and further progress, the demand for heavy capital goods and the maintenance and replacement of the existing ones will continue to constitute a potential market for our heavy industry. Coincidentally, for every new level of improvement of the economic well-being of these people, a larger market will be continually developing for our consumer goods. The best proof of how the economic progress of the other countries of this hemisphere tends to make them better customers of ours, is presented by the case of Canada. With an industrialization and economic standard similar to ours, Canada has been buying from us, during the last several years, 3 to 4 times more than Mexico in dollar value, while the population of Canada is only about half as that of Mexico; and likewise, Canada has been buying from 4 to 6 times more than Brazil, with a population only one-quarter as that of this latter country. When we consider that we have living to the south of us about the same number of people as there are in the United States, we can just about start to realize what an opportunity for trade there will be, once these people reach a standard of living anywhere similar to ours. While that consideration is, as it should be, of great importance, there is another consideration that is, to my mind, equally as important and that is, the storehouse of raw materials that will be developed and placed at the common use of all the countries of the Americas, as soon as the countries to the south of us are given the means of beneficiating their natural resources. And finally, but by no means less important, but on the contrary much more so, the cooperation extended to the countries to the south of us to develop themselves will make it possible for them to realize their goals of economic maturity, and would thereby create the most powerful contingent of allies we could wish for in our crusade for freedom. The most effective way of accomplishing this cooperation with the countries to the south of us will be through the making available to them of suitable loans for the purchase in the United States of the capital equipment and the engineering planning necessary for their development. In some particular cases this financial aid should not be limited to the dollar value of the equipment to be procured, but should also cover local expenditure within the countries themselves. This part of the financing made available for use within the country, will act in the manner of pump priming which will accelerate considerably the improvement of the economic well-being of the country concerned. The most immediately available channel to extend this financial assistance to the countries to the south of us is that provided by the Export-Import Bank which has already had considerable experience in this field, as attested to by the record of its successful loans there during the last few years. In order to better accomplish the task ahead of us, it is my belief that the lending powers of the Export-Import Bank should be increased correspondingly. Financial aid provided so far by the Export-Import Bank to the countries of the Americas, has resulted in what would be considered very sound banking ventures. There is every reason to believe that further financial assistance will likewise result in faithful meeting of the obligations contracted. CIA. FUNDIDOra de Fierro Y ACERO DE MONTERREY, S. A., Senator HOMER E. CAPEHART, Chairman of Committee of Banking and Currency, United States Senate, Washington, D. C. MY DEAR SENATOR CAPEHART: I take pleasure in replying to the questionnaire you submitted to me through your letter of September 3, pursuant to the study of the operations of the Export-Import Bank of Washington that your committee is conducting. (1) My contact with the Export-Import Bank dates from the latter part of 1942 when I was accredited as Washington representative of Nacional Financiera S. A. of Mexico, position which I held until the end of 1945, and since then, as representative of Cia. Fundidora de Fierro y Acero de Monterrey, S. A. In the first instance, my mission was to secure project approvals, allocation of materials, priorities, and export licenses for the industrial program which the Mexican Government was sponsoring through Nacional Financiera S. A., part of which was financed by the Export-Import Bank. In the second instance, I have negotiated on behalf of Cia. Fundidora for suitable financing for the expansion program it has been carrying on, at its steel plant, in Monterrey, Mexico. (2) My correspondence with the Export-Import Bank has always met with prompt and satisfactory replies. (3) I have applied for two loans from the Export-Import Bank on behalf of Cia. Fundidora: the first one, in 1948 for $800,000, and the second one, last year for $4,500,000, both of them to cover the purchase of United States manufactured steel-plant equipment. (4) Both applications were granted. The negotiations were conducted in a very satisfactory manner and were completed with the kind and able assistance of the staff of the Export-Import Bank. The staff of the Export-Import Bank made a very conscientious study of the economic, financial, and engineering phases of our program and their findings were corroborated by independent surveys reported by firms of consulting engineers who dealt with the already indicated points, and made, as well, a market analysis. (5) The administration of the credits have been conducted in a satisfactory and efficient manner by the Export-Import Bank. The first credit has been paid back with interest to almost over 80 percent and will be paid in its entirety by December 1954. The second loan has just been placed in operation. (6) I have no complaints about the operation of the Export-Import Bank; but rather, gratefulness for the kind assistance always extended to me by its officials. (7) In my opinion, the Export-Import Bank has done a commendable job in facilitating the export and import trade of the United States within the limitations imposed by the means at its disposal. (8) I can answer categorically that the Export-Import Bank has helped in the development and expansion of the economy in Mexico through the financing of key projects that have materially_contributed by the improvement of economic conditions in that country. The Export-Import Bank financing has allowed the beneficiation of some of Mexico's natural resources converting them into very necessary products, and in this process, has fostered the creation of a larger contingent of skilled workers and caused a substantial improvement in the standard of living. (9) and (10) I choose to answer these 2 questions as 1 because they are interdependent and integrate each other. I feel that the Export-Import Bank has served an eminently important purpose and can be counted upon to do an ever-increasingly far-reaching job, particularly with relation to the countries south of the Rio Grande, if its powers to lend are suitably increased. The importance of the rest of the American continent to the well-being of the United States has been recognized for a long time and has contributed to shape the foreign policy of our country. In more recent years, the awareness of the interdependence of all these nations, found expression in the good-neighbor policy. For many years the tenets of this policy have been almost exclusively political, without integrating them economically to make them more effective toward a consolidation of a strong Pan American Union. The lessons learned during the Second World War, when we were cut off from our regular sources of essential and strategic raw materials, which had been capriciously established in the farthest corners of the world, and made us turn to our own continent for desperately needed sources of supplies, should have taught us the imperious necessity of looking to our own backyard and developing its potentialties to forestall dire consequences in the next possible emergency. The incalculable wealth of natural resources which the countries to the south of us possess in enormous abundance, can be and should be developed for the well-being of our neighbors to the south, and our own protection as well. This can be accomplished through financial and technical cooperation, and I feel that the Export-Import Bank, with its intimate knowledge of the countries of the Americas, gained through the years they have been dealing in this field, are ideally prepared to carry out this program. I feel that the only necessary step is to enlarge the lending capacity of the bank to carry out the program. There is an ever-increasing consciousness in the countries to the south of the importance to reach economic maturity through the proper utilization of their resources. They know they need outside cooperation in technical skills and the procurement of capital goods necessary to accomplish their goal. The United States has a golden opportunity to enter into partnership to make such undertaking possible, and thereby create, not only ideal opportunities for the developing of trade with the rest of the countries of this continent, but also a contingent of rapidly developing prosperous and contented people who can be counted upon as our stanchest and most effective allies. None of my answers need to be held in confidence. They represent the considered opinion of a citizen who has been, for many years, interested in the de velopment of the countries to the south of us, and who is ever-increasingly conscious of how important, to our own well-being, their own well-being has become. Should you consider it necessary, I would be willing and ready to appear in person before your committee to testify on the subject outlined. Please accept my thanks for giving me this opportunity of presenting my views on this matter. Respectfully yours, MANUEL NORIEGA. Senator BENNETT. The next witness is Mr. H. R. Pape, general manager, Altos Hornos de Mexico, S. A., Monclova, Coahuila, Mexico. Mr. Pape, although not present, is in Washington and since we will meet this afternoon we will pass over his name at this point. We will now call Mr. M. H. Maiwandwal, counselor of the Afghanistan Embassy. Will you give your full name, for the record? STATEMENT OF MOHAMMED H. MAIWANDWAL, COUNSELOR OF AFGHANISTAN EMBASSY, WASHINGTON, D. C. Mr. MAIWANDWAL. My name is Mohammed H. Maiwandwal. I am counsel of the Afghanistan Embassy. Senator BENNETT. Do you have a prepared statement? Mr. MAIWANDWAL. Yes. Senator BENNETT. Would you like to read it? Mr. MAIWANDWAL. Yes. Senator BENNETT. You may proceed. Mr. MAIWANDWAL. Mr. Chairman, I welcome this opportunity to appear before your committee and tell you something of the successful working relationship between my government and the Export-Import Bank of Washington, and of the Helmand Valley project, which is of such vital importance to my country. The Royal Kingdom of Afghanistan lies at the crossroads of Asia, with Iran on the west, Pakhtunistan on the west and south, and the Soviet Union on the north. From around 2500 B. C. when Aryan tribes entered the land now called Afghanistan and developed what scholars believe may prove to be the seat of Aryan culture, tide after tide of invasion swept over the country, mainly as great movements of conquest from the north and west seeking the riches of India. Cyrus the Great, Darius, Alexander, Genghis Khan, all crossed the rugged Afghan barrier to India. The present kingdom emerged in the 18th century from a long struggle for national independence and internal security and, after fighting three wars with the British, Afghanistan threw off the last vestiges of foreign control immediately following World War I. At about the same time the movement to integrate and modernize the country, which had begun about the turn of the century, was intensified and, although it suffered a severe check toward the end of the twenties in consequence of internal political disturbances, has been gaining strength ever since. Today Afghanistan still stands at one of the world's great crossroads. Our ceaseless struggle for independence, the heritage of intense individualism which goes with the history of a pastoral people in a mountainous land, and our strong Moslem faith have combined to make us one of the most freedom-loving nations of the world. Our task in carrying out our obligations to ourselves and to the free world is enormously complicated by the fact that we are a landlocked country with extremely limited natural resources and a culture and way of life which even today knows little of western progressive methods. It is in that connection that the full significance of our relationship with the Export-Import Bank emerges. During the war years Afghanistan was able to accumulate a sizable amount of foreign exchange. Careful plans were laid to use this asset to initiate a basic program of economic development. The attack was to be a two-pronged one. In the north industries were to be developed by state support of private enterpreneurs in such fields as cotton textiles, sugar manufacture, soapmaking, coal mining, and so forth. In the south along the river valley of the great Helmand, which rises in the northeast of Afghanistan and cuts through the country to the southwest some 500 miles to the border of Iran, a great agricultural area was at long last to be brought back from the carnage left by the passage of the hordes of Genghis Kahn some 700 years before. The program was begun simultaneously in the north and south, and a contract was made with the Morrison-Knudsen Co. of the United States for design and construction of the Helmand Valley irrigation works. Construction went forward on all fronts, with particular success in the north, where the projects were localized and the problems easier to cope with. In 1949 it became apparent that no matter how courageously the Afghan people might sacrifice current living standards in an attempt to pull themselves up by their own bootstraps, foreign exchange resources of the country were not sufficient for the job. Yet, to maintain essential political and economic balance in the country, both developments had to go forward. It was at that time that an application was made to the Export-Import Bank of Washington which resulted, in late 1949, in the conclusion of a loan agreement for $21 million to cover the cost of United States equipment, materials, and services required to construct two major dams and the completion of a major system of canals in the central section of the Helmand River Valley. Under the terms of that loan agreement, the Arghandab Dam has been completed, which forms an irrigation reservoir capable of storing about 350,000 acre-feet of water or enough to cultivate over 130,000 acres in the Arghandab Valley. The Kajakai Dam is virtually completed and forms a reservoir with a gross capacity of 1,900,000 acre-feet which can be used for irrigation of about 700,000 acres in the main Helmand Valley. Finally, the Boghra Canal system is nearing completion to service 150,000 acres of agricultural land in the center of the valley. This great accomplishment in less than 3 years has been a cooperative venture with the heaviest burden of actual work falling upon the American contractor, Morrison-Knudsen, and with an Afghan Valley Development Board receiving substantial technical assistance from TCA. Besides providing the funds, the role of the Export-Import Bank has been one of constant checking on overall planning and detailed inspection and guidance of the work. The equivalent of over $40 million has gone into this great project thus far-nearly half of that sum from the Government of Afghanistan-and the works today stand as a symbol of a successful AfghanAmerican attack on the basic problem of underutilization of natural resources in the Middle East and Asia. One-fourth of the land area of Afghanistan will be directly affected by the project and approximately one-sixth of its 12 million people. The present works represent the first of three basic investment stages and, when completed, this great river development will not only go far toward putting Afghanistan well on the road to economic stability and progress, but will stand as everlasting proof of American-Afghan friendship and goodwill. The contribution of the bank to this endeavor cannot be measured in money terms. Afghanistan lacks technical and administrative skills required in the design and inplementation of such a project, and only through close and continuous work with the staff and officers of the bank, both in Washington and in Kabul, has a beginning been made in overcoming the many problems which harass such an undertaking. During the last 3 years 3 major bank missions have been sent to Afghanistan for detailed talks with Cabinet officials working directly on the project. In a world in which economic progress is a requisite for world peace and internal security of small nations struggling to work out their own destiny, the direct expression of the United States interest in the welfare of its allies could scarcely find finer expression than in the assistance which is being rendered Afghanistan in this project. Thank you very much, Mr. Chairman. Senator BENNETT. Thank you. I have just one observation. This is a loan made to the Government of Afghanistan rather than to a private organization? Mr. MAIWANDWAL. It is to the Government of Afghanistan. Senator PAYNE. If I understand it correctly, that has brought about the possibility of the utilization of about 1,200,000 acres of land there that otherwise would not have been of productive use? Mr. MAIWANDWAL. It is for that purpose. Senator PAYNE. It is helping now to elevate and bring up the standard of living in the country? Mr. MAIWANDWAL. It is helping. Senator BENNETT. Thank you very much, Mr. Maiwandwal. I should like to put into the record at this point the statement of Dr. Antonio Tonello of the Instituto Mobiliare Italiano, Washington, D. C., which has been submitted by him for the record without other testimony. (The material referred to follows:) STATEMENT OF DR. ANTONIO TONELLO, INSTITUTO MOBILIARE ITALIANO, WASHINGTON, D. C., ON LOAN FROM THE EXPORT-IMPORT BANK OF ITALY— SEPTEMBER 1951 INTRODUCTION Negotiations for a credit from the Export-Import Bank of Washington on behalf of the Italian economy, for purposes of production and exports, were motivated by Italy's dire necessity-the country having issued from the war to face grave hardships-to increase as rapidly and as much as possible its exports of industrial goods. In view of the decline in the payment balances of some items and the increased necessity for importing foodstuffs, the exportation of manufactured goods became a matter of prime urgency to the Italian economy in point of its foreign trade. An increase in the exportation of industrial goods was found to be technically feasible provided it were possible to have the immediate availability of the needed raw materials in the required quantities. The productive capacity of the factories-notwithstanding the serious damage wrought by the war-was still |