The Market, the State, and the Export-Import Bank of the United States, 1934-2000 (review)

This history of the Export-Import Bank of the United States (Ex-Im) was coauthored by a former winner of the Newcomen Award for Outstanding Book in Business History (William Becker). Although this was a sponsored history to commemorate the sixty-fifth anniversary of Ex-Im, the book does not seem unduly biased in the way that some sponsored histories can be. The fact that the volume was reviewed by numerous scholars and published by a respected university press removes much of the stigma of sponsorship.

The Ex-Im, a creation of Franklin Roosevelt's New Deal, is the federal government's official export credit agency. Although initially designed to support the credit needs of exporters and to promote exports, the organization also at various times has served as a policy tool of the White House. The authors contend that the agency was adroit in being able to successfully meet its financial goals while serving public policy interests. This was accomplished while facing such dilemmas as the Depression of the 1930s, post-World War II European reconstruction, the sponsorship of third-world development, the countering of leftist groups in the 1950s, the Alliance for Progress in the 1960s, the oil shocks and end of the Bretton Woods agreement in the 1970s, the international debt crisis of the 1980s, and the aftermath of the breakup of the Soviet Union in the 1990s. Key personages in the bank's leadership have included such noted businessmen as Jesse H. Jones, William J. Casey, Jr., and William McChesney Martin. Jones was secretary of commerce and chairman of the Reconstruction Finance Corporation before becoming chairman of Ex-Im. Casey had a long Wall Street career before joining the State Department, and Martin had been head of the New York Stock Exchange. The book brings out little-known aspects of these leaders' careers.

The aforementioned leadership caused the Bank to embrace the routine standards of the financial marketplace with respect to risk analysis, loan structuring, and collections. The customers of the bank were foreign purchasers of American exports. Although export was encouraged, profit was initially the motive; the Ex-Im was not intended as an aid-giving institution. By the 1960s, the Bank began partnering with commercial banks to guarantee loans, while partnering with foreign credit insurers to limit its exposure to liability. By the 1990s, the guaranteeing of loans made by other financial institutions had become the primary activity of the Ex-Im.

The high interest rates of the 1970s hurt the Ex-Im's profitability as it often had to lend money at less than its cost of capital. The result was that by 1980, the long profitable Bank suspended its dividend payments to the U.S. Treasury. This non-business-like practice opened the agency to criticisms that it had become a distributor of subsidies to foreigners to the extent that the interest rates charged were less than the capital costs. Since it was primarily manufacturers of capital goods, such as jet aircraft and nuclear power stations, that were benefiting from the subsidies, this criticism became a contentious issue. These manufacturers were mostly well-known names like General Electric, Boeing, and Westinghouse. As a result, Congress questioned the Ex-Im's expenditures on behalf of a handful of powerful and profitable companies. Indeed, the last two decades of the twentieth century were particularly arduous for the agency. The concept of giving subsidies was frowned upon by the Reagan administration, while at the same time the strong dollar resulted in declines in exports. In the 1990s, the organization reinvented itself.

In summary, Becker and McClenahan highlight the important role that the Ex-Im has played in promoting American exports and in serving the interests of U.S. foreign...