The Export-Import Bank and gold ownership

The US Export-Import Bank was established by executive order on February 2nd 1934, 85 years ago today. It provides financing to enable the export of goods and services in circumstances where the political and commercial risks of a deal deter commercial lenders. In the past it has provided funding for the Pan-American Highway that links Alaska to Chile, and for the Burma Road that enabled supplies to be sent from Burma to China while bypassing Japanese forces.

It has been criticized for excessive support to some corporations, notably Boeing. In 2007 and 2008, 65% of Exim’s loan guarantees were to enable foreigners to buy Boeing aircraft, and in 2012 it was 85%. Critics have alleged that this acts to raise the price of new planes, and it has been seen as a form of subsidy to the US domestic air industry. Certainly, supporters of competition and free markets have long been strident opponents of the Bank.

My own involvement with it was modest. In 1974, when I worked for the 12-strong Republican Study Committee that did research for fairly conservative members of Congress and senators, the supporters of Exim Bank did not have the votes to push through Congress a renewal of its funding. The Democrats had the clever idea of tacking an addendum onto the appropriations bill to legalize the private ownership of gold for the first time since 1933, something the centre-right in the US had long campaigned for. They hoped this would tempt enough conservatives to support the joint bill.

The group leader called us together and asked if we should go for it. We all agreed, and swung just enough support to see it through. It passed, and President Ford signed it into law. Exim Bank had its funding renewed for another year, and Americans celebrated now being able to own gold legally, and have a hedge against future federal inflation. Exim today still has its troubles and its critics, and Americans can still own gold.