Mr. GRENAS. Monthly payments, yes. But any other dealer will require at least one-third cash payment, or 20 percent, and the rest in monthly payments. Today a dealer offered a car to me with 24 payments without any cash down.

We have another situation which is of great importance. Agriculture in Mexico by previous political situations has not developed. There is a great need of money for commodity loans to enable the farmer to market his produce in an orderly way and in such a way as to raise his standard of living and his capacity to buy goods.

Senator BENNETT. In this country that is done through a combination of interests. The Government participates in some crops and private interests participate in other crops.

Mr. GRENAS. In any country you have the farm banks enabling the farmer to buy his ranch and pay for it in a number of years. They also have the farm banks making loans to the small credit unions, which you call cooperatives here, and then on that basis they have created the structure of financing the farmer. We have no such thing in Mexico.

Today the commercial banks are used to handle part of such loans. There are two Government banks, the Agrarian Agriculture Bank and the National Agricultural Bank. They are not able to meet the requirements of the rural population of Mexico. The importer in his bank will fill an important gap by establishing credits that the bank in Mexico could produce in two types of loans. We have the development loan which will require 3 years. It has a first lien on the property and on the equipment.

Then we have the loan to develop production. If those two types of loans were not there, the agricultural program of Mexico would disappear.

Senator BENNETT. Realizing that the Export-Import Bank exists primarily and almost completely to finance and encourage exports from the United States and imports into the United States, I can see an interest in the question of the financing of American exports of machinery. It is hard for me to visualize the use of the bank in this general agricultural financial problem.

Mr. GRENAS. I have heard many people in your country talk about a three-cornered hat, but I do not believe there is a use for it, with due respect to those who believe that way. I believe the development of agricultural production in Mexico would increase their capacity to buy from the United States in a very, very considerable manner. Today, Mexico is your third largest client. Mexico, by increasing its standard of living, will become a very important and most important factor in your exports.

Senator BENNETT. That would involve a completely different approach to this problem, because I am one of those who doubt that the American people have the credit to supply that service to all the other free nations of the world. I do not know how we would dare to supply that service to Mexico without being prepared to supply it to all other South American countries and probably many countries on the Continent.

Mr. GRENAS. Mexico is the only country that I know of that does not have an agricultural mortgage bank or private agricultural banks to meet the requirements of agriculture. The reason I have gone into agriculture, answering the questions from you, is that this com

mittee looks into the need of providing the necessary power to the Export-Import Bank to grant credits to the American manufacturers through the United States banks to enable them to sell on the same terms and conditions that Europe is selling in Mexico.

Senator BENNETT. Earlier in the discussion the general question was raised whether that whole burden should be thrown on the governmental agency or whether the manufacturers involved should not be concerned with that problem.

Mr. GRENAS. The manufacturers will assume part of the insurance guaranteeing the repayment of the loan. But as far as my understanding of banking legislation and banking structure in the United States is concerned, the commercial banks are not qualified to grant trade for more than 90 days with renewals, and no time for more than 2 or 3 years.

As long as the private banks lack that capacity they will not be able to extend that credit facility to the manufacturer, and the manufacturer will not be able, in turn, to meet the credit requirements created by the competition from Europe.

Senator BENNETT. Which is created largely on the basis of American money which has been supplied to Europe.

Mr. GRENAS. Correct.

Senator BENNETT. Do you believe that the Export-Import Bank should finance consumer goods?

Mr. GRENAS. I believe the Export-Import Bank was created for that very definite purpose.

Senator BENNETT. To finance the exportation of consumer goods? Mr. GRENAS. Yes, sir.

Senator BENNETT. Rather than of durable goods or productive goods?

Mr. GRENAS. You have the International Bank financing the requirements for the development of backward countries or associated governments, to provide the credit necessary to enable those people to develop their large industries and resources. But what we need is a banking organization capable of granting the American manufacturer and exporter, in all the number of items exported, the facilities to handle that trade.

Senator BENNETT. Should we not look forward to the time when the Republic of Mexico develops a banking system to take care of its own consumption problems?

Mr. GRENAS. Mexico is a very wealthy and very rich country which is in the midst of development. It has an ever-growing demand for money. Mexico up to the past 4 or 5 years had not borrowed from the time of the confiscation of oil, had not borrowed in the international market. They have developed the country to a tremendous proportion out of their own earnings. But the time has come when Mexico cannot continue to grow in industry and agricultural production without looking to the foreign markets for additional credit.

Senator BENNETT. Unfortunately I have just been reminded that I have another meeting at 4 o'clock. I had forgotten about it. Much as I would like to discuss this further, Mr. Grenas, I must go to another meeting.

I appreciate your coming. Thank you very much.

With this testimony we will bring to a close this part of the hearings. We will recess the hearings, to meet again at the call of the chairman.

As you know, Senator Capehart has not been well. His personal physical requirements impose some limits on the continuation of these hearings.

Tomorrow morning at 10 o'clock the Subcommittee on Banking and Securities will begin a series of hearings on proposed amendments to the Securities and Exchange Act, under the chairmanship of Senator Bush of Connecticut.

If there are any additional statements or if there is additional evidence that anyone feels should be added to the material that we have been able to develop in the last week, that material may be submitted to the staff of the committee, and if satisfactory, will be included in the record.

At this moment, then, I will recess the hearings, to be continued again at the call of the chairman. I appreciate the contributions all of you have made.

(Whereupon, at 3:55 p. m., the hearings were recessed, subject to the call of the chairman.)

APPENDIX

The following documents were inserted in the record as referred to in the testimony of E. V. Huggins, page 76.

THE UNITED STATES AND ITS FOREIGN TRADE POSITION

A special study prepared by the National Industrial Conference Board, Inc., for the National Electrical Manufacturers Association

SUMMARY OF FINDINGS

The highlights of the factual data, charts, and tables of this report-a large portion of which has never before been available for general public use-may be summarized as follows:

1. The dollar value of total sales of United States corporations manufacturing electrical products, as well as the dollar value of both exports and imports of such products, have risen sharply in the postwar years, 1946 to 1953, inclusive, but at widely varying rates.

(a) Total sales during the postwar years have averaged 6.6 times their average for the prewar years (1935 to 1939, inclusive).

(b) Exports have averaged in the postwar years 4.9 times their prewar average. (c) Imports have averaged in the postwar years 4.6 times their prewar average. (Details in secs. I and II.)

2. While total sales in 1952 were 9 times their prewar average, imports in 1952 were 12 times their prewar average. In contrast export sales in 1952 were only

6 times higher than their prewar level.
The foregoing data are expressed in tabular form below:

3. The rate of increase of imports of electrical equipment reflects the rehabilitation of foreign industry and its approach toward a surplus position.

The rate of increase in imports has accelerated significantly in more recent years, as compared with a slowing down in the growth of exports.

This divergence in trends became far more marked in 1953, as is shown by the following table:

United States imports__

United States exports. -

First half of 1953 over

first half of 1952, percent increase

50

9

Excluding Canada, exports for the first 6 months of 1953 were 7 percent below those of the first 6 months of 1952 (secs. I and II).

4. Competition from foreign countries for third markets has also grown much keener, especially during the past 2 years, and is now threatening further inroads upon United States exports of electrical equipment, particularly in South America.

399

For example, a comparison of European and United States price quotations of heavy electrical equipment, publicly opened within the past 18 months in Latin American and Asian countries, shows that of 124 different quotations 80 percent were less than the United States bid (sec. IV, exhibits B, C, D).

5. Foreign manufacturers of electrical products have very large labor cost advantages over United States competitors. These advantages are greater now than ever before.

(a) In 1952 total monetary hourly wages and wage supplements (converted into United States dollars at official exchange rates) of the 9 nations covered by the survey ranged between only 10 percent of United States wages (and supplements) in Japan to 33 percent in Belgium and Sweden. In 1938, the range was from 7.3 percent in Japan to 46.6 in Germany.

Wage supplements have now become a significant factor in any wage comparisons among nations. For example, in France and Italy such supplements exceed one-third of the cash wages of their workers.

The wage ranges for 1938 and 1952 in the 9 countries were as follows:

The wage differentials between the United States and these 9 countries have widened substantially in the postwar years. Only Japan, of the nine countries, has increased its wage rates relative to the United States since 1938. Germany, as shown by the above table, has moved from her prewar position of the highest wage country among the 9 nations to the fourth lowest in 1952.

(b) By 1952 industrial production in 7 of the 9 countries had recovered to levels which were 33% percent or more above their 1938 levels. Japan was only 1 percent above her 1938 level.

West Germany's production in 1952 was 44 percent higher than in 1936, while her production of electrical machinery and equipment was 188 percent above 1936, but a substantial portion of these gains has been the result of transfers of industrial capacity from East to West Germany rather than overall increases in West German production.

(c) The legal work week (before overtime payments become due) ranges between 44 and 48 hours in most European countries. Overtime payments are not generally more than 25 percent above regular wages.

(d) During the postwar period, labor costs as a percentage of production value have decreased considerably more in the various foreign countries than they have in the United States. Three of the 4 countries for which comparison with a prewar year is possible also show a much steeper decline for that period than does the United States. The reason for the more rapid postwar decrease in labor costs abroad is a combination of increases in productivity, which was very low at the beginning of the postwar period, and in value of production both rising considerably faster than wage rates (including wage supplements). In the United States, on the other hand, money wages and wage supplements approximately kept pace with increases in productivity and in value of output. These factors are mainly responsible for the increased disparity in labor costs between the United States and the various European countries.

(e) Statistical limitations make it impossible accurately to compare the output per man-hour between particular industries of various nations. However, it is both proper and possible to compare trends in productivity of particular industries of various countries, since substantiating data are available for certain nations over certain periods.

The following table shows changes in productivity of the electrical manufacturing indsutries in 6 nations over certain years for which comparable data are available.