Export-Import Bank of the United States history

Commonly known as the Eximbank, the Export-Import Bank was created in 1934 by the Roosevelt administration to promote trade with the United States. Specifically, the bank is designed to promote exports by offering favorable financial terms to importers of American goods. It is managed by a five-person board of directors, which is appointed by the president and confirmed by the Senate.

The Eximbank was created during the Great Depression in order to stimulate trade through exports. After the passage of the Hawley-Smoot tariff in 1930, world economic conditions worsened, and the creation of the bank was seen as a way of improving trade and returning the international economy to some order while promoting American exports at the same time. The bank normally guarantees financing to a buyer of American products by offering to guarantee the transaction to the American exporters’ bank. These guarantees are known as export credits and form a significant part of American trade. All developed countries have such export guarantee operations falling under a variety of names. Usually, the terms and conditions of the credits are subject to international convention, specifying the length of loans and amounts extended.

The activities of the Eximbank are also combined with other forms of export guarantees in order to generate export activity. Export insurance is provided by the Foreign Credit Insurance Association, which guarantees exports of American sellers. The combination of the two, along with other forms of credits and guarantees, is part of American trade policy and can significantly affect the balance of payments.

The Eximbank has come under severe criticism, especially during the 1980s when the United States ran large trade imbalances. Many studies showed that the foreign buyers of American goods supported by the bank were the customers of a handful of the largest manufacturing exporters, usually those that produced big-ticket items that would provide the largest foreign orders for American producers. Despite the criticism, the bank remains the premier government agency designed to promote trade and competes with similar institutions in other industrialized countries, all designed to stimulate their home country’s exports.

See also FOREIGN CORRUPT PRACTICES ACT; HAWLEY-SMOOT TARIFF ACT.

Further reading

• Adams, Frederick C. Economic Diplomacy: The Export- Import Bank and American Foreign Policy 1934–1939. Columbia: University of Missouri Press, 1976. 
• Becker, William H., and William McClenahan. The Market, the State, and the Export-Import Bank of the United States, 1934–2000. New York: Cambridge University Press, 2003. 
• Feinberg, Richard E. Subsidizing Success: The Export- Import Bank in the United States Economy. New York: Cambridge University Press, 1981.