Mr. BOETTLER. I am just bringing that up. There was another $12 million for Spanish commercial banks, which was probably part of our wooing of Spain recently. So we opened up assistance for Spanish banks.

There was $30 million for various mining companies. That was probably in connection with our purchase of strategic materials, either to develop facilities or do other things. So out of the total, the interest to the Federal Government, it seems to me, accounts for the major portion of the activities. The Export-Import Bank, as I see it, is largely an agent of the United States Government, which may be the ideal way to handle it.

Senator BUSH. Of course, Mr. Chairman, it is generally considered that the Export-Import Bank is an arm of the United States foreign policy. Do you disapprove of that?

Mr. BOETTLER. No, I do not disapprove of it. That is exactly what they want. But I do not believe we need a separate agency to carry that on.

I think where the United States Government is interested, and if the bank makes commitments, it could have been handled without having the right hand pass it over to the left hand, to do the thing the right hand could have done directly.

Senator BUSH. You, as a banker, know very well you have to have investigation and very careful planning for the making of these loans. They have to be carefully examined. There has to be an agency of some sort that specializes in that kind of work; is that not true?

Mr. BOETTLER. There are many private agencies that do that. There are American banks that are well-equipped to do that sort of thing all over the world.

Senator BUSH. That proves further what I am trying to say, that it does require an organization and planning and scrutiny.

Mr. BOETTLER. That is right.

Senator BUSH. If the Government is going to step in and make loans to foreign countries when private agencies will not make themthat is the precept of the Export-Import Bank policy, as you knowthen do you think it is unreasonable that the Government should have an organization expertly set up for that kind of work?

Mr. BOETTLER. No; I do not think it is unreasonable, but unfortunately when it is handled that way sometimes things are done for political purposes, as we saw in the RFC, rather than for the real intent.

Senator BUSH. That is a very interesting point. We are talking about the Export-Import Bank and not about the RFC. But if you have any evidence

Mr. BOETTLER. I have no evidence of that.

Senator BUSH. You just referred to the RFC.

Mr. BOETTLER. The reason I make the point is that Federal agencies often do come under that control. The Federal Government had worked out-take during the war, they used regulation B. They needed careful credit studies and analyses made of credit, but they did not necessarily have to set up a special Government agency to do that. They ran it through the banks and did it successfully.

Senator BUSH. I am sure, if the chairman will agree, that if you have any evidence of any malfeasance as to the officials in the bank, anything of that kind which can in any way be compared to the RFC,

which you referred to, you owe it to this committee to submit such evidence.

Mr. BOETTLER. I was only saying that often happens where you have governmentally controlled agencies.

Senator BENNETT. Do you have any further comments, Mr. Boettler?

Mr. BOETTLER. No, sir.

Senator BENNETT. Thank you very much. We appreciate your taking the time to come down here and give us this point of view. It is very valuable.

Because Senator Bush has another appointment and is particularly anxious to hear two witnesses, unless there is objection I would like to call now Mr. Frank P. Shepard, vice president of the Bankers Trust Co. of New York City. Mr. Shepard, you have a short prepared statement, do you not?

Mr. SHEPARD. I do, sir.

Senator BENNETT. We will be happy to have you present it to us in any way you please.

STATEMENT OF FRANK P. SHEPARD, VICE PRESIDENT,

BANKERS TRUST CO., NEW YORK CITY, N. Y.

Mr. SHEPARD. My name is Frank P. Shepard. My position is that of vice president of the Bankers Trust Co. of New York, where I am in charge of the foreign division.

Our experience with the Export-Import Bank of Washington extends back to April 1939, when we first initiated a business relationship with that institution. A list of Export-Import Bank loans in which Bankers Trust Co. took part is attached for the record. It may be helpful if I describe very briefly the nature of our business with the Export-Import Bank, and then proffer a few conclusions drawn from the observations of the past 15 years.

In the first few years, our main participation was in agency arrangements under which Bankers Trust handled documents and advanced funds on behalf of the Export-Import Bank to borrowers of the latter institution. We obtained a share in this business through soliciting it from the Export-Import Bank. Our compensation was initially 1 percent on advances made; later the rate was raised fractionally from time to time, and presently stands at 2% percent.

The understanding was that the Export-Import Bank would repay, upon demand, the sums advanced by us on its behalf, but we continued the policy of carrying such advances until the autumn of 1948, when the demand for loans from our regular domestic customers led us to employ our funds elsewhere. At that time, the amount of our advances on behalf of the Export-Import Bank was above $26 million. Another activity, which has increased considerably in the postwar period, involves the issuance of letters of credit by Bankers Trust Co. under commitments made by the Export-Import Bank. Foreign borrowers from the Export-Import Bank employ the proceeds of their loans for purchases of goods in the United States. The general practice is to make payment for these purchases by way of a letter of credit of an American bank in favor of the United States exporter. Thus, we obtain a share of this business, which is guaranteed by the Export-Import Bank, as a result of requests from the borrowers

abroad that Bankers Trust Co. be designated to open letters of credit. In some instances the letter of credit is first submitted to the ExportImport Bank in order to establish that the proposed transaction conforms with the terms of the loan. In other cases we are given a set of instructions and the burden is upon us to follow them in issuing letters of credit. The bank then agrees to reimburse us for the amounts we advance to the United States supplier.

Occasionally we have discounted notes of foreign borrowers endorsed by the Export-Import Bank. Also, in some instances in recent years, Bankers Trust Co., together with other banks, has participated in foreign credits where the Export-Import Bank acted as manager but did not guarantee or endorse the loan. Such instances included participation in a $200 million loan to the Netherlands Government in 1946 and in a $50 million loan to the Belgian Government in 1952.

My comments on the general subject to Export-Import Bank activities are necessarily based on the specific experience gained in the transactions in which we have participated. As a general rule, we do not take part in the negotiations leading to Export-Import Bank loans, and, accordingly, we enter the picture only after that bank has concluded the loan agreement with its borrower. My observations tend to support the following conclusions:

(1) The operations of the Export-Import Bank have materially developed and facilitated United States exports, especially to Latin American countries. A great many individual transactions in world. trade would in all probability not have been concluded without the services of the Export-Import Bank.

(2) I am fairly certain that the credits extended by the ExportImport Bank in which Bankers Trust participated, and which are shown on the attached list, would not have been obtainable from private sources without the facilities of the Export-Import Bank at the time the loans were made. I presume that this would be generally true also of those loans made by the Export-Import Bank in which Bankers Trust did not share.

It should be kept in mind that the present unsettled world conditions make it unwise for commercial banks to grant long-term credits to foreign borrowers, especially since the risks differ significantly from those involved in the financing of domestic enterprise.

(3) Our experience with the Export-Import Bank loans in which we participated has been thoroughly satisfactory. Furthermore, our contacts with the Export-Import Bank have been gratifying and we have found that institution quite cognizant of the many current problems relating to business and banking. From time to time, we have referred some of our customers to the Export-Import Bank, where we felt it could be of help in their business operations. Our customers tell us that their problems receive sympathetic consideration. There have been instances where further action appeared warranted and the results have been generally constructive

(4) Consequently, I feel justified in stating that in those matters which have come to my attention, the operations of the ExportImport Bank have been useful and efficient. I believe that the practice of the Export-Import Bank to employ the existing facilities of the commercial banks, wherever possible, for servicing its loans

has contributed importantly to this result, since the bank has thereby been able to avoid the expansion of its organization and personnel which duplication of facilities would otherwise have entailed.

(5) My conclusion at this time is that it appears to be in the best interests of American foreign trade, particularly in the face of growing competition for world markets, to have available the facilities of the Export-Import Bank, which is prepared to undertake the required financing not available from other sources. Many other countries have established similar organizations, with resulting advantages for their foreign trade.

These, in brief, are my observations and opinion. I heartily appreciate having received the privilege of presenting them to this committee.

(The list of credits extended by the Export-Import Bank in which Bankers Trust participated, and referred to above, follows:)

Bankers Trust Co., New York, N. Y., participations in credits extended by Export-Import Bank of Washington

under letters of credit by Spanish
banks and discounted by us.
Guarantor on acceptances created by
Italian banks and discounted by us.
Guarantor of loans made to refinance
payments to exporters.