city has been increased by 25 percent. The American management firm which was employed by the Chilean steel mill is now busier than it ever has been, operating other projects in Chile and elsewhere in Latin America. On the Bolivian highway project where over 2,000 men were employed, only 70 United States technicians were employed. All the other were trained on the job, including operators for hundreds of pieces of construction equipment, mechanics, servicemen and administrative personnel. The turnover in local employees was high because, once trained, they left the job to go into small businesses and, in many cases, to become instructors in local trade schools.

The bank's staff itself has been able, in the course of frequent field trips, to make many valuable technical suggestions that have generally been well received by foreign management. A relatively simple case which involved a saving of approximately $8 million comes to mind. A Latin American railroad requested a credit of $9 million for the purchase of 1,600 boxcars. Two members of the bank's staff, an engineer and an economist, made a quick tour of the railroad. Among other things, they found that quite serviceable boxcars were being used as domiciles by the railroad's road gangs. They also discovered that adequate and attractive portable houses could be built for less than one-tenth of the cost of the equivalent freight-car space thereby released. About 1,000 freight cars have been released for road service and the road gangs were much more satisfactorily housed than they had ever been before.

In another case, the bank's representatives located about $15 million worth of scrap metal held by an enterprise that was seeking a loan of more than that sum from the bank for expansion. In still another instance, the recommendation of bank staff members that a return-loads bureau be established in the country increased the effectiveness of that country's motor fleet by an estimated 30 to 35 percent.

Technical knowledge as applied to a single enterprise is of limited value unless it is disseminated through a country's economy and creates trained personnel for establishing still other enterprises in still other fields. For make no mistake about it, the importation of know-how is expensive. A good illustration of dissemina

tion of technical knowledge is found in the large number of industrial enterprises clustered around the Volta Redonda steel mill and staffed largely by personnel who owe their training directly or indirectly to the 100 United States specialists who were employed initially for the purpose of operating the plant and training their Brazilian successors.

Attached to this paper as an exhibit is a list of projects financed by the bank where the major operations have been conducted by United States engineers and construction contractors. This is not a complete list; practically every credit for capital goods involves consultation with some United States technician, often with the exporter itself, some of which offer extensive engineering services. Many United States nationals have organized foreign companies which perform services as subcontractors and often as prime contractors, however, these are not readily identifiable. Besides the above, a tremendous amount of technical know-how has gone into projects in the hope of obtaining financing, but which have been rejected by the bank for reasons other than nonfeasibility. Many of these either have been or will be eventually accomplished.

The list mentioned above includes 61 projects, the total cost of which was $991 million; the extent of Export-Import Bank financing for these was $534 million. They were for transportation, power, mining, metallurgical, steel, industrial, synthetic fertilizer, agricultural and other projects. On every one, United States engineers, scientists, administrators, craftsmen and skilled laborers worked side by side with their foreign counterparts, freely exchanging ideas and skills, training these people to carry on the same work after the "gringos" went home. From these people come the country's automobile mechanics, contractors, highway engir eers, railroad train dispatchers, radio servicemen and so on and on. And better still, they are good students because they worked to get that education, it wasn't a handout.

(Exhibits A to F attached to the report will be found in the appendix, p 1149.)

42493-54-pt. 2- -7

Export-Import Bank projects employing United States engineering and construction firms

H. E. Bovay & Co., engineer; Tellepsen Construction Co., construction supervision.

Brown & Rott, engineer contractor; H. E. Pollard & John
Myers, engineer and geologist.

Chemical Construction Corp., engineer; Blaw-Knox Con-
struction Corp., contractor.

Allen & Garcia, engineer, washing plant; Pierce Manage-
ment, general engineering.

Armco International Corp., engineer.

Arthur G. McKee & Co., engineer.

Constructora Intercontinental, contractor.

Edward D. Stone, architect; Paul Smith, contractor.
R. W. Hebard & Co., engineer.

Ebasco Services, Inc., engineer, power facilities; New Jersey
Zinc Co., process consultants.

Utah Construction Co., engineer contractor.

Holabird, Root & Burgee, architect; Intercontinental Hotel
Corp., consultants.

Mr. STAMBAUGH. There are two memorandums: "Contribution of Export-Import Bank to Flow of Private Capital Abroad," and "Hotel Credits in Latin America," by Albert J. Redway:

BIOGRAPHICAL SKETCH OF ALBERT J. REDWAY

Born Cincinnati, Ohio, December 17, 1895.

Harvard University, bachelor of arts, 1918.

Commissioned first lieutenant, Infantry, United States Army, 1917. Served with AEF in France; aide-de-camp to commanding general, 35th Infantry Division. Honorable discharge May 1919.

1920-25: Employed by American Laundry Machine Co., Cincinnati, Ohio, in factory production in Cincinnati, and sales offices in Boston and New York. 1926-29: Member of E. & F. King, Inc., Boston, Mass., paint manufacturers and distributors of heavy chemicals to textile and related industries.

1929-42: Successively vice president, president, and member of board of directors of National Wrapping Machine Co., Springfield, Mass. This company is a wholly owned subsidiary of Package Machinery Co., Springfield, Mass., and Baker Perkins Co. of Saginaw, Mich., and manufactures automatic machinery for the application of diverse wrapping materials to foodstuffs, tobacco products, pharmaceuticals and many other types of merchandise for both preservation and display. Company sells a considerable percentage of its products abroad, having a profitable export business to Europe and manufacturing facilities in England. Latin American markets were being developed when curtailed by war and company directed its energies to manufacture of equipment for military establishment.

1942-45: On leave from company to United States Army Air Forces. Commanded air depot group formed at San Antonio, Tex., and transported to Calcutta, India, to become part of large air depot established there for supply support of 10th and 14th Air Forces in China, Burma, India theater. Returned to United States and reassigned to temporary duty in ETO with team of officers to carry out posthostilities intelligence requirements in Germany. Honorably discharged in October 1945. Retain rank colonel, USAF Reserve. Performed civilian service with Armed Forces as member of Navy Price Adjustment Board until April 1946.

With Export-Import Bank since June 1946, serving as Associate Chief and Chief, Private Capital Participation Division 1940-53.

CONTRIBUTION OF EXPORT-IMPORT BANK TO THE FLOW OF PRIVATE CAPITAL ABROAD

(By Albert J. Redway, Chief, Private Capital Participation Division) The Export-Import Bank of Washington has provided an important incentive to the flow of private capital abroad. Established in 1934, the Export-Import Bank Act of 1945, as amended, states that "The objects and purposes of the bank shall be to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States or any of its Territories or insular possessions and any foreign country or the agencies or nationals thereof." The act further states, "It is the policy of the Congress that the bank in the exercise of its functions should supplement and encourage and not compete with private capital, and that loans, so far as possible consistently with carrying out the purposes of subsection (a), shall generally be for specific purposes, and in the judgment of the Board of Directors, offer reasonable assurance of repayment." During the years of its existence, the bank has made many types of loans in most of the free countries of the world. Some of these, where the national interest dictated, and particularly following the war, have been to foreign governmental agencies for basic economic facilities such as roads, dams, irrigation developments, etc. These are prerequisites to the advent of private investment. Principally, however, the bank's activities, as directed, have been for the stimulation of United States exports and imports and the investment of United States private capital abroad. Since it is a banking institution, the projects presented for its consideration are judged in the light of their worthiness as to self-liquidation and their benefit to the recipient foreign economies in respect to dollar earnings or savings, and generally have been financed in three broad categories: (1) Exporter loans; (2) loans for foreign projects in which the United States investor has an interest; (3) loans made in which United States commercial banks participate with Export-Import Bank for their own account and risk.

(1) The exporter loan is the means by which many United States manufacturers and service organizations finance the sale of their products or services in countries on credit extended by the bank. In these instances, the bank purchases the dollar obligations of the foreign purchaser so that the latter may promptly pay the United States supplier in dollars for his goods or service. It is usual for the United States supplier to carry a share of the foreign paper for his own account and risk.

(2) Loans for foreign projects in which the United States investor has an interest, ranging from complete ownership to a minority position, are particularly attractive to the bank. These loans serve the dual urpose of aiding in the export of American know-how techniques as well as capital. The bank undertakes to have the United States interests, as well as local interests, invest in the needed equity. The bank supplies the appropriate debt financing.

(3) Loans made by the Export-Import Bank in which United States commercial banks participate by purchasing certain_maturities for their own account and risk are those where the Export-Import Bank has initiated the loan to a foreign entity in whose country the investment climate and security is good but where the terms of repayment are longer than a private lending institution by law or policy may extend. By purchasing early maturities of such a loan from ExportImport Bank, the United States commercial bank may participate for that period of time feasible for its interests and receive a rate of interest consistent with the period of its participation.

The first category of financing has been responsible for the export of many United States products from every manufacturing community in the United States manufacturers of railroad and steel mill equipment, airplanes, motor buses, agricultural machinery, hydroelectric equipment, and the like, have been the beneficiaries. The second category has been responsible for the undertaking of permanent foreign investment in mining enterprises for basic metals, communication systems, and public utilities. In June 1952, the bank lent $41,140,000 to 7 Brazilian power and light companies to purchase United States equipment and services to enhance their service to various communities in Brazil. These companies are all subsidiaries of American and Foreign Power Co. The third classification has given opportunity for private financial institutions to do their part in association with the bank in situations and enterprises appropriate to their available facilities. Last year, 32 United States commercial banks participated with the Export-Import Bank in a $50 million loan to Belgium. In this instance, the bank notified members of the Federal Reserve System of its intention to make the loan and invited participation or purchase of the entire amount by commercial banks. Forty-five million dollars was purchased by the commercial banks for their own account and risk. Export-Import Bank retained $5 million for its own portfolio.

Presently, the bank is engaged in conversations with United States insurance companies and commercial banks relative to the financing of loans to foreign borrowers upon the Export-Import Bank's guaranty against default of repayment. The practice of this authority, which is contained in the bank's enabling legislation, retains for the bank its customary rights of selectivity, examination, interest rates, term of repayment, etc., but makes use of private capital for the financing rather than funds from the United States Treasury.

Of perhaps equal importance with the Export-Import Bank's role as international banker to United States foreign trade, where private financing facilities are unavailable, is the stimulus which the presence of the bank, as a participant, lends to mutually beneficial projects which might not otherwise be undertaken. In the present stage of United States foreign commerce, a steady and increased flow of American foreign trade and investment calls for the creation of an atmosphere of confidence on the part of United States foreign investors, as well as adequate financial participation. The Export-Import Bank, through its normal operations, can facilitate the realization of both these objectives.

The bank also has the responsibility of Public Law No. 30, passed by the 83d Congress in May 1953, and has completed arrangements for the bank to issue war risk and expropriation insurance. The bank's rules and regulations governing the issuance of the insurance were published in November and agreements were entered into with a broad list of insurance companies to act as the bank's underwriting agents throughout the country. Since the amount of money fixed by the Congress for the activity is small by comparison with American foreign exports, it has been determined to inititiate it on a selective basis and confine the coverage at the outset to raw cotton and cotton waste. Operational detalsi having now been perfected, the bank is prepared to receive applications from its underwriting agents on behalf of the cotton exporters.