I have nothing further to say by way of prepared statement, Mr. Chairman.

The CHAIRMAN. There has been a feeling that the Export-Import Bank should not secure money direct from the Treasury because of the debt limit, and that they should not secure money from private sources or commercial banks because it would interfere with their financing of Government bonds, so the Export-Import Bank has been in the middle?

Mr. MAFFRY. That is right.

The CHAIRMAN. And as a result, the American exporter is suffering?

Mr. MAFFRY. That is right.

The CHAIRMAN. Those are about the facts. Maybe they are not stated quite correctly, but they are almost 100 percent correct.

In the meantime the foreign seller, particularly in Western Europe and Japan, has been actively securing much of the market that American exporters could have secured had they been able to give longer terms.

Mr. MAFFRY. Competition is increasingly severe.

The CHAIRMAN. Because Western Europe at the moment, and Japan, are really in production and are on the march. They are making goods. We should always remember in the United States that there is nothing we can make here that they do not make in Europe. If they cannot buy it in the United States, they will buy it in Europe, if they need it and want it. It is just a question as to whether or not we want the export business. If we do want it, I think we are going to have to change some of our habits.

Mr. MAFFRY. May I enter a reservation, Mr. Chairman? I think we agree with all of what you have just said. It is possible, however, that export financing on a competitive basis can get out of hand. The CHAIRMAN. There is no question about that.

Mr. MAFFRY. I would not want it understood that we are for the unsound extension of credit. We do not believe in the unsound extension of credit even for good purposes

The CHAIRMAN. We certainly do not want to get into competition as to who is to give the longer terms and sell at the lowest price, because that will wreck everybody.

Also, by virtue of this fact-which I discovered many, many years ago that it is pretty hard to sell equal merchandise to someone at a higher price and shorter terms than the other fellow is offering. You may proceed.

Mr. MAFFRY. I have nothing further.

The CHAIRMAN. Thank you very much. You have been very helpful.

We will call the gentleman from Houston, Mr. Crockard, assistant vice president of the Second National Bank. Then we will call Mr. Faulk, vice president of the Merchants National Bank of Mobile.

Senator ROBERTSON. Banks in Houston go by the name of individuals. What name does this bank go by?

STATEMENT OF MERLE R. CROCKARD, ASSISTANT VICE PRESIDENT, THE SECOND NATIONAL BANK OF HOUSTON, TEX.

Mr. CROCKARD. I suppose you would say the Anderson Foundation, if you are speaking of the ownership of the bank.

Senator ROBERTSON. Clayton-Anderson?

Mr. CROCKARD. We do not tie ourselves to individuals-Judge Elkins, Jesse Jones, or Glenn McCarthy.

Senator ROBERTSON. I know a little something about Houston, and I know certain figures dominate in the banking industry down there. Your group is the Anderson group?

Mr. CROCKARD. Yes, sir.

Mr. Chairman, my name is Merle R. Crockard. I am assistant vice president of the Second National Bank of Houston, Tex., and assistant manager of its foreign department, a relatively young but growing part of the bank.

The opportunity of appearing before your committee is sincerely appreciated. It is approached with considerable humility in view of the august company among which I find myself in today's list of witnesses.

I would like to be able to expound on the many aspects of the Export-Import Bank and the International Bank, but I am afraid my opinions on that would be rather lost when compared to the opinions that we have received from bankers who have had a great deal of experience with it and know more about it.

Our experience with the bank has been confined to the opening of letters of credit under their credits covering the exportation of raw cotton to certain European and South American countries.

We have been extremely happy with the arrangement we have had with the Export-Import Bank, and the procedure. The procedure set up by them has been easily followed, and we have had no difficulty in handling any of these transactions, and hope likewise that our handling of them has been in accordance with their own standards. Senator MAYBANK. They are all short-term loans; are they not? Mr. CROCKARD. Up to 18 months.

Senator ROBERTSON. Have they been guaranteed loans?

Mr. CROCKARD. Yes, sir. We have been guaranteed by the bank. The CHAIRMAN. You made primarily cotton loans?

Mr. CROCKARD. Yes, sir; as a matter of fact, entirely cotton at this point.

The CHAIRMAN. How much would you say it has amounted to in dollars and cents?

Mr. CROCKARD. From the Export-Import Bank it has been a very small amount. I think slightly over $1 million. We have participated in the FOA program to a much greater extent.

We do feel that the Export-Import Bank cotton credits have been most helpful, both to the cotton textile industry abroad and the raw cotton shippers in this country who have long looked on them with favor.

Senator MAYBANK. If you have only had $1 million-being a former cotton man myself—that is not much business.

Mr. CROCKARD. When I said $1 million, I was speaking only of the amount we got from the Export-Import Bank.

Senator MAYBANK. That is nothing in cotton.

Mr. CROCKARD. That is right. As you will determine from looking at a schedule of where these loans are placed, by far the greater part of the loans have been placed with the banks in the financial centerSenator MAYBANK. The Guaranty Trust Co. or the National City Bank? You handled it through one of the New York banks? Mr. CROCKARD. No, sir.

42493-54-pt. 1—13

Senator MAYBANK. How do you handle yours?

Mr. CROCKARD. We handle ours the same as the National City Bank handles theirs. We have our direct correspondents throughout the world. We feel there will be a need and place for more of these letters in the future.

Senator MAYBANK. In other words, you believe that the private banking industry, yours in the Southwest and the big banks in New York are taking care of what is necessary.

Mr. CROCKARD. We are certainly interested in handling more of that business. The foreign bank probably has a bigger hand in placing credits, that they go to the larger banks where they have large credit lines. In other words, a bank in France which might have occasion to participate in this program, would want to give the banks in New York which have given them longer credit lines a part as a participating buyer. Our bank is small in size.

Senator ROBERTSON. What is your capitalization?

Mr. CROCKARD. $15 million; $7 million capital and $7%1⁄2 million surplus. So you see we are a small bank.

But we have a department that is growing and I think compares favorably with some of the larger banks in the East.

Along this line, the Export-Import Bank participation that we have been able to have has benefited us not only from the income derived from the handling of such transactions, but probably more important, the opportunity to make ourselves known to foreign bank with which we come in contact in the course of these operations.

Senator MAYBANK. Where did you finance this $1 million through the Export-Import Bank to, Europe?

Mr. CROCKARD. To Europe and South America.

Senator MAYBANK. I notice that most of the Export-Import Bank loans are to Japan and the Orient. Do you do any business out there now?

Mr. CROCKARD. We have not participated. There have been large credits to Japan, but we have not participated.

Senator MAYBANK. Private banks in Houston do not handle that? Mr. CROCKARD. No. We are anxious to participate. We handle the financing of cotton to Japan in millions of dollars under other than the Export-Import Bank.

Senator MAYBANK. That was mostly this cotton that we shipped over there under commodity credit. That amounted to $1,250 million. You say you handled some of that. How about some of Anderson's cotton or some of the others?

Mr. CROCKARD. We handle shipments of the cotton companies under private financing arrangements that are made in Japan. Senator MAYBANK. You deal direct in Tokyo?

Mr. CROCKARD. Yes, sir. We have direct connections with banks in Japan, who have accounts on our books. It is simply an occasion where we make payments against the balance they have on our books. Senator MAYBANK. The Southern Cotton Co. used to be the largest shipper to Japan. Is it shipping any cotton now?

Mr. CROCKARD. I do not think so. I do not recall seeing that name. Senator MAYBANK. Some of the people at Houston said they were shipping some now.

Mr. CROCKARD. I do not know the name.

Senator MAYBANK. Their headquarters used to be in Dallas.
Mr. CROCKARD. They may very well be.

We believe we have made a reasonable start in organizing our department. We feel we would like to have an opportunity to participate more in the Export-Import Bank credits.

While recognizing that the foreign banks normally designate the participating United States banks, we urge that the Export-Import Bank give whatever assistance it can in enabling us to receive a more appropriate share in the operation of its cotton credits. The old and traditional courses impose obstacles to the new and growing institutions. We are fully aware that it would not be practicable for private banking operations under Export-Import Bank credits to be spread too widely, but we believe there is a place for those banks outside of New York City which are fully qualified and strategically located to have a greater share in those cotton credits.

Realizing that there are undoubtedly a number of banks throughout the United States who have a desire to increase their participation in these operations, we hope our request will not fall into the category of another bank looking for additional business, and we are confident that this will not be the case if full consideration is given to the following:

(1) By far, the greater portion of cotton export is shipped from gulf ports and a large number of cotton firms have indicated their desire to receive letters of credit payable nearer the point of shipment.

(2) While our bank is small, we compare favorably with a number of the larger banks insofar as foreign trade is concerned. We are certain that our past record will reflect our capacity and ability to handle this business in an increased volume if given the opportunity. Someone asked the question as to our capitalization. While our capitalization is only $15 million, we have letters of credit and acceptances outstanding somewhere near that same amount, $15 million, which you will note from examining statements of other banks is a fairly good-sized operation.

Senator SPARKMAN. Would that be your participation in ExportImport Bank loans and also in the FOA operation?

Mr. CROCKARD. Yes, sir. I mentioned the figure of $15 million. That figure includes some of those operations but the principal part of that amount was handled under private financing.

Senator SPARKMAN. Your own financing, independent of Government agencies?

Mr. CROCKARD. Yes, sir. Over a period of 3 or 4 years we have handled, I think, $16 million of cotton credits under the FOA program.

In closing I would simply like to say that we appreciate the opportunity we have had to share in the program up to this point, and pledge our cooperation and support to the Export-Import Bank in any work they are doing and will do in the future.

The CHAIRMAN. Thank you very much. We appreciate your testimony. We may want you to come back later.

We will make your letter of October 20, 1953, in reply to the questionnaire a part of the record.

(The material referred to follows:)

Hon. HOMER E. CAPEHART,

THE SECOND NATIONAL BANK,
Houston, Tex., October 20, 1953.

The United States Senate, Washington, D. C.

DEAR SIR: In answer to your letter of September 10, we are listing below our comments concerning the various points brought out in your questionnaire.

1. The cotton textile industry of various countries abroad has been assisted greatly in financing of their imports of United States raw cotton. Clients of our bank who are in the cotton export business have in turn benefited from this ficilitation of the cotton trade.

2. We do not feel that the Export-Import Bank has competed with private capital in this area because the investment of private funds in projects abroad undoubtedly would not be undertaken in the absence of credit assistance by our Government.

3. Business of our bank has not suffered because of the Export-Import Bank credits, and as a matter of fact, we have benefited by issuing letters of credit under the protection of the credits. It has also enabled us to make contacts with other banks and has stimulated other bank business with them to some extent.

4. It is our understanding that the commercial banks engaged in business under an agreement with the Export-Import Bank have been largely those located in New York City and to some extent in San Francisco and Chicago. In some instances we have been designated as one of the United States commercial banks through which these credits are operated and are desirous of increasing our participation in such credits, especially those covering cotton, which, of course, is shipped from this part of the country.

5. While we do not classify a 6-month loan as a term loan, in most instances we do discourage loans extending over a period of more than 1 year.

6. No. The only financing of shipments to foreign countries payable over term periods would be under the Export-Import credits providing for our negotiation of up to 18 months date drafts but on which we are reimbursed by the ExportImport Bank within a period of 1 month or less.

7. Commissions paid us by foreign banks on these transactions have been in line with other operations handled in our foreign department. The rate of interest paid by the Export-Import Bank is on the low side, however, and while we have been willing to handle this business at this low rate, we feel that the rate should be increased.

8. No, we have not.

9. We feel that the Export-Import Bank's loaning facilities are essential in the interest of international trade. Despite our feeling that the Government agency should not compete with private industry, we are highly in favor of the continuation of this bank since we feel that they have steadfastly held to a policy of supplementing and encouraging, but not competing with, private capital.

10. We are of the opinion that the Export-Import Bank has facilitated the expansion of international trade in that it has granted loans which have bolstered the economy of many of those countries who are friendly to us. We have long since decided that it is to our advantage to assist in the strengthening of these countries and a program which permits them to help themselves is certainly more advantageous to us than our free aid programs.

We hope that the above will be of some assistance to you and assure you of our desire to cooperate in every way possible.

Yours very truly,

M. R. CROCKARD, Assistant Vice President.

You may

The CHAIRMAN. Our next witness will be Mr. E. W. Faulk, senior vice president, Merchants National Bank of Mobile. proceed, Mr. Faulk, in your own way.

STATEMENT OF E. W. FAULK, SENIOR VICE PRESIDENT,
MERCHANTS NATIONAL BANK, MOBILE, ALA.

Mr. FAULK. Thank you, Mr. Chairman. My name is E. W. Faulk. I am senior vice president of the Merchants National Bank of Mobile. In that capacity I supervise the operation of our foreign department.

I sent on November 16, 1953, in answer to the inquiry of the general counsel of the committee, a letter in answer to the various questions which he had raised, and have given our agreement to that being placed in the record.