The current money market resulted in the bank receiving inquiries and applications which normally would have been directed to and financed by commercial banks or private sources. The Board of Directors has resisted extending credits when it was obvious that the approval of the application would be contrary to our Government domestic fiscal policy. A further effect of the current money market is that the potential for selling parts of the bank's portfolio in the financial market is reduced.

The bank's expanded exporter credit program was inaugurated approximately 2 years ago. The number and type of applications being received, together with related changes in financing, are circumstances which have changed the operational pattern of the bank without any significant change in policy. Many of the credits authorized, where the bank participates with others, are for very small amounts; in some instances the bank's participation is less than $1,000. Credit information is required on each foreign dealer, and the bank is establishing current credit files to expedite the processing of credits of this type. As a further measure of expediting the processing of applications, the bank is encouraging exporters to submit credit information on their potential customers abroad prior to requests for actual financing. The number of applications received under this program exceeded the number of applications received for all other types of credit. Although the applications individually are for considerably less than commodity, or project type credits, the work required by members of the staff is in some instances greater than on the larger type credits. A workload factor to be considered in this connection is that the bank will be advancing its own funds in these loans, whereas at the outset of the program there was reason to believe the funds would be advanced by commercial banks.

Comparison with 1957

ANALYSIS OF THE BANK'S 1958 BUDGET

The bank is requesting an administrative expense limitation of $1,980,000 for fiscal 1958 out of estimated net profits of $63.1 million. The amount requested represents an increase of $310,000 over the approved limitation of $1,670,000 for fiscal 1957. A comparative analysis of the 2 fiscal years also indicates an increase in net profit of $2.4 million in 1958.

The 3 largest items included in the increase of $310,000 are due to (a) contributions to the civil-service retirement fund, $97,000 (per Public Law 854, approved July 31, 1956); (b) the increase in the average employment for permanent positions, $157,700; and (c) travel, $30,000. Contribution to the civilservice retirement fund is included for the first time and represents approximately 30 percent of the total increase. An increase in workload is contemplated during fiscal 1958 and travel is estimated to be at a level above the current fiscal year projection.

The bank is operating on a reduced budget for the current fiscal year as a result of absorbing certain unbudgeted expense items which were effective July 1, 1956. Public Law 854, approved July 31, 1956, increased salaries of members of the Board by $23,000. The annual office rental was increased $0.10 per square foot. Neither item was contemplated nor included in the 1957 budget estimate. The estimated savings required is approximately $26,600. In order to preclude exceeding the approved limitation the Board of Directors determined that savings were to be effected by (a) curtailing employment, although additional employees are needed to several divisions; (b) restricting travel; and (c) deferring the acquisition of additional office space.

The amount requested for personal services, $1,543,000, reflects an increase of $165,700 over fiscal 1957. Nineteen additional positions are provided which increase the gross number of permanent budgeted positions from 202 to 221. Included in the 19 positions are 9 technical positions, namely, 1 assistant treasurer, 1 statistician, 2 economists, 3 engineers, and 2 lawyers. The remaining 10 are clerical and stenographic positions. (At December 31, 1956, there were 186 employees on the payroll, including 5 directors, 77 technical, and 104 clerical and stenographic.) The need for these additional positions is directly related to the increase in the number of active loans including the work performed in the consideration of applications and the approval of new loans. Based upon the estimated volume of new business in fiscal 1958 together with the carryover of work resulting from the heavy backlog of credits authorized in the current and prior fiscal years, the workload involved will transcend any previous year. Increased demands will be made upon the economic, engineering, and legal divisions, requiring seven additional technicians. Due to the increased demand and need of special and comparative information, the position of a statistician is projected for fiscal 1958. This position will eliminate time loss and work interruptions of accountants and clerks in meeting such requirements. The Vice PresidentTreasurer was elevated to the position of Senior Vice President in the latter part of fiscal 1956. At the same time the Assistant Treasurer was elevated to the position of Treasurer. The replacement of an Assistant Treasurer is required to assist in the financial transactions and controls of the Treasurer. The 10 clerical and stenographic positions are required in the following offices and divisions: Office of the Treasurer (1), Accounts (4), Administrative (1), Engineering (1), Legal (1) and Loan Division (2).

Between June 30, 1956, and December 31, 1956, the bank's permanent employees increased in number by 14. This was a significant accomplishment in that technicians, who were being recruited for more than a year, represent 9 of the 14 positions.

Personal services compared, 1957 and 1958

The following table indicates the items comprising personal services and a comparison between the 1957 and 1958 fiscal years:

Travel costs for fiscal 1958 are estimated at $130,000. Although travel costs for 1957 will necessarily be considerably less than the $100,000 provided for the current fical year due to the budgetary savings required, the need for additional travel in 1958 is more pronounced for this reason.

During fiscal 1956 travel costs totaled $72,900 or approximately $22,000 less than the approved budget provided. Not all travel contemplated for fiscal 1956 was performed, but it should have been, in the opinion of the Board of Directors. The Board is always watchful to effect economies in the bank's operations. However, the safeguarding of the bank's loans is of primary importance and this can be accomplished most effectively by field inspections. The additional travel which should have been performed in 1956 was not possible for two reasons: (a) recruiting of new personnel (particularly technicians) lagged behind the increase in volume of work; and (b) the influx of applications and other documents received required immediate review and examination which reduced the manpower available for field investigations and inspections. The acquisition of the additional technicians in the first 6 months of the current fiscal year has improved this situation to some degree.

Analysis of travel performed

The following table presents a breakdown of the travel performed during the period July 1, 1956, to December 31, 1956, inclusive:

Foreign travel performed by members of the Board of Directors during the first 6 months of the current fiscal year included their attendance; as official members of Government delegations to international conferences; at dedication ceremonies of projects financed by Export-Import Bank; and further to see, firsthand, the results of our lending operations, as well as to gather financial information with respect to pending requests for the allocation of Export-Import Bank funds. For example, one of the Directors accompanied by members of the staff conducted a survey of Argentina's transportation facilities, for the purpose of determining the equipment to be financed under the approved credit for the rehabilitation of the system.

Domestic travel during the 6 months ending December 31, 1956, included 34 trips for the purpose of attending meetings of bankers and business groups interested in foreign trade and attendant financing problems. Members of the Board and the staff addressed some of these meetings.

Growth in active credits

As of June 30, 1956, there were 503 active credits, on December 31, 1956, the number was 550. The number of active credits is always significant as related to the workload of the bank from a standpoint of policing, investigating and inspecting. Experience indicates that investigations and inspections are proportionally higher in the instance of project-type credits and correspondingly travel costs are also higher. The following table shows a comparison of the number of active project credits and the number estimated for fiscal 1958:

The estimated cost of travel for fiscal 1958 is broken down as follows:

The amount of $1,500 estimated is the same as for fiscal 1957. This object includes the cost of transporting household goods when employee appointments are made by transfers to Washington from field offices of other agencies. Also included are charges for the moving of equipment within the bank.

Communication services

The amount of $19,500 is $1,300 more than provided in the 1957 budget. The increase is due to the uptrend in workload and to provide telephone facilities for additional personnel. The cost of the individual services is broken down

The estimate of $142,300 covers rentals to be paid to the General Services Administration. Although the bank has not acquired any additional office space

during the current fiscal year, additional space is required. The bank did not acquire approximately 1,500 square feet of office space, which was approved in the 1957 estimate, because of budget restrictions previously referred to. The estimate for 1958 provides for approximately 2,800 square feet of additional office space over the 1957 estimate. The bank is presently paying an annual rate of $3.55 per square foot for office space and $0.75 per square foot for storage space. Except for the cost of $660 covering the rental of one station wagon from the General Services Administration, the entire amount estimated covers office and storage space.

Printing and reproduction

The amount estimated, $17,400, is $1,800 more than approved for fiscal 1957. The funds required under this object are to cover the cost of the semiannual reports to Congress, office forms, checks, promissory notes, etc., and the cost of duplicating work. The increase over 1957 is estimated to cover the increased volume in the bank's program and the increase in printing costs.

Other contractual services

This object includes: The cost of repairs and renovation of furniture and equipment; alterations to the bank's quarters; contributions to the Federal employees' insurance program; investigations of personnel required by Executive Order 10450; the pro rata cost for operating the health unit which services all agencies in the Lafayette Building; credit reports; the maintenance of 1 passenger automobile; and the $9,000 provided as a limitation in our language which is available for entertainment expenses.

Supplies and materials

Under this object the increase of $1,400 is attributable to greater usage of supplies and materials because of increased activity and an enlarged staff. Grants, subsidies, and contributions

The entire amount, $97,000, is an increase over fiscal 1957 and represents the bank's contribution to the retirement fund in accordance with section 4 (a), Public Law 854, approved July 31, 1956.

Taxes and assessments

The entire amount included under this object is for deposits under the Federal Insurance Contributions Act, covering nonstatus personnel who are not eligible for civil service retirement benefits.

Mr. PASSMAN. Mr. Waugh, President and Chairman of the Board, is with us. Would you like to make a general statement at this time? Mr. WAUGH. Yes, Mr. Chairman. This is the first opportunity I have had to appear before your committee in my present capacity. I appeared some 2 or 3 years ago representing the economic area of the Department of State. I have a very brief statement I would like to read into the record with a few inserts as I go along, if I may, sir. Mr. PASSMAN. We are happy to have you before the committee. You may proceed in your own way, sir.

GENERAL STATEMENT

Mr. WAUGH. The Export-Import Bank of Washington submits to the Congress its request for the authority to pay out of the bank's estimated earnings of $107.2 million in fiscal year 1958 the amount of $1,980,000 for administrative expenses. The bank will also pay out of its earnings interest estimated at $42.1 million to the United States Treasury upon its borrowings. This will result in a net profit upon the bank's operations for fiscal year 1958 of $63.1 million. Out of these net profits the bank expects to pay to the United States Treasury a dividend of $22.5 million upon its capital stock. The balance of earnings totaling $40.6 million will be placed in reserve for contin