MEMBER: I would like to find out if anybody received
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import permits recently against such goods?
CHAIRMAN: Any recent reports issued against that?
(No response.)
ROUND TABLE QUESTION SWEDEN FCIB 2-k-48
CHAIRMAN: QUESTION -- "During the last six months Sweden has
rem ~v?d a great many articles from the free list of articles
to o-, ilnported without a license. A number of United States
exporters have goods actually in Sweden shipped six months or
more ago against which import licenses are now being refused.
What is the best way for them to protect their interests?"
What is the best way to protect your interests? Do you have
to bring your goods back?
PANEL MEMBER: No. Six months ago the Swedish import
regulations were not yet enforced and if we shipped the
goods prior to that date in good faith, there is no reason
for not inst Jtuto on payment. I believe there is a chance of
getting payment from Swedes n . I do not think they would go
back on their obligation.. All you have to do is to go after
it, and you may even request the American Consul General in
Stockholm to intervene. That may help.
ROUND TABLE CONFERENCE TRINIDAD FCIB 2-4-48
CHAIRMAN; QUESTION -- "Outstanding licenses have been
cancelled; we are told of the possibility of reinstatement,
if we can prove that the 'merchandise
recently n~tarbe sold e otherslhavinge.
What is the exchange experience
better luck than this?"
How many are shipping to Trinidad?
(No reponse. )
CHAIRMAN: Does anybody want to comment on this licensing
situation and the exchange risk there?
MEMBER: Did you say sold or bought elsewhere?
CHAIRMAN: Cannot be sold elsewhere.
MEMBER: Whom do they have to prove that to?
CHAIRMAN: Apparently to whoever controls the licenses in
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MEMBER: The proper authorities.
CHAIRMAN: Any comment on that?
MEMBER: i think that is all part of the British Empire set-
up, when convertibility went overboard. I would suggest the
American mnsul down there, asking him to intervene.
ROUND TABLE CONFERENCE TURKEY
FCIB 2-4-48
CHAIRMAN: QUESTION -- "For some time Turkish customers tried
to make their American suppliers change from Letter of Credit
payment terms to Sight Drafts, stating that dollar exchange
was easier available at Sight Draft Terms. So as to test
these statements, we shipped to some preferred accounts on
SD/DA terms. Some of these drafts are now over three months
old without having been paid as yet. What is the experience
of other members in this connection?"
How many are shipping to Turkey?
(10)
CHAIRMAN: How many selling on Sight Draft or have sold on
Sight Draft?
(Majority of those present.)
CHAIRMAN: Does anybody want to comment on this situation?
MEMBER: I have a good deal experience in Turkey
confirmedd I
would not sell Turkey on any
irrevocable letter of credit, not because of the business
houses, but because of the integrity of the government.
Some remittances take six weeks and some three to four
months.
MEMBER: We are shipping Sight raft, and I am glad to say
we are getting remittances
MEMBER: I think this particular situation is a question of the
Turkish importer or the agent himself. There has been
considerable abuse in the acting upon import permits which
have been allocated by the Turkish Government, and the importer
would take the order from the New York exporter and order one
.twice the quantity, and then he would a apply
second permit a ainst
shipment; and then he would apply g
permitswere
the second shipment. In eresth~tnif'theeimports ~
made a new ruling over th
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dated later than the bill of lading, they would not permit
entrance of the goods, and I think you will find a lot of
merchandise is accumulating over there due to that-fact. And
from the commercial Turkish accounts downtown, I understand
that the only alternate is to have the goods returned to the
United States because it will never be paid for.
CHAIRMAN: Any other comments?
(No response.)
ROUND TABLE CONFERENCE URUGUAY
FCIB 2-4-48
CHAIRMAN: QUESTION -- "Last July, Uruguay decreed that prior
exchange permits must be obtained before a sales contract is
closed, and while no distinction in categories of imports
was specified, we are told that preference is shown in grant-
ing permits for raw material, iron, machinery, agricultural
implements, tools and foodstuffs. Has operation of this
decree: (1) Had any effect on the time required for the
collection of drafts, covering both the so-called essentials,
listed above, and merchandise not so essential? (2) Aided
in correcting Ur-uS:za-j s trade poy .j-.a o which, I believe, was
unfavorable for o om i months in l9k7 ?"
Who wants to comment on the first part of the question?
MEMBER: It took us over six months to collect on shipments
pertaining to the so-called third category, but we notice
that on shipments made in December or even early January, we
have already been paid.
PANEL MEMBER: The Uruguayan people have made the statement
that it has taken them about six months to get this machinery
operating and from now on they think it will operate better.
That is again a statement that we have got to watch. Maybe
it is true and maybe it is not.
MEMBER: I noticed a statement in the New York Times Sunday
where the Uruguayan Government objected to being called
"slow pay", but as a matter of fact, it takes you nine
months to get your money out of Uruguay, and perhaps six
months from now it will be cleaned up and on a prompt paying
basis, but for the time being it seems to me it is a letter
of credit market until they have proved themselves better
able to pay.
MEMBER: First 11 months in 1947 there was an unfavorable trade
balance. Again, of about $76,000,000. It was estimated recently
that between $8,000,000 and $10,000,000 of outstanding collec-
tions,primarily of 2nd and 3rd category merchandise.
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ROUND TABLE CONFERENCE ANNOUNCEMENT FCIB 2-4-48
Mr. Gray announced that the next Round Table Conference would
be held at two p.m., Wednesday, March 3rd, 1948, again at the
Pennsylvani Hotel in New York. He urged all present to attend,
invited questions, and then called upon the bankers to announce
themselves.
ROUND TABLE CONFERENCE BANKS REPRESENTED FCIB 2-4-48
Chemical Bank & Trust Company, Bankers Trust Company, Philadel-
phia National Bank, Marine Midland, National City Bank, Chase
National Bank, Bank of Manhattan, First National Bank of
Boston, Central Hanover Bank, New York Trust Company, Penn-
sylvania Exchange fa.nk, Irving Trust Company.
GENERAL QUESTIONS
CHAIRMAN: Mr. Joseph A. Mack, acting Director of the New York
Regional Office of the Department of Commerce is present with
us to discuss current developments in Export and Import Con-
trols and related functions of the Department of Commerce.
ROUND TABLE CONFERENCE W.T.D. REPORTS FCIB 2-4-48
CHAIRMAN : QUESTION : "The New York office of the Department
of Commerce solicits applications for World Trade Directory
Reports. It'is stated that they are avilable at $1 each, no
reference being made to terms for payment and that requests
for reports should be made to an individual, whose telephone
number only is given. It does not prohibit requests sent by
mail. Why does the Department of Commerce require advance
remittance of $1 for a World Trade Directory Report without
4*1d1 ca,t,ing whether they have the report and after remittance-
is sent advise that the report is not available?"
MR. MACK: Government accounting procedures do not permit of
credit sales and payment for reimbursable services must be made
in advance. Users of the World Trade Directoryservices may
at any time inquire as to the immediate availability of any
report in which they are interested, and in so doing need not
order the report. In following this suggestion, no payment
need be made until the report is actually ordered.
MEMBER: I would like to make a suggestion, Mr. Mack, to make
it possible for the manufacturers to buy in advance a set of
or a book of coupons of one dollar a piece. It saves us the
paper work.
MR. MACK: That is a very good question, and quite candidly,
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we had it for a number of years and found it worked very well.
But the general accounting office did not agree with our
procedure. As I say we fully agree with the difficulties of
manufacturers and know what others are up against in putting
the vouchers through. We would like very much to return to
that coupon system, if it were possible under the law to do it,
but we cannot do it.
MEMBER: How about postage stamps?
MR. MACK: We cannot accept postage stamps. We have no way of
getting rid of them.
ROUND TABLE CONFERENCE LETTERS OF CREDIT FCIB 2-4-48
TIME ELEMENT
CHAIRMAN: QUESTION -"Are members experiencing difficulty
in obtaining letters of credit from Sweden, Brazil, Colombia,
India, China, Costa Rica, and Ecuador to allow for prccduction
of special material and collect with a reasonable margin of
time for unforeseen delays?"
There are a number of countries mentioned here. I will take
them rapidly one by one.
How many are having difficulty getting letters of credit from
Sweden of sufficient maturity to give you a chance to process
and ship your merchandise ? (1)
How many are getting letters of credit from Brazil and having
trouble with those credits? (3)
MEMBER: I should say we are having difficulty in getting
credits. Period.
CHAIRMAN: In Brazil it is difficult to open letters of credit?,
MEMBER: They kick about it, but they open them.
MEMBER: You cannot get a letter of credit for fourth category,
and in the first category it might take six weeks or two months
before you can get it.
CHAIRMAN: How about Columbia? Who is getting credits from
there, and is there any difficulty on the maturity dates?
(None).
India? Any credits from India?
MEMBER: Tremendous delay in getting letter of credit opened,
but once it is opened, it is good for two to three months.
CHAI, 1bVed FTdPFReP6i t0 xX2*: C $#D~ 891 A ~ O O n?
igh
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through?
MEMBER: Yes, short maturity, 60 days.
CHAIRMAN: Anybody getting Costa Rica credits? (No).
Ecuador? Those are all letters of guarantee which were dis-
cussed.
MEMBER: Chile is not mentioned. I would like to inquire if
anybody is getting letters of credit out of Chile? (2)
SAME MEMBER: What products?
(Electrical goods; metals.)
PANEL MEMBER: While we are on Chile, let us find out how many
have sight draftspending which are overdue now?
(A large number).
MEMBER: Do you still send on sight draft to Chile? (No).
BANKER: Could we have a question on how many are continuing
to ship to Chile on sight draft terms?
CHAIRMAN : Nobody.
PANEL MEMBER: I would suggest we send copies of the minutes
to the Chilean Consel and the Department of Commerce, so that
they know what we think about it. If they cannot get any mer-
chandise, maybe they will speed up the payment of their drafts.
MEMBER: I would like to comment on that that while the people
here are credit conscious and do not ship, there are many
exporters that do ship.
PANEL MEMBER: But it may help if the consul knows how we
feel about it.
PANEL MEMBER: I have a general comment on Chile, Mr. Chairman.
Under the Marshal Plan, the thing they talk about, and the thing
that will take up the bigger part of the payments is what they
call the 3 F's -- food, fuel and fertilizer, and I was told
within tvo ?,.re ks by a high official of the Department of Agricul-
ture, that 11.".?ey would purchase all the nitrates from Chile
that they would get, much of them paid for direct by us in
dollars and some of it or much of it paid by the European govern-
ments involved. So that there is some possibility that in
what Washington calls offshore purchases, offshore in the
Western Hemisphere, a considerable amount of the dollars will
go ApMvtd FC4hRtloase YQA2/@ 9 gQWGRDR O MOi dd35P21.an is going
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to become operative just as well as I can. I doknow they will
buy nitrates, synthetic nitrates from Canada, and they say
that a good part of the fertilizer to be shipped to Europe
under the Marshall Plan will not be purchased in the
United States.
PANEL MEMBER: In the meantime don't ship to Chile on sight
draft .
ROUND TABLE CONFERENCE QUOTAS
FFCIB 2-k-k8
CHAIRMAN: QUESTION --- "Would you comment as to the advisabili-
ty and practicability of setting up liability limits by
countries? By liability limit I mean setting a maximum figure
as to the total amount of collections which may be outstanding
at any one time for a certain country."
I think that is a good question for this meeting here on
credit quotas, dealing with the advisability and practicability
of setting up limits by coiuitries, as well as by customers.
Who wants to comment on that?
How many firms here really set up an overall quota for a
country as to what you will have at risk there? (About 5).
How many of these five or six stick to that quota and don't
go over? (2).
BANKER: How do they set up that quota?
MEMBER" Based on the yearly sales turnover of the previous
year.
MR. GRAY: Any other method?
MEMBER: I.. set up a quota by customer. I don't want too much
for any one cu; ';on'3r. : don't sot i''.: up on a country basis,
except to' ' 7-ir,, e wnt ? T' z 'c if 1 k,aov a courltry is no good,
I just require of cr?od:Lt.
CHAIRMAN: Does anybody want to comment on this business of
really setting a quota limit for a col. try, so that you know
what your overall risk is?
MEMBER: I think it is a desirable thing to do. We have been
doing it in those countries where we :hip on draft terms. We
have in mind that as far as we want to go in certain countries,
to a certain figure. If you have $200,000 deposited to your
order in Brazil or Argentina, maybe that is as far as you want
to go in the way of risk there, in view of possible currency
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changes. That is the basis on which we work.
PANEL MEMBER: In my opinion, it does not work. This is a
very theoretical idea which sounds beautiful, but it does not
work. I don't know any bad country. I only know bad customers.
If you have a good customer in a bad country, he will be able to
fulfill his obligations. If you have three bad customers in a
good country, you won't see your money. So that quota system
does not work. I tried it and I got in some orders. They looked
so nice to me. I said, "The hell with the quota"and I shipped,
and I broke my own theories?
MEMBER: I don't agree. You certainly must differentiate. You
cannot say that China is on the same basis with Panama. You
do have to differentiate on the basis of countries as well as
customers.
PANEL MEMBER: If new regulations come in, what would you say
then, is it a good country or a bad country? Conditions
change.
MEMBER: I know that we set up a quota and stick to it, and
that operates very well. The quota was set up more or less
arbitratily, in percentage to our overall amount of business
that we want to have outstanding in a particular country at
a particular time.
CHAIRMAN: I will comment on this. The Chairman is not supposed
to, but I will. Back in the early thirties when the Argentine
had to block its exchange and Brazil had to, and subsequently
Spain, there were a lot of exporters who found all of a sudden
that a big part of their working capacity was in those
countries, and they had to work it out over a period of time.
I think it is quite true that a lot of our export manufacturers,
who perhaps are dealing in pretty substantial sums,do set up a
quota for their different markets, so that they will not
have more than so many thousands of dollars at risk in any one
country , and, of course, theyevaluate that on the economy of
the country, what the total sales are, and all of the benefits
and perils involved, and a lot of them are sticking to those
quotas. They would not accept orders if they have more than a
given amount at stake in some of these countries where they
have exchange regulations that make things look a little dubious.
MEMBER: What would be the time element on the quota, a period of
a year or six months?
CHAIRMAN: No, that is an over all quota, sort of like a revolving
credit would be. You have a lot of shipments totaling $50,000,
and once you hit that figure you do not ship any more until you
get s o~ll'p~~~8 20i~r12oIAs~d~~~~P1~RPA?~44r~5-2
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PANEL MEMBER: In your business, it is based upon customers.
PANEL MEMBER: It does not work, you may ship goods to a cus-
tomer who doesn't mean anything, and the money does not come
in and so you push your good customer. That does not work
with me.
ROUND TABLE CONFERENCE COMPENSATION REMUNERATION FCIB 2-4-48
CHAIRMAN: I have a telegram headed up as Compensation Remuner-
ation, "Please submit Round Table Conference following ques-
tion: What is being done regarding Colombia-Venezuela so-
called compensation remuneration at end of employment whether
voluntary resignation or dismissal of employees in payroll
of concerns in United States? Do they settle according to
Colombian-Venezuelan Laws?"
Does anybody have a subsidiary plant down there that can help
this particular member? (None).
CHAIRMAN; QUESTION -- "What is the news concerning the exchange
risk guaranty publicized about a month ago in connection with
ERP? r"
Does one of the Panel Members wish to comment on that?
PANEL MEMBER: I don't know enough about that.
CHAIRMAN: Is there anybody in the audience that wants to take
a crack at the so-called guranteeing of the exchange risk?
MEMBER: There was a comment to the effect of the overall
sum to be spent on ERP. Seven per cent or something like
$500,000 would be set aside by our government to guaranty to
American firms that moneys would be paid to them, and the
only reason why it was not paid was because of the fact that
there was an exchange transfer delay. In other words, if you
are selling power plants to somebbdy in Belgium, and the only
reason why you cannot get your money is because of the fact
that there is a dollar exchange, the United States Government
will, under ERP, out of this $500,000 fund make payment to you.
MEMBER: It seems to me they are trying to stick into the
Marshall Plan and ERP every cat that died in the last five
years.
PANEL MEMBER: I rather believe that the Marshall planners are
a little bit hazy about how much and what is going to be ecpended
under the Marshall; Plan for ca ital e ui ment and material of
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Import Bank and under what arrangements. I think they are
quite hazy on that, and I feel that we should ask for
considerably more information than we have now gotten on that
particular score. More than 50 to 60 per cent of it is going
to be spent on this fuel, food and fertilizer, and a tremend-
ous amount is going to be spent for petroleum. What is going
to happen to the rest of it? What is that going to be spent
for in centive goods, things that they can use with the German
miners to get them to work harder -- things of that sort.
But what is going to happen to the rest of it. What is
that going to be expended for. Under what direction.is it going
to be expended -- railway cars, transport equipment, refinery
equipment, and all that sort of stuff. Who is going to spend
the money and how? If it is going to be spent over here, you
havent an exchange problem. If it is going to be spent some
other way, if it is going to-be applied as an export credit,
you haven't an exchange publem. We haven't very much informa-
tion on that score.
MEMBER: We have gone far enough to know that every mistake
that was made under Lend-Lease, UNRRA and whatnot in the ten
years past is being shoved right Into the Marshall Plan.
PANEL MEMBER: You would not think that the mistakes they
made previously in Export Control would reappear, would you?
MEMBER: They have, and it is appearing in the Marshall Plan.
ROUND TABLE CONFERENCE BANK CHARGES FCIB 2-4-48
CHAIRMAN: QUESTION: "We would like to know how Bank charges
are figured? By this we mean, does the percentage vary from
amount of a draft, also the country? When these charges are
refused by customer, is it customary for the company drawing
the draft to absorb these charges?"
BANKER: I will answer that for the banks. New York bank
charges in the United States are based primarily on bank charges
made by foreign correspondents. The charges do vary. The
banks in this country endeavor in most cases to collect an
eighth of one per cent on all items, but the charges, as I said
before, are based, the overall charges, on the bank's chargers
abroad. For instance, in Nicaragua, as I recall, the banks had
a charge of one per cent for collections. Therefore, the
banks charged one and one-eighth here.
The collection charges do vary as to the amount in
some countries. In other words, in the Argentine, I think you
will bare me out, Ralph, that an eighth of one per cent is made
on bills of 40,000 pesos.
CHAIRMAN: I think forty or fifty thousand. I forget the top
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figure.
BANKER: I think-it is an eighth of one per cent up to 40,000
pesos in the Argentine and free to any amount over 40,000
pesos. The bank here adding one-eighth on to those charges.
CHAIRMAN: The charges vary in every foreign country, and your
banks here assess the corresponding collection charges plus
their own. Do you want to comment on that?
MEMBER: To t1at you must add the various stamp taxes and so
forth that are assessed locally.
BANKER: The stamp taxes are really an internal tax of the
foreign country, and are generally paid by the drawees.
CHAIRMAN: Most banks enumerate these various charges separate-
ly, so that you know what you are paying your American bank,
what you are paying abroad and what your stamp charges are.
They are.sually on the schedule.
MEMBER: They also have airmail charges where the prevailing
rates are rather high.
BANKER: Not as far as we are concerned. There are actual post-
age charges.
ROUND TABLE CONFERENCE EXPORT CONTROL ? FCIB 2-4-48
CHAIRMIAN:' QUESTION -- "According to Current Export Bulletin
No. paragraph D, export licenses for commodities not on
the:>:itive List will be issued for a validity period of 90
day?. This period appears much too short considering import
formali"ties and openings of Letters of Credit abroad as well
as difficulties here. The Department of Commerce
Shou:l:r. be requested to extend this period immediately to 180
days as a minimum."
MR.. MACK (Department of Commerce): I do not know whether
it is going to be extended or not, but I think it is well to
see- that it goes into the minutes.
CHAIRMAN: How many feel that they should have a year's period
on these licenses?
PANEL MEMBER: Two years.
ROUND TABLE CONFERENCE HOLDING DOLLAR BALANCES FCIB 2-4-48
CHAIRMAN: QUESTION -- "We are receiving requests from South
Am eri rc 1F ~fv~ 2~ ~2~ri 49 ~A~ ~O~ and to
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hold their commissions for them here. Are others receiving
similar requests and what action are they taking? What are
the hazards involved?"
How many would do so, if requests? (None).
PANEL MEMBER: There is no reason why you should not follow
a request like that.
CHAIRMAN: What are the hazards involved?
MEMBER: I don't see any hazard or risk involved. You pay the
commission after the account is paid to you, and naturall you
keep the commission here at the disposition of your agent.
MEMBER: I will say it is a nuisance, because sometimes we
are advised to make five or six payments against an amount of
$500, but we have to comply with it.
CHAIRMAN: How many retain those commissions on their own
books? (9).
How many insist that they are paid to their bank so that it
can be taken off your books? (None).
MR. GRAY: Is there a possibility that the United States
exporter will get into difficulty with the authorities in the
importer's country?
CHAIRMAN: I don't think so. I think you have to look after
your own government regulations, and if they take a census on
assets held here by any foreigners in countries that are still
blocked, you will have to be sure to declare them or yuu will
get in trouble with your own Treasury Department.
MEMBER: There, too, is the question in some foreign count-
ries, such as Sweden, where the Nat ionals are not allowed to
maintain balances abroad. So there is a certain risk. And
when those balances are accrued, they certainly should be paid
without any delay.
MEMBER: I would like to say that we look upon the matter as
between principal and agent. If the agent asks us to credit
the account, we do so. If he asks us to credit the account
in a New York bank, we do so. If anybody is guilty of violat-
ing the regulations, it is he and it is his liability with his
government.
CHAIRMAN: We have some customers up in the New England area
,that have, over a period of some years now, acquired quite a
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lot of money for some of their agents. The customer is
dealing in machinery, and all that runs into fairly substantial
sums. They wanted to get that liability off their books, and
they have insisted that these agents open their own bank
accounts and they will pay checks into the bank for their
credit. And we have quite a number of them that have done
that because they did not want to assume that liability.
MEMBER: We have a system whereby we pay these commissions as
earned quarterly, so that the respccn .biltty of the disposition
of the money goes to the agent when we send him our check.
That is a matter between him and his own government.
CHAIRMAN: There are a lot of them that do not want checks
mailed to them at all.
MEMBER: We do make exceptions, as an accommodation.
MEMBER: We use these deposits as guarantees for sight draft
shipments.
PANEL MEMBER: You cannot do that.
MEMBER: We do.
PANEL MEMBER: You have no right to do it unless your agent
authorizes you to do it.
MEMBER: We have written agreements from all of them.
CHAIRMAN: I think that was done in one instance in a nearby
country where the agent wants one or two customers sold on sight
draft, and he has written to his principal that he will guarantee
those accounts if they are not paid, and I think that is done
in a few exceptional cases.
PANEL MEMBER: I would like to ask an entirely different ques-
tion, if I may? Secretary Snyder made a very important state-
ment a couple of days ago concerning the release of foreign
funds over here, which could be very important to the export
business. I must confess that it is away over my head as to
just what he means. Do you suppose that with this galaxy of
bankers we could chew on that one a while?
BANKER: I understand that the foreign governments will utilize
dollar holdings in this country, and use them for dollar pur-
chases. If that occurs, it seems to me that the fellows
that hold these dollars are going to suffer in the exchange
by being paid in local currency against their dollar holdings
here.
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MEMBER: The last release I saw would only affect the blocked
European nations. And only the accounts of five thousand or
above and only old customers, no new customers. So that the
total amounts of those countries, dollar balances will not be
very large. France will probably be the largest and Belgium
may be considerable, but the rest will be, if you leave
Switzerland out, very small.
CHAIRMAN: I think that is right.
MEMBER: I would like to ask a question, whether it is the
consensus of the people present that there is actual dollar
shortage or whether it is a fact that most of the dollars
have actually gone underground.
CHAIRMAN : In ai particular country?
MEMBER: Take the world as a whole.
CHAIRMAN: How many feel that on the whole there is actually
a dollar shortage, or there is a lot of underground dollars
that could offset it?
MEMBER: That comes up with the question of Brazil. There
it was mentioned that Argentina requires payment in United
States dollars. I heard from my own agents in South America,
that they do not buy or they cannot by anything neither from
Canada nor from any other American country, nor from
Europe
except
by paying in dollars. Therefore, the demand
for United
States
dollars is far bigger than actual sales from
the United
States
would demand.
MEMBER:
That still does not answer the question.
MEMBER:
Isn't the word "shortage" a purely relative term?
There can always be a shortage, because the rest of the world
wants more American goods, and therefore, there will be a short-
age of dollars, but that does not mean that they cannot pay
for a reasonable amount of goods. The Senate Finance Committee
recently published a report, and that has the exact amount of
dollar balances by foreigners in this country, split up between
officials and private, so that as of June 30, 1947, that
report will give a very good outlook of how many privately
owned -- you might say black markets in some cases -- are in
this country in circulation.
MEMBER: I think the estimate given the other day by the
Treasury Department was $1,100,000,000. But getting back to
the shortage, I think there will always be a shortage as long
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~,s j have each an, J M E
PANEL MEMBER: I must confess that I find it difficult to believe
Argentina has a dollar shortage, as they claim. In view of all
the things that are going on. How is Argentina spending the
dollars she has? That is the question we ought to ask. And
other countries, too.
MEMBER: I think it is more of a mal-distribution of dollars
than an actual shortage. That.mal-distribution is created by the
Washington authorities. The Department of Agriculture, through
their food department, and everybody, wants to get sufficient
dollars to be able to purchase their foodstuffs.
PANEL MEMBER: Of course, you have to figure out how much
abnormal use there was of dollars from abroad last year, to
pay for food and fuel. If all those dollars could have been
expended for machinery and drygoods, and what have you, just
think of the difference there would have been.
MEMBER: As to the relativity of the holdings in dollars,
there is a table in the Monthly Federal Reserve Bulletin each
month showing the pre-war dollar holdings of every country as
well as the current ones. They are about three months behind
in the tabulation of those, but in almost every country, it
shows they have more dollars now than they had before the war.
MEMBER: Practically all of these comments have been based
on stories that have appeared in the newspapers. I will give
my own opinion. I asked the question. I think there is actual-
ly no shortage of dollars, that there actually is more dollars
available for foreign account than ever before, but through the
operation of Gresham's Law, bad money driving out good money,
these people abroad wherever possible want to get their hands
on American dollars and hold on to them. I know from my own
experience. And I have been surprised at many instances, where
I will open an envelope in the morning, and there is a check
in the mail from a person I did not know, "Please credit the
account of so and so abroad." They knew me, and they felt
that they would rather let the $20,000 stay with me than with
anybody else. I could not ask them any questions as to how or
where they got the money, or anything of that sort.' And I
think that practically every exporter has had similar experienc-
es. Perhaps not in $20,000 amounts, but in various other
amounts.
(With a vote of thanks to the Chairman and the
Discussion Panel, the meeting adjourned at 4:0O p.m.)
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