transactions. These bankers acceptances then could be offered in the acceptance market, thereby limiting the actual cash outlay on the part of the accepting bank and would call for no actual outlay of funds by the Export-Import Bank. This is a proposal that, in my opinion, should be explored.

The competition that is now offered by industries in many European countries makes it extremely difficult for United States industries to compete in the world market. Industries in the Cleveland area have been informed by the buyers in foreign markets to the south of us that certain European countries have offered to sell them on 13 months' credit terms. It has been stated that some European governments are assisting their industries to enable them to grant such credits.

Therefore, it seems most logical that in attempting to meet this competition, the Export-Import Bank should fit in and become increasingly helpful to exporters here by guaranteeing such longterm credits. With the guaranty of the Export-Import Bank, commercial banks could purchase the paper without recourse on the seller of the merchandise, thereby enabling the industrial exporter to continue in a liquid financial position.

Should we dispense with the facilities of the Export-Import Bank, there will be great agitation in this country for Government credit insurance. If such an agency was created, it would be the beginning of a building of a bureaucracy the like of which we have never seen. Further, the insuring of credits, in my estimation, would permit a lot of unwise granting of credit by sellers of merchandise. Such sales would do the United States no good-in fact, it would do great harm. I feel that the activities of the Export-Import Bank should be broadened.

If we do not help foreign countries, especially those to the south of us, to improve their facilities for feeding themselves and developing their transportation systems, someone else will, and in the process, will have available to them a market for everything that they produce. Should we help intelligently, there will come great good will toward the United States.

Surely, with the continuation of the Export-Import Bank under its present capable management, conditions will be developed so that our exporters will be in a position to sell more and more United States goods abroad.

I have the same feeling of confidence regarding the activities of the International Bank for Reconstruction and Development. I appreciate that this bank is an international partnership and that loans made by it will not always result in the sale of merchandise produced in the United States. However, I do feel that this bank has good management and that they are making loans needed to help many of the difficulties existing throughout the world today. I am confident that applications for loans are scrutinized carefully to ascertain that the applicant is worthy of credit and that the need is economically sound.

The International Bank for Reconstruction and Development, as well as the Export-Import Bank, has been extremely helpful in extending credit for the purchase of machinery for developing agriculture, roadways, railways, and hydroelectric power-machinery urgently needed. Loans made for such purposes usually develop markets for other products made in the United States. I think that both the Export-Import Bank and the International Bank for Reconstruction and Development are serving a great need in the world today and should be continued.

Senator BENNETT. Thank you, Mr. Carlton. Other witnesses this morning talked about terms of 3 to 4 years offered by European competitors in South America. Do you understand that to mean that is an installment problem or that the entire principal is not due until the end of the term?

Mr. CARLTON. I wish I might answer that but the information I have is that it is on an installment basis, if it is 4- or 5-year. On the 13-month basis, that, too, as far as I understand it, would be on an installment basis.

Senator BENNETT. Do you feel that the Export-Import Bank should be used as an agency to enable American sellers and American exporters to engage in credit competition with the outside world? Should we undertake to give more liberal credit terms than Germany, for instance, as was advocated this morning?

Mr. CARLTON. I never advocate more liberal terms if they are not entitled to them. But I think through such an agency more liberal terms can be granted than most industries can afford to take on themselves without some financial assistance from banks.

When you come to financing a commercial transaction, when you get into 4 or 5 years, according to the lending facilities of our banks today, the credit is too long.

Senator BENNETT. It is an interesting problem. I have gathered the inference from testimony given here that some of our foreign competitors are offering merchandise that might be inferior and are in effect selling credit rather than merchandise, and that some of our potential customers are making their decision on the basis of the credit offered.

Do you think we should as a nation undertake to get into that kind of competition as a matter of policy?

Mr. CARLTON. No, I do not think we have to go all the way to meet that competition. I think we have to extend more liberal credit terms. I wish I had factual evidence to present to you. But only recently, as stated by 3 or 4 who are actually engaged in the selling of American products abroad, "We are convinced that whenever it is possible to buy American-made merchandise, not necessarily across the board, but a large number of things that we produce, foreign pruchasers prefer to purchase the things that we make."

My feeling is that probably we do have to go some distance in order to meet the credit requirement that they feel they need and probably are justified in obtaining from us.

Senator BENNETT. Is it not one of the marks of a buyer's market that pretty soon you get into the business of selling credit as well as selling the merchandise that you have?

Mr. CARLTON. You mean, that with the facilities available for extending

Senator BENNETT. When the buyer has a wide choice there is a tendency to throw in credit advantages to induce him to make a choice, in addition to whatever advantage his product has?

Mr. CARLTON. I think that is right.

Senator BENNETT. Are we in that kind of world situation today? Mr. CARLTON. I think we are. I think we have got the product, and in order to fully meet the competition there should be available, probably, an opportunity to extend more credit and longer terms.

Senator BENNETT. Thank you very much. Without objection, we will make your letter of September 18, 1953, giving the answers to our questionnaire, a part of the record.

(The material referred to follows:)

Senator HOMER E. CAPEHART,

CENTRAL NATIONAL BANK OF CLEVELAND,

Cleveland 1, Ohio, September 18, 1953.

Chairman, Committee on Banking and Currency,

United States Senate, Washington, D. C.

DEAR SENATOR CAPEHART: We are very glad to comply with your wishes by answering the questions which you have set forth in your letter of September 10, concerning the Export-Import Bank. We are answereing your questions in the same order that they appear in your letter.

(1) We feel that the Export-Import Bank indirectly, at least, has been of assistance to clients of our bank. We have had occasion where good customers of our bank have asked for financial assistance in extending credit to foreign buyers that in our estimation did not come in the category of the loaning facilities of a commercial bank. In such cases, we have suggested that they communicate with the Export-Import Bank where they have received full cooperation even though it might have been impossible for the Export-Import Bank to assist in extending such credit. The overall results of many loans made by the Export-Import Bank into foreign countries have certainly helped develop markets for exporters in our area.

(2) We have never had the feeling that the Export-Import Bank has competed with private capital in our area.

(3) We feel sure that the Export-Import Bank has never taken any business. away from our bank.

(4) We feel that we have had a rather close relationship with the Export-Import Bank and have made frequent calls that we may be acquainted with the management and therefore feel that they are fully aware that we are anxious to cooperate with them at all times. At the moment, we know of no way that they could use our services in the future more than they have in the past.

(5) In answering this question, we are assuming that you are requesting information regarding term loans for the financing of imports or exports and in no way is my answer based upon our feelings on term loans in general. We have rather freely financed (principally) export transactions for shippers in this area on repayment basis up as high as 30 months and our experience has been excellent. However, we have gone into each transaction very carefully and aside from being fully acquainted with the borrower, have been able to establish pretty definitely that possibilities of continuing payments to eventually liquidate the loan over a period of time on the part of the buyer, have always been good.

(6) While we have actually purchased paper from some of our customers without recourse on them, we have had recourse either on a bank abroad of a credit established by the foreign bank in this country. As you know, it is impossible for a commercial bank to buy such paper without recourse.

(7) In the several cases where we have acted for the Export-Import Bank on the operation of credits, we have felt that our compensation has been adequate and we have always taken into consideration the risk factors involved by the Export-Import Bank as a Federal agency. We might add that it has always been a real pleasure to cooperate with them.

(8) We have never participated with the Export-Import Bank in any of its loans without their guaranty.

(9) We consider that the continuation of the Export-Import Bank's loaning facilities are essential in international trade. We feel that there are loans that can be made by the Export-Import Bank not eligible, according to leading regulations of commercial banks, that both directly and indirectly benefit the markets for goods manufactured in this area and open sources of raw materials necessary to continue our economy.

(10) We believe that the Export-Import Bank has facilitated the expansion of international trade in the past and can more adequately expand its activities in the future if they are given broader powers and if the policy be continued to have this organization manned only by men with complete working knowledge of all of the problems in import and export trade activities. The people with whom we are well acquainted we feel have those qualifications.

If we can help further in aiding your committee work, we hope you will feel free to call on us.

Very truly yours,

O. L. CARLTON, Vice President.

Senator BENNETT. Our next witness will be Albert L. Long, vice president of the Republic National Bank of Dallas. You may proceed in your own way, Mr. Long.

STATEMENT OF ALBERT L. LONG, VICE PRESIDENT, REPUBLIC NATIONAL BANK OF DALLAS, TEX.

Mr. LONG. My name is Albert Long. I am vice president of the Republic National Bank in Dallas. After hearing the testimony this morning I would like the privilege of getting away from those matters. There are several things that have been brought out.

First, Senator Capehart has emphasized that you are particularly interested in facts rather than opinions. The facts as regard my bank are outlined in our reply to the questionnaire which I believe is to be part of these proceedings.

Senator BENNETT. May I interrupt you there? Mr. Long, is that the reply to the questionnaire of the Advisory Committee?

Mr. LONG. Yes, which is intirely favorable.

Senator BENNETT. I wanted to be sure that I identified it. There have been two questionnaires. One was by the Advisory Council and one by the committee itself.

Mr. LONG. This is to the committee itself.

Senator BENNETT. Do you want me to put that material in the record?

Mr. LONG. Yes.

Senator BENNETT. Without objection, and at this point we will put into the record the reply of the Republic National Bank of Texas over the signature of Mr. Long, dated September 21, 1953.

(The material referred to follows:)

Hon. HOMER E. CAPEHART,

REPUBLIC NATIONAL BANK OF DALLAS,

Dallas, Tex., September 21, 1953.

Chairman, Committee on Banking and Currency,
United States Senate, Washington, D. C.

DEAR SIR: It is my pleasure to reply to your recent favor which is in the form of a questionnaire regarding certain features of the operation of the Export-Import Bank of Washington. Our answers to your questions should, in my opinion, be as follows:

1. "Has the Export-Import Bank been of assistance to clients of your bank?" The Export-Import Bank has been of assistance to clients of our bank by making loans abroad which permitted the exportation of agricultural products, especially cotton, and gave our customers the opportunity to sell the commodities. 2. "Has it competed with private capital in your area?"

To the best of our knowledge, it has not competed with private capital in our

area.

3. "Has it taken business away from your bank and, if so, how and to what degree?"

We know of no business they have taken away from our bank, as the loans the Export-Import Bank have made were not in direct competition with our loans. 4. "Can the Export-Import Bank use the services of your bank more than in the past and, if so, how?"

We have always had close cooperation between the Export-Import Bank and ourselves and believe that in the future the opportunity may arise when they can open more of their letters of credit direct with the interior banks such as ourselves, than they have in the past.

5. "What position has your bank taken with respect to term loans, i. e., where repayment exceeds a term of 6 months?"

We take it that by "term loans" you mean term loans to borrowers outside of the United States. We have entered into one or two of these term loans over 6 months with borrowers in Mexico, but we have not solicited this type of loan in the past.

6. "Are you financing, without recourse, shipments to foreign countries payable over term periods?"

We are financing, without recourse, shipments of goods to foreign countries, payable over a period of time up to 6 months, where a letter of credit is opened and we have the direct obligation of the foreign bank.

7. "In cases where you have acted for the Export-Import Bank in the operation of credits, has your compensation been adequate, taking into consideration the risk factors involved, by the Export-Import Bank as a Federal agency?"

Where we have acted for the Export-Import Bank in the operation of credits, our main consideration has been to facilitate the movement of Texas commodities and goods rather than proper compensation. Therefore, we have not carefully analyzed the compensation to see if it was adequate in comparison with other services.

8. "Have you participated with the Export-Import Bank in any of its loans without the latter's guaranty? If so, was your experience satisfactory?"

We have not participated with the Export-Import Bank in any of its loans without the latter's guaranty.

9. "Do you consider continuation of the Export-Import Bank's loaning facilities essential in the interest of international trade?"

Certain Export-Import Bank loans such as the ones outstanding to and now in consideration for Japan move cotton by making purchase dollars available. If these dollars cannot be made available by the foreign buyers through other banking facilities, it is my opinion that a continuation of the Export-Import's loaning facilities would be essential in the interest of international trade.

10. "Has the Export-Import Bank facilitated the expansion of international trade in the past, and if so, how can it more adequately expand it in the future?” Many other commodities such as cotton, mentioned in the answer to No. 9, no doubt have been financed by Export-Import Bank facilities and tend to expand international trade.

We trust that these answers will assist you in arriving at your conclusion. However, as this is a controversial subject, we wish to give you this information in confidence as mentioned in your letter.

Assuring you that we are willing to cooperate with you in every respect, we are, Very truly yours,

ALBERT L. LONG, Vice President.

Mr. LONG. You will note from that reply that the principal exports we are interested in are commodities, especially cotton, which is now in surplus supply, a problem that you in Congress have before you at the present.

I would like just to make a few remarks that may be construed as opinions and, if they are, please pardon the expression of them.

To begin with, I would like to bring two facts forward against the Export-Import Bank. One is its slowness in moving in certain instances. Particularly on February 12 when in a meeting with Secretary Benson we recommended that war-risk insurance abroad be passed. The Senate passed the law. It is my understanding that it is not working yet. That is nearly a year. The delay in the Spanish loan cost the Spanish buyers considerable money because the cotton market had gone up in that time.

The other side of the ledger is strictly in favor of the Export-Import Bank. General Edgerton in his statement to you of January 27 reported losses of about one one-hundredth of 1 percent charged