Export-Import Bank of the United States
The Export-Import Bank of the United States, established in 1934 by President Franklin D. Roosevelt's Executive Order 6581 as part of the New Deal, is a government agency designed to facilitate international trade for U.S. companies. Its primary function is to provide loans and loan guarantees that might be deemed too risky by private financial institutions, thereby enhancing the ability of American exporters to compete globally. The bank aims to level the playing field by matching the financial support offered to businesses by other countries, which has been crucial for U.S. firms looking to expand into international markets.
The bank's inaugural transaction involved a $3.8 million loan to Cuba, and over the years, it has funded various projects worldwide, including significant contributions to the reconstruction of Europe post-World War II. In 1945, it became an independent agency and was later renamed the Export-Import Bank of the United States in 1968. Since its inception, the bank claims to have supported U.S. exports exceeding $400 billion, with a focus on aiding small businesses in accessing markets in developing nations. The bank's efforts are seen as vital in helping the U.S. economy recover from historical economic challenges while promoting international trade.
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Export-Import Bank of the United States
Identification Official export credit agency of the U.S. government
Date Established on February 2, 1934
During the early 1930’s, the Export-Import Bank was able to extend credit to exporters that private banks could not because of their weakened positions during the Great Depression. Some critics argue that the bank contributed to prolonging the Depression by interfering with the free market.
By signing Executive Order 6581 on February 2, 1934, President Franklin D. Roosevelt created the Export-Import Bank of Washington, a new government agency, as part of the New Deal. Its purpose was to make loans and loan guarantees that might be too risky for private banks to offer, making it easier for U.S. companies to trade with other countries. The bank also supported American exporters by attempting to match the levels of financial support that international trade partners gave their own citizens, enabling American companies to match or beat the prices of their competitors. This allowed firms to expand their markets internationally—an important step in helping the U.S. economy recover from the Great Depression.
The bank’s first transaction was a $3.8 million loan to Cuba so it could buy silver ingots from the United States. In 1938, $22 million was loaned to China to complete the Burma Road. Since the 1930’s, the bank has loaned money to other nations to build roads and industrial plants, helped fund the reconstruction of Europe after World War II, and has loaned money to troubled nations to help them purchase American goods. In 1945, Congress reconfigured the bank as an independent agency, the Export-Import Bank. Its name was changed again in 1968, to the Export-Import Bank of the United States.
Impact
According to the bank’s own figures, the Export-Import Bank has supported U.S. exports with a value of more than $400 billion since its founding. Most of its support has gone to help American small businesses reach markets in developing nations.
Bibliography
Becker, William H., and William M. McClenahan. The Market, the State, and the Export-Import Bank of the United States, 1934-2000. New York: Cambridge University Press, 2003.
Higgs, Robert. Against Leviathan: Government Power and a Free Society. Oakland, Calif.: Independent Institute, 2004.
U.S. Export-Import Bank Handbook. Washington, D.C.: International Business, 2004.