So on June 30 the Bank had outstanding loans and authorizations in 56 countries amounting to almost $4.8 billion, and we had an uncommitted lending authority of $2.2 billion.

Gross earnings during our history have totaled over $1 billion. From these earnings there has been paid to the Treasury $260 million in interest on borrowed funds, as well as $196 million in dividends on the Bank's $1 billion capital stock, all of which is held by the Treasury.

After paying all of the Bank's administrative expenses and its modest losses to date, there remain $572 million of undivided profits or reserves which is currently being loaned. The Bank's loans are made from the $1 billion of capital which, as previously stated, is held by the Treasury, and from our power to borrow $6 billion from the Treasury, which was authorized by the Congress in the latest amendment to the Bank's statute.

In addition to our activities under the Bank's statute, we act administratively as agent with respect to $4.3 billion in other loans made by the U.S. Government, particularly the International Cooperation Administration and its predecessor agencies.

The Bank makes loans in foreign currencies derived from the sale abroad of surplus U.S. agricultural commodities. To date the Bank has authorized 71 credits in 12 of the 22 countries in which these loan funds have been provided, for a total equivalent of $33.8 million. Most of the 71 credits range in size from $100,000 to $500,000, that is dollars equivalent to the foreign currencies, of course, and 28 are for less than $250,000.

As our statute directs, the Bank exists to finance and facilitate U.S. foreign trade where private financial facilities are not available and to supplement the private facilities that are available. We are directed to loan only on businesslike terms, that is, on the basis of banking judgments regarding reasonable assurance of repayment. For many recent years of a world either at war or handicapped by peacetime maladjustments, private institutions have not been able to meet all the world's financing needs for trade and investment. This is particularly true for medium and longer term needs, and for less- developed countries or other countries with great present day problems.

In short, by the very nature of our mandate and our objectives, Export-Import Bank financing concentrates on operations of greater risk than tend normally to be assumed today by private business and banking.

Our loans are of four types, in each of which small business plays a significant role and from each of which small business derives substantial benefit.

First, we make development loans for the construction of private enterprises and public facilities abroad. The development loans, as is true of all our loans, are almost exclusively for the procurement of U.S. materials, equipment and services. In assisting export sales for development projects, it would be impossible to single out any illustrative group of companies, small or large, for we believe they include almost every U.S. firm which regularly exports machinery or equipment that is used in development projects.

We do not give blank checks to our borrowers, no matter how reputable a company may be or how promising a project may appear.

At the same time, although our administration of loans is directed to approving individual payments for the equipment orders, this process does not lend itself to a statistical calculation of the role of small business. For example, a good-sized project may involve orders placed with many dozens, and actually even hundreds, of suppliers in the United States. One of these orders may involve delivery, and therefore disbursement by the Bank, of several items at different times. And the time over which procurement, and also our payments, is spread may extend over a number of years.

Furthermore, for some large projects, a major supplier, who may have developed the business through what sometimes is called a project department, may organize the procurement so that much of it is centralized. We then find it difficult to determine whether some small item priced at a few hundred dollars was procured from another firm, very likely from a small firm that was not itself interested in trying directly to develop so small a transaction with a foreign firm or government, unknown or unfamiliar to it.

However, for our own interest we have tried to develop information, on a spot basis, of how far-reaching an effect our project loans have on U.S. suppliers. In appearing before this committee in 1957 we mentioned the $14 million cement plant built in Indonesia with the aid of an Export-Import Bank loan. In that case we found out that our loan resulted in orders to over 1,000 suppliers in the United States. We also mentioned similar far-reaching results of steel-mill loans in Mexico.

So today we present some fresh illustrations, and we have a couple of charts to help you visualize the positions.

The first chart shows the results of a $1,157,000 loan for a grain storage project for the State of Pernambuco, in Brazil. As a result of our credit, orders were placed with 25 subcontractors, with 29 plants, located in 16 States, involving over 80,000 employees.

This chart, by the way, was furnished to us by the company that received the order for $1,157,000. They prepared these figures for us, and we then put them on the chart."

Mr. YATES. Is it in order to state the name of the company?

Mr. WAUGH. It is Black, Sivalls & Bryson, a Kansas City, Mo., firm.

Another good illustration, which tells much about the spread of benefits is the Bank's loans to the Pacific Steel Co. in Chile. Loans from our Bank total $76.6 million. Incidentally, $16 million has already been paid, so the outstanding balance is approximately $60 million.

In addition to our loans the Chilean steel company spent during the past 10 years, about $120 million from its own resources on equipment, supplies and services purchased from the United States. The company's purchasing agents' records indicate that 8,194 individual orders have been placed with 909 individual U.S. firms.

A second type of credit made by the bank embraces what we sometimes call, for want of a better term, emergency credits. These include such transactions as our lend-lease termination loans and reconstruction credits immediately after the war, and other loans made for dollar exchange to enable our trading partners to resume or maintain normal purchases from U.S. exporters. Under these loans all our exporters, small and large, have benefited. The literally thou

sands of individual transactions or payments assisted cannot be successfully distributed by size of firm benefited.

Third, we make commodity loans, usually for a year, to assist in marketing our agricultural commodities abroad. Particularly, over the years we have authorized $979.5 million to finance the sale of over 5,600,000 bales of cotton. These credits, of course, help the cotton growers regardless of size.

Fourth, at the request of U.S. manufacturers, we make what we call exporter credits. These assist our U.S. firms to complete sales which they cannot finance entirely through their own resources. In one way, these credits may be of particular interest to the committee, because in these transactions we deal directly with the U.S. exporter, rather than with the borrower abroad.

As a rule, these require at 20-percent downpayment by the importer overseas, and we purchase notes from the exporter to the extent of 60 percent that is without recourse-leaving 20 percent to be financed by the seller.

Through exporter credits we assist both large and small transactions, and indeed the large transactions may themselves afford extensive help to small businessmen.

For example, this second chart shows how our large exporter credits can bring widespread benefits to many firms, including some of the smallest. These figures were prepared for us by the manufac turer of a single plane, and they show us that orders placed with 2,000 U.S. firms in 38 States as a result of a single $2 million airplane credit. Note that almost 30 percent of the orders go directly to firms classed as small business, with fewer than 500 employees. A further survey has shown that the major subcontractors in turn placed about 30 percent of their contracts with their own small business suppliers. Adding the effect of these purchases, better than a third of the business made possible by the Export-Import Bank credit went to small firms.

To give you the overall exporter credit picture, during fiscal 1959 we made 66 exporter credits for $16.3 million. Of these, 10 were for amounts less than $10,000, and 12 for amounts greater than $10,000 but less than $25,000. This activity in exporter credits suggests that they are proving a useful means to assist the financing of exports by small business. A table summarizing these credits during the last fiscal year has already been submitted to your committee. In fact, it is attached to this statement.

(The tabulation is as follows:)

Credits by size groups authorized by Export-Import Bank on request of U.S. exporters or financial institutions,1 fiscal year 1959

1 Exclusive of increases in previously authorized credits totaling $784,772.

2, 193, 500 66 12,459,000

$68,300 266, 300 587,800 1,678, 300 3,871, 800

16, 330, 800

Mr. WAUGH. It is doubtful whether the experience of the ExportImport Bank supplies a firm basis to estimate, however roughly, the future role of small business in international trade. However, I will venture a personal guess that its participation will grow overall, and hence also in Export-Import Bank lending.

For this there are a number of reasons, such as our continuously growing national experience of foreign countries and their markets. Much of this is derived from the compelling circumstances of world history which have enlarged our role in international affairs generally. Our growing interest has been expressed through larger numbers of our citizens traveling abroad, which has also stimulated interest in commercial contacts. Furthermore, our growing industrial capacity, while it continues to be largely sparked and absorbed by our domestic market, has stimulated an urge to find offshore outlets.

At the same time, to moderate any excessive optimism, it is necessary to bear in mind certain limitations. As suggested earlier, foreign trade entails some risks not found domestically, and by the nature of our charter the Export-Import Bank deals particularly in risks that are not found attractive by the private market. Uncertainties, of course, tend to limit the attractiveness of the foreign field for the small businessman.

In fact, whether large or small, most American firms tend to specialize in meeting the demands of our large internal market and prefer the better known domestic market if there is some latitude for choice. In addition, international business requires certain specialized knowledge and special costs, in the way of economic and credit information, in dealings with foreign agents abroad, in the development and promotion of business, and possibly in provision of service activities such as engineering design, installation and followup.

These are, of course, quite general problems everywhere, but they may be less restrictive to small business firms in some foreign capital exporting countries, where a business is more likely to be founded in whole or in large part to engage in foreign trade, because of the small size of domestic markets. For small business firms in the United States, concentrating on our internal market, I do not know if we have reasonably sure information about the conditions under which the size and structure of the firms make entry into the foreign trade field attractive and financially sound.

It may be that the most immediate obstacle to increased foreign trade activity by small business is the lack of knowledge-the lack of knowledge of opportunities and the limited knowledge of how to grasp opportunities. At the same time, it should be reemphasized that knowledge must also include knowledge of risks and of their appraisal.

More knowledge is being made continually available by private trade organizations and by private banking institutions, which are generally expanding their foreign departments. Government agencies are also contributing a great deal in this field. Particularly our Government missions through their work abroad, and the Department of Commerce through its contacts with business at home, are continually improving the knowledge of trade opportunities and problems.

The directors, officers and staff of the Export-Import Bank have made continuous and increasing efforts to make the private business.

and financial world aware of the facilities we have to offer. It is our hope that these efforts are already bearing some fruit.

I don't believe it is necessary for me to read the attachment, gentlemen, it speaks for itself.

Now, we have three charts some of you may have seen before, because they have been used before the Appropriations Committee.

Here is a good example of two credits where loans were made totaling $16.5 million, but the dollar cost of the two thermal plants bought in this country were $24,900,000. While on our books this shows a single credit, or two credits, at the most, it indicates that 40 companies in 15 States received orders as a result of this financing.

Where does the Export-Import Bank money go? The black color indicates the countries in which we have made loans. This is up to last December 31, 1958, and indicates that we have made loans in Canada for $375 million, Latin America, 3.6 billion, Europe 3.5 billion (and that includes the lend lease loans made at the close of the war), in Africa, 250 million, in Australia for 27 million, and in Asia 2 billion.

Those are round figures, and I think I mentioned before we are now loaning in 56 countries.

At the end of our 25 years, we made a chart which gave an overall financial picture. It indicates that up to February 12, 1959, we authorized some $10 billion in loans for over 1,600 individual credits. At that time we had disbursed-we had actually paid out, 6.6 billion and had committed at that time 1.6 billion.

The commitments, gentlemen, are for orders that have been placed, where shipments have not as yet been made. We had received repayments at that time of $3.3 billion, which was just half then of what we had disbursed.

We had paid to the U.S. Treasury $438 million in interest and dividends.

In addition, we had paid all of our own administration expense from earnings, charged off losses totaling 2.9 million of dollars, and at that time we indicated that we had $536 million as reserves.

It is rather interesting that in going over these records our best estimate is that we have encouraged more than $1 billion in private investment to go overseas.

Mr. YATES. Thank you very much, Mr. Waugh, for your very excellent and enlightening statement.

What is the minimum loan that you would consider?

Mr. WAUGH. We have no minimum loan, Mr. Chairman. I think the smallest loan we made was $550 for a plow that went from Rome, Ga., down to Brazil. We have made numerous loans for $2,000, but we have no minimum, sir.

Mr. YATES. The next question that comes to mind is one with reference to your requirements.

Suppose a manufacturer of saws-that was an example yesterday-a manufacturer of saws in a small town in this country wants to sell his saws abroad. He gets the information from the Bureau of Foreign Commerce of the Department of Commerce as to where a likely market is, then he needs some credit and he comes to you.

What do you require of him in order that he may obtain money from you?