tee will inhibit the new Overseas Private Investment Corp., from making its guarantees available to important projects such as the Indian Farmers Fertilizer Cooperative. This section contains a provision which requires the corporation to "assure whenever practicable" that unguaranteed capital is raised from U.S.-not local foreign

sources.

The Cooperative League strongly requests the members of this committee to consider eliminating this provision from the bill, or at least to modify it to make clear that the intent of Congress is not to deny private loan guarantees to such important projects.

ACCOMPLISHMENTS OF COOPERATIVE LEAGUE MEMBERS

Now the second point, Mr. Chairman, I would like to mention is a recitation of several accomplishments that have been made by members of the Cooperative League, some of whom are here to testify on their own behalf.

The Foundation for Cooperative Housing is not here, it is one of our members, and they have a summary statement that they made describing in detail the loan guarantee program as it affects housing. I would like, with your permission, to insert that in the record, if I

may.

Senator PELL. Without objection that statement will be inserted in the record.

Mr. TOWNSEND. That is the conclusion of what we have to present to you. If you have questions we will be very glad to try to answer them.

(The statements follow:)

STATEMENT OF DWIGHT TOWNSEND, THE COOPERATIVE LEAGUE OF THE U.S.A.

Mr. Chairman and Members of the Committee: The Cooperative League of the USA is grateful for the opportunity to be heard on the important legislation under consideration which we all call Foreign Aid. We believe your deliberations to be far greater than the words "Foreign Aid” imply. It involves international relations, maintenance of world peace, and the promotion of human dignity to all the countries of the world including those developing nations needing our help to help themselves.

The Cooperative League is a federation of all types of cooperatives, both urban and rural whose individual members exceed 20 million families. Our League is made up of national, regional and statewide cooperative associations active in farm and home supplies, marketing of farm products, credit, housing, insurance, prepaid health care, rural electrification and a variety of other services for their members.

The latest credentials for our appearance before you today were provided by the recent 26th Biennial Congress of the Cooperative League which met in Kansas City, Missouri:

"We reaffirm our standing resolution to assist our government in its programs of International Development through Technical Assistance to developing countries. The Biennial Congress commends the Congress, the President, the Department of State and the Agency for International Development, and other cooperative organizations for their efforts to bring an understanding to the peoples of developing countries of what people, who are free, can do through mutual efforts to raise their level of living to achieve their full measure of human dignity."

In addition to passing this resolution the member organizations have made voluntary assistance of various staff members available to help cooperatives in AID assisted countries. Following this action cooperatives authorized and formed advisory committees to lend counsel and technical advice on agricultural credit, oil seeds processing, consumer cooperatives, insurance and fertilizer production

and marketing. In addition, the Cooperative League membership has continued to make small grants available for technical assistance overseas through Worldwide Co-op Partners.

In this regard, Mr. Chairman, we want to call to the Committee's attention a few of the outstanding accomplishments cooperatives have made and hopefully you will want continuity of our work in this regard.

The Cooperative League of the USA with some of its own resources and in collaboration with AID has given technical assistance for cooperative development, feasibility studies, developed cooperative federations, agriculture production, processing and organization of cooperative enterprises.

Our League itself has been in India for 16 years and such success as we have had is based on the principle that all our programs first have support of Indian cooperatives and people plus assurance of their wholehearted backing and participation. A second principle that has insured success is the management capabilities and involvement of our U.S. cooperatives business organizations from the inception of the programs and following through to their successful conclusion. This has taken a lot of the guesswork out of the proposals taken to AID and other sources of capital, sharply separating the truly promising ones from those which "look good on paper." As a case in point, feasibility studies are completed on the first fertilizer production plant to be owned by Indian cooperatives. Plans call for construction contracts to be let late 1969 and start up late 1972.

U.S. cooperatives through Cooperative Fertilizers International (CFI), of which Mr. Thomas is president, will manage the plant until local people are trained and can take full control. U.S. cooperatives will donate $1 million in cash and additional amounts in kind for technical assistance in planning, construction and management. For this they ask and expect no return and no ownership. Financing is in the amount of $112 million-about $48 million in dollar costs by the Bank of America with an AID Extended Risk Guarantee, AID Political Risk Insurance (commonly referred to as Specific Risk Guarantee), and AID development Loan. The balance of $64 million is in rupee costs by Government of India loan and equity investment, and Indian cooperative equity investment.

In connection with AID's.guarantee of the private U.S. bank financing involved in the India Farmers' Fertilizer Cooperative (IFFCO) project, we respectfully urge that the authority to apply this type of incentive to productive private initiative in the developing countries not be weakened in the pending legislation. Specifically, we understand that AID has been able to apply its 75% guarantee to 100% of the eligible U.S. private loan financing so long as 25% of the total investment is unguaranteed. Often, as in the IFFCO Project, this unguaranteed portion of the financing comes from local non-U.S. sources; i.e., Indian farmers and Indian government. This enables institutional lenders in the United States to participate in important development projects to which they could not lend funds on an unguaranteed basis.

We therefore are concerned that a strict construction of the new language contained in Section 324 (b) of the Bill before this Committee will inhibit the new Overseas Private Investment Corporation from making its guarantees available to important projects such as the Indian Farmers Fertilizer Cooperative. This section contains a provision which requires the Corporation to "assure whenever practicable" that unguaranteed capital is raised from U.S.-not local foreign

sources.

The Cooperative League strongly requests the members of this Committee to consider eliminating this provision from the Bill, or at least to modify it to make clear that the intent of Congress is not to deny private loan guarantees to such important projects.

Another example of U.S. cooperatives assisting in the Foreign Aid effort is the Foundation for Cooperative Housing, a member organization of the Cooperative League. In over 20 developing countries the FCH has assisted with cooperative housing in collaboration with AID in developing low cost housing. This assistance by FCH as is the case with all our member associations is on a non-profit basis.

In prior testimony before this Committee we recited the success story of housing for very low income in Panama. Four years ago USAID/Panama made a grant of $3.000 to a cooperative group of 10 small farmers in Los Pocitos, Panama. With FCH assistance, and using their local credit union as a fiduciary this small sum became the basis for a revolving fund which over the course of the past four years has funded the construction of 22 simple but attractive homes.

The average cash cost of each unit is about $300 most of which was spent for cement, roofing and hardware. The people involved were so interested in leaving

their rude earth-floored, thatched huts that they eagerly provided most of the labor and the locally available materials such as sand, poles and cane used in the construction of the homes.

Originally, the grant provided for the construction of only 10 homes. But each family was required to put up a $30 down-payment which provided enough cash to begin construction immediately on the eleventh home. The families repay the 4%% loan over a 7 year 7 month period. The $4 monthly payment includes not only principal and interest but a small amount for reserve and for cooperative operating expenses.

Since that time others in the community have become interested in participating as fast as funds become available, a fact which no doubt has contributed to the ahead-of-schedule repayment record.

A visit to Los Pocitos today discloses that many of the families who were among the original beneficiaries of this program have added further embellishments to their homes and have even enlarged them in some cases. This is a tribute to the lesson taught and confidence gained through the program's self-help feature. The result has been to bring rural families out of miserable, unsanitary conditions by teaching them to help themselves and to work together for their own benefit as well as that of the community.

The first major objective of FCH programs overseas is to assist in the establishment of institutions with capabilities similar to those of FCH. In this way, when FCH assistance is no longer available, a Technical Services Organization (TSO), staffed with trained local people, will remain to carry on programs in cooperative housing.

In each country in which FCH has worked it has either helped in the development of a new Technical Service Organization or in some cases helped to strengthen an existing federation of housing cooperatives to perform the same function.

Actually, this latter course has not been as successful as developing new organizations. For example, in Colombia the FCH spent considerable time and effort to develop the capability of an existing Federation only to find it necessary to establish a new Technical Service Organization to carry out an action program. FCH has been responsible for helping create Technical Service Organizations: in Honduras, in Panama, and Mutual Housing Services in Jamaica. In addition, a new Technical Service Organization is being developed in Guatemala and a Foundation for Housing Cooperatives in the Dominican Republic. The total of dwellings is as follows:

These do not include projects under the investment guaranty program which if all move ahead as contemplated should result in several thousand additional dwellings. Furthermore, if the units built or projected under programs in Argentina and Brazil which FCH assisted in the past are included they would add many more to the total.

With the permission of the Chairman we would like to submit, for the record, a comprehensive description of the housing guarantee program as was presented to the House Sub-Committee on Inter-American Affairs by the Foundation for Cooperative Housing. [See end of statement]

We could recite many additional examples of success stories in developing countries where the FCH has started organization procedures, building on the available capabilities of the people and giving them guidance in their housing programs. One such mission was a study in Vietnam to assist their on-going programs of rehabilitation that has perhaps the most politically and economically advantageous activity that USAID can undertake with an eye to what we all hope will be an early cease-fire. It will serve the dual purpose of meeting the housing problem and bolstering the process of democratization.

In the field of thrift and credit the credit union movement is under the guidance of another member of the Cooperative League, the Credit Union National Association International. CUNA's program is writing a glowing chapter in this story, with hundreds of new credit unions coming into being, especially in Latin America. It is our understanding that CUNA will present testimony before this Committee.

A further example, the National Rural Electric Cooperative Association, another member of the Cooperative League of the USA, is scoring some dramatic successes with its rural electric cooperatives in less developed countries.

Electrification through cooperative organizations also brings the special benefit that comes from people working together and with their government to achieve the common objectives of personal and community development.

Some detail about what cooperative rural electrification is doing to increase food production and promote rural industrialization as a result of NRECA's collaboration and participation in our foreign aid efforts will be given in testimony by NRECA officers.

But we would like to call to the Committee's attention the fact that the story of cooperative rural electrification is so recent in our own national experience that many of us recall the "Miracle of the Thirties" which dramatically increased food and fiber production. That is what is beginning to happen in the underdeveloped world, underdeveloped let it be said for the same root causes that kept the American farm underdeveloped in terms of its real potential. The "Miracle of the Thirties" and Forties of the American farm belt can become, and is becoming in a small way, the "Miracle of the Sixties" in places far removed from our own fertile farms.

Let it be noted, Mr. Chairman, that some of the same farmers who as young men strung the lines and wired the homes here 30 years ago are showing others how to perform those same chores in Asia and Latin America today.

Time does not permit extended reference to the significant contribution other sections of the cooperative family in the United States play in the foreign aid effort. Examples taken at random would include grocery managers going on assignment to give expert advice to a Colombian grocery cooperative; an insurance company, cooperatively oriented, which has sent some of its executive and management personnel on study and assistance missions for cooperatives to South America, Asia, and Africa-an activity completely divorced from profit incentive performed in a spirit of corporate good citizenship under the auspices of the Cooperative League; farm co-op leaders going by the dozens to give a boost to the struggling agricultural cooperatives in newly independent nations.

In summary, Mr. Chairman, the Cooperative League of the USA and its member organizations, as a result of the experiences already cited believe: (a) That the growth of private enterprises and institutions in developing countries depends largely on people-their managerial, organizational and technical skills. (b) That U.S. private organizations perform an increasingly important role in providing technical assistance to develop those skills. (c) That cooperatives and credit unions, an important segment of the U.S. private enterprise system, have played and will continue to play an important role in the U.S. foreign aid effort. (The report earlier referred to follows:)

SUMMARY OF TESTIMONY OF WALLACE J. CAMPBELL, PRESIDENT, FOUNDATION FOR COOPERATIVE HOUSING BEFORE THE SUBCOMMITTEE ON INTER-AMERICAN AFFAIRS OF THE COMMITTEE ON FOREIGN AFFAIRS, U.S. HOUSE OF REPRESENTATIVES, APRIL 30, 1969.

The population explosion in Latin American urban centers and the cancerous growth of squatter areas and slum dwellings threaten to engulf metropolitan area before normalized patterns of public services and housing can be made available.

To meet this critical situation, a massive program of urban development and housing construction is essential. But because of the shortage of funds for international development, housing loans have been cut back to nearly zero by the Inter-American Development Bank and AID. The housing deficit is growing rapidly and we are losing the battle for better housing in Latin America.

Fortunately a program initiated by and supported by the Congress is beginning to meet part of this need with private funds. The AID Housing Investment Guaranty program insures or guarantees the investment of private capital in housing projects in the less developed countries. The program has had its problems; and many mistakes have been made. But today 38 projects with a total of 31,000 housing units have been built or are in the process of being built. An additional 52 projects have received preliminary commitments for 38,000 more units.

The Latin America program can be geared up to handle $100 million or more each year in new housing guaranties. It requires several years to develop, review

and carry housing projects to completion and a long range pipeline of authoritythree to five years-would be highly desirable. This requires Congressional authorization but does not cost the taxpayer a penny.

The primary objectives of the program are (a) to encourage the development of institutions in the less developed countries essential to the long range solution of housing problems-such as savings and loan systems and cooperatives; (b) to provide mortgage financing on terms generally comparable to those in the United States; (c) to provide home ownership in decent housing for lower and middle income families; and (d) to secure the maximum participation of the private sector.

The Foundation for Cooperative Housing began its work with the housing investment guaranty program with skepticism and reluctance. We are still aware of its shortcomings; but we are convinced of its substantial accomplishment to date; its constructive mobilization of private financial resources as well as human resources; and its institution-building character in helping people to help themselves.

The following four recommendations are made in connection with any proposed change in the organization of AID housing programs:

(1) That a Housing and Urban Development office be established which would respond directly to the Director of the Agency and which could operate on a world-wide basis with all the participating countries in the Housing Investment Guaranty Program.

(2) That to reach the expanding market of lower income families, it is necessary to adjust the credit lending terms of the program to fit the savings capacity and monthly incomes of such families.

(3) That consumer oriented non-profit sponsoring and servicing organizations be encouraged in less-developed countries to sponsor cooperative type housing for lower and middle income groups, provide sustained management to preserve the physical and financial value of the properties and assure continuing ownercitizen participation in the affairs of the community.

(4) That recognizing the institution-building objectives of the program and the important social and political goals as well, the Congress and the Administration should take steps to assure that adequate amounts of authority are available for cooperative programs sponsored by in-country cooperative housing services organizations.

Senator PELL. Thank you very much. I only wish we had some time for some questions. Your statement has been very helpful and thank

you.

The next witness is Dr. Darrell Randall representing the Division of World Peace, Board of Christian Social Concerns of the United Methodist Church.

Mr. Randall, you have a 19-page statement which would take about three quarters of an hour if read. So I would like to have this inserted in the record and would ask you to briefly summarize it.

STATEMENT OF DR. DARRELL RANDALL, REPRESENTING THE DIVISION OF WORLD PEACE, BOARD OF CHRISTIAN SOCIAL CONCERNS OF THE UNITED METHODIST CHURCH

Mr. RANDALL. Mr. Chairman, I appreciate the opportunity to be here on a subject that is very important.

The United Methodist Church has asked me through its Board of Christian Social Concerns to present some of the official policies of the United Methodist Church, which is a sizable body of church people in this country and then to share some of my own personal observations, having had the opportunity to travel and visit most of the countries where the U.S. aid program is operating.