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of our bank. We refer, in particular, to the $125 million loan made by the bank to a consortium of Argentine banks in 1950 and the $300 million loan granted by the bank in 1953 to the Banco do Brasil, S. A., Rio de Janeiro.

2. No. 3. No.

4. We have had the pleasure in the past of participating in loans granted by the Export-Import Bank, and on several occa. ions have issued letters of credit under the guaranty of the bank. We are interested in considering any other transactions of this type or others which the bank might offer to us.

5. With regard to term loans where repayment exceeds a term of 6 months, our present policy is to give favorable consideration to such loans where it is obvious that a loan on shorter terms does not fit the case. In other words, we prefer to grant such loans on a term basis rather than, say, on a 90-day basis, which would be renewed from time to time at rates probably lower than those applicable to term loans.

6. No.

7. Yes.

8. Yes, on a few occasions with entirely satisfactory experience.

9. Yes.

10. We very definitely feel that the Export-Import Bank has facilitated the expansion of international trade in the past and that there is very real need for the continuance of such a Government agency. It seems to us that an additional service which the Export-Import Bank might offer would be "convertibility insurance." We believe that many desirable transactions are not consummated because of the unwillingness on the part of exporters and banks to assume the risk that dollar exchange will not be available. We realize that FOA offers such insurance for long-term investments but, so far as we know, there is no method available at present to insure convertibility for current short-term transactions. It is a pleasure for us to try to assist you in your investigation and we trust that you will feel free to call on us if we can supply any further information.

Very truly yours,

H. A. FREY, Jr., Assistant Vice President.

The CHAIRMAN. In other words, your position is, whether or not a customer, even though he may have the currency of his own country and be willing to pay on the due date of the note or obligation, if his country does not have dollars, he cannot pay you?

Mr. FREY. That was the position of Brazil.

The CHAIRMAN. You think that peril is one that ought to be undertaken by some governmental agency such as the Export-Import Bank? Mr. FREY. Yes. It may not need to be a continuing policy, but certainly for the time being.

The CHAIRMAN. You have been listening all day, have you not? Mr. FREY. I did not get here until this afternoon.

The CHAIRMAN. Do you have any comments?

Mr. FREY. No, sir, I do not think so.

The CHAIRMAN. Do you disagree or agree?

Mr. FREY. I agree with what I have heard. I think the commercial banks, as a whole, are pretty much in agreement on the bank in the past, and perhaps what it should do in the future.

The CHAIRMAN. I gather this group of witnesses today are for the continuation of the bank.

Let me say that the purpose of this study is not to eliminate the bank. It is a study to find out what we ought to do in respect to credit and finance in this whole matter of international trade. I still say that you bankers have the big end of it; that is, the matter of financing it, particularly financing it on longer terms, making the dollars of these foreign countries go further.

Mr. FREY. I agree with that.

The CHAIRMAN. If they can find the answer to that, set up finance companies in their own country to sell on the installment plan, sell

automobiles and everything that we sell here on 10, 15, or 20 percent down, long-terms, learn how to sell securities to their people in private enterprise, as we have done in this country for years-they are beginning to do it in some of these countries, and I am glad to see it-they will get there all right.

It is just a question of whether or not we are going to get our share when they do. I do not think there is any question that they will become industrialized and will increase their standard of living.

Thank you very much. We appreciate your statement.

Mr. Maffry, will you take the stand one minute? You were with the Export-Import Bank?

STATEMENT OF AUGUST MAFFRY, VICE PRESIDENT, IRVING TRUST CO., NEW YORK, N. Y.-Resumed

Mr. MAFFRY. Yes, sir.

The CHAIRMAN. As vice president, I believe, a few years ago?
Mr. MAFFRY. Yes, sir.

The CHAIRMAN. I wanted to ask you this question: What, in your opinion, did Reorganization Plan No. 5 do, or what effect did it have upon the operation of the Export-Import Bank, and particularly, I am thinking in terms of their guaranteeing exporter loans?

Mr. MAFFRY. On this point, I should like to give you a personal opinion.

The CHAIRMAN. Yes, that is all right.

Mr. MAFFRY. Whereas this morning, when I spoke, I was giving you the considered opinions of my institution.

The CHAIRMAN. We understand that.

Mr. MAFFRY. On this point, it seems to me that the principal effect of Reorganization Plan No. 5 was to impair the independence and autonomy of the Export-Import Bank and to make it more difficult, even more difficult than it has been in the past, for the bank to function effectively and efficiently.

May I specify? I am speaking, now, particularly about exporter loans, loans made by the bank on application of and with the participation of individual exporters for their exclusive benefit.

I do not see how the bank can consider such applications effectively, efficiently, or in a reasonable period of time, if every single transaction has to go before a Cabinet committee. Í fully appreciate that the general policies under which the Export-Import Bank works must be defined in the first instance by statute, as they have been. I appreciate that other broad policies under which the bank operates must be fixed by a committee of Cabinet level, largely because the bank is, after all, working with public funds and one must be certain that it ority, works within proper limitations.

But it seems to me there is a large class of transactions on which the bank ought to be able to pass, to say "Yes" or "No" on its own authority without reference in each instance to a Cabinet committee.

The effect of this is to make it extremely difficult and extremely time consuming to get a decision from the bank. This is no fault of the bank. The bank has an extremely competent management, in my opinion. It has an extremely competent staff, which is perfectly capable of passing on its own authority on many of the applicatiors that come to it. This is my opinion, sir.

The CHAIRMAN. I was opposed to Reorganization Plan No. 5. I was opposed to the plan that took the Board of Directors away from the RFC. I was opposed to the plan that took the Board of Directors away from the Export-Import Bank and put it in the hands of one director. I just cannot conceive of a bank or a corporation not having a board of directors.

Mr. MAFFRY. Nor can I.

The CHAIRMAN. I do not know why the Export-Import Bank, which has $2,800,000,000 in loans outstanding, should be in that category. I always felt they should have a good strong board of directors. Just as I felt before we liquidated the RFC, it ought to have had a good, strong board of directors instead of being a one-man operation. Nevertheless, it does have a one-man operation.

Since Congress did not object to Reorganization Plan No. 5, we have a Director and Deputy Director. Even under that plan, it could work properly, I presume, if the council would give them sufficient latitude. I do not know whether they have or have not. We will find out before we get through with our study. It is one of the things we are going into. We will find out just how much time is wasted and lost, just how much they have held back the operations of the ExportImport Bank.

Mr. MAFFRY. This is the principal criticism that one hears of the bank.

The CHAIRMAN. The slowness in operation?

Mr. MAFFRY. Yes. I rarely hear the bank criticized because it says "No" to an application.

The CHAIRMAN. It is because it says "Maybe," or "Yes"?

Mr. MAFFRY. They can't tell you, because there are six other departments of the Government which must be consulted.

The CHAIRMAN. It takes too long to come to a decision?

Mr. MAFFRY. That is right.

The CHAIRMAN. I have heard that, too. We are going to try to find out why that condition exists before we get through with our study.

Thank you very much, gentlemen. We appreciate your being here today. We may want to call you back later.

We have a big problem to solve, to try to make this whole business better. Thank you very much. We will recess now until 10 o'clock tomorrow morning, when we will have 8 or 9 witnesses.

(Whereupon, at 3:17 p. m., the committee recessed, to reconvene at 10 a. m., Friday, January 29, 1954.)

STUDY OF EXPORT-IMPORT BANK AND WORLD BANK

FRIDAY, JANUARY 29, 1954

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met, pursuant to call, at 10:05 a. m., in room 301, Senate Office Building, Senator Wallace F. Bennett, presiding. Present: Senators Bennett, Bush, Payne, and Maybank.

Also present: Henry F. Holthusen, general counsel; H. K. Cuthbertson, Jr., Raymonde Alexis Clarke, and Donald L. Rogers, assistant counsel.

Senator BENNETT. The committee will come to order. We have a long list of witnesses. We will try to expedite them. Our first witness is Mr. Herbert F. Boettler, vice president of the First National Bank of St. Louis, Mo. Mr. Boettler, will you please identify yourself for the record?

STATEMENT OF HERBERT F. BOETTLER, VICE PRESIDENT, FIRST NATIONAL BANK, ST. LOUIS, MO.

Mr. BOETTLER. My name is Herbert F. Boettler. I am vice president and chairman of the loan committee of the First National Bank of St. Louis.

Senator BENNETT. Do you have a prepared statement?

Mr. BOETTLER. No; I do not. I came here in respect to a reply that I made to a questionnaire that was sent to me last fall.

Senator BENNETT. Without objection, your letter of September 16, 1953, in reply to the questionnaire will be made a part of the record. (The material referred to follows:)

Hon. HOMER E. CAPEHART,

FIRST NATIONAL BANK,

St. Louis 2, Mo., September 16, 1953.

United States Senate, Washington, D. C.

DEAR SENATOR CAPEHART: We are pleased to reply to your letter of September 10 concerning the study your committee is making of the Export-Import Bank. Below we list our replies to your questions:

1. Has the Export-Import Bank been of assistance to clients of your bank? Answer. We know of only one direct case where the Export-Import Bank has been of assistance to clients of our bank, and that was in connection with its approximately $300 million loan to Brazil for the purpose of bailing out American firms that had been too liberal in their sales and credit policies to that country in the past. While this action assisted our clients by reimbursing them with taxpayers' money, it was of no assistance currently in aiding international trade, and it probably set a bad precedent which may lead to the conclusion that further lax business and credit policies in the international field will be corrected by some governmental bounty.

2. Has it competed with private capital in your area? Answer. No.

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