Mr. MILLER. On the question of shipping war materials, I just understood you to say that you would not lend money to ship munitions. Mr. JONES. We would not finance that.

Mr. MILLER. Does not that seem contrary to the position that this Government took during the special session of Congress?

Mr. JONES. On the neutrality question? I would think so.

Mr. MILLER. It seems inconsistent to me. The special session of Congress certainly indicated-both in the Senate and in the House and in the legislation signed by the President-that this Government took the position that there was no difference between a shipment of wheat and a shipment of munitions. That being so, is it not inconsistent for our loaning agency or for the Government now to set up this distinction?

Mr. JONES. I think that was the cash-and-carry idea, was it not and applied to belligerents? That is, that they would buy in this country if they had the money.

Mr. MILLER. But they have to borrow the money.

Mr. JONES. That is the point. We have thought, and I have so stated before all the interested committees, that if Congress wants to lend any of this country's money for munitions, Congress itself should do it and not expect a loaning agency to do it.

Mr. MILLER. But has not Congress already declared that there is no difference between the shipping of munitions and the shipping of wheat?

Mr. JONES. On a cash-and-carry basis.

Mr. MILLER. Well, on any basis.

Mr. JONES. Well, that is the cash-and-carry idea, is it not? At least, that has been the discussion, as I have understood it.

Mr. MILLER. I think the members of the committee will bear me out on this, that during the debate the whole thought of Congress seemed to be that there was a difference between wheat and munitions. But by the vote of the majority of the House and Senate, I take it, that it was the position of our Government that there was no difference, that they were both in essence war materials. I cannot see any reason for making any distinction between loaning money to Finland in this case, knowing that they are going to buy wheat or knowing that they are going to buy munitions; would it not be in line with the vote of the Congress in the special session to give Finland $20,000,000 and say to them, "We do not care whether you use that credit with some aircraft company or with the Colt Firearms Co. or the Winchester Co. or what-not?"

Mr. JONES. We have no objection, if Congress wants to tell us to do it that way.

Mr. MILLER. Has not Congress told you?

Mr. JONES. I do not think so. This bill does not so provide. Mr. MILLER. This bill does not provide that, but what I am getting at is that if we pass this bill, are we not being inconsistent with the action taken at the special session of Congress?

Mr. JONES. That would be, I suppose, if you wanted to disregard the cash-and-carry idea.

Mr. MILLER. We would not be disregarding the cash-and-carry idea. We would lend the money to Finland and they would pay cash for whatever they got here.

Mr. JONES. But we lend money for the purchase of certain things in this country. We do not lend them dollars, we lend them things. Mr. MILLER. We extend them credit.

Mr. JONES. Yes.

Mr. MILLER. And then we say to them, "You cannot use this for munitions."

Mr. MILLER. You see the point that I am making.

Mr. BARRY. Is there not this difference? Finland technically is not at war, just as China and Japan are not at war.

Mr. MILLER. Does not the whole discussion go back to the fact that this is all a subterfuge and that we are kidding ourselves? As reasonable men, we know that there is a war going on, and for reasonable men, sitting around a table, to draw a distinction as to whether there has been a declaration of war or not, seems to me to mean that we are just trying to kid ourselves. I am not trying to kid myself one bit. If we lend $20,000,000 to Finland, I maintain that we are unneutral. I am willing to do it under the existing circumstances, but I am not going to try to ease my conscience by saying that I do not know there is a war going on because there has not been war declared.

If I may use Mr. Jones as an example, in his private banking business and in his Government banking, he takes advantage of all the information he can get. If a man's reputation in his community is not good, Mr. Jones does not care whether he is actually adjudged a bankrupt or anything else. If he knows he is no good, he will not get the loan. But if we want to be honest with ourselves, and with all the countries of the world, we will say that Finland and Russia are at war.

Mr. BARRY. Based on Mr. Jones' statement, this is going to be a good loan. I am taking Mr. Jones' word for it.

Mr. MILLER. I am just talking about the violation of neutrality, that is all.

Mr. BARRY. My point was directed at the neutrality discussion. We had the situation then existing between Japan and China, and the Neutrality Act did not apply to those countries. The point you raise is whether you can take care of the situation you have in mind.

As a matter of fact, I think we voted on the same side on the neutrality bill, as far as that is concerned.

Mr. MILLER. I think we are just adopting a subterfuge to say that they are not at war.

Mr. BROWN. Mr. Jones, is the general purpose of this bill to stimulate the export business of this country?

Mr. JONES. Yes, sir.

Mr. MILLER. Mr. Chairman, I had just two brief questions and I got side-tracked; if I may ask them at this time?

Mr. WILLIAMS. Proceed.

Mr. MILLER. Would it simply your work if we passed this bill with no reference to Finland, and then the Congress passed a concurrent resolution authorizing you to loan $20,000,000 to Finland. Mr. JONES. I did not get that question.

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Mr. MILLER. Would you prefer that this bill pass increasing the capital $100,000,000 and then, if the Congress desires to aid Finland, for them to pass a concurrent resolution authorizing you to loan $20,000,000 specifically to Finland?

Mr. JONES. I think this bill should be passed if we want to continue to aid our export-import business. So far as the question of Finland is concerned, under this act you give enough discretion to us, you show us that the majority of the people in Congress would like us to lend the money to Finland.

Mr. MILLER. Did you ask it to be more specific than that? Mr. JONES. I asked it to be more specific, but did not get it. Mr. MILLER. Just one more question. During their appearance before the Ways and Means Committee, I talked to two manufacturers from my district that were interested in the business before that committee, and I was rather surprised to have both of them tell me that they did not dare to come down here and testify before a congressional committee, because they had R. F. C. loans. I would like to ask you, if you can set their mind at ease. I assume you can. Mr. JONES. I would be glad to.

Mr. MILLER. What I want is some assurance to those who have R. F. C. loans that you are not going to refuse them a loan, if you think the situation justifies it, just because they come down here and oppose_certain legislation that the administration may favor. Mr. JONES. It would have not effect on us whatever.

Mr. BARRY. Mr. Jones, I understand from Mr. Crawford's questions that the provisions of the so-called Johnson Act do not apply to the Export-Import Bank, and that therefore you could make loans to countries that were in default at the time that act was passed. such as Great Britain and France, is that right?

Mr. JONES. That is our understanding; yes, sir.

Mr. BARRY. Would you have any objection, or is there any good reason, why we should not have the Johnson Act apply to the loans made by the Export-Import Bank? Would that in any way curtail your activities?

Mr. JONES. It would not curtail our activity, no; would not affect it. Mr. BARRY. It would not bother you at all?

Mr. JONES. It would not bother us at all. I think it would delay the passage of this bill, if you want to pass it.

Mr. WILLIAMS. Mr. Barry.

Mr. BARRY. I am talking about amending this act rather than amending the Johnson Act.

Mr. JONES. That would have the effect of amending it, would it not? Mr. BARRY. How is that?

Mr. JONES. I think that would have the effect of amending the Johnson Act, would it not?

Mr. BARRY. I think the same result is accomplished.

Mr. WILLIAMS. The point is the Export-Import Bank is one of the Government lending agencies to which the Johnson Act does not apply. Now, the question is, if you adopted that as a matter of policy, you would have to amend the Johnson Act?

Mr. JONES. Yes.

Mr. WILLIAMS. That goes back to the question I asked in the beginning. I do not see why that should not be done. I can see no

reason why it should not be done; and, so far as that is concerned, I agree with Mr. Barry.

Mr. BARRY. What I had in mind, Mr. Chairman, is that possibly we might have some money or might want to lend some money to a Latin-American country that was in default, or that you might want to extend further credit, in our own interest.

Mr. JONES. No country down there owes the United States Gov

ernment.

Mr. BARRY. Yes.

Mr. JONES. None of these countries that are at war would come under that.

Mr. WILLIAMS. In any event you are not making any loans to any of these governments that are in default under the Johnson Act. Mr. JONES. No; and will not.

Mr. WILLIAMS. And will not?

Mr. JONES. And will not as long as I can help it.

Mr. SPENCE. Should not this also be considered, in making a loan to Finland, that she is in a little different position than any other country, because she has fulfilled her obligations in the repayment of $100,000,000? That was a large loan when you consider the size of that country.

Do you not think that would give here a preferred standing because she has met her obligation promptly.

Mr. JONES. Well, undoubtedly. And not only that, Finland has a favorable trade balance of about $20,000,000; exports over imports, favorable to her to the extent of about $20,000,000. She is not a rich country, but her people work and export more than they import. That enables them to pay.

Mr. SPENCE. Which would give the ordinary individual a good standing, a good credit standing.

Mr. JONES. Yes.

Mr. BARRY. Well, if we did lend money to Finland originally she should be grateful for it. I am, of course, appreciative of the fact that Finland has met her obligations to this country promptly, but ordinarily, I mean, Finland should be grateful to us for having made the loan, and her repayment does not put us under an obligation to her.

Mr. JONES. That is right.

Mr. MONRONEY. With the additional $10,000,000 commitment that has already been made, would there be required any more time, if this act is passed, before the money could be made available to Finland? Mr. JONES. For it to be made available?

Mr. MONRONEY. Yes; any further investigations into that phase of the case?

Mr. JONES. No.

Mr. GORE. You referred to the trade balance of $20,000,000. That was not the trade balance between Finland and the United States? Mr. JONES. No; but she has a favorable trade balance of that amount. Mr. GORE. You mean $20,000,000 favorable trade balance, but not with the United States?

Mr. JONES. No; I am talking about Finland's exports to all countries; they are something like $20,000,000 more than her imports.

Mr. GORE. That is what I understood.

Mr. JONES. That gives her a good credit position.

Mr. GORE. What is the relationship as between the two countries, the United States and Finland?

Mr. JONES. Finland imports from the United States about twothirds as much as she exports to us.

Mr. WILLIAMS. I think that concludes the hearings so far as the testimony of Mr. Jones is concerned, unless there are some requests for further testimony. You will be available for a few days, will you? Mr. JONES. Yes.

Mr. WILLIAMS. We expect to have someone from the State Department here tomorrow.

(Whereupon an adjournment was taken until 10:30 o'clock of the following day, Tuesday, February 20, 1940.)