COMMITTEE ON APPROPRIATIONS CLARENCE CANNON, Missouri, Chairman JOHN H. KERR, North Carolina ANTONIO M. FERNANDEZ, New Mexico E. H. HEDRICK, West Virginia PRINCE H. PRESTON, JR., Georgia OTTO E. PASSMAN, Louisiana LOUIS C. RABAUT, Michigan DANIEL J. FLOOD, Pennsylvania CHRISTOPHER C. MCGRATH, New York SIDNEY R. YATES, Illinois FOSTER FURCOLO, Massachusetts EDWARD H. KRAUSE, JR., Indiana JOHN TABER, New York RICHARD B. WIGGLESWORTH, Massachusetts CHARLES A. PLUMLEY, Vermont ALBERT J. ENGEL, Michigan KARL STEFAN, Nebraska FRANCIS CASE, South Dakota H. CARL ANDERSEN, Minnesota JOHN PHILLIPS, California ERRETT P. SCRIVNER, Kansas GEORGE Y. HARVEY, Clerk (II) 1 GOVERNMENT CORPORATIONS MONDAY, JANUARY 23, 1950. EXPORT-IMPORT BANK OF WASHINGTON WITNESSES HERBERT E. GASTON, CHAIRMAN AND PRESIDENT SIDNEY SHERWOOD, SECRETARY AND BUDGET OFFICER MICHAEL R. RING, HEAD ACCOUNTANT Mr. GARY. We will take up today the request for authorizations for the Export-Import Bank of Washington. GENERAL STATEMENT Mr. Gaston, would you like to make a general statement? METHOD OF FINANCING Mr. GARY. We will be glad to hear from you at this time. Mr. GASTON. We are presenting a request for an allowance of $980,000 for the administrative expenses of the bank for the fiscal year ending June 30, 1951. It is an allowance rather than a request for an appropriation, since the bank's funds are not appropriated out of the general fund, but come from funds of the United States available to the bank from its earnings, on which we make a net return to the Treasury. The request that we are presenting for $980,000 is somewhat less than 2 percent of the bank's current net earnings, which we estimate at more than $50,000,000 for the fiscal year 1951. EFFECT OF POINT IV PROGRAM ON EXPORT-IMPORT BANK ACTIVITIES The President's point 4 program, if enacted into law, should be in full operation in fiscal 1951. Legislation under that program, which is now pending before Congress, would grant to the Export-Import Bank authority to guarantee United States private capital invested in productive enterprises by contributing to economic development in foreign countries, against certain limited risks. Those risks would, as the legislation is now phrased, be the risk of inability to convert oreign currency into dollars, and the risk of expropriation of property without prompt and adequate compensation. The enactment of this legislation would be likely to have a significant effect upon both the bank's uncommitted lending authority and on its administrative expenses. However, the fact that the program is new indicates that it will be experimental in its early application. In fact, it is our intention-that is, the intention of the present Boardto proceed in an experimental way in the application of the program. UTHOR UNCOMMITTED AMOUNT OF LENDING AUTHORITY Consequently, we have made no attempt in presenting this budget to indicate whether or not the uncommitted lending authority, which was $889,000,000 as of December 31 last, will be sufficient to care both for the bank's lending and guaranty operations. It should be said, in that connection, that as the present law is phrased, a guaranty would be the equivalent of a loan so far as pledging our uncommitted lending authority is concerned. If we were to guarantee $1,000,000 for conversion and against expropriation, that would mean that we would reduce our uncommitted lending authority by just that amount, namely, $1,000,000. We have no percentage arrangement in the law for an actuarial reduced liability. Nor has the bank made any attempt in its administrative budget for 1951 to estimate the increased number of personnel which might be required to administer a guaranty program if the authority to administer it is vested in the bank. Mr. GARY. Then you have not anticipated the adoption of the President's point 4 program in your budget? Mr. GASTON. It is very difficult to answer that question. I would say that generally the answer is "No." However, we have provided in the budget for some expansion of our force, which we think will be necessary, whether or not the point 4 program is adopted. Generally speaking, the answer is "No." However, the Board of Directors, after thorough consideration of the possible potential total of new loans in 1951, estimate that $607,000,000 of its lending authority will remain uncommitted as of June 30, 1951. That is a reduction of $282,000,000 from the present amount. If the guaranty program is operative in that year, this figure probably would be substantially reduced. That is to say, the figure of uncommitted funds at the end of 1951 will be substantially reduced. RESERVE FOR EMERGENCIES As indicated in its budget request for 1950, the Board believes that some $350,000,000 should be reserved for unforeseeable needs. That is not a fixed static figure, but certainly we have to have some reserve for emergencies. OUTSTANDING LOANS Loans outstanding, distributed among 40 foreign countries, now total approximately $2,250,000,000. Since the bank was established in 1934, loan authorizations have totaled more than $4,500,000,000. Loan disbursements in 1951; that is, disbursements, as distinguished from commitments, are estimated at $263,000,000, and loan repayments and interest should total approximately $248,000,000. The bank has entered into a period where a significant portion of the funds for new loans is provided by repayments and interest earnings. This situation places the bank's operations more nearly on a revolving basis. The net effect is to reduce materially the bank's draw or draft on the Government budget. |