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 as follows:

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 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

gencies increasing the undivided profits so reserved to $483.6 million at the end of fiscal year 1958.

You understand, of course, the figures given above are all estimates. Submitted with this request is a report to the Congress on the bank's budget estimates for fiscal year 1958. This report presents in detail the factors affecting the bank's budget requirements for 1958; the basis of computing the amounts requested for the various classes of administrative expenses; as well as data pertaining to the bank's lending operations for the calendar year ending December 31, 1956, and cumulative.

The most pertinent factor is the progressively increasing workload of the bank. This workload is reflected in the increasing number of transactions handled during successive fiscal years. In fiscal year 1956 the bank made 156 Export-Import Bank loans totaling $378.7 million (table, p. 30 of report). In fiscal year 1957, it is estimated that the bank will make 355 Export-Import Bank loans totaling $1,140 million (table, p. 30 of report). (Total at April 30, 1957 was $1,038.1 million.) Here I should say we will not handle the number of Export-Import Bank loans as estimated, but the total in dollars will be equal to or probably will exceed the figure just read.

It is estimated that in fiscal 1958 the bank will make 373 ExportImport Bank loans totaling $850 million (table, p. 30 of report). The bank's active loan accounts over a period also reflect an increasing workload:

During calendar year 1956 Export-Import Bank authorized 193 credits to borrowers in 38 countries for a total sum of $1,156,607,000 for United States industrial products, commodities, and technical services. The largest credit was the $500 million secured credit to the United Kingdom to meet dollar requirements for the purchase of petroleum and United States goods and services. Not since 1946 when postwar reconstruction loans were being made has the bank authorized a larger total amount for new credits.

The bank made cash disbursements during calendar year 1956 totaling $233,402,000, and received $266,286,000 in loan repayments, plus $84,710,000 in interest and certain minor fees, for total collections of $350,996,000 in the calendar year.

On March 16, 1957, our directors attended a hearing before the House Banking and Currency Committee on proposed legislation to extend the life of the bank to June 30, 1963, as recommended by the President in his Economic Report to the Congress last January. This legislation was approved by the House of Representatives on April 9, 1957, and was also favorably reported out by the Senate Banking and Currency Committee.

The bank's operations for fiscal years 1955 and 1956 resulted in a credit of approximately $90 million against the Government's budget for each of those fiscal years. Our best estimates for the fiscal years 1957 and 1958 indicate that our operations will result in a draw on the United States Treasury. The two factors resulting in a draw on the Treasury in 1957 and 1958 are (1) the $500 million credit approved for the United Kingdom and (2) the current money markets preclude the expectation that there will be any substantial participations in our credits by banks or financial institutions for some time.

The question as to whether or not we will have to draw on the budget in fiscal 1957 depends upon whether or not the United Kingdom will take down any of their credit which has been authorized. If the credit is not drawn down in the next calendar month, we can anticipate that we will pay approximately $90 million into the Treasury, but that will probably result in a draw in 1958. I think that explanation is in order. As of today, no funds have been advanced under the $500 million credit to the United Kingdom.

The bank recently introduced a new program designed to meet the increasing number of requests from American exporters for financial assistance. One of the important features is the use of an application form which will permit the faster processing of the smaller loan applications. Furthermore, under this program the refinancing of completed export transactions will be considered by the bank.

Definite benefits have resulted from on-the-spot investigations and inspections abroad by the members of the Board of Directors and the technical staff pertaining to the bank's credits. Such travel has been curtailed because of the necessity of absorbing unbudgeted expense items due to the Executive Pay Act of 1956 and rent increases effective from last July, without the benefit of a supplemental limitation to cover such expenses in the current fiscal year.

There was approximately $27,000 additional expense incurred due to these last two items, namely, the Executive Pay Act and the rent increase by GSA. The bank directors did not submit a supplemental budget but have through conservative management, I believe, saved this amount out of the actual appropriations for last year. This appears in more detail on page 4 of the report submitted.

In addition to restricting budgeted travel it has also been necessary to curtail employment of needed and budgeted technical assistants, and also to defer the acquisition of necessary additional office space.

Efforts are being continued to improve the bank's lending procedures and to expedite consideration of requests for assistance to United States exporters.

With the expansion that has taken place in financing by the bank of the sale abroad of American products, there has been a considerable increase in the number and amount of outstanding credits. This results in a greater need for inspections in many parts of the world, in addition to examinations of projects involved in pending applications. The bank's approved budget for fiscal year 1957 authorized the employment of consultants at a rate not to exceed $50 per diem. Experience has shown this amount insufficient for the purpose of engaging qualified consulting engineers who are specialists in their respective fields. The bank is, therefore, requesting that the maximum daily rate be increased from $50 to $100.