all told we have some problem loans which we are constantly working on, which is normal in a banking portfolio.

Mr. EVINS. How were your losses in the lend-lease program, how are they working out?

Mr. WAUGH. To date I have been talking entirely in the operation of the Export-Import Bank with our appropriated funds. We don't show any losses in the lend-lease operations.

Mr. EVINS. You canceled out a lot of the lend-lease agreements?

Mr. WAUGH. You are referring now to the lend-lease that we are financing?

Mr. EVINS. Yes.

Mr. WAUGH. We have had no defaults on those loans. We had one request for a postponement from one country a year ago in November, but the financial position of that country is today so good when the payment came due in July, this July 1, they paid in full and did not take advantage of the deferment. Those payments are being made right along.

Mr. EVINS. Actually, then, the Export-Import Bank has had preferred or gilt-edge loans. There have been marginal loans canceled out not in your portfolio or accountable to the Export-Import Bank? Mr. WAUGH. No, I don't think so.

Mr. EVINS. You handled clearance and finalizing of all lend-lease loans?

Mr. WAUGH. No, these lend-lease loans were loans to the European governments at the end of the war, and were simply turned over to us after settlement had been made.

Mr. EVINS. You are administering the remaining portions of lendlease. Are they all working out?

Mr. WAUGH. Yes, sir, we have had no defaults in principal and interest, other than the one I just mentioned.

Mr. ÉVINS. Now, you indicated that you had borrowing authority of $6 billion from the Treasury in a recent enactment to the bank statute. How much has been utilized?

Mr. WAUGH. We have $2.2 billion unused.

Mr. EVINS. We on the committee gain the impression that when you make a big loan to a big concern, this concern makes subcontracts, and small business participates in the subcontracts-that it sort of trickles down.

In other words, the small business benefit from an Export-Import Bank loan is ultimately somehow trickled down to benefit the workingman and the small subcontractor, the small businessman. That is the way we can calculate in the general picture a loan by the ExportImport Bank, isn't it?

Mr. WAUGH. Yes, sir, I think that is a rather fair conclusion, that is a conclusion that we reach-that the small businessman with comparatively few employees very seldom operates direct in the export field, but he will usually operate through a larger manufacturer, or through a broker or an export agent who will act as his agent.

Mr. EVINS. Do you consider the government of the country in which a borrower expects to engage in business before you make the loan?

Mr. WAUGH. You mean the financial position of the government, today? We most certainly do.

Mr. EVINS. I believe your chart shows that your loans generally are all over the world, but you must have some areas in which the Bank decides not to make loans, is that correct?

Mr. WAUGH. We do have certain areas in which the bank does not make loans at certain times. In other words, there are countries today that are in questionable financial position so we sit down with their authorities and try to work out their problems.

Mr. EVINS. It has been called to our attention that some exporting concerns are worrying today about exporting to Cuba. Are you making loans to concerns doing business in Cuba under the present circumstances?

Mr. WAUGH. We are not making loans in Cuba, today. We have two sizable loans in Cuba today. One has been intervened, and the other is being investigated. Both of U.S. firms, one the International Telephone & Telegraph Co. which has the major interest in the Cuban Telephone Co., and the other is the American Foreign Power Co., which has the major interest in the power company in Cuba. We have not made any loans in Cuba, recently.

Mr. EVINS. Is that because of the judgment by the directors or management of the Export-Import Bank of the prevailing political instability?

Mr. WAUGH. Perhaps it would be better to say we have not had any applications for loans.

Mr. EVINS. Well, that was a very astute answer. I think that is all, Mr. Chairman, at this time.

Mr. YATES. Mr. Multer.

Mr. MULTER. Mr. Chairman, it has been my very fortunate privilege and experience to be able to go to many parts of the world where the Banking and Currency Committee was giving particular attention to the operation of the Export-Import Bank, and I can't forego the opportunity to say to Mr. Waugh that I have always been extremely well impressed with the operations of the Export-Import Bank wherever I have been. Wherever I have made inquiries I have been impressed because the people in those countries were most enthusiastic about the operations of the Export-Import Bank, and that goes, of course, for those Americans who have had occasion to do business with the Bank in connection with their operations outside the country, and I am pleased to say that again.

I think it would be well to say that my subcommittee in the last session of Congress had Mr. Waugh and his associates before it when we inquired into its operations, particularly with reference to its effect on small business. I think the committee then was satisfied that the Export-Import Bank was doing a good job for small business as well as big business, though most of the loans were big loans. The figures and facts he submitted at the time indicated there were hundreds, if not thousands, of small businessmen who were supplying services and equipment and material to the larger borrowers, which they in turn either shipped directly or as part of what they were shipping abroad.

I think I may have misled my distinguished colleague, Mr. Evins, in the suggestion that he ask a question about the lend-lease, and I would like to straighten it out.

The lend-lease loans, are they loans that your Bank is administering, or are they loans your Bank has made?

Mr. WAUGH. Both. And thank you, Mr. Multer. Mr. MULTER. You inherited some that were turned over to you for administration, and others you made directly?

Mr. WAUGH. These were all made in 1941 and 1942 by the Government, but the Export-Import Bank's funds were used for the purpose. They were turned over to us really to service for the Government; yes, sir.

Mr. MULTER. Now, in referring to the fact that you try to make loans available where they are otherwise not available, I think you must always bear in mind, and correct me if I am wrong, that you do not try to make funds available to bad credit risks.

If the Bank turns down a borrower or an applicant because he is a bad credit risk, you don't step in and make funds available there. It is only if it is a good loan that you will step in and make the money available, if it is not available through private sources.

Mr. WAUGH. That is correct.

I think perhaps for the benefit of the committee, I might explain that there are many instances where the banks come to us with borrowers wherein they will take the first 1 or 2, or possibly 3 years of a piece of financing, if we will carry the other portion of the loan that might run 2, 3, or 4, or 5 years, and it is in that connection that we work very closely with the private banks.

I think our records will indicate that we arranged for or sold nearly $100 million of our paper last year without recourse.

Mr. MULTER. I think the total of such loans has been sold without recourse running between 400 and 600 millions?

Mr. WAUGH. Four, sir.

Mr. MULTER. Those are loans you made in the first instance because private financing was not available, but after you made the loan and the loan was seasoned, you were able to sell it to private or commercial bankers without recourse?

Mr. WAUGH. Largely, sir. In other words, bankers would take a portion of the loan. Many private bankers like to have U.S. Government through the Export-Import Bank stay in with them even though they would carry as high as 90 percent of the loan, they still like to have us carry 10 percent of the loan. There is an obvious reason why they would like to have the Export-Import Bank connected with them in their financing.

Mr. MULTER. In connection with commodity loans, you are not in competition with the Commodity Credit Corporation?

Mr. WAUGH. No, sir.

Mr. MULTER. They are financing the farmer.

Mr. WAUGH. Our cotton loans are all made through the private

sector.

Mr. MULTER. In other words, when it comes to the commercial sale. of the commodities abroad, then they will come to you and if it is a good loan you will finance it?

Mr. WAUGH. We usually finance-for example, we have financed in the last few months both Austria and Japan. We authorized a loan of $30 million to the Bank of Japan and for the purchase of cotton, and they will open bank accounts with as many as 23 banks. throughout the United States, and they will handle letters of credit in that particular manner.

As the cotton is shipped, we make our payment accordingly.

Mr. MULTER. I think you financed some sales of farm commodities to the Middle East, too, did you not?

Mr. WAUGH. No, sir.

Mr. MULTER. To India?

Mr. WAUGH. No, sir. That is under Public Law 480, sir, under what we call, when we are referring to the House, to the Cooley loans where we get 25 percent of that to loan back to U.S. private business in that particular area. This is all local currency financing and does not come out of our dollar funds.

Mr. MULTER. Thank you, Mr. Chairman.

Mr. YATES. Mr. Brown.

Mr. BROWN. Mr. Waugh, this is a most interesting, fine picture to see. What was the percent of your total loans which have gone to governments, and what percent to private companies or individuals?

Mr. WAUGH. I cannot give you that figure, sir. I will say this, that in number of loans that we have made, the largest number of loans have gone to the private sector, but in the dollar volume, the largest percentage of the dollar volume goes to governments or gov. ernment agencies.

Mr. BROWN. Those loans to governments are for public facilities, and in some instances public utilities, are they?

Mr. WAUGH. Yes, sir.

Mr. BROWN. Are they also for public-owned industry in those countries, in some instances?

Mr. WAUGH. In some instances, yes, sir.

Mr. BROWN. Now, do you have a breakdown of what percent of your loans have gone for utilities and facilities, what percent to industrials, and what percent agriculture?

Mr. WAUGH. We developed for our own use, and I am sorry I do not have it, but will furnish a copy to the committee, as to what our funds have been used for over the 25 years. I am sorry I don't have it with me.

Mr. BROWN. With the chairman's permission, could it be inserted at this point in the record?

Mr. YATES. Without objection, it will be included.

(The material referred to is as follows:)

EXPORT-IMPORT BANK OF WASHINGTON

Credits authorized 1934 to March 31, 1959, inclusive, classified by purposes

Mr. BROWN. Now, as I understand it, a good portion of your loans are made to, say, industries in these countries, such as Haiti, Paraguay, and so forth-such as a cement plant. Do they often have some U.S. money in those industries, too?

Mr. WAUGH. There is a whole gamut of plans that are used. I wonder, sir, if I could answer your question by giving you a specific illustration on how it develops.

Mr. BROWN. I wish you would.

Mr. WAUGH. In 1940, the Export-Import Bank, and Nacional Financiera, which is a sort of RFC in Mexico, decided to build a steel mill at Monclova, Mexico. Monclova was a typical little town down there with two automobiles registered in the town, no paving, no hospital-it was a very, well, I don't want to use an uncomplimentary term, but it wasn't very much of a city.

The steel mill was originally principally owned by the Mexican Government. They could see the war coming and they wanted to have a steel mill operation. Ten percent was owned at that time, at the outset, by U.S. citizens.

Now, that steel mill today at Monclova, Mexico, has developed a city of, they say, 35,000, and I will be conservative and say 25,000 people. They have three hospitals, they have paved streets, they have beautiful schools, they have fine residences, modest residences for the workmen. There were 1,600 automobiles registered from that place last year instead of 2 in 1940. The employees of the steel mill receive today $5 per day, plus fringe benefits. They originally received 1 peso, or 50 cents a day, 4 years ago.

Now from that 90-percent government owned plant, we have encouraged them to get this ownership into the private sector as fast as they could. Four years ago when we made a loan, when I first came with the Bank, they had 87.5 percent in the public sector, still. Today they tell me that now over 40 percent is owned in the private sector, and gradually they are selling to the private sector.

Now, the same thing can be illustrated in Chile, at the Huachipato steel mill at Concepcion, Chile. Today that is almost out of the public sector, except the fact that the Government has a debt.

So while at the outset you sometimes make these loans in the public sector, frankly because there is not enough private money in the country to develop the industry from time to time we encourage these people to turn the ownership to the private sector. We are great believers in the Export-Import Bank, of the private enterprise and American know-how system.

These two steel mills, incidentally, both are operated with management contracts here in the United States.

Mr. BROWN. That is very interesting, and it is part of what I wanted to know.

I notice here also on your reports where, for instance, there is a company that had borrowed money from your Bank-General Electric, Argentina.

Now, tell me about that company.

Mr. WAUGH. That is what we call a mixed company, they have both Argentine and United States capital in it.