are some of the South American countries who are in default. Well, they are in default. We know that. And we know the reason for it. I do not presume you are going to go down there and bribe any South American country to take a loan, are you?

Mr. JONES. Certainly not.

Mr. FORD. That is one thing.

Mr. JONES. And if we make loans we are going to try to make them on a business basis.

Mr. FORD. And you are going to get security for every dollar lent? Mr. JONES. We are going to do the best we can.

Mr. FORD. You are going to do the best you can. For the life of me I cannot see why there should be any objection to this matter from this standpoint. We have just completed authorizations and appropriations for military and naval and our air forces running into billions of dollars. That is on account of military and naval and battle equipment. But wars are not fought today alone with implements of war. They are fought along economic lines. And if we are going to make our defense line complete we are going to have to prepare economically as well as militarily and navally, are we not? Mr. JONES. I should think so.

Mr. FORD. And it seems to me what you are asking is merely a sum of money that will enable you to function on the economic front while the Army and Navy are functioning on the military front. That is my conception of the bill. For that reason I shall be very happy to support it. I feel that once the House get the idea of what you are driving at there will be no objection to it.

Mr. WOLCOTT. Just one more question. The removal of limitations has to do with the limitations which are now in the law that you cannot lend more than $20,000,000?

Mr. JONES. That is one of them.

Mr. WOLCOTT. To any person or country?

Mr. JONES. That is one of them.

Mr. WOLCOTT. That is removed.

What other restrictions are there now that are removed or that will be removed by this bill?

Mr. JONES. At present I do not think we could lend for the purchase of anything in the nature of war materials. Probably some of the countries may want to buy some planes or other war supplies. Mr. WOLCOTT. This would authorize that?

Mr. JONES. This takes off the limitation. This leaves it to the discretion of the directors.

Mr. WOLCOTT. This would authorize the Export-Import Bank so that they may loan?

Mr. JONES. For any purpose.

Mr WOLCOTT. For the purpose of military or naval equipment? Mr. JONES. For any purpose; yes.

Mr. WOLCOTT. That would have to be purchased in the United States? That equipment would have to be purchased in the United States?

Mr. JONES. The only purpose in lending for a gun or an airplane would be to have it bought in this country and not some other.

Mr. WOLCOTT. Then it indirectly, unless we, the United States, is successful in what I think is partially its purpose in increasing the blockade against Germany, it would make possible the indirect sale of American munitions to Germany, would it not?

Mr. JONES. American? In Germany?

Mr. WOLCOTT. To make possible the sale indirectly of American implements of war to Germany.

Mr. JONES. How?

Mr. WOLCOTT. By selling to a South American republic who reconsigns to Germany by German carrier.

Mr. GORE. How are they going to get over there?

Mr. WOLCOTT. How do they get foodstuffs?

Mr. JONES. We certainly would attach to every sale whatever conditions would be proper. There would be no way of our policing to prevent their doing something they agreed not to do.

Mr. WOLCOTT. This makes possible the arming of South America with United States credit?

Mr. JONES. To a very modest degree, I would say; yes.

Mr. WOLCOTT. To the extent of 500 million? Mr. JONES. No, no. That is for all purposes. We may not spend $500,000,000. Heretofore over a period of 8 years we have not spent all of the money we have had available to us.

Mr. WOLCOTT. You have in this particular case. You came in for some increase of $100,000,000.

Mr. JONES. We had that.

Mr. WOLCOTT. Now you are asking for another increase. It is very apparent you are up to the limit of your loans.

Mr. JONES. I think that is because we placed too small a limitation to begin with. We were reduced $100,000,000 from the limitation originally proposed by me.

Mr. WOLCOTT. What other limitations or restrictions do you have in mind which are removed by this bill?

Mr. JONES. Limitations? I think that is all.

Mr. PATMAN. If the authority is granted, Mr. Jones, and you make loans to South American countries you will require the purchases to be made from people in America, would you not? In other words, the purchases that are made through the use of the money that you furnish would be made from America, from our country, the United States.

Mr. JONES. To the extent it can reasonably be done.

Mr. PATMAN. I understand possibly there will be exceptions but you will expect that?

Mr. JONES. Generally speaking, yes.

Mr. PATMAN. You expect to help promote trade with South America with this money?

Mr. JONES. Yes.

Mr. PATMAN. I am glad you said that because just before the war broke out in Europe I was in Mexico. I discovered that the German manufacturers were making especial efforts to sell all the machinery and equipment they could in Mexico and I understand the same situation existed in the South American countries. For this reason, for building trade with Germany. If they could place road machinery and dredging machinery or any other type of machinery used in cities if they need parts or extra equipment they have to get them from Germany. They could not get them from the United States. And if we do not do something to counteract that Germany, with the additional power that she will have after acquiring all those other countries they will undersell us in those South American countries

and get control of the trade there. I can see it is a great weapon when they sell machinery and replacements and the supplies for this machinery and the parts all have got to be bought from Germany. That places our manufacturers at a great disadvantage. I hope that it will be used for the purpose of encouraging trade with South America.

Mr. JONES. I think we have been very shortsighted as a country in developing relationships with the other countries of this hemisphere. Mr. PATMAN. And one other suggestion, Mr. Jones. Suppose that Germany puts out a certain type automobile and they begin to sell automobiles down in Mexico and South America and they need parts? Why, they have got to go to Germany to get those parts, don't they? That might seriously affect the Michigan automobile industry as well if it should be enlarged or expanded to that extent.

Mr. JONES. I would like to add that I think the principal purpose of this bill is in aid of our exports.

Mr. PATMAN. You mentioned a while ago, I do not know whether you quoted it but you used the words "blocked sterling." Possibly it was a quotation from the press?

Mr. JONES. No, it was in my statement.

Mr. PATMAN. It was your statement? Well, what do you mean by "blocked sterling"? Of course, I know it is money, I presume, used in England?

Mr. JONES. It means money that England buys and pays for with sterling and the sterling, the money, must be spent in England.

Mr. PATMAN. That is a point I want you to discuss a little bit further. Why would they have to spend the money in England? Why couldn't they convert it into dollars and spend it here?

Mr. JONES. They can but there is no market for that sterling. If they buy sterling it has got to be spent in England.

Mr. PATMAN. In other words, they would be placed at a disadvantage if they attempt to convert it into other currency?

Mr. JONES. Yes, decidedly.

Mr. PATMAN. Of course, money that we let them have in order to protect our own interests, we should have in the same way as to where the money would be spent.

Mr. JONES. Yes. They are all having trouble with their exchange situations and I think it would be good business to assist them some in that direction, not too much.

Mr. PATMAN. The American dollars, no one has any trouble with the American dollar in any exchange in the world.

Mr. GORE. Mr. Jones, it might be well if the record would show just when the Export-Import Bank was created.

Mr. JONES. In 1934.

Mr. GORE. It has a capital stock of how much?

Mr. JONES. We have a total lending authority of 200 million dollars. Some of it is capital and some of it is borrowed money. Mr. GORE. What amount of loans have you made since the Bank has been in operation?

Mr. JONES. The bank has authorized a total of $436,900,000. Of this amount $119,000,000 was canceled. That leaves $317,000,000. Disbursements have been $162,000,000 and repayments have been $62,000,000. There is outstanding at the present time $99,900,000 for all purposes.

We have commitments outstanding of $156,000,000, which is $56,000,000 more than our present revolving fund. But our experience shows that authorized loans are not always taken and because of that and of repayments we can overcommit. So that the total, including present commitments and outstanding disbursements, is $256,000,000.

You may be interested, I am sure you would be, to hear a little bit of what happened after we got the last authority.

Mr. GORE. Just before you go into that. What have your losses been?

Mr. JONES. We have had no losses.

Mr. GORE. How do you feel about the loans to Poland?

Mr. JONES. We think our loans will be paid. We have nothing much in default. There is a little bit, I think.

Mr. GORE. How about the Poland thing?

Mr. JONES. We have a loan to Poland. There is some question about that one. It is not in default though.

Mr. GORE. I remember when we gave this additional authority there was a good deal in question about loans to Scandinavian countries. Did you lend any money to Norway?

Mr. JONES. I was getting to that. That is the point I was going to make.

Mr. GORE. All right. Go ahead.

Mr. JONES. After the last authority we committed 10 million dollars to Denmark, none of which has been taken; 15 million to Sweden, only 4 million of which has been taken; 10 million to Norway, only $250,000 of which was taken; $30,000,000 to Finland, $18,000,000 of which was taken; there has been a total of $45,000,000 lent to China, $23,000,000 of which has been taken.

Now, we have suspended, we have not canceled, but we have suspended the loans to Denmark and Sweden and Norway. We have asked them to make no more purchases until further clearances, or further permission. Finland is buying a little more. We have not stopped that. China is continuing her buying and most of that money is committed. That is the present status of these loans.

Mr. GORE. Under this further authorization do you anticipate using the same practices as you recognize as being sound business judgment that you have exercised in the other loans?

Mr. JONES. We do.

Mr. GORE. I see there are three purposes here, Mr. Jones, one is to assist in the development of the resources and, of course, you named some of those in your statement, that this country particularly needs, such as rubber production?

Mr. JONES. Yes.

Mr. GORE. Do you have in mind assisting South America to cultivate the production of rubber?

Mr. JONES. Well, that is a thing that could be done if they were interested in doing it. We cannot go down there and grow rubber. But, if they want some help along that line in a sensible way, we can give consideration to it. We can assist them in any of those things if they want to undertake them. But we would expect them to do it in the right sort of way and make our loans with that in view.

Mr. GORE. And you would expect to get your money back?
Mr. JONES. Oh, yes.

Mr. GORE. And the second purpose is the stabilization of their economies. Can you tell us, just give us an idea how you are going to accomplish that purpose?

Mr. JONES. Stabilization of their economies? Well, if they can increase their exports that would help to give them exchange. That would help stabilize their economies. Loans prudently made would assist in stabilizing their economies, not recklessly made, not too large. If we had the authority, I am sure we could lend to assist them in building some things that they need. For instance, getting out some metals, iron and other ores. All of these things would aid their economy. The extension of some of their highways and airways things of that kind-would help to improve their economies.. In fact, everything we do should be helpful in that respect.

Mr. GORE. How many applications do you have from South Ameri

ca now?

Mr. JONES. None to speak of. Some discussions.

Mr. GORE. Have you made very many commitments since the last. authorization was made?

Mr. JONES. We had made a commitment recently to Argentina. of $20,000,000, $10,000,000, I believe, immediately, and the balance when the funds are available.

Mr. GORE. Out of the Habana Conference and from other sources do you have good reason to believe that you will have applications that you will have opportunity to use this amount of money?

Mr. JONES. I am sure we will.

Mr. GORE. All of it?

Mr. JONES. All of the money?

Mr. GORE. Yes.

Mr. JONES. I would not think so. I doubt if we would use this entire increase within a year's time.

Mr. MILLER. Mr. Gore, may I ask at that point that Mr. Jones explain about the $20,000,000 Argentina loan and how it was handled? Mr. GORE. I am sure he will be glad to.

Mr. MILLER. Will you explain the $20,000,000 Argentine loan; what it was for; and how it was handled?

Mr. JONES. That was to pay for exports from this country.

Mr. MILLER. From this country?

Mr. JONES. Yes, all of it.

Mr. KEAN. Weren't the loans made to the South American countries about 6 months ago?

Mr. JONES. Yes. We made a loan to Columbia. We made several loans. We could give you a list of them if you want to put it in the record, a list of all loans made.

Mr. KEAN. May we have a list of all the loans made since the last. authorization?

The CHAIRMAN. We certainly would be glad to have that.

Mr. JONES. Here is a list of everything done in Latin America up until June 30, 1940.

Mr. GORE. Could we all have a copy of that?

The CHAIRMAN. Put it in the record.