STATEMENT OF ELJA VIHMA, REPRESENTATIVE FOR THE FINNISH-AMERICAN TRADING CORP., NEW YORK, N. Y.

Mr. VIHMA. I am just prepared to answer your questions, Mr. Chairman. I only want to express my satisfaction with how our loan was handled by the Export-Import Bank, and also to at least inform you that this loan had a very good effect on the Finnish economy after the Second World War. It helped our possibilities through the increase of our exports to foreign countries and also this country.

Senator BENNETT. Finland has only had one loan?
Mr. VIHMA. Yes; $21⁄2 million.

Senator MAYBANK. Have you applied for more?
Mr. VIHMA. I am not sure.

I think we have also applied for more.

Senator BENNETT. The Finnish-American Trading Corp. has had only one loan of $2 million?

Mr. VIHMA. That is right.

Senator BENNETT. But there have been other loans to the Republic of Finland amounting to about $125 million.

Senator MAYBANK. Thank you, Mr. Chairman.
Senator BENNETT. They were Government loans.

private company?

Mr. VIHMA. Yes.

Yours is to a

Senator BENNETT. This is the only private company loan. Do you remember if your loan was guaranteed by the Finnish Government? Mr. VIHMA. It was guaranteed by the Bank of Finland.

Senator BENNETT. Is that bank a part of the Finnish Government, the central bank?

Mr. VIHMA. Yes; the central bank.

Senator BENNETT. Have you been here before at these hearings? Mr. VIHMA. No.

Senator BENNETT. So you have not heard the testimony of the witnesses ahead of you?

Mr. VIHMA. No.

Senator BENNETT. There is no use, then, of asking your opinion as to the other testimony.

Senator MAYBANK. You said that the one loan you made was handled satisfactorily with the Export-Import Bank?

Mr. VIHMA. That is right.

Senator MAYBANK. Does the international bank lend much money to Finland?

Senator BENNETT. The International Bank for Reconstruction and Development.

Mr. VIHMA. I could not say.

Senator BENNETT. Senator Bush, do you have any questions?
Senator BUSH. No questions.

Senator BENNETT. Thank you very much, Mr. Vihma. At this point I should like to put in the record Mr. Vihma's response to the committee questionnaire, which letter was dated September 21, Thank you very much, Mr. Vihma.

(The material referred to follows:)

1953.

FINLAND HOUSE,

FINNISH-AMERICAN TRADING CORP.,
New York, September 21, 1953.

UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

GENTLEMEN: In reply to your letter of September 3 we hereby inform the following:

1. Finnish-American Trading Corp. obtained a loan of $21⁄2 million in 1947. 2. The bank always replied prompt and satisfactorily.

3. We applied for a loan from the bank.

4. Our application was granted and it was handled in a courteous and expeditious manner.

5. The credit was administered in an efficient manner.

6. No complaints.

7. The bank's activities certainly have facilitated the export-import trade. 8. The bank has developed trade between the United States and Finland. 9. No.

10. As we are only trading with Finland we have to limit our answer correspondingly.

The bank has facilitated the trade by granting our company a $21⁄2 million loan which was used for purchasing modern machinery from the United States for the industry of Finland in order to expand Finnish exports.

The bank could of course expand the trade in the future by investigating possibilities of new loans. This would be of extreme importance for Finland who is struggling to maintain her western markets.

I have nothing against appearing in person before your committee but as our experience is only limited to Finland we do not see how we could be of help for your investigation. Please also note that the undersigned is a citizen of Finland and maybe not allowed to testify before your committee.

Sincerely,

ELJA VIHMA, President. Senator BENNETT. The next witness will be Mr. Roberto Jaramaillo Ferro, general manager of the Empresa Siderurgica Nacional de Paz de Rio, Bogota, Colombia. I understand he is not here at the present

moment.

We will proceed to call Mr. Roberto Eisenmann, representing the El Panama Hotel, Republic of Panama.

STATEMENT OF ROBERTO EISENMANN, PRESIDENT, HOTELES INTERAMERICANOS, REPRESENTING THE EL PANAMA HOTEL, REPUBLIC OF PANAMA

Mr. EISENMANN. Mr. Chairman, I have a short statement to make. Senator BENNETT. Do you have a prepared statement, Mr. Eisen. mann?

Mr. EISENMANN. No, Mr. Chairman; I do not have a written state

ment.

Senator BENNETT. Will you identify yourself for the record?

Mr. EISENMANN. My name is Roberto Eisenmann. I am president of the Hoteles Interamericanos, which is the owner of the El Panama Hotel. I am going to be a little informal.

Senator BENNETT. Feel perfectly free to approach it in any way you please.

Mr. EISENMANN. I think the only fair way to bring out the problem of the El Panama Hotel and the assistance in financing which was given to it by the Export-Import Bank of Washington is to give you gentlemen a little better perspective of the Republic of Panama.

Panama is a country of approximately 800,000 inhabitants with a total government budget of about forty-million-odd dollars. Of this

budget, approximately 10 percent is derived by the government from its profits from gambling, including a lottery, the horse track, and so forth. A great deal of the rest of the money comes from the import duties on merchandise brought in, mostly from the United States.

I want to give you these few details to give you an idea of the size of the project of the El Panama Hotel compared to the rest of the country. It was about a $61⁄2-million project in all, of which the Export-Import Bank loaned us $2 million.

Naturally, as is necessary in these cases, we made every attempt to get the funds from other sources first. Unfortunately, hotels have a pretty bad name as far as concerns the ownership of first owners. We found difficulty in raising funds. We raised approximately $1 million locally in common stock. We raised $12 million from one of the Panama Government entities called the social security.

Then, as I say, we got $2 million from the Export-Import Bank. The country of Panama has a very strange setup with regard to its foreign exchange. This has also to do with the project that I am going to speak about. We are probably the only country in the world that never has had a favorable balance of trade. Our exports total approximately $11 million; our imports around 10 times that amount, or 10 times the amount of the exports from year to year. Naturally, the question comes up, How is it that the country continues to exist with a decent standard of living? That is caused by the geographical position of the Republic of Panama. It is at the crossroads of the world and has been called that for years.

Our invisible exports are what take up the slack, the difference between those two figures. I say this because after the last World War Panama found itself in a very, very difficult position. Its main source of getting outside currency was delinquent. The ships that were coming through were bringing fewer and fewer tourists, or transients, which is what they were at that time.

Senator BUSH. When was this?

Mr. EISENMANN. After the last World War when travvel by plane took over.

The people of Panama were extremely worried about this drying up of our resources of invisible exports. The Canal Zone was reducing its personnel. Money was not coming into the country. Several of us-the people of the country-who had some funds that they had made, decided to do something about it. So we got together and formed a private corporation, selling stock to all our friends to build up that business of tourism, which had been the greatest of Panama's industries. It was the only means outside of the smaller exports that we had which brought in foreign currency.

We organized the El Panama Hotel Co. and started work. I do not want to go into all the details of all the difficulties that were natural in that type of operation, but we finally got to the point where we opened our doors to the public in 1951. At that time we were in a very, very bad position financially due to increased prices of materials for finishing the hotel, building materials themselves, and so forth.

We found ourselves short to the tune of $12 million on the day of the opening of the hotel. Fortunately, we had public backing as far as getting materials, food, liquor and the rest of the things that are necessary to start an operation. We got most of them on credit.

At that time there were quite a few difficulties in trying to raise this extra $12 million which was due and payable at the opening of the

hotel. Finally, the problem was taken directly to the Government of Panama.

At that time the Assembly, as we call it, our Congress, unanimously approved a subsidy or a purchase of the subsidy clause which they had included in their contract.

They unanimously approved giving us a subsidy in cash of $1% million. They felt the people who had invested their money in Panama had done it with more of the thought of patriotism than the thought of making profits on their investment. That they deserved help. That the hotel was going to be definitely a source of income of foreign money. As I say, they approved it unanimously.

The $1 million was received and the hotel started to operate. I would say without any doubt whatever that the Hotel of Panama has proven both to Panama and the Export-Import Bank that the Government's guarantee on that loan was well placed, that the loan by the Export-Import Bank had done for Panama just what we had expected, hoped and promised it would.

I will just give you a few items that might be of interest. The payroll, to show you the effect of this new industry, is quite substantial. I say new because up to that time Panama had been a crossroadsand I mean it in just that way-people passed through Panama because it was a forced pass. People did not come to Panama to stay because we had nothing to offer. We had not developed our hotels. We had not developed our tourist interests due to the fact that we had no hotels and people did not come, and the rest of the attractions for tourists were not forthcoming.

Today I might say that we have definitely seen in the tourist season we fill the hotel, which to me is definite proof that tourists are coming to Panama to spend a week or more. That has naturally brought forth the development of the rest of the attractions.

The yearly payroll of the hotel is approximately $620,000. That might sound very small to you gentlemen but in Panama that is a fabulous payroll. The payroll of all the firms that are in our free zone in Colon is just about the same amount, and that includes some of the biggest firms of the United States that have developments down there. Senator BENNETT. Did I understand you to say that the payroll of the hotel is equal to the total payroll of the other firms?

Mr. EISENMANN. In the free zone.

Senator BENNETT. So it represents one-half of the payroll in the free zone?

Mr. EISENMANN. No. The hotel is not in the free zone. The hotel is in the city of Panama. I just wanted to compare it with another one of our developments that we are working on to bring us outside capital.

Senator BENNETT. The payroll in the free zone is approximately $600,000 and the payroll in this hotel alone is $600,000?

Mr. EISENMANN. Yes.

Senator BENNETT. How many rooms are there in the hotel? Mr. EISENMANN. Three hundred. The local purchases of food run close to $950,000 a year. The duties and taxes which we pay to the Government, although we are exempt from certain taxes, such as the building and land tax, and we have no income tax to pay yet because of the fact that there are no profits yet

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Senator ROBERTSON. Can the tourists that stay at your hotel buy many items cheaper than they can in this country?

Mr. EISENMANN. Yes. Anything that comes from Europe is cheaper than anything you find here in the United States.

Senator ROBERTSON. How much can they bring back to this country without duty?

Mr. EISENMANN. It depends on the length of time that they stay. I understand it is $400 to $500.

Senator BENNETT. If they are out of this country more than 12 days it is $500 apiece.

Mr. EISENMANN. The local advertising and promotion that we do in Panama, and this is more money that circulates in the country, is about $55,000 a year. In total, I would say, the El Panama spends approximately $12 million of its funds locally.

The majority of those funds are now coming in from actual tourists, transients who are coming through and waiting for another plane to go out, people from the Canal Zone. I do not have the exact figures of the income this year as they have not been finished, but I would say our total sales in the hotel would run close to $2 million. Two million dollars in Panama means that it is probably among the first three industries in the country in volume. The total number of guests that we have had in the hotel has also shown a terrific increase since it has been in operation. Before that we could not tell very well. There were no statistics available.

In 1951 there was a total of guest room hotel, as we call it, the guest per room-in other words, we take a guest that comes in and stays 7 days and that room has been rented for 7 nights, then we call that 7 guests. We have not the details of how many days each guest spends. We have not kept that statistic yet.

Senator MAYBANK. How much do you charge for a room?

Mr. EISENMANN. Off-season it is a minimum of $10, and during the season it is $12. We had an increase of $2. We are still a great deal cheaper in the season than any of our competitors. I was going to bring that up a little later.

Senator MAYBANK. I beg your pardon.

Mr. EISENMANN. It is perfectly all right. In 1951, the first year of operation, when we were very fortunate in getting terrific publicity from Life magazine, we had a pretty good year, considering that it was the first year and the difficulties that we had in the opening of the hotel. We had 42,586 guests in the hotel. In 1952 we had 52,900; in 1953 there was a small drop of 2.1 percent

The percentage of occupancy ran 47.5 percent the first year; 65.5 percent the second year; 63.49 percent the third year.

As you can see, with that percentage of occupancy it is pretty difficult to make ends meet with a company which has such a heavy load of debt.

We have done everything possible. We are still working on it and developing sport fishing in Panama, which is excellent. We are developing other small hotels in the country so that a person who will stay a few extra days and goes out in the country will have another hotel to go to.

Senator MAYBANK. What sort of fishing do you have? We have a great fisherman here. When you said that, I saw his eyes open up.