The CHAIRMAN. That is the opinion of all those connected with the Export-Import Bank? There is an overriding opinion about that? General EDGERTON. I am certain it is the general consensus of opinion in the bank. I don't think there are apprehensions in the bank, of any substantial magnitude, that our bank's operation would suffer in any way.

The CHAIRMAN. The IFC would invest risk capital which might bring great returns, in which there is a greater hazard than the investments of the Export-Import Bank?

General EDGERTON. That is right, sir.

Mr. BROWN. Mr. Chairman.

The CHAIRMAN. Mr. Brown.

Mr. BROWN. I notice at the top of page 2 you say:

However, in the circumstances that exist in much of the world today, private capital is unable or unwilling alone to establish or expand foreign business enterprises to the desirable extent. Thus, some measure of assistance from public funds is required.

As risk capital, how much would be required of public money? What do you mean by that?

General EDGERTON. I mean, with currencies controlled, with trade between countries governed by import and export licenses, and all those artificial impediments to trade between countries of the world, it is a very poor time for private capital to take the risk that it would take if those measures didn't exist.

Mr. BROWN. I read on:

In many such instances, the necessary public investment may constitute only a fraction of the total financing needed. For the best results, these investments should not ordinarily entail a guaranty of repayment by the government of the recipient country***

I don't understand that.

Doesn't it mean you can go ahead and guarantee payment to government agencies?

General EDGERTON. Yes, sir. I meant it is not wise to force every borrower, especially those engaged in businesses that we regard as appropriate to private enterprise, to seek a governmental guaranty in order that he might borrow money from the International Bank. Mr. BROWN. You are going to set up a corporation along the lines of private enterprise, and then you are going to say, "We guarantee repayment by the Government"?

General EDGERTON. I meant by that, sir, if you have to go to the local government and ask for its guaranty, you have introduced it in some measure undetermined into the management of your business.

Mr. BROWN. You say, "For the best results, these individuals should not, et cetera. If that is true, it should be in the bill. Who is going to decide that?

General EDGERTON. That is my statement. It is not necessarily correct. It is what I believe to be correct.

Mr. BROWN. There is an inference the Government will guarantee payment.

General EDGERTON. I was trying to describe there, sir, the difference between the things that this Corporation and the Export-Import Bank both can do that the International Bank cannot do under its present charter.

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One of the necessities of a private borrower in a foreign country seeking a loan from the international bank would be to secure a guaranty by his government of the repayment of the loan.

Mr. BROWN. I hate to see the Export-Import Bank become involved in any other agency or take a stand with any other agency.

The CHAIRMAN. What percentage of your loans are guaranteed by foreign governments, generally?

Mr. BROWN. The percentage is quite low. I would have to do some research to give it accurately, but the percentage is low-1 in 5, say 20 percent. That is a rough estimate.

The CHAIRMAN. The Export-Import Bank is held in great respect and esteem by the Congress. I think you have done a fine job, and when we consider the organization of the IFC I think we will all consider whether or not it will weaken the Export-Import Bank, and while I agree with the general objectives sought by IFC, I am glad to hear you say it will not impair its influence or workings in any way. Mr. Wolcott?

Mr. WOLCOTT. The loans by the Export-Import Bank are made in dollars; is that right?

General EDGERTON. Yes, sir; they are made in dollars and repayable in dollars.

Mr. WOLCOTT. And the capital subscriptions of the International Finance Corporation may be either in dollars or other currency?

General EDGERTON. I believe they must be in United States dollars or gold.

Mr. WOLCOTT. The sale of securities of the International Finance Corporation, for example, which might be made in France, will be made to the International Finance Corporation in francs or dollars? General EDGERTON. They might be made in any manner so far as the charters are concerned. I assume loans made in francs would generally be repayable in francs.

Mr. WOLCOTT. There is no assurance that we could safely convert dollars into foreign exchange. Every country that we know of would be perfectly willing to take dollars in exchange for their own currency? General EDGERTON. I think so.

Mr. WOLCOTT. Sometimes the agencies of the United States Government under the jurisdiction of the National Advisory Council, exercise control over whether these agencies of the National Government might want to take in exchange dollars or currency of the foreign country. That has never presented any problem for you? General EDGERTON. No.

Mr. WOLCOTT. But do you see a possibility in the International Finance Corporation that that problem might arise in the liquidation of their assets, for the purpose of creating a revolving pool for loan purposes?

General EDGERTON. I don't apprehend that their problem would be different in that particular from those of the International Bank now. They have been solved pretty well. I believe this Corporation would solve them about the same.

Mr. WOLCOTT. Have you sensed any-I was going to say "desire"— but any activity, I will say, on behalf of the International Bank to compete with you in the making of loans?

General EDGERTON. No, sir; generally, the fear has been expressed the other way, that we might furnish unfavorable competition with

the International Bank because of our rather broader authority than theirs. We have never had any objection, I believe, to any loan of theirs. In fact, we are very pleased to have these countries who may be our trading partners improve their economic situation by loans from the International Bank.

Mr. WOLCOTT. The loans made by the International Bank, although they are called loans for the purpose of strengthening the economy of the participating country, are primarily for the purpose of stabilizing their economy as a means of stabilizing their country; is that right? General EDGERTON. I think so; yes, sir. I would say that, taking the whole charter of the bank in its entirety, that the International Bank was set up among these governments to aid the governments in the development of their economies by making loans.

Mr. WOLCOTT. With respect to certain South American loans, have you sensed any competition between the Export-Import Bank and the International Bank?

General EDGERTON. No, sir; I don't think I have. As I say, the loans that are well in the field of the International Bank, and that it is prepared to consider favorably, we are quite pleased to have it make. Mr. WOLCOTT. If there isn't any competition between the ExportImport Bank and the International Bank, of course there shouldn't be any competition between the International Bank and the ExportImport Bank and the International Finance Corporation, so an amendment to this organic bill providing that there shouldn't be competitition wouldn't be objectionable, would it? It would not be objectionable, would it?

General EDGERTON. No; I think not. The fields in which we could operate do overlap, and there is the possibility of competition. It requires some coordination, which, I think, has generally been pretty well maintained.

Mr. WOLCOTT. Do you feel also that there might not be any objection to declare in this act that the American directors on the International Bank-directors of the United States-would likewise be encouraged to veto loans, as they have a right to do, I believe, which might be considered in competition with our Export-Import Bank or the International Finance Corporation?

General EDGERTON. I think, generally, that in an operation of this kind it is desirable to have a rather wide latitude and not have too many rules prescribed to govern the action in circumstances not yet disclosed. That has been one of the great assets of the Export-Import Bank. It has a broad charter and directs its activities to serve objectives well prescribed and within the limitations established. So while I am entirely in sympathy with the objectives of the suggestion just made, and some others I have heard, I am a little doubtful about the desirability of writing too strict provisions into the law, because there are of necessity unforseeable circumstances in connection with almost every transaction of this kind.

Mr. WOLCOTT. I was prompted to ask those questions because I would like a clarification of the powers and duties and prerogatives of the NAC.

Have you found in the NAC any activity which might be interpreted as administrative in their functions?

General ELGERTON. Administrative?

Mr. WOLCOTT. Administrative.

General EDGERTON. No, sir. It is a coordinating agency. It inquires quite meticulously about some of the matters on which it is called upon to pass.

Mr. WOLCOTT. In the operation of any of these acts-I suppose you might say primarily the Export-Import Bank-do you feel or do you know from your contacts with the NAC that they feel that they have veto power over any of your actions?

General EDGERTON. I didn't hear that.

Mr. WOLCOTT. Could they stop a loan, say, made by you, other than by advising against making the loan?

General EDGERTON. Yes. They could advise us that in their opinion this loan should not be made because of some reasons stated, and I think it would be necessary for us to abide by that decision.

Mr. WOLCOTT. Would it be necessary for you to abide by the decision?

General EDGERTON. I think so; yes.

Mr. WOLCOTT. Where is that in law?

General EDGERTON. Well, the power to coordinate is a little difficult to define, I must say

Mr. WOLCOTT. They have the power to coordinate so long as the coordination can be done through the advisory powers of the Council?

General EDGERTON. I don't know exactly how to define the power to coordinate, but I suppose it would involve in a proper case a power to say to this agency, "That loan you shouldn't make. That perhaps should be made by some other agency."

I don't think the power of coordination would go so far as to say to this agency, "You must make the loan," but I should think it might go so far as to say that "the loan which we believe should be made by the agency on my left hand should not be made by the one on my right."

I admit that is quite a question.

Mr. WOLCOTT. Of course, the Board would respect their right? General EDGERTON. That is right. That is a better statement of the position I stated.

Mr. WOLCOTT. They would consider your advice if they thought you were wrong?

General EDGERTON. If we thought they were wrong we would say so to them, and express the reasons.

Mr. WOLCOTT. You might reconcile the area of differences?
General EDGERTON. That is correct.

Mr. WOLCOTT. There was a case in South America a couple of years ago where the State Department and the Treasury—well, I guess I will remain silent.

The CHAIRMAN. I didn't hear that completely.

Mr. WOLCOTT. When we set up the NAC I was very much opposed to having representatives of the State Department in the NAC because I was afraid we might be a little under their influence in diplomacy, and it has been borne out since that time.

Is there any objection to writing in the law that the agencies, under the advice of the NAC, would not be in competition? It would be merely a legislative declaration of policy for the guidance of the NAC.

General EDGERTON. I woudn't see any objection to that.

Mr. DAVIDSON. If the gentleman will yield?

Mr. WOLCOTT. Yes.

Mr. DAVIDSON. I am wondering, Mr. Edgerton, whether you would favor having the IFC exempt from any influence whatsoever of the NAC?

General EDGERTON. No: I don't believe I would.

Mr. DAVIDSON. You would have some objection to that?

General EDGERTON. I believe it would be better to have the NAC in the picture.

Mr. DAVIDSON. You would strongly object to the NAC being left out?

Why is it, then, that Secretary Humphrey, our Secretary of the Treasury, was reported in the New York Times on April 15 of 1954 as having stated the following, and I understand Mr. Humphrey heads the National Advisory Council-he said: "Let it be known"-I am quoting the article—

Secretary Humphrey let it be known early in his tenure that he believed the NAO was an unnecessary adjunct of the Treasury Department in the formulation of this country's monetary and financial policy. Mr. Humphrey told congressional leaders

and that included this committee last year—

That if they wanted to leave the statute on the statute books it was all right with him, but he did not propose to go through with the motions of polling the other four members on the question of operation of the Export-Import Bank.

Apparently Secretary Humphrey didn't have a very high regard for the National Advisory Council. Was that by reason of the fact that there was a great deal of criticism just about that time by exporters who claimed that restrictions imposed by the National Advisory Council were limiting the sphere of service and opportunity for service of the Export-Import Bank?

Mr. PATMAN. Mr. Chairman, since I asked Mr. Humphrey that question I think in fairness to him it should be stated that he said he was not responsible for what was printed in the newspapers. I asked him that.

Mr. DAVIDSON. I didn't know that, Mr. Patman.

It is a fact, is it not-we will accept the Secretary's statement on that, but it is a fact that the activities of the Export-Import Bank have been sharply curtailed in the last 2 or 3 years?

General EDGERTON. Well, no, not exactly.

Mr. DAVIDSON. I have some figures before me which show that for the years 1947 down through 1952 your annual average rate of lending was in the neighborhood of $214 million; right?

General EDGERTON. I expect so; yes, sir.

Mr. DAVIDSON. How much has been loaned by the Export-Import Bank for development and reconstruction loans in 1953, 1954, and 1955 ?

General EDGERTON. Well, I don't have those figures here, but much less than the average for the preceding years, and less than the average for the last year or so, but I don't think that is properly attributable to external curtailment.

Actually, the loans by the bank are not self-generated. They are brought in by applications of prospective borrowers and do not originate in the bank. The fluctuations in volume are affected by public attitudes, or general economic circumstances.