AMENDMENT OF FOREIGN ASSISTANCE ACT OF 1961

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP66B00403R000300080044-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 16
• Document Creation Date: December 27, 2016
• Document Release Date: May 20, 2014
• Sequence Number: 44
• Publication Date: August 11, 1964
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2014/05/20: CIA-RDP66B00403R000300080044-4
1.8426
CONGRESSIONAL RECORD ? SENATE August 11
being served a notice to do so. A fine of $50
per day for such failure to comply is pro-
vided here also, upon conviction of the own-
er in court. The principal change which
H.R. 7441 would incorporate in this section
of the present law is to add dead, dangerous,
or diseased trees to the list of nuisances
coming under its purview.
The District of Columbia Board of Com-
missioners has informed this committee that
such dead, dangerous, or diseased trees pose
a safety hazard in the District, for which
reason their being listed as abatable
nuisances is justified. This view has been
supported by the District of Columbia De-
partment of Licenses and Inspections, and
the District of Columbia Department of
Public Health.
? For some years, under the authority of an
agreement between the U.S. Department of
Agriculture, the National Park Service, and
the District of Columbia Department of
Highways and Traffic, District employees
have removed trees afflicted with Dutch elm
disease from private property in the city
when the owners have failed to remove them.
In these instances, the District employees
have . been acting as agents of the Federal
Government. However, the city has never
had any authority to remove trees from pri-
vate property for an reason other than the
presence of Dutch elm disease.
This provision of H.R. 7441, which would
grant this removal authority, specifies that
a "dead" tree is one of which no part is
living; a "dangerous" tree must constitute
a danger to perions or property on public
space, and a "diseased" tree must be one
which is infested with a major pathogenic
disease which causes it to be a threat to the
health of any other tree. Also, it is stipu-
lated that the authority to remove a danger-
ous or diseased tree shall be exercised by the
Commissioners only after every reasonable
effort has been made to abate the condition
by other means.
The Chief of Quarantines and Hearings,
Plant Quarantine Division, U.S. Department
of Agriculture, and the Superintendent of
National Capital Parks have expressed their
endorsement of the Commissioner's request
for this authority with respect to diseased
trees.
As in the case of urisafe structural condi-
tions, it is proposed in H.R. 7441 that costs
to the District incurred when the city is
obliged to abate these nuisances will be
assessed as taxes against the properties, and
collected in the same manner.
The present act specifies methods of serv-
ing the notices referred to above, and estab-
lished an order a precedence for the use of
these methods. This bill seeks to amend this
section by eliminating this order of prece-
dence so as to provide greater flexibility in
the choice of methods of serving notice.
Further, this bill provides that whenever
any method other than personal service is
utilized, a copy of the notice shall also be
sent to the owner by mail.
HR. 7441 will also provide the Commis-
sioners with authority to order an unsafe
building vacated, by serving of proper notice,
when in their judgment the condition is
imminently dangerous to the occupants.
Failure of any occupant to obey such an
order would be punishable by a fine not to
exceed $300, or imprisonment for not more
than 30 days.
On August 3, 1964, public hearings were
conducted with regard to HR. 7441 by the
Subcommittee on Public Health, Education,
Welfare, and Safety. A representative of the
District Commissioners appeared and testi-
fied in support of the bill's enactment. No
one appeared in opposition to the bill.
Legislation identical with this bill except
for the tree provision set forth above, was
approved by the Senate in the 86th and 87th
Congresses. question is on agreeing to Senate amend-
No additional cost to the District govern-
ment is anticipated by this bill because prop-
erty owners will be assessed costs involved.
AMENDMENT OF FOREIGN ASSIST-
ANCE ACT OF 1961
The Senate resumed the considera-
tion of the bill (H.R. 11380) to amend
further the Foreign Assistance Act of
1961, as amended, and for other pur-
poses.
The ACTING PRESIDENT pro tem-
pore. The pending question is on agree-
ing to amendment No. 1175, offered by
the Senator from Alaska [Mr.. GRUEN-
ING] .
CALL OF THE ROLL
Mr. MANSFIELD. Mr. President, I
suggest the absence of a quorum.
The ACTING PRESIDENT pro tem-
pore. The clerk will call the roll.
The legislative clerk called the roll.
[No. 532 Leg.]
Aiken
Allott
Bartlett
Bayh
Beall
Bennett
Bible
Boggs
Brewster
Burdick
Byrd, Va.
Byrd, W. Va.
Carlson
Case,
Church
Cooper
Cotton
Curtis
Dirksen
Dodd
Dominick
Douglas
Eastland
Ellender
Ervin
Fong
Fulbright
Goldwater
Gruening
Hart
Hartke
Hayden
Hickenlooper
Hill
Holland
Humphrey
Inouye
Jackson
Javits
Johnston
Jordan, N.C.
Jordan, Idaho
Keating
Kuchel
Lausche
Long, Mo.
Magnuson
Mansfield
McCarthy
McClellan ?
McGee
McGovern
McIntyre
McNamara
Mechem
Metcalf
Miller
Monroney
Morse
Morton
Moss
Mundt.
Muskie
Nelson
Neuberger
Pastore
Pearson
Pell
Prouty
Proxmire
Randolph
Ribicoff
Robertson
Russell
Salinger
Saltonstall
Scott
Simpson
Smathers
Smith
Sparkman
Stennis
Symington
Talmadge
Thurmond
Tower
Walters
Williams, N.J.
Williams, Del.
Yarborough
Young, N. Dak.
Young, Ohio
Mr. HUMPHREY. I announce that
the Senator from Tennessee [Mr. GORE],
and the Senator from Louisiana [Mr.
LONG] are absent on official business.
I also announce that the Senator from
Nevada [Mr. CANNON], the Senator from
Pennsylvania [Mr. CLARK], and the Sen-
ator from Oklahoma [Mr. EDMONDSON]
are necessarily absent.
I further announce that the Senator
from New Mexico [Mr. ANDERSON] and
the Senator from Massachusetts [Mr.
KENNEDY] are absent because of illness.
Mr. KUCHEL. I announce that the
Senator from Nebraska [Mr. HRUSKA] is
necessarily absent.
The PRESIDING OFFICER. [Mr.
SALINGER in the chair]. quorum is
present.
AMENDMENT OF FOIEIGN A SIST-
ANCE ACT OF 1961
The Senate resumed the consideration
of the bill (H.R. 11380) to amend further
the Foreign Assistance Act of 1961, as
amended, and for other purposes.
The PRESIDING OVVICER. The
ment No. 11'75 proposed by the Senator
from Alaska [Mr. GRITENING]
Mr. GRUENING. Mr. President, I
speak on my amendment No. 1175, which
aims to reform the existing Foreign As-
sistance Act in regard to interest rates
on development loans. Such loans are
being made now at no interest whatever,
although there is a nominal three-
quarters-of-1 percent service charge.
I submitted this amendment last year,
with a number of cosponsors, and it was
defeated by a vote of 44 to 30.
The administration, of course, opposed
this change.
What our AID administrators are doing
is concealing grants which should not
be concealed. This bill might have a
subtitle, which I borrow from a piece of
legislation the "truth in lending" bill
long sponsored by the distinguished Sen-
ator from Illinois [Mr. DOUGLAS], and so
my amendment might be called the
truth in foreign aid lending amendment.
About 3 years ago there was a move-
ment in the Congress against the idea of
giving grants in our foreign aid programs.
It was said, "Let us make loans instead."
So we started making so-called loans.
These transactions are not really loans
at all. They are called loans, but they
are concealed grants as well as loans.
In the first 2 years of this policy, we
loaned $1,315,775,000; and the cost of
servicing that amount was not far from
another $1 billion. The concealed grants
were in the neighborhood of $900 mil-
lion. So actually it was costing Uncle
Sam more than $2 billion to make these
loans, but with a showing of only $1,315
million.
In the years 1961 and 1962, the aver-
age was $657 million, if we divide the total
amount of the loans in 1961 and 1962
by two.
That amount has now increased sub-
stantially.
One the desk of each Senator will be
found a list of the loans of this charac-
ter that were made in 1963. It will be
found that they amounted to $1,057,-
925,000.
If Senators will go over this list and see
what the projects are, it will be clear that
little or no discretion is being exercised
as to whether they are for self-liquidat-
ing projects such as powerplants or in-
dustries, or for other projects which are
not self-liquidating, such as schools or
roads.
There was a striking example of that
last year. I was in Cairo a year ago last
February and was present at the signing
of a $30 million loan to Egypt's dictator,
Nasser, to build a powerplant for west
Cairo. A powerplant is a revenue-pro-
ducing project. Revenues start as soon
as the plant is completed and the current
is turned on. In that particular case, be-
ing a dictator, Nasser could charge what-
ever he wanted to charge, and the con-
sumers would have to pay it.
What were the terms of that loan?
There was to be no repayment of prin-
cipal for 10 years. During that period we
shall be borrowing money at an interest
rate of roughly 4 percent, to be paid by
the American people. So we are out
about $12 million before the payments
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1964 CONGRESSIONAL REtORD ? SENATE
even begin. Then we are out the differ-
ence between three-quarters of 1 per-
cent, which is not really an interest
charge but a service charge, and 4 per-
cent. So at the end of 40 years, which is
the time given to repay this loan of $30
million, there is another $23 or $24 mil-
lion concealed.
On another occasion?a recent occa-
sion?the Bureau of the Budget was
shocked at the idea of making loans that
concealed grants. It happened in con-
nection with the amended Alaska omni-
bus bill. One of its provisions was to
have the Federal Government loan some
money to the State of Alaska to tide it
over because of the great loss of revenue
caused by the earthquake with the inter-
est rate fixed at 3% percent. I offered an
amendment to make the interest rate for
loans to a State that had suffered unpar-
alleled damage three-quarters of 1 per-
cent, the rate applied to a $100 million
loan to Chile after an earthquake there.
The Bureau of the Budget opposed my
amendment declaring in writing that the
amendment would provide a subsidy of
$14.2 million, if the full $25 billion were
borrowed. Thus, the effect on the Fed-
eral Government would be a cost of $14.2
billion grant plus $10.5 billion interest.
In other words, the Bureau of the Budget
declared itself in opposition when it was
'proposed to lend to the State of Alaska,
after this unparalleled disaster, some $14
billion in grants, but it is not at all
shocked when we lend $1.057 billion to 35
foreign countries in the last fiscal year,
? at the terms they opposed for our own
citizens. It should be noted that our de-
velopment loans carry this three-fourths
of 1 percent service charge even when
there has been no disaster.
The countries that have received such
loans are Argentina, Bolivia, Brazil,
Chile, Colombia, Costa Rica, Dominican
Republic, Ecuador, El Salvador, Hondu-
ras, Jamaica?Jamaica even got in there
while she was still a colony?Nicaragua,
Panama, Peru, Uruguay, Venezuela,
Korea, Afghanistan, India, Nepal, Paki-
stan, Turkey, Egypt, Cameroon, Ethiopia,
Ivory Coast; Liberia, Mali, Niger, Nigeria,
Somalia, Sudan, Tanganyika, Tunisia,
and Uganda.
Hope was expressed in the previous de-
bate, when I sponsored a similar amend-
ment, that the AID administration would
show some discretion in making these
loans; that where a project was self -
liquidating, as in the case of a power-
plant, the terms of a true loan at busi-
nesslike interest rates showing some con-
cern for the American taxpayer would
prevail, but apparently there was no dis-
cretion.
The impressive list which is on every
Senator's desk indicates the extent to
which the U.S. administrators have been
prodigal, spendthrift, ana wanton in
spending the American taxpayers' dollar.
I think it is all wrong. We have no
right to pretend that these are loans
when, they are both loans and grants.
This is one of the many concealments
that take place in our foreign aid pro-
gram.
I am in. favor of foreign aid. I voted
for it. But I am extremely critical of
many abuses in our foreign aid pro-
No. 156-21
grams of the numerous concealed spig-
ots that pour out the money, directly and
indirectly. . .
The coffee agreement which the Sen-
ate recently voted for is another con-
cealed spigot. It will be a great subsidy
to a number of coffee-producing coun-
tries, 14 of them in the Western Hemi-
sphere, and some in Africa. I voted for
it. I voted for it with some of the mis-
givings that the Senator from Illinois
[Mr. DOUGLAS] voiced, and the burden
that I feared it would place on the Airier-
ican consumer. Yet I felt it was desir-
able to assist some of those countries and
help stabilize their economies. But there
does not seem to be enough concern
about the multiplicity of spigots through
'which American dollars are ladled out
abroad. I am sure many of our col-
leagiles are not even aware of them.
We were told by the administration
that this $3.4 billion program was a
bare-bones program, and that for that
reason it should not be cut or amended,
but should be accepted as it is.
However, there was a very interesting
colloquy between the Senator from Mis-
souri [Mr. SYmINGTON] and Mr. David
Bell, AID Administrator, during the
hearings on this bill. I read that col-
loquy:
Senator SYMINGTON. You- come out with a
figure of $3.4 billion. I turn that over to
somebody trying to be objective and say,
"Give- me what the true figure is." He then
gives me a figure of $6 billion as actually
the foreign aid we are going to give or loan
this year. That includes incidentally over
$2 billion of Public Law 480 money. * * *
The AID program is not a $3.4 billion pro-
gram. It is a $6 billion program. Right?
Mr.' BELL. (Hon. David E. Bell, Adminis-
trator, Agency for International Develop-
ment) . Somewhere between five and six; yes,
sir.
Mr. President, I could develop this
point at some length. I believe we
should stop making these "soft" loans.
They are not loans at all. It would be
much better to go back to outright
grants. Egypt's Nasser was boasting that
he was paying back our loans ahd that
those transactions were loans, not grants.
He knows perfeetly well that it was a
grant and our administrators should be
frank enough to admit it. He was in-
cluded in another such loan the follow-
ing year. The one I referred to occurred
the previous year.
I hope my amendment will be accept-
ed. It would put an element of truth in
the foreign aid program. It would save
a great deal of money. At the rate we
are going, with loans of this kind of over
$1 billion a year and concealed grants of
$800 million, with this amendment we
would have much more money to use on
legitimate aspects of foreign aid.
Mr. LAUSCHE. Mr. President, will
the Senator yield? _ .
The PRESIDING OFFICER (Mr.
WALTERS in the chair) Does the Sena-
tor from Alaska yield to the Senator
from Ohio?
Mr. GRUENING. I yield with pleas-
ure to my friend from Ohio.
Mr. LAUSCHE. The probability is
that the Senator from Alaska knows that
an amendment has been submitted,
sponsored by Senators MUNDT, MORSE,
18427
and myself, which fixes one rate of in-
terest on commercial loans and another
rate of interest on noncommercial loans.
On commercial loans, which are loans
made for the development of productive
enterprises or facilities directly used in
the operation of productive enterprises,
the rate of interest shall be equal to the
average rate which the Treasury must
pay in borrowing the money; the second
half of the amendment provides that on
noncommercial loans the rate of inter-
est shall not be less than 21/2 percent.
Mr. GRUENING. I should say that
is a very desirable amendment. If the
pending amendment fails, I shall support
the Senator's amendment. It is cer-
tainly a step in the right direction. I
still think, however, that we are perpet-
uating a fraud on the American people
when we are making loans at a rate
lower than what it costs the American
people to get the money.
Mr. LAUSCHE. Do I correctly un-
derstand that the Senator's amendment
fixes the rate of interest equal to what
the Treasury is paying ,on all loans,
whether commercial or noncommercial?
Mr. GRUENING. The Senator is
correct.
Mr. LAUSCHE. In that respect the
two amendments differ. Is that correct?
Mr. GRUENING. They do differ. I
believe the amendment sponsored by the
Senator from Ohio is more moderate.
It does not go as far as my amendment
goes. I shall be glad to support it if my
amendment fails. In any event, I be-
lieve that we should stop fooling the
American people. If some of these
countries are too poor to pay back loans,
let us make grants to them. Many of
the loans will not be repaid anyway. I
may sound like a cynic, but that, I am
convinced, will inevitably happen. Ten
years from now, when the first pay-
ments become due, those who arranged
them will no longer be here. They will
have gone elsewhere. Then, instead of
it being called a default, what will hap-
pen will be called a -refunding or refi-
nancing operation; or some other euphe-
mistic term will be applied. Then, when
the second due date arrives 20 years
hence those who had the refunding ar-
rangements will be gone. Their succes-
sors will be able to absolve themselves of
past follies.
Therefore, Mr. President, we are in
large part actually giving the money
away. There is no question about that
in my mind. I hope the amendment will
prevail.
I ask for the yeas and nays.
The PRESIDING OFFICER (Mr.
SALINGER in the chair).. Is the request
sufficiently seconded?
The yeas and nays were ordered.
Mr. DOUGLAS. Mr. President, will
the Senator yield?
Mr. GRUENING. I am glad to yield
to the Senator from Illinois.
Mr. DOUGLAS. I assume that the
very informative table which the Senator
has prepared will be made a part of the
RECORD.
Mr. GRUENING. Yes; it will be made
a part of the RECORD.
Mr. DOUGLAS. The table shows the
interest rate to be three-quarters of 1
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18428 CONGRESSIONAL RECORD - SENATE
percent. Is that interest rate to be ap-
plied throughout the 40-year period, or
does it serve as the rate for the first
10 years; and will the interest rate after
the first 10 years be 2 percent?
Mr. GRUENING. I believe an amend-
ment was adopted last year which raised
the interest rate after a certain period of
time.
Mr. DOUGLAS. After 10 years.
Mr. GRUENING. Yes. I am not posi-
tive whether that will remain in this bill
or not. In any event, there will be a
considerable period of time in which we
shall be making concealed grants,
whether the interest rate is three-quar-
ters percent or 2 percent.
Mr. DOUGLAS. In the report, at page
42, in the statement of individual views
by the Senator from Oregon, the Senator
from Ohio, and the Senator from South
Dakota, it is stated, in the third para-
graph:
In 1963, the Congress amended the law to
require a minimum interest rate of 2 percent
after the 10-year grace period during which
the interest may still be (and usually is) as
low as three-fourths percent.
I take it, so far as the law is concerned,
that after 10 years the minimum interest
rate is presumed to go up to 2 percent.
August 11
Mr. GRUENING. The Senator is cor-
rect. However, we still incur a substan-
tial loss in that we are borrowing the
money at 4 percent or 33/4 percent. So a
lesser interest rate abroad is still a grant,
although it may be a less generous grant.
We should make a grant if a country is
too poor to pay back a loan. But we
should not deceive the American people
by calling such transactions loans.
I ask unanimous consent that the table
showing the loans made at this rate be
included in the RECORD at this point.
There being no objection, the table was
ordered to be printed in the RECORD, as
follows:
? Loans made by the Agency for International Development to foreign countries during calendar year 1963 at % of I percent for 40 years I
[Repayable in dollars]
Country
Borrower purpose
Date of
loan
agree-
ment
Number
years re-
payment
Interest
rate
Amount
of loan
LATIN AMERICA
Argentina
Bolivia
-
Brazil
Chile
Colombia
Costa Rica
Dominican Republi
Ecuador
'
El Salvador
Honduras
Jamaica
Nicaragua
Panama
Peru
Uruguay
Venezuela
FAR EAST
Korea
NEAR EAST AND SOUTH ASIA
Afghanistan
India
Government of Argentina:
Central Housing Bank
Route 12 road project
Road program loan
Feasibilities studies
Grain storage facilities
Government of Bolivia:
Access roads
La Paz-El Alto Highway
El Alto Customs Center
Banco Industrial, S.A., assist in fmancing subloans
Agricultural Bank
Government of Brazil:
Credito E Financiamento, S.A. Development Bank
CIA de Carbonos Coloidois Carbon Black Plant
Emergency stopgap assistance
Super Desenvolvimento, N.E. emergency electric power
Government of Chile: Development program
Government of Colombia:
Feasibility studies
National Housing Institute of Colombia, self-help housing
Colombia Institute of Agrarian Reform, supervised agrarian credit
Mineral Resources Survey
Banco Nacional de Costa Rica:
Agricultural development
Slum replacement housing
Cachi hydroelectric project
Metro emergency water supply
IBRC/AIC highway program
CO EISA: Financing subloansDec.
National Housing Bank Savings Si 'Loan Association
Government of Ecuador:
Quito, Quevedc Road
Economic and engineering studies
Administrative and fiscal reform
Republic of El Salvador:
Primary school construction
Agricultural loan program
INSAFI
Government of Honduras small water systems
Government of Jamaica project assistance
Government of Nicaragua: Las Mercedes Airport
Instuto de Acuedletos water supply and sewerage system
Government of Peru:
Lima water sewerage
Feasibility studies
Banco Hipotecaric del Uruguay: Home construction
C.A. Bank for Economic Integration: Feasibility studies ?
C.A. Bank for Economic Integration: Home loan department
Government of Korea: Changsong Coal Mine District .
_
Government of Afghanistan:
Arians Afghan Airlines
Transport equipment
Government of India:
Ramagundam thermal power
Delhi C thermal power
Satpura themal power
Central Ropeway F project
Nonproject imports
Chandrapura thermal, stage II
5th railway loan
Tarapur nuclear power
196S
June 3
Jan. 21
Mar. 18
June 3
Oct. 10
Aug. 1
Aug. 17
do
__do
do
Mar. 6
Mar. 11
Apr. 24
Oct. 29
Jan. 31
June 26
do
do
Sept. 18
July 23
__do
do
_do
do
23
Jan. 2
Sept. 1
Sept. 4
Sept. 2
Sept. 18
do
do
Aug. 22
Nov. 29
July 25
Feb. 6
Mar. 15
do
Feb. 28
Nov. 29
do.
Dec. 7
Mar. 23
Dec. 3
May 21
Mar. 8
do
Oct. 21
Feb. 25
Oct. 21
do
Dec. 7
Tiny 20
eoemo op000 00000 0000 oc00000 000 e000-poo $$$$$ $
, .
?
,sli
%
%
%
%
%
%
%
%
%
%
%
3/4
3/1
%
3/4
3/4
%
Vi
34
so
yl?
34
%
%
%
34
%
.54
34
%
%
%
%
34
8%3,
50,
%
%
%
%
%
%
34
:4
51
34
3,4
$12, 500, 000
6, 700, 000
30, 500,000
3, 000, 000
21, 700, 000
7, 200, 000
3, 400, ON
2,200, 000
2, 400, 000
3,700, 000
4, 000, 000
2,000, 000
25,500, 000
2, 400, 00C
35, 000,000
- 4, 000, 000
7,500, 000
10,000, 001
2,000, 001
5, 000, 00(
2, 000, 00(
1,000, 00(
1,400, 001
2,100, 001
5, 000, 00(
2, 100, 001
2,700, 001
2, 000, 00
1, 600, 00
2, 400, 00
8, 900, 00
4, 500,00
1, 050, 00
1, 500,00
1, 000, 00
6, 000, 00
8, 600, 001
000, 001
6,000, 001
2, 500, 001
10, 000, 001
9, 500, 001
2, 625, 00
2, 000, 00i
8, 4000, 0
16, 000, 00
25, 100,00
7, 700,00
240, 000, 00
16, 000, 00
15, 850, 00
80, 000, 00
5. 100.001
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Declassified and Approved For Release 2014/05/20: CIA-RDP66B00403R000300080044-4
1964 CONGRESSIONAL RECORD - SENATE
18429
Loans made by the Agency for International Development to foreign countries during calendar year 1968 at 3A of 1 percent for 40 years 1-Con.
[Repayable in &Mars] ?
Country
Borrower purpose
Date of
loan
agree-
ment.
Number
years re-
payment
.
Interest
rate
-,
Amount
of loan
NEAR EAST AND SOUTH ASIA-COIL
Nepal
Pakistan
_
Turkey
United Arab Republic (Egypt)
AFRICA
Cameroon
Ethiopia
Ivory Coast
Liberia
Mali -
"
Niger
Nigeria
Somalia
Sudan
Tanganyika
tunisia
?
Uganda
?
Grand total for all countries
?
Government of Nepal: Nepal Industrial Development Corp
Government of Pakistan:
Sawmill and timber extraction
Malaria eradication program
Airport and airways equipment
Salin conservation and reclamation project No. 2
General commodities 20
Chalna anchorage project
Feasibility studies
CPS and Maini, Rechna DCAB project
Coastal embankment project
General consultant
Third commodity loan
General service in public health
Investigative services
5th railway loan ?
Telecommunication expansion
Machinery pool organization, WAPCA
Mechanical equipment
Government of Turkey:
Kcban and Ciceroz feasibility studies
Feasibility studies
General commodities
Government of United Arab Republic:
Cairo west power project
Cardboard project
Government of Cameroon: Extension of railway system
Government of Ethiopia: 3d highway program
Government of Ivory Coast: Highway equipment
Government of Liberia: National Medical Center
Monrovia Power Authority: MT coffee hydroelectric project
Government of Liberia: Monrovia junior-senior high school
Government of Mali:
Teachers training college
Central Veterinary Laboratory at Bamako
Government of Niger: Development bank
Government of Nigeria:
Ibadan water supply
Calabar-IKCM Rd
Government of Somalia: Chisimaic port
Government of Sudan:
Industrial development bank
Khartoum sewerage
Government of Tanganyika:
Dar es Salaam water supply system
Urban water supplies
University college
Teacher training college
Commodity development training center
Agricultural college
Program loan
Electrical equipment
Government of Tunisia:
Water and irrigation projects
Commodity assistance
Construction of university
Agricultural equipment
Government of Uganda:
Development bank
Secondary schools
1965
Dec. 8
Oct. 23
Feb. 28
Mar. 22
do__
Mar. 27
Mar. 22
Mar. 27
Aug. 15
do__
Aug. 15
Sept. 28
Dec. 9
Nov. 20
do
Oct. 23
Dec. 9
Nov. 20
July 15
Oct. 15
Sept. 11
Feb. 20
Nov. 12
Aug. 27
Dec. 2
Nov. 29
Dec. 5
Sept. 26
Oct. 23
Dec. 4
do
Dec. 14
Dec. 4
do
do
July 14
Dec. 7
May 20
Dec. 4
Oct. 9
Dec. 4
do
do
Dec. 6
do
Feb. 15
June 20
Oct. 31
_do,.......
Oct. 4
Oct. 11
?
14..t t
00 0000 0 000000 00 000 000 00 000 0 000 000000000000 000
%
Yi
%
y,
ty,
%
%
54
%
%
5%
IX
yi
%
94
.%
%
%
%
%
,,,4
%
%
%
im
.341
%
4
%
%
%
%
%
%
.24
%
!,,,,i
%
.34
5,1
%
%
%
94
%
%
%
%
%
V4
%
$1, 000, 000
2,200, 000
3,800, 000
2, 100, 000
10,800, 000
30, 000, 000
3, 600, 000
2, 000, 000
750, 000
-6, 500, WO
4, 400, MO
70, 500, 000
1,500, 000
5, 600, 000
14, 500,000
4, 700, 000
5, 000, 000
1, 500, 000
350, 000
3,000, 000
35, 000, 000
30, 600,000
5,700, 000
9, 260, 000
4, 000, 000
1, 700, 000
5, 300, 000
24, 300, 000
1, 700, 000
2, 100, 000
1, no, 000
500, 000
12,100,000
8, 600, 000
3, 600, 000
2, 000, 000
3, 800, 000
2, 200, 000
1, 300, 000
800,000
800,000
250,000
1, 250, 000
1, 000, 000
300,000
, 2,400, 000
15, 000, 000
1, 800, 000
6, 500, 000
" 2, 000, 000
2, 400, 000
1,057, 925, 000
RECAPITULATION
Country
Total amount
Country
Total amount
Country
Total amount
Argentina
$74,
400, 000
Peru
$11, 600, 000
I,iberia
$31, 300,
000
Bolivia
18,
900, 000
1, ruguay
6, 000, 000
Mali
3,200,
000
Brazil
33,
900, 000
Venezuela
. 12, 500, 000
Niger
500,
000
Chile
35,
000, 000
Korea
9, 500, 000
Nigeria
20, 700,
000
Colombia
23,
500, noo
Afghanistan
4, 625. 000
Sony ha
3, 600,
000
Costa Rico
17,
000, 000
India
414, 150, 000
Sudan
5, 800,
000
Dominican Republic
2.
100. 000
Nepal
1, 000, 000
Tanganyiko
7, 900,
000
Ecuador
6.
300, 000
Pakistan
169, 450, 000
TUTINP
25, 700,
000
El Salvador
15,
800. 000
Turkey
38, 350. 000
'Uganda
4, 400,
000
Honduras
Jamaica
Nicaragua
1,
1
1,
050,000
500,000
000, 000
United Arab Republic (Egypt)
Cameroon
Ethiopia
36, 300, 000
9, 200, 000
4, OK 000
Total
1,
057, 925,
000
Panama
6,
000, 000
Ivory Coast
1, 700.000
.
1 source: "Status of Loan Agreements" (W-224), Agency for International Development, as of Mar. 31, 1964, Office of the Controller, AID.
The PRESIDING OFFICER. The
question is on agreeing to the amend-
ment offered by the Senator from Alaska
[Mr. GRUENING]
Mr. MORSE. Mr. President, first I
wish to extend my high compliment to
the Senator from Alaska for offering his
amendment.
As the Senator knows, he and I have
been criticizing the three-quarters of 1
percent loans, with a 10-year grace pe-
riod in which no money needs to be paid,
and a 40-year period in which to pay back
the loans.
I believe it will be found, if the RECORD
is checked-I shall do so and correct the
RECORD if what I say is not correct-that
some of the loans in the past have been
for periods longer than 40 years. I have
no doubt that the battle which some of
us have put up on the floor of the Senate
In recent years for reforms of foreign aid
has produced some changes; certainly
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18430 CONGRESSIONAL RECORD ? SENATE
not enough, but what has been done is
better than nothing at all.
One of the changes has been at least a
little shift of position on the part of those
downtown in respect to the interest rate
problem.
Although we are still making loans at
three-quarters of 1 percent for the first
10 years, the amendment which was
adopted last year provides that the loans,
after 10 years shall bear a minimum of
2 percent interest. About $21/2 billion in
hard loans was lent at less than 2 per-
cent and $745,600,000 in soft loans also
carried a rate of less than 2 percent be-
fore Congress amended the law.
In fairness to the AID Administrators,
it must be mentioned that some loans are
being negotiated at rates somewhat above
2 percent. We do not have the figures as
to the amount of such loans. If I can
obtain the figures before the day is over,
I ask unanimous consent that they may
be inserted in the RECORD at this point.
The PRESIDING OFFICER. Without
objection, it is so ordered.
AID advises that between 1948 and 1952
five loans were made for 45 years each. All
are repayable in dollars.
AID advises that in fiscal 1964, five loans
were negotiated carrying interest rates in ex-
cess of 2 percent. In amount, they totaled
$23,300,000. Four were at 3% percent, and
one was at 5% percent. Under the Alliance
for Progress program, four loans were made
at interest rates above 2 percent. Three
were at 5% percent and one was at 5% per-
cent. In amount, they totaled $9,500,000.
Mr. MORSE. The RECORD should also
be clarified in regard to another matter.
I have been a critic of the policy of soft
loans. Since 1961 we have not been
making many soft loans, although we
have a considerable amount of outstand-
ing soft loans made previously.
I ask unanimous consent that if I can
obtain the exact figures during the day,
as to outstanding soft loans, those fig-
ures be inserted at this point in the
RECORD.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The outstanding balance on June 30, 1964,
of loans made by AID and predecessor agen-
cies which are repayable in local currencies
totals $1,879,400,000.
The outstanding balance on June 30, 1944,
of loans made under Public Law 480 includ-
ing so-called Cooley loans and repayable
In local currencies is $2,368,120,000. Cooley
loans account for $104,022,000 of this figure.
Mr. MORSE. However, we are still
making a great many soft loans under
Public Law 480 arrangements. Of
course, those loans represent as much
American taxpayer money and Ameri-
can taxpayer interest as any other kind
of loan.
I am just as critical of soft loans in
connection with Public Law 480 funds
as I am in connection with any other
funds.
The Senator from Alaska must not
despair, nor give up hope. The going is
tortuous; the road is long; but we are
making a little progress. We are hop-
ing that between now and the time the
next foreign aid bill comes before the
Senate, the American people will catch
up. When the American people catch
up, they will bring this administration
to an accounting concerning the ineffi-
cient, wasteful, unsound foreign aid bill
which Congress continues to shackle as
a yoke upon the economic necks of the
American people.
?We shall continue to make progress.
During the past 2 weeks officials at the
State Department level have expressed
their great concern about my minority
views this year. I quote them directly
and accurately when I say that they said
to me:
Your minority views give us much con-
cern, because we have no answers to them.
They have no answers to them be-
cause the criticisms I make in my views
cannot be answered, and the State De-
partment knows it. So they have pro-
posed a 2-day conference with me in De-
cember. I have said that they can have
such a conference only on condition that
my colleagues on the Committee on For-
eign Relations who may wish to attend
may participate, because I am satisfied
that any members of the committee who
wish to take part in a conference with
representatives of the State Department
for i days will be in agreement that dras-
tic changes will be needed in the foreign
aid bill that will come before the Senate
next year.
One of our difficulties has been that
policy changes and policy reforms have
not been agreed upon before the bill has
come here. I have been in the Senate
long enough-20 years, now?to know
the handicap we are under in having
policy changes made by members of the
same party in Congress after an admin-
istration position has been announced.
If policy changes are desired, there is
a stronger hope of getting them if some
such arrangements as State Department
officials have suggested to me twice in
the past 2 weeks can be made.
I replied that I would attend such a
conference with enthusiasm. The De-
partment realizes that next year it must
bring to us a bill that will meet some of
the major criticisms -in my minority
views. They appreciate that they will
be headed for increasing trouble on for-
eign aid. Why? Because, at long last,
it is sinking through the heads of the
State Department and the AID admin-
istration that there is a rising revolt on
the part of the taxpayers of this country
against the foreign aid program?and
there should be.
The State Department fully recognizes
that if it does not do something to im-
prove the foreign aid situation next year,
that revolt will begin to express itself at
the ballot box. Some of it will express
itself at the ballot box in November
1964?and it should. I hope the Ameri-
can people will express their dissatisfac-
tion .with the foreign aid program. I
have said many times that the only test
of, a politician is his voting record, not
his talk. Some of the voting records in
Congress on foreign aid will result in an
accounting by the American people in
November 1964.
We all know that this bill.will pass the
Senate today or tomorrow without sub-
stantial changes. But it will pass, in-
my judgment, to the everlasting dis-
credit Of Congress.
August 11
The Senator from Alaska has offered
an amendment that represents sound
reform, and I shall vote for it. We shall
-make our record. We shall call it to the
attention of Members of the Senate next
year if, at the December conference
which-the State Department has told me
it is planning, it does not make this pro-
posal as one of its policy changes.
I congratulate the Senator from
Alaska. I am proud to support his
amendment.
Mr. GRUENING. I thank the Sena-
tor from Oregon.
When this proposal was debated a year
ago, the distinguished Senator from
North Carolina [Mr. Eavix] placed in
the RECORD an article published in a
daily newspaper of San Jose, Costa Rica.
The article described the activities of
that country's Foreign Minister, who had
come here to tap our Treasury. He de-
scribed how Costa Rica was receiving a
$45 million loan, but he said, "What we
are getting from you is considered a
gift." He made it very clear that it was
a gift. One interesting thing that was
developed in the article was that a part
of the loan was to be used to pay Costa
Rica's share of Central America's one-
third contribution to the construction
of the Inter-American Highway.
Some 20 years ago, a treaty was en-
tered into with the Central American
countries in which it was agreed that
Uncle Sam would pay two-thirds of the
cost of construction of the highway, and
that the beneficiaries?six Central
American countries?would pay one-
third. When I was in Central America
2 years ago, representing the Committee
on Public Works, I found that with one
exception all of the Central American
countries were paying their share out of
U.S. foreign aid funds. In other words,
they were using our money to pay us
back. That is typical of the many loose
practices that prevail in our foreign aid
program. They are practices which
should be tightened up.
Mr. LAUSCHE. Mr. President, as I
stated a moment ago, in the Committee
on Foreign Relations the distinguished
Senator from South Dakota [Mr.
MUNDT], the distinguished Senator from
Oregon [Mr. Moan], and I offered an
amendment which is in substance iden-
tical with the amendment offered by the
distinguished Senator from Alaska, but
actually is somewhat milder. The Sen-
ator from Alaska contemplates that an
interest rate shall be charged which is
equal to the average interest that the
Treasury pays on all money that it
borrows.
The amendment offered by the Sena-
tor from South Dakota, the Senator from
Oregon, and me is divided into two parts.
Commercial loans would bear a rate of
interest equaling the average rate that
the Treasury pays in borrowing money
to make the , loans. The second part
deals with what are known as noncom-
mercial loans. In that category 'would
be embraced loans for the building of
schools, dock facilities, highways,. wa-
terworks, sanitation installations, and
the like. Our amendment provides that
on noncommercial loans the interest rate
shall be not less than 21/2 percent.
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1964
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CONGRESSIONAL RECORD ? SENATE
The comparison, therefore, would be
that the rate of interest under the
amendment of the Senator from Alaska
would in all instances be about 4 percent.
Under the amendment offered by the
Senator from South Dakota, the Senator
from Oregon, and me, the rate of in-
terest would be 4 percent on commercial
loans and not less than 21/2 percent on
noncommercial loans.
I am sure that the Department of
State objects to the amendment of the
Senator from Alaska and, of course, does
not look favorably upon the approach
that the Senator from South Dakota, the
Senator from Oregon, and I have to the
program. The State Department has
contended that it has been in the process
of begging other nations?our allies,
which make loans?to reduce the rate of
Interest which they charge. It was
argued that the World Bank is making
loans at a very low rate of interest, and
that inasmuch as the World Bank is mak-
ing loans to the underdeveloped countries
out of a certain fund at a low rate of
interest, our Government should not de-
part from that practice.
In answer to that argument, I point
out to the Senate' that, in effect, we fixed
the rate of interest in the World Bank.
We hold a 30-percent interest, if not
more; thus, we are the ones who estab-
lished the rate of interest that the World
Bank charges on the loans it makes to
underdeveloped countries. I know that
on the basis of the facts, it does not
sound reasonable that we should be
charging a low rate of interest when our
allies are generally charging a rate of
interest much higher.
Mr. MORSE. Mr. President, will the
Senator from Ohio yield?
Mr. LAUSCHE. I yield.
Mr. MORSE. I congratulate the Sen-
ator from Ohio and the Senator from
South Dakota for the magnificent work
they did in the Foreign Relations Com-
mittee in the interest fight. The Sen-
ator is correct. The argument of the
State Department was that because the
World Bank charges a lower rate of in-
terest than the Senator from Ohio, -the
Senator from South Dakota and I were
asking for, we should not be charging
a higher rate. As the Senator has just
pointed out, we put up at least 30 percent
of the World Bank money. It is a rather
strange argument that because we par-
ticipate in a joint enterprise under the
World Bank for aid to underdeveloped
countries for projects which are sorely
needed in those countries at a low rate
of interest, we should soak the American
people a second time with an interest
rate below the cost of use of the money
for direct loan q from the United States.
If we are to invest in the projects at
all, they should be economically sound,
so that they can pay out. If they cannot
pay out, we should not waste American
taxpayers' money on such projects. We
should stop talking about the fact that
we are really doing something for these
countries, if we are not investing our
money in sound projects.
The time has come for the foreign aid
authorities to be required by Congress to
save the taxpayers' money when there
is a direct loan between the United States
to another country in projects which will
'pay out. If they will not pay out, we
should save the American taxpayers'
money. If they do pay out, they will pay
back a very small percentage in any
event. It is the old "gimmick" of re-
funding, renegotiating, and reloaning;
and it will continue interminably.
Finally, the whole transaction will be
recognized as a bad debt, and will be
written off the books.
Mr. GRUENING. Mr. President, will
the Senator from Ohio yield?
Mr. LAUSCHE. I yield.
Mr. GRUENING. Can the Senator
from Ohio or the Senator from Oregon
tell me whether there has been any dis-
cussion in the sessions of the Foreign
Relations Committee on the reloaning of
this money, which we lend at virtually
no interest rate, by the recipient gov-
ernment at much higher rates?
Mr. LAUSCHE. I anticipate that the
Senator from South Dakota [Mr. Mumrrl
will be in the Chamber before this dis-
cussion is concluded. It is my under-
standing that the Senator from South
Dakota has a letter or information to
the effect that there is one country?
and I shall not identify the country,
although I know the name of it?to
which we once loaned money at an in-
terest rate of three-quarters of 1 per-
cent before the 1961 law was passed.
That country loaned the money to a pri-
vate enterprise to build a manufacturing
plant and the lender to the private en-
terprise was collecting a rate of interest
far in excess of the interest which the
country had to pay to the United States,
which loaned the money in the first-place.
That is the only instance I know of.
A country in the Middle East borrowed
from us at three-fourths of 1 percent
interest. It took that money and loaned
it to its own citizens and was collecting
a higher rate of interest by far than it
was paying to the United States.
Mr. MORSE. Mr. President, will the
Senator from Ohio yield?
Mr. LAUSCHE. I yield.
Mr. MORSE. Let me say to the Sen-
ator from Alaska that if he will take the
repayment of loans of countries A, B, C,
D, E, F, on through the alphabet, in the
past 10 years, to any one foreign power,
we do not have to be hit on the head with
a baseball bat to know "how come."
It is difficult to show that we made a
loan and the recipient used the money to
pay off a debt to some other country.
Let me put it this way: If we take a list
of any payments which have been made
by countries A, B, and C to any foreign
power which previously loaned them
money at a higher interest rate, the con-
clusion is perfectly obvious that there is
a relationship between their -repayments
and the loan they received from the
United States. They have been playing
the United States for a sucker in that
kind of interest-rate shell game.
The time has come to invest our money
by way of loans only in repayable proj-
ects. If countries do not wish to bor-
row our money on these terms, let them
go somewhere else to get it.
It is about time for the U.S. Govern-
18431
ment to start telling other countries that
they are trying to blackmail and black-
jack us into giving them a loan on the
basis of threats, and that if they do not
like it, to go somewhere else fast.
Mr. GRUENING. Mr. President, will
the Senator from Ohio yield?
Mr. LAUSCHE. I yield.
Mr. GRUENING. Two years ago, in
order to stop the extreme abuses in-
volved in this relending situation, which
sometimes involved usurious amounts of
interest-16, 18, and 20 percent?I spon-
sored an amendment that the recipient
country would not be permitted to reloan
the money at more than 5 percent higher
than the interest rate. In other words,
on a three-quarters-of-l-percent loan,
they would not be permitted to reloan it
at more than 53/4 percent. This was, of
course, violently opposed by the admin-
istration. Nevertheless, by some miracle
it passed the Senate by a vote of 74 to 16.
The State Department representatives
told the conferees that this reasonable
reform would ruin the foreign aid pro-
gram. If we stopped these usurious
practices, they said, the program would
be wrecked; that one could not change
the established customs of other coun-
tries. So, the amendment was deleted.
And the abuses it sought to correct,
continue.
This is an evidence of how vigilant
some are, not in behalf of the American-
taxpayers but on behalf of the interests
of those in foreign countries who utilize
all kinds of improper and usurious prac-
tices.
If the money which we lend at three-
quarters of 1 percent for 40 years is then
reloaned at 6, 8, 10, or 15 percent com-
pounded, or even more, the recipient
countries make profits from our philan-
thropy running into many millions of
dollars. .
Mr. LAUSCHE. Mr. President, I
should like to read what was placed in
the report by the Senator from South
Dakota [Mr. MuNar], the Senator from
Oregon, and myself:
The administration opposes harder U.S.
loan terms primarily on two grounds: First,
that the movement of U.S. policy in this
direction would interfere with the adminis-
tration's efforts to induce other developed
countries to soften their terms; and second,
that it would aggravate the balance-of-
payments problems of the borrowing nations.
Neither argument is persuasive.
It is my understanding that we made
some progress with Canada in inducing
it to make some small loans at a low rate
of interest. Otherwise, our efforts have
not been successful.
I read further from the report:
With respect to the first argument, the
administration lays great stress on the fact
that loan terms of other developed countries
have become softer in recent years. Never-
theless, with the exception of a portion of
the Canadian loans, the softest of these
loans still carry shorter maturities and in-
terest_twice as high as the softest U.S. loans.
To the extent that foreign borrowing ag-
gravates an underdeveloped country's bal-
ance-of-payments problem, aggravation is
certainly caused more by borrowing from
Europe than from the United States.
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18432
CONGRESSIONAL
Certainly, they pay much higher inter-
est than they pay the European nations.
I continue to read:
So long as the Congress tolerates a situation
in which U.S. money is available for half the
cost of European money, the United States
will continue to be faced with requests for
easy help on balance-of-payments problems
which are partially due to European credits.
Thus, to some degree, we are helping to
make it possible for underdeveloped debtors
to pay their European creditors.
Mr. MORSE. And, I add, they were
made at higher interest rates.
Mr. LAUSCHE. Mr. President, I be-
lieve that is the point that the Senator
from Oregon makes. We loan at a low
and soft interest rate. And while our
money probably is not used directly to
pay a high interest rate to some other
creditor country, indirectly it is so used.
Those are the reasons why the three
Senators whose names I have mentioned
,filed a dissenting opinion and have an
amendment pending before the Senate.
Mr. MORSE. Read it further.
Mr. LAUSCHE. We contemplate call-
ing it up as a substitute at a later hour
in the event the amendment of the Sen-
ator from Alaska [Mr. GRUENING] is re-
jected.
The Senator from Oregon [Mr. MORSE]
requested that I read further from the
dissenting views. I read further:
A hardening of U.S. loan terms would cor-
rect this situation. It would also serve
notice on the Europeans that we do not
intend indefinitely to make soft loans while
they made hard ones. Instead of interfering
with efforts to persuade the Europeans to-
soften their loans terms, it might well con-
tribute to those efforts.
A hardening of U.S. loan terms will also
have the salutary effect of imposing..better
habits of fiscal discipline and responsibility
on the borrowing countries by requiring
them to plan their affairs more carefully and
to exercise greater self-restraint.
Mr. MORSE. Mr. President, will the
Senator yield for 30 seconds, or less?
Mr. LAUSCHE. I yield.
Mr. MORSE. Of course, if the Senate
agrees to either the amendment of the
Senator from Alaska [Mr. GRUENING],
or the amendment which the Senator
from Ohio [Mr. LAUSCHE], the Senator
from South Dakota [Mr. MUNDT], and I
have proposed, we would still be substan-
tially below their usual interest rate.
They could still soften their interest
rates down to the interest rate called for
by either of those amendments and still
not be below the interest rate of the
United States. If we could get them
down to the interest rate we are propos-
ing of 4 percent for commercial loans and
2 or 21/2 percent for other loans?which
is in our amendment?it would still be a
softening process on their part so far as
the fixing of interest rates is concerned,
RECORD ? SENATE August 11
Mr. LAUSCHE. Mr. President, I
regret that the table which is set forth -
on page 43 of the report does not show
how much money has been loaned by
other countries, at what is supposed to be
a low interest rate.
I am quite sure that the facts will
show that the loans made by other coun-
tries have been at high interest rates.
The table shows that Canada's high in-
terest rate is as high as 6 or 7 percent.
France's interest rate is 7 percent and
up. Germany's interest rate is 6 to 7
percent and up. In Italy, the lowest rate
charged is 3 to 4 percent, and the highest
is 7 percent or more. The Netherlands
on some few loans have made a low in-
terest-rate charge, but their high inter-
est rate is 3 to 4 percent. In Portugal,
the high interest rate is 7 percent and up.
I repeat that if all the facts were
shown, they would disclose that the
amount of loans made at the low interest
rate is negligible, and that the loans made
at high interest rates are substantial.
They come to us because of our low in-
terest rate.
Mr. MORSE. Mr. President, will the
Senator yield further?
Mr. LAUSCHE. I yield.
Mr. MORSE. Mr. President, I again
compliment the Senator from Ohio for
the demolition which he is doing. He is
demolishing the weak case of the State
Department and the AID representatives
in regard to the interest rate. As I
pointed out in my speech yesterday, when
one starts to analyze the list of countries
to which other countries are making the
loans, he will be surprised at the large
percentage of such loans made to their
former political colonies?still their eco-
nomic colonies. There are still areas
that France, Great Britain, -Belgium, and
the Dutch dominate economically. The
loans which they make to their former
territorial colonies?which are still their
economic colonies?involve a high degree
of self-interest. They are still charging
those colonies an interest rate that is
on the average far above our own inter-
est rate.
Mr. LAUSCHE. Mr. President, until a
few years ago we were charging three-
fourths of 1 percent. That was charged,
I believe, 2 years ago. We are now
charging 2 percent, with 10 years of
grace during which the interest rate is
three-fourths of 1 percent and the ma-
turity date is 40 years. During the grace
period of 10 years no payments on the
principal amount are required. At the
11th year the interest rate becomes 2
percent.
In my judgment, we are not moving
in the right direction. We are not in
fact helping those to whom we are lend-
ing money. We are causing them to be
neglectful. We are' allowing them to
cast aside all discipline and sound man-
agement.
Moreover, we are not acting justly
with the taxpayers of the United States.
In addition, we have created a situation
in which all the applicants are coming
to our country for loans because of the
low interest rates which we charge. And_
they will continue to come unless we
harden the terms.
I favor the hardening of the terms
under which we make the loans.
, I ask unanimous consent that there
be made a part of my statement in the
RECORD the individual views contained
in the report as set forth on pages 42, 43,
and 44, and signed by the Senator from
South Dakota [Mr. MUNDT], the Senator
from Ohio [Mr. LAUSCHE], and the Sen-
ator from Oregon [Mr. MoRsE]
There being no objection, the individ-
ual views were ordered to be printed in
the RECORD, as follows:
INDIVIDUAL VIEWS
We strongly believe that this bill should
contain provisions hardening the terms of
development loans and loans under the
Alliance for Progress. An amendment to this
effect was rejected by the committee by a
vote of 8-7, a decision which we shall urge
the Senate to overturn.
Historically, the foreign aid program has
gradually moved from a program which was
almost all on a grant basis to a program
which (excluding military assistance) is
composed of roughly 60 percent loans and 40
percent grants. This progress is welcome.
It has been, we think, too' slow; but we are
here concerned not so `much with increasing
the loan component as with the nature of
the loans which comprise that component.
Until the Congress took a small step last
year toward hardening loan terms, the com-
mon administration policy was to make loans
at three-fourths of 1 percent interest and a
maturity of 40 years including a 10-year
grace period on repayment of ,principal. In
1963, the Congress amended the law to re-
quire a minimum interest rate of 2 percent
after the 10-year grace period during which
the interest may still be (and usually is)
as low as three-fourths percent.
To call a transaction of this nature a
"loan" is to be something less than candid.
Loans on such soft terms contain an; element
of grants and a concealed subsidy in the
interest rate. We are deceiving ourselves and
the American people if we pretend that this
Is a loan program. The three-fourths per-
cent interest during the grace period barely
covers the cost of administering the loan.
Even the 2 percent interest charged after
the grace period is far below the cost of the
money to the U.S. Treasury, which is now
paying 3% percent.
Under the current requirements of the
Foreign Assistance Act, the average interest
on development and Alliance for Progress
loans is 1.7 percent.
This is far below what most other devel-
oped countries are charging, as shown in the.
following table: '
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196.4
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CONGRESSIONAL RECORD ? SENATE
DAC donor countries bilateral terms of aid, 196'2?Commitments
18433
Interest rates
Maturities
Grace period (most
liberal)
Lowest
Highest
Weighted
average
(percent)
Longest
Shortest
Weighted
average
(years)
Belgium
Canada
Denmark
France
Germany
Italy
Japan
Netherlands
Norway
Portugal
United Kingdom
Total, other DAC
United States
Total, DAC
Nonavallable
4 of 1 percent
1 to 3 percent
do
3 to 4 percent
5 to 6 percent
0 to 1 percent
0 to 1 percent
do
0 to 1 percent
Nonavallable
6 to 7 percent
7 percent and up_
6 to 7 percent
7 percent and up_
do
3 to 4 percent
7 percent and up_
6 to 7 percent
6 to 7 percent
5.S
(I)
4.4
4.2
4.9
6.1
5.0
4.6
5.6
5 to 10 years
50 years
40 years and up
20 to 30 years
10 to 20 years
do
40 years and up-
20 to 30 years
40 years and up
40 years and up
5 to 10 years
do
1 to 5 years
do
do
do
20 to 30 years
1 to 5 years
do
1 to 5 years
7. 5
(9
23.3
17.0
9.8
8.1
20.0
22.4
26.3
Not available.
3 years.
7 years.
5 years.
85 percent, 10 years.
3 years.
7 years.
10 years.
5.1
2.6
19.8
29.9
3.6
25.8
1 Not available.
The administration opposes harder U.S.
loan terms primarily on two grounds: First,
that the movement of U.S. policy in this di-
rection would interfere with the administra-
tion's efforts to induce other developed coun-
tries to soften their terms; and second, that
it would aggravate the balance-of-payments
problems of the borrowing nations. Neither
argument is persuasive.
With respect to the first argument, the ad-
ministration lays great stress on the fact that
loan terms of other developed countries have
become softer in recent years. Nevertheless,
with the exception of a portion of the
Canadian loans, the softest of these loans
still carry shorter maturities and interest
twice as high as the softest U.S. loans.
To the extent that foreign borrowing ag-
gravates an underdeveloped country's
balance-of-payments problem, aggravation is
certainly caused more by borrowing from
Europe than from the United States. So long
as the Congress tolerates a situation in which
U.S. money is available for half the cost of
European money, the United States will con-
tinue to be faced with requests for easy help
on balance-of-payments problems which are
partially due to European credits. Thus,
to some degree, we are helping to make it
possible for underedeveloped debtors to pay
their European creditors.
A hardening of U.S. loan terms would cor-
rect this situation. It would also serve notice
on the Europeans that we do not intend in-
definitely to make soft loans while they
make hard ones. Instead of interfering
with efforts to persuade the Europeans to
soften their loans terms, it might well con-
tribute to those efforts.
A hardening of U.S. loan terms will also
have the salutary effect of imposing better
habits of fiscal discipline and responsibility
on the borrowing countries by requiring
them to plan their affairs more carefully and
to exercise greater self-restraint. A grace
period of 10 years provides a considerable in-
centive to postpone the day of planning to
meet, regular payments. With respect to
politically unstable countries, a 10-year
grace period increases the risk that a change
in government might lead to default of the
loan.
For -all of these reasons, we urge the
Senate to support an amendment which we
intend to offer and which will make the
lending part of the foreign aid program
loans in fact as well as in name. Under
the existing law, the so-called loans are in
reality little more than grants. If the U.S.
Government is going to make grants to for-
eign countries?and in some instances there
may be a case for doing so?we should at
least be honest with ourselves and with the
American people and call them grants. We
NOTE.?Data available laCk precision or consistency; these average terms should be
regarded as rough orders of magnitude.
cannot justify making grants and calling
them loans.
KARL E. MUNDT.
FRANK J. LAIISCHE.
WAYNE MORSE.
Mr. LAUSCHE. Mr. President, I now
suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. NEL-
so in the chair) . The clerk will call
the roll.
The Chief Clerk proceeded to call the
roll.
Mr. GRUENING. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
Mr. LAUSCHE. Mr. President, I ob-
ject.
- The PRESIDING OFFICER. Objec-
tion is heard. The clerk will continue
to call the roll.
The legislative clerk resumed the call-
ing of the roll.
Mr. LAUSCHE. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The question is on agreeing to the
amendment of the Senator from Alaska
[Mr. GRUENING].
Mr. FULBRIGHT. Mr. President, the
amendment is one of the most drastic
of all amendments that are being offered
to change the character of this program.
The Administrator, Mr. Bell, has
summed up the arguments on the
amendment very succinctly.
I ask unanimous consent that his let-
ter be printed in the RECORD at this point
In my remarks.
There being no objection, the letter
was ordered to be printed in the RECORD,
as follows:
DEPARTMENT OF STATE, AGENCY
FOR INTERNATIONAL DEVELOP-
MENT,
Washington7D.C., August 6, 1964.
lion. J. W. FLTLBRIGHT,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMAN: I understand several
amendments concerning interest rates and
amortization schedules have been proposed
to HR. 11380, the Foreign Assistance Act of
1964. The purpose of these amendments
would be to raise the present minimum inter-
est rate of 2 percent (with a three-fourths of
1 percent rate during the grace period), limit
or eliminate the present 10-year grace pe-
riod, and shorten the present 40-year ma-
turity on dollar-repayable development loans.
? These amendments are a cause of deep
concern for they threaten the effectiveness
of the development loan program, the cen-
tral feature of foreign assistance. Congress
recognized, in passing the Foreign Assistance
Act of 1961, that by shifting to dollar-repay-
able loans from grants or local currency re-
payable loans, a much greater burden was
being placed on the less-developed countries
receiving U.S. assistance. Consequently,
minimum repayment terms for development
loans were set to meet the capacity of the
borrower to repay. Last year the terms were
modified by raising the minimum interest
rate to 2 percent after the expiration of the
grace period. Further hardening of these
minimum terms would work against the very
goals of economic development and stability
the U.S. mutual assistance program tries to
achieve.
In the case of one proposed amendment,
the interest rate would be increased to 21/2
percent, the grace period on principal re-
duced to 2 year and and maturity date short-
ened to 30 years. A second proposed amend-
ment would set the interest rate by adding
one-fourth of 1 percent to average interest
rate on the U.S. debt, which, for example, in
1964 would be approximately 3% percent. A
third proposed amendment tries to create a
distinction between "commercial" and "non-
comniercial" loans; for the former, the in-
terest rate would be the same as proposed
In the second proposed amendment, for the
latter, the interest rate would be set at 21/2
percent. This amendment would, in addi-
tion, require principal repayment on "com-
mercial loans" within 25 years after the com-
mencement of operation of the facility fi-
nanced and, in the case of "noncommercial
loans," within 25 years.
I believe all three amendments should be
defc: tcd because they do not reflect the real-
ity Cf international economic development.
First, terms on loans for economic develop-
ment must be fitted to the capacity of the
recipient .to service its foreign debt. The
World Bank has estimated the total out-
standing foreign debt of 74 developing coun-
tries had risen 21/2 times from 1955 to 1962:
service payments have tripled in the last 7
years. In the case of some countries, the
present debt-service payments are 25 percent
or more of their export earnings. It is vital
that the structure of this debt be stretched
out so the bulk of it falls due at a time when
the process of development has brought
about the growth needed to finance the debt.
To do otherwise would encourage irrespon-
sible debt practices such as postponement
or default, divert badly needed resources
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18434 CONGRESSIONAL RECORD ? SENATE
from development to debt-service and thus
prolong the need for external assistance and
increase the need for new funds from the
United States.
Second, the adoption of these amend-
ments would frustrate and undermine the
efforts of the United States to obtain more
realistic terms from other developed coun-
tries. The U.S. effort has been increasingly
successful; the fact that U.S. terms are bet-
ter than most DAC members is the strongest
incentive for other developed countries to
Increase the amount and improve the terms
of their assistance. It must always be kept
in mind that the purpose of U.S. foreign
assistance is not to compete with other
donors but to help the less-developed coun-
tries. It serves no useful purpose to increase
dangerously the debt-service of less-devel-
oped countries merely for the sake of com-
parability with other developed countries at
harder, unrealistic terms. The most likely
result of across-the-board hardening of U.S.
development loan terms would be to reverse
the present trend in other donors' terms and
to push them to harder terms, thereby fur-
ther accelerating the debt problem of less-
developed countries. Let me assure you that
the United States will continue its stren-
uous efforts to encourage other developed
countries to increase the amount of their as-
sistance and to move more rapidly to terms
comparable to those of the United States.
Third, AID will continue to set interest
rates and repayment terms to fit the borrow-
er's capacity to repay. In a number of cases
these terms have been significantly harder
than the present statutory minimum of 2
percent (three-quarters of 1 percent in the
grace period). I would expect the number of
loans at medium terms to increase as de-
velopment proceeds. Moreover, average in-
terest rates on overall U.S. lending to key
less-developed countries are close to the cost
of the Treasury because Export-Import Bank
loans are on commercial terms. Adoption
of these amendments would thus raise the
overall average terms in some countries above
the terms of other donors and beyond the
point of prudent fiscal policy.
Let me close by reemphasizing that all de-
velopment loans authorized by the Foreign
Assistance Act are repayable in dollars. In
addition, any development loans to private
enterprises, whether directly or through the
recipient government, are on prevailing com-
mercial terms.
For these reasons, and because it is in the
best interest of the United States, I hope
these amendments will not be adopted.
Sincerely yours,
DAVID E. BELL,
Mr. FULBRIGHT. Mr. President, for
emphasis, I wish to read a few para-
graphs for the information of the Senate
at this time. There are several amend-
ments, of course, of a somewhat similar
nature, as has already been stated by the
Senator from Ohio:
These amendments are a cause of deep con-
cern for they threaten the effectiveness of
the development loan program, the central
feature of foreign assistance. Congress rec-
ognized, in passing the Foreign Assistance
Act of 1961, that by shifting.to dollar-repay-
able loans from grants or local currency-re-
payable loans, a much greater burden was be-
ing placed on the less developed countries re-
ceiving U.S. assistance. Consequently, mini-
mum repayment terms for development loans
were set to meet the capacity of the borrower
to repay. Last year the terms were modified
by raising the minimum interest rate to
2 percent after the expiration of the grace
period.
I remind the Senate particularly that,
? in 1961, for example, three-quarters of
1 percent was the interest rate during
the whole period of many loans. Today
it is 2 percent. That was the rate last
year.
I continue to read:
Further hardening of these minimum
terms would work against the very goals of
economic development and stability the U.S.
mutual assistance program tries to achieve.
I believe all three amendments should be
defeated?
He is referring to three different varia-
tions, but all of them have the same ob-
jective and are quite simple?
because they do not reflect the reality of
international economic development. First,
terms on loans for economic development
must be fitted to the capacity of the recipient
to service its foreign debt. The World Bank
has estimated the total outstanding foreign
debt of 74 developing countries had risen
21/2 times from 1955 to 1962; service pay-
ments have tripled in the last 7 years. In
the case of some countries, the present debt
service payments are 25 percent or more of
their export earnings. It is vital that the
structure of ? this debt be stretched out so
the bulk of it falls due at a time when the
process of development has brought about
the growth needed to finance the debt. To
do otherwise would encourage irresponsible
debt practices such as postponement or de-
fault, divert badly needed resources from
development to debt service and thus pro-
long the need for external assistance and
increase the need for new funds from the
United States.
Second, the adoption of these amendments
would frustrate and undermine the efforts
of the United States to obtain more realistic
terms from other developed countries. The
U.S. effort has been increasingly successful;
the fact that U.S. terms are better than most
DAC members is the strongest incentive for
other developed countries to increase the
amount and improve the terms of their as-
sistance. It must always be kept in mind
that the purpose of U.S. foreign assistance
is not to compete with other donors but
to help the less-developed countries. It
serves no useful purpose to increase 'dan-
gerously the debt service of less-developed
countries merely for the sake of compara-
bility with other developed countries at
harder, unrealistic terms. The most likely
result of across-the-board hardening of U.S.
development loan terms would be to reverse
the present trend in other donors' terms and
to push them to harder terms, thereby fur-
ther accelerating the debt problem of less-
developed countries.
Third, AID will continue to set interest
rates and repayment terms to lit the bor-
rower's capacity to repay. In a number of
cases these terms have been significantly
harder than the present statutory minimum
of 2 percent (three-fourth of 1 percent in
the grace period) . I would expect the num-
ber of loans at medium terms to increase
as development proceeds. Moreover, average
interest rates on overall U.S. lending to key
loss-developed countries are close to the cost
to the Treasury because Export-Import Bank
loans are on commercial terms. Adoption
of these amendments would thus raise the
orevall average terms in some countries above
the terms of other donors and beyond the
point of prudent fiscal policy.
Let me close by reemphasizing that all de-
velopment loans authorized by the Foreign
Assistance Act are repayable in dollars. In
addition, any development loans to private
enterprises, whether directly or through the
recipient government, are on prevailing com-
mercial terms.
I have read from a part of the letter
In which the very able Administrator of
August
the program protests this amendment
most vigorously. He has told me that
this amendment is probably the most
serious one he knows of to be offered, as
concerns the terms of the policy of the
Foreign Assistance Act.
Also, I have a very interesting report
from Paris relative to these loans. I re-
fer to an article by a special foreign cor-
respondent, Bernard Nossiter, of the
Washington Post. I shall read a portion
of the article. It refers to the effort to
increase the rates in accordance with
the pending amendment:
The provision would double the minimum
Interest rate that the United States may
charge for development loans.
If the Senate adopts this proposal?and it
has strong support?officials fear that it
would seriously undermine their long cam-
paign to persuade other nations to liberalize
their aid terms.
The whole subject is particularly sensi-
tive at this moment. The leading Western
Powers and Japan meet in Paris on Thursday
and Friday?
The article was published in the Wash-
ington Post of July 22?
f or their yearly review of aid programs and
policies.
The struggle to make aid terms easier is
based on a widespread belief that many im-
portant nations receiving help already have
saddled themselves with outsized repayment
burdens. Among others, the World Bank has
joined the fight for easier terms.
A little later the article states:
A year.ago, the committee under U.S. prod-
ding, resolved that aid terms should be easier.
Ironically, the United States is winning this
battle. Between 1961 and 1963, the propor-
tion of aid loans made by development com-
mittee members with a charge of less than
3 percent more than doubled.
Canada now is seeking legislation permit-
ting 50-year loans at three-quarters of 1
percent. West Germany, regarded as the
most tight-fisted aid giver, reported that the
average length of its outstanding loans to
poor nations in 1963 was 19 years. This was
an increase of mon than a third since 1961.
Mr. President, I ask unanimous con-
sent that the entire article be included in
the RECORD at this point.
There being no objection, the article
was ordered to be printed in the RECORD,
as follows:
U.S. OFFICIALS WORRIED BY MOVE To BOOST
FOREIGN AM LOAN RATES
(By Bernard D. Nossiter)
PARIS, July 21.?U.S. officials here are deep-
ly worried over a little-noticed sleeper
amendment that has been proposed to the
foreign aid bill.
The provision would double the minimum
Interest rate that the United States may
charge for development loans.
If the Senate adopts this proposal?and it
has strong support?officials fear that it
would seriously undermine their long cam-
paign to persuade other nations to liberalize
their aid terms.
The whole subject is particularly sensitive
at this moment. The leading Western Pow-
ers and Japan meet in Paris on Thursday and
Friday for their yearly review of aid pro-
grams and policies.
HEAVY BURDENS CITED
The struggle to make aid terms easier is
based on a widespread belief that many im-
portant nations receiving help already have
saddled themselves with outsized repayment
burdens. Among others, the World Bank has
joined the fight for easier terms.
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194 CONGRESSIONAL RECORD ? SENATE
The? amendment that officials say IS em-
barrassing has beenyoffered by Senators KARL
MUNDT, Republican, of South Dakota, and
FRANK LAIISCHE, Democrat, of Ohio. It would
require the aid agency to charge recipients
the same interest cost paid by the U.S,
Treasury.
The minimum aid charge now is 2 percent
and the current yield on long-term Treasury
bonds is a little more than 4 percent. The
difference may not sound like much, but it
would add $6 million in interest charges on
a $10 million loan running 30 years.
NARFLOWLY DEFEATED
The Mundt-Lausche amendment was beat-
en in the Senate Foreign Relations Commit-
tee 'by only an 8-to-7 vote. The prevailing
congressional collness toward aid, perhaps
reinforced by Senator BARRY GOLDWATER'S at-
tacks, could, it is feared, create a climate that
would enable the amendment to pass.
Aid experts say that countries like India,
Pakistan, Brazil, and Argentina are already
laboring under too heavy a load of repay-
ments. Turkey gives up about half of its
foreign aid for charges on previous debts.
The recent United Nations trade confer-
ence took note of this problem, and urged
aid-givers to offer softer terms. This meeting
of poor and rich nations has had a sur-
prisingly strong effect on the thinking of
authorities in several leading European
countries.
TO REVIEW POLICIES
The non-Communist world's aid policies
will be reviewed at the end of the week here
in a meeting of the Development Assistance
Committee. The Committee includes the
United States and 11 other principal aid
donors. It -was set up to measure aid con-
tributions and make policies more consist-
ent.
A year ago, the committee, under 'U.S.
prodding, resolved that aid terms should
be easier. Ironically, the United States
is winning this battle. Between 1961
and 1963, the proportion of aid loans made
by development committee members with
a charge of less than 3 percent more than
doubled.
Canada now ,is seeking legislation permit-
ting 50-year loans at three-quarters of 1
percent. West Germany, regarded as the
most tight-fisted aidgiver, reported that the
average length of its outstanding loans to
poor nations in 1963 was 19 years. This was
an increase of more than a third since 1961.
The U.S. delegation to the develop-
ment group's meeting wil be led by Wil-
liam Gaud, deputy aid administrator, and
former Congressman Frank Coffin, Demo-
crat, of Maine, the permanent U.S. delegate
to the committee.
Mr. FULBRIGHT. Mr. President, to
sum up, increasing the interest rates to
' the figure provided in the amendment
would hamstring the administration of
the program. Many countries are un-
able to service loans at those interest
rates. This proposal fixes a rate that
can almost be obtained in some of the
international agencies, such as the In-
ternational Bank. It is somewhat lower
than the International Bank or Export-
Import Bank rate, but adoption of these
rates would take the aid program out
of the lending business.
It seems to me more logical, if the
Senate wishes, to - stop the program
rather than to pretend to have the pro-
gram and hold out the hope that there
is an aid program, While making the
terms so severe that an underdeveloped
country struggling to get on its feet
could not obtain a loan. One of two
No. 156-22
things would happen?either it would not
get the loan or else it would not be able
to service it. That would cause a great
(setback to the effort we are making
in the international field. That would
be worse than not making the loan at all.
This is a very important amendment,
and it should be voted down; or, if not,
the Senate should stop the program and
should go out of the development assist-
ance business.
Mr. SALTONSTALL. Mr. President,
will the Senator yield?
Mr. FULBRIGHT. I yield.
Mr. SALTONSTALL. Mr. President,
is not the purpose of the development
loans to make it possible for countries to
grow and produce economically so that
they can hope to do more business with
us in the days to come? To make the
interest rate too high would mean that
they could not get started in that devel-
opment.
Mr. FULDR/GHT. The Senator is
quite correct. The purpose is to do what
the Senator says. If it is a worthy and
sensible purpose, we should make the
money available on reasonable terms.
It should be noted that since 1961 these
loans have been made repayable in dol-
lars at the minimum rate, although some
are higher than that.
Mr. DOUGLAS. Mr. President, will
the Senator yield?
Mr. FULBRIGHT. I yield.
Mr. DOUGLAS. First, let me say that
it is my intention to support the posi-
tion of the Senator from Arkansas.
However, I believe that, in the interest
of truth, certain facts should be made
clear, so that we in the United States
will not have a guilt complex in connec-
tion with this program.
First, is it not correct to say that the
interest rates charged by the World
Bank, the Export-Import Bank, foreign
governments, and private parties are
very much in excess of the ,interest rates
which we charge?
Mr. FULBRIGHT. It is certainly
true of the Export-Import Bank and
the World Bank,
Mr. DOUGLAS. Is it not also true so
far as foreign government loans are con-
cerned?
? Mr. FULBRIGHT. It has been true.
However, there has been a marked tend-
ency within the past 2 years for coun-
tries, particularly members of the Devel-
opment Assistance Committee of OECD
to reduce their terms. I have just read
the information with respect to what
Canada is seeking to do, namely, to pro-
vide a 50-year term at three-fourths of
1 percent interest. That is a completely
new approach on the part of Canada.
At page 43 of the committee report
Senators will find the interest rates. All
I can say is that they have been much
higher, but that now they are beginning
to come down, due to our prodding, pri-
marily. We have been doing our best
to persuade the members of OECD to
soften their terms. That is the hopeful
part of it. Not only has this been true
in the area of foreign lending, but the
Senator also knows that in their domes-
tic lending nearly all these countries
traditionally have maintained a higher
18435
interest rate than we employ in our
domestic lending. For example, that
is true of Germany and France. Of
course all this is more or less relative.
Mr. DOUGLAS. I invite attention to
the fact that the weighted average of
the Belgium loans is 5.5 percent; on
French loans, it is 4.4 percent; on Ger-
man loans, it is 4.2 percent; Italy, 4.9
percent; Japan, 6.1 percent; Netherlands,
5 percent; Portugal, 4.6 percent; United
Kingdom, 5.6 percent. The U.S. average
is 2.6 percent. ? On this particular type
of loan, the interest rate is percent.
There may have been some improve-
ment?and I am glad that there has
been?but certainly the existing dispar-
ity is great.
Mr. EULBRIGHT. The Senator is
quite correct. It was worse than it is
now. I invite the Senator's attention to
the fact that while the situation in
other donor countries is not as favor-
able from the standpoint of absolute
amounts, a better case can be made with
regard to levels of aid as related to the
gross national products of these coun-
tries. The grant assistance of these
countries has been a higher percentage
of the total aid than is the case with us.
I have before me a comparative study
of the grants, shown as a percentage of
the total aid of a particular country.
In the case of a country like Belgium,
it is 94 percent. In the case of Canada,
it is 76 percent. In the case of France,
it is 86 percent. Grants represent a sub-
stantially higher percentage of total aid.
Mr. DOUGLAS. May I comment on
that?
Mr. FULBRIGHT. One reason for it
is that this aid is confined largely to
former colonial areas.
Mr. DOUGLAS. That is correct. The
Senator from Arkansas has now touched
a crucial point. Loans by France are
made almost exclusively to her former
colonial possessions in Africa, with which
France has very intimate economic rela-
tionships. France has obtained, for these
possessions, duty free entrance for their
raw materials to the Common Market. It
is obvious that France intends to retain
virtual economic control over these de-
veloping nations in Africa. I imagine
that the same thing is true so far as
Belgium is concerned. The Portuguese
money goes largely to what we used to
call Portuguese East Africa and Portu-
guese West Africa, one of which is now
called Angola.
The Senator has mentioned the fact
that this money represents a larger pro-
portion of the gross national product of
those countries than is the case with
the United States. This is true. That
fact is played up by AID as an indication
that European nations are more gener-
ous than we in providing foreign aid.
But what AID does not mention is that
the loans are made at extraordinarily
high rates of interest. Many advocates
of foreign aid?and I am a supporter,
and always have been?do not tell the
whole story. They present the side of
the case most favorable to them, and
they suppress the fact that, instead of
making grants to nations outside the
economic alliances, European countries
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18436 CONGRESSIONAL RECORD ? SENATE
lend to their colonial possessions or
former colonial possessions and that we
lend to countries over which we have
very little or no control.
I shall vote against the amendment
offered by my good friend from Alaska
[Mr. GRUENING] , with great reluctance.
My comments are meant to dispel any
inferiority complex in the United States
which is being inculcated. The fact is
that we are more generous in making
contributions to nations outside our eco-
nomic control than are European coun-
tries. We are more generous in connec-
tion with interest terms. That fact
should be frankly faced. I am ready to
face it.
I believe that in? the case of Latin
America, the people are so poor that spe-
cially favorable terms should be made to
them. But I do not believe anything is
gained by concealing the fact that Eu-
ropean nations, while they may be im-
proving, still are not bearing their fair
share.
Mr. GRUENING. Mr. President, will
the Senator yield?
Mr. DOUGLAS. I do not have the
floor.
Mr. FULBRIGHT. I agree with what
the Senator has said about interest rates.
All I can say is that formerly much of our
development aid was on a grant basis and
we are proceeding to make the program
somewhat more realistic than before. At
the same time, there is a gradual increase
in the participation by Europeans at more
lenient terms and conditions. Tradi-
tionally, the interest rate structure has
been lower in this country. That is why
we have had to have the tax equalization
bill, because even in the commercial
markets the interest rates charged in this
country were substantially lower, on the
whole.
Mr. DOUGLAS. The disparity be-
tween the rates which the European na-
tions charge to countries abroad and
their own domestic rates is also much
less than the disparity in the United
States.
We have an interest rate on long-time
Government loans of 3% percent. We
have an interest rate on certain foreign
loans of three-fourths of 1 percent, a
rate which is only about one-fifth of
what it is internally. We do not find
France or even Great Britain lending to
her colonial possessions at a rate one-
fifth of what is charged at home.
Although I shall not support the
amendment of the Senator from Alaska,
his attitude is correct. But I hope the
advocates of foreign aid?and I am one
of them?will not get an inferiority
complex and think that we are not as
kind and generous as are the European
nations. The truth is that we are
more so.
Mr. GRUENING. Mr. President, far
from having an inferiority complex be-
cause we are not generous enough, the
fact is that in some ways and for some
recipients we have been too generous.
The remarks of the Senator from Illi-
nois indicate that the AID administra-
tion does not always "level" with Con-
gress; it does not tell us the whole story.
We have to dig these errors out and dis-
cover them painfully.
If the Senator will look at the list of
more than $1 billion worth of loans we
have made at a negligible interest rate,
with a 10-year moratorium on the pay-fa-
ment of principal, he will find that, in-
discriminately, the list includes both en-
terprises that can and cannot make a
profit. If we wish to assist in the build-
ing of a school or a road, if the recipient
country is deemed too poor to repay a
loan, perhaps we should make grants for
that purpose. But that is entirely dif-
ferent from a profitmaking enterprise,
that will begin to earn rxioney the min-
ute it is completed. It is in that cate-
gory that we ought to improve the for-
eign aid loan program.
I, too, favor foreign aid; but I have
opposed and continue to oppose the
many abuses I have discovered since I
began to study the program. It is dif-
ficult to have amendments agreed to be-
cause past administrations have resist-
ed efforts at reform and have taken the
position that everything in the program
is nearly perfect and that no improve-
ments are desired. That is why this
amendment is desirable. It would be a
step in the right direction. Even when
such amendments have been adopted by
the Senate, they have been taken out in
conference at the behest of the State De-
partment and AID Administrators.
Three years ago I offered an amend-
ment which provided that countries to
which we lent money could not relend it
at more than 5 percent above the rate
at which we lent it. In other words, if
we lent the money at a rate of three-
quarters of 1 percent, the recipient coun-
try could not lend it at a rate of more
than 534 percent. Over the opposition
of the administration, this amendment
was adopted by the Senate by a vote of
74 to 16. But the AID representatives
rushed up to the conference and said
that the amendment would wreck the
program. So these usurious practices
still continue. The recipient countries
continu to take our money, relend it at
high interest rates, make a bonanza, for
the few, while the people for whom
Americans are making this sacrifice bear
the costs.
Mr. MORSE. Mr. President, I offer
the Bell letter, read by the chairman of
the committee, to prove exactly the op-
posite of the conclusion reached by the
chairman of the committee. If ever one
wanted an exhibit that supports the
amendment of the Senator from Alaska
or supports the amendment offered by
the Senator from South Dakota [Mr.
'MUNDT], the Senator from Ohio [Mr.
LAUSCHE] , and the Senator from Oregon,
let him reread the Bell letter. If ever
there was received from the AID admin-
istration or the State Department an
epistle that expressed any concern about
the American taxpayer, I think I would
drop dead of a heart attack. If ever
there was a place in which the American
taxpayer received no consideration to
any degree, it is at the State Department
and the AID administration in connec-
tion with the foreign aid program.
If ever there was a time for Congress
to make a great contribution both toward
strengthening the foreign aid program
and protecting the American taxpayer,
August 11
and at the same time perform a service to
the recipient countries, now is the time
to do it, through the Gruening amend-
ment. I cannot think of anything that
we could do by way of reforming our for-
eign aid program that would result in
greater long-time benefits to the borrow-
ing countries than the Gruening amend-
ment, because this amendment would
have a strong effect on changing the na-
ture of the projects or the uses to which
American money is put. We would find
the recipient countries putting their eco-
nomic houses in order. We would find
them investing the money that they seek
to borrow from us in projects that would
pay out.
Comment has been made about the sit-
uation in Latin America. The interest
rate problem is one of the great problems
in Latin America. Do not overlook the
fact that the legal interest rate in coun-
try after country in Latin America runs
all the way from 12 percent to 30 percent.
How can there ever be economic reform
in Latin America with the legal interest
'rates running between 12 percent and 30
percent, if the United States makes loans
to Latin America with American taxpay-
ers' money at a rate of three-quarters of
1 percent, with 10 years in which to pay
nothing, and after 10 years paying a
minimum of 2 percent interest? If we
want to perform a service for the mass of
people in Latin America, I say, most re-
spectfully, that we should adopt the
Gruening amendment or the Mundt-
Lausche-Morse amendment. It is neces-
sary to have interest-rate reform in Latin
America; otherwise the Alliance for
Progress will not have the chance of a
snowball in a hot oven.
How can homes be built in Latin Amer-
ica to be owned by the poverty-stricken
People of Latin America, when legal in-
terest rates from 12 to 30 percent, com-
pounded? I do not know what we are
thinking of when we continue this tra-
vesty in regard to interest rates.
Let us turn to Europe, where we have
so many alleged allies who are making a
sordid and sorry record of putting their
nationalistic interests ahead of service
to humanity in respect to so-called for-
eign aid on their part. We do not find
anything about them in the Bell letter.
It would be necessary to probe with a
more powerful magnet than I have ever
seen to drag out of the AID administra-
tion such facts as we are entitled to have
in connection with this issue. We are
not told how much money those coun-
tries are lending.
The AID administration is careful, in
a letter like this, not to tell us to whom
they are lending. The Senator from
Alaska and the Senator from Oregon to-
day, and in many other speeches, have
brought out this point; but we are in-
debted to the Senator from Illinois [Mr.
DOUGLAS] for pointing out that most of
the loans of our alleged allies are going
to their economic vassals. They are
going to countries in which, for decades,
they exercised control. They were their
territorial colonies, and they are still
their economic colonies. They have huge
national investments in those countries.
Go to any of them that are dominated by
Portugal, the Netherlands, Great Britain,
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116
1964 CONGRESSIONAL RECORD ?SENATE
Belguim or France. There we find the
nationalistic economic empires of the
dominating country. But we do not learn
that from the Bell letter. We cannot
drag it out of the State Depal [Anent We
must take a militant position, as I have
so frequently done, in regard to the State
Department and the AID administration.
In my judgment, the AID adminis-
tration and the State Department have
been for years exploiting the American
taxpayers with this shocking foreign aid
program. It is about time to reform.
This is one reform that ought to be
adopted. I will tell Senators what our
allies are doing in their dominated eco-
nomic colonies. They are also making
economic arrangements with those colo-
nies to discriminate against the United
States in connection with foreign trade.
If Senators do not think so, let them talk
to some of our agricultural exporters,
who are trying to ship American agricul-
tural products into those countries.
Talk to some of our industrial exporters.
Those former colonies are being per-
suaded to execute discriminating agree-
ments against the United States in the
field of foreign trade, because they are
going to continue to do what they can
to keep us out to the maximum extent
possible, and let us in only to the mini-
mum extent they are required by law to
do so.
All we have to do is turn to the table
in the separate views filed on the ques-
tion of interest rates. The table is found
on page 43 of the report. Let us see what
the interest rates are. Take the column
that deals with weighted average:
Belgium 5.5 percent. Canada?not
available?although the next column
gives the highest at 6 to 7 percent, and
the lowest at three-fourths of 1 percent.
Again I ask the controlling question:
How much? What is the total amount
of the loan? It is a drop in the bucket
compared to what the United States is
doing.
In the column entitled "Weighted av-
erage," France is given at 4.4 percent;
Germany 4.2 percent; Italy 4.9 percent;
Japan 6.1 percent; the Netherlands 5
percent; Portugal 4.6 percent; and the
United Kingdom 5.6 percent.
The weighted average for all coun-
tries is 5.1 percent. The weighted aver-
age for the United States is 2.6 percent.
What more do we need to know about
how we are being played for suckers in
this loan arrangement?
I heard Mr. Bell make his statement
before the committee. He now makes
an evasive reply in the letter which has
just been read to the Senate. I say
"evasive," because it does not tell the
American people all the facts they should
be told about this issue.
What the Senator from Alaska is ask-
ing for in his amendment still allows
plenty of room for them to soften the
interest policy still more without being
as generous as we would be under the
amendment.
It is Mr. Bell's argument that we
should not insist that they bring the
interest down even with that of our own.
If they did, and the Gruening amend-
ment were accepted, they would still
have great advantages in their trade ar-
rangements with their economic vassals.
We would still find great difficulty get-
ting through their trade barriers.
France is not the only bad actor in this
connection, although she is one of the
, worst. But she is not the only one. We
do not find Great Britain, Belgium, the
Netherlands, or any of the other coun-
tries listed doing any favors for the
United States in this field. They will
continue,to discriminate against Amen-
-can farmers.
I say to the farmers of America,
"Watch what AID is up to. Watch what
the State Department is up to." The in-
terest rate exploitation by the State De-
partment and the AID people is an ex-
ploitation of the American farmer. In
the last analysis, the policy will work to
the discriminatory disadvantage of the
farmer in regard to the export of Ameri-
can farm products.
I say to the businessmen of America,
too, "Get your heads out of the sand.
They are still working on you. They will
kick you out as fast as they can build up
their economic power in order to do it."
Mr. President, I close by asking: Who
is going to think of the American tax-
payer?
What is wrong with protecting the
American taxpayers with an interest rate
proposal that they pay for the cost of
the use of the money, and pay what the
American Government has to pay out of
the Treasury for the use of the money.
If they have any project which is not suf-
ficiently self-liquidating in its purposes
so that it can pay out an interest rate to
cover the cost of the use of the money,
we should not lend it.
In connection with the statement that
certain countries have a higher percent-
age of grants than does the United States,
there are two points I wish to have borne
in mind: Look at the total amount of
their loans and grants. It is a far cry
from what we have done?since 1946, al-
most $105 billion.
Is there no end to this?
What objection is there to putting such
transactions on a sound business basis,
so that the American taxpayer will not be
fleeced and rooked to the tune of hun-
dreds of millions of dollars each year?
I have such faith in the American
people that I am satisfied that eventually
they will catch up with the politicians.
When they do, they will empty some
seats in the Senate?and the sooner the
better.
In my judgment, we cannot continue
to support a foreign aid program that
works the kind of economic injustice
upon the American taxpayer that this
program has been working.
Some of us have been trying to reform
it. I said earlier in the day that the
State Department at long last recognizes
that it must be reformed. After the
election and before the' Department
comes forward with the bill next year it
wishes to have at least a 2-day confer-
ence at the State Department, which I
have been invited to attend. It was sug-
gested that the conference be with me,
and I said, "Oh, no, I wish the members
of the Foreign Relations Committee to
have the benefit of the great enlighten-
18437
ment that would result from that kind of
conference."
State Department officials are scared.
I really believe that they are worried.
They know that they are going to get a
majority of the Congress to go along with
them this time, because an election is
coming up, although they have no justi-
fication for continuing a program which
should be reformed. If it should be re-
formed in December preparatory to next
year, it should be reformed in August
before the bill is enacted.
I am greatly disappointed. I have
not thrown any bouquets at Mr. Bell or
Mr. Rusk with regard to foreign aid, be-
cause in my opinion, they do not even
deserve a boutonniere to say nothing of
a bouquet. Mr. Rusk and Mr. Bell
should have reformed the foreign aid
program this year.
The Foreign Relations Committee
should have reformed it, too, because it
is a far cry from what the Foreign Re-
lations Committee promised in last year's
report.'
In last year's report, great promises
were made by the majority of the For-
eign Relations Committee, warning the
State Department that it had better do
something about it or it would be in
trouble this year.
? It was forgotten, of course, that the
great warning would be weakened by
political expediency in 1964, because
there is an election this year.
It is extremely difficult to bring about
reforms during an election year.
- The majority on the Foreign Rela-
tions Committee bring in a report this
year which is very interesting to read in
comparison with last year's foreign aid
report.
Now is the time to start to reform.
Now is the time to keep faith with the
American taxpayers.
Now is the time to serve notice on our
alleged allies that we will not continue
to pay through the nose when they make
profits from our loans to them.
I said earlier in the day, in colloquy
with the Senator from Ohio [Mr.
LAIISCHE] , that it is difficult to show that
loan No. 1 to country X was used by
country X to pay back a loan to some
other country at a much higher interest
rate.
If we consider repayments over the
Past 10 years to other countries for loans
made at higher interest rates, compared
with the amount of loans from the
United States at a very low interest rate,
one does not have to be much of an
economist or expert in the field of inter-
est rates to know that the borrowers
were put in a position to pay their loans
at high interest rates because of the low
interest rate loans that they received
from the United States. This particular
gimmick?there is no mention of it by
Mr. Bell?in the foreign aid bill ought
to be torn by its roots.
What would we accomplish by this
amendment from the standpoint of
strengthening the interest of the mass
of the people in the recipient countries?
A great deaL We would force those
countries to take a long look at their
borrowings. We would foree those coun-
tries to ask for money relating to proj-
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18438 CONGRESSIONAL RECORD ? SENATE
ects that are economically sound instead
of using the money to pay off loans from
other countries at high interest rates.
Proper use of the loans means jobs. It
means employment. It means purchas-
ing power. If we put our money, into
such projects, we will perform a great
service for the mass of the people in
those countries.
Reluctantly I have come to the con-
clusion that too much of the money that
we are lending is not used for the kind
of projects in which it ought to be used.
Furthermore, I believe the time has come
for us to serve notice on the people in
every potential recipient country that
..the Treasury of the United States has a
floor.
It is not a-bottomless pit out of which
we can dredge up more and more dol-
lars in an unending supply. I believe
that they ought to be told also that there
is an awakening among the American
taxpayers with respect to the entire
policy of foreign aid. And more and
more taxpayers are saying to the politi-
cians, "Enough is enough." I believe
that an increasing number of American
taxpayers are saying, "We have already
been taken for too much."
Mr. President, I strongly support the
Gruening amendment. If it is defeated,
I shall strongly support the Mundt-
Lausche-Morse amendment:
I yield to the Senator from Illinois.
Mr. DOUGLAS. Mr. President, I
thank the Senator.
On page 335 of the hearings, there is a
- very important table on comparative
contributions by various countries in
foreign aid and bilateral aid commit-
ments. The second column gives the
percentage of gross national product
which each country has contributed.
In 1962, the United States contributed
eighty-four-hundredths of 1 percent of
its gross national product to foreign aid.
This is sometimes compared with the
contribution of France, which amounted
to 1.26 percent. It is said that we are
less generous than France. Of course,
the French interest rate is much more
than that which we charge. Further-
more, the money goes into the former
French colonies of Africa?of which the
Senator from Illinois and the Senator
from Oregon spoke?which are tied by
close trade provisions to the former
imperialist country.
Mr. MORSE. That is correct.
Mr. DOUGLAS. At times even Por-
tugal is cited as being more generous
than the United States. It contributed
2.21 percent of its gross national product.
That is almost three times the share of
the gross national product which we
contributed. But Portugal contributed
only $60 million. The interest rate, as
we have shown, is very, much higher,
amounting on an average to 4.6 percent,
and running for only 22 years, with a
grace period of 3 years.
Mr. MORSE. Mr. President, let us
face one of the ugly realities of inter-
national relations as to the 2.21 percent
of the bilateral commitments of Portugal
in such countries as,Angola and Mozam-
bique. I believe the amounts can be
described as amounting in one way to
the payment of tribute. Let us face it.
The Portuguese are going to be kicked
out of Angola and Mozambique in the
near future anyway. This process is an
economic clipping by Portgual and An-
gola and Mozambique.
When one thinks of the human tyr-
anny that Portugal has imposed upon the
several millions in Mozambique and An-
gola, and we have Bell in the AID de-
partment trying to cite Portugal to the
American people for the purpose of keep-
ing down the interest rate, it is to his
everlasting discredit. He should not
even whisper anything about Portugal.
I sat in the United Nations as a delegate
of this country in 1960. I listened to a
description of the sordid acts of Portugal
in Angola and Mozambique. Portugal
even opposed having a United Nations
team go in to make an inspection. They
knew that what would be seen would
be to the everlasting discredit of Por-
tugal. Yet Portugal is cited in this de-
bate as an example for the United States
to follow. I believe that we should not
be making a single dollar of the Ameri-
can taxpayers' money available to Por-
tugal until she gets out of Angola and
Mozambique. Yet we give her military
aid under this bill while .she lends to
her African colonies at high interest
rates. If ever a population was shock-
ingly discriminated against, abused, and
exploited, it is the people of Angola and
Mozambique. The 2.21 percent figure of
Portugal is cited as an argument on the
part of AID, for us to keep our interest
rate down to 0.75 percent the first 10
years, and then raise it to a minimum of
2 percent after 10 years, with no payment
on principal the first 10 years.
I do not know how we are going to
get these facts across to the American
people. But I would put them before
any jury in America. I will state the
case against Bell and Rusk to any jury
in America; and they would not get a
vedict once the American taxpayer ob-
tained the facts.
I yield to the Senator from Illinois.
Mr. DOUGLAS. Mr. President, let me
say first that I do not associate myself
necessarily with the comments about
the Secretary of State and the Director
of the AID program.
Mr. MORSE. I understand that. No
guilt by association should be attributed
to the Senator from Illinois [Mr. DOU-
GLAS ]
Mr. DOUGLAS. I thank the Senator.
Mr. MORSE. Before the Senator pro-
ceeds, I point out that the interesting
thing about the loans of Portugal to
Mozambique and Angola is that she does
not even consider them colonies. She
considers them as oversee parts of
Portugal. By way of analogy they are
considered to be Portugal states in Africa.
That is mere nonsense.
Mr. DOUGLAS. The Senator from
Arkansas pointed to the improvement
of Canada, in the lowering of its interest
rates.
Of course, we welcome this. But I be-
lieve it should be noted that in 1962 Can-
- ada committed only $58 million for for-
eign aid, or sixteen-one hundredths of 1
percent of its gross national product,
which is less than one-fifth of the pro-
portionate aid given by the United
States. And while we welcome this im-
Augusi 1.1
provemetit on the part of Canada so far
as interest rates are concerned, we also
hope that the improvement will con-
tinue with respect-to the volume of the
loans as well.
Mr. MORSE. The Senator is correct.
The Bell letter very carefully avoids
telling the American people about the
total amount.
Mr. DOUGLAS. Let us consider Den-
mark and Norway. Denmark gave the
magnificent sum of $1 million, which
amounted to 0.01 percent of the gross na-
tional product of that country; whereas
our contribution amounted to 0.84. So
they contributed proportionately one
eighty-fourth as much as we did.
If we consider Norway, we find that
Norway gave $4 million or 0.08 percent of
the gross national product, which is less
than one-tenth of what we gave. Bel-
gium contributed 0.55 percent of the
gross national product. That was in
1962. It would be interesting to note if
that went to the Congo, which I believe
was then.?,a Belgium possession, and
where the Union Miniere controls the
mineral resources of that area.
Mr. MORSE. And which is of vial
concern to the economy of Belgium.
Mr. DOUGLAS. Very much so. Italy
contributed 0.15 percent, or about one-
sixth as much as we did. Italy is a
much poorer country and should not be
expected to contribute as large a pro-
portion. But there is quite a disparity
there.
Japan contributed 0.5 percent. The
Netherlands contributed 0.32 percent of
its gross national' product, which is a
little over one-third of what we con-
tribute.
In short, while I believe it is true that
around the conference table, Secretary
Rusk and Mr. Bell have tried to get the
foreign countries to contribute more and
to lower their interest rates in the interest
of international amity, they soft pedal
these arguments so far as the people of
the United States are concerned.
While I am not going to be able to vote
with the Senator from Alaska [Mr.
GRUENING], and may not be able to vote
with the Senator from Oregon [Mr.
MORSEL they are performing a very val-
uable function in showing that the pub-
lic is getting somewhat fed up with the
continued leniency toward foreign gov-
ernments and their continuing treat-
ment of the United States as somehow
being less charitable and less humane
than -we are. We can be proud of our
record ,-and' there should be no adverse
comments from abroad. On the con-
trary they are the ones who should
reform.
Mr. MORSE. I thank the Senator
from Illinois very much. He has made
a very cogent and brilliant contribution
to the debate. It has been of great help
to the Senator from Alaska and the Sen-
ator from Oregon in substantiating the
position that we have taken.
I realize that there are other reasons
why the Senator from Illinois is still
willing to go along with this arrange-
ment. He is a much more ardent ad-
vocate of the objectives of foreign aid
than is the Senator from Oregon. I am
an ardent advocate of foreign aid, but, as
the Senator knows, I think foreign aid
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1964 CONGRESSIONAL RECORD - SENATE
should be drastically reformed before it
is continued. That is why I offered yes-
terday my amendment which would end
it in 1966, and start it all over again on
the basis of policies that I believe are
sound and would result in reforms that
ought to be adopted.
Mr. President, I ask unanimous eon-
sent to have printed at this point in the
TABLE I.-1962 bilateral aid commitments1
RECORD the table appearing on page 335
of the hearings, together with certain
other substantive explanatory material
that goes along with the table, which the
Senator from Illinois has so brilliantly
discussed.
There being no objection, the table
was ordered to be printed in the RECORD,
as follows:
and various measures of donor capacity and
interest
Bilateral
aid
commit-
ments
Bilateral
aid corn-
mitments
as percent
of GNP 2
GNP per
capita
Defense
expendi-
tures as
percent of
GNP
Bilateral
commit-
ments as
percent of
exports to
LDC's
Bilateral
commit-
ments as
percent of
total trade
with LDC's
Total LDC
trade as
percent Of
donor
GNP
Millions
Belgium $
$70
0.55
$1, 381
3.3
12. 8
,
5. 5
10.0
Canada
58
. 16
2,009
4. 5
13. 3
5.2
3.0
Denmark'
1
.01
1,559
3. 1
.6
.3
4. 1
France 5
901
3.26
1, 524
_
6. 1
37. 1
17. 6
- 7.2
Germany
428
. 50
1, 558
5. 1
16.8
7.8
6.4
Italy
60
. 15
788
3. 5
5.6
2.3
6. 7
Japan
265
.51
547
1.1
11.4
6. 0
8.6
Netherlands
42
.32
1, 105
4. 6
8.0
2. 5
12.8
Norway
4
.08
3,423
3.7
3.4
1.3
6. 0
Portugal
60
2. 21
294
7.4
45.8
20.3
, 10.9
United Kingdom..
' 556
.70
1.482
6.4
16. 2
7.2
9. 7
Total, other DAC
2,441
1, 135
4.7
17. 6
8. 1
7. 5
United States
4,656
-.84
2.974
9. 4
64. 9
35. 1
2.4
Total, DAC
? 7, 101
.74
1,766
7.4
33. 8
16.3
4. 5
I Grants and loans over 5 years.
2 GNP at current market prices.
Bilateral gross expenditure figures.
Mr. MORSE. Mr. President, I close
by saying that in my judgment I would
characterize the amendment of the Sen-
ator from Alaska-to be followed, if it
is not agreed to, later this afternoon
by the Mundt-Lausche-Morse amend-
ment-as an American taxpayers'
amendment.
The PRESIDINZ+ OFFICER. The
question is on agreeing to the amend-
ment offered by the Senator from Alaska.
On this question the yeas and nays have
been ordered and the clerk will call the
roll.
The legislative clerk called the roll.
Mr. HUMPHREY. I announce that
the Senator from Louisiana [Mr. Lorre]
is absent on official business.
I also announce that the Senator from
New Mexico [Mr. ANDERSON] and the
Senator from Massachusetts [Mr. KEN-
NEDY] are absent because of illness.
I further announce that the Senator
from Oklahoma [Mr. EDMONDSON] , the
Senator from Nevada [Mr. CANNON] , and
the Senator from Pennsylvania [Mr.
CLARK] are necessarily absent.
I further announce that, if present
and voting, the Senator from Louisiana
[Mr. Lorre], and the Senator from Penn-
sylvania [Mr. CLARK] would each vote
"nay."
Mr. KUCHEL. I announce that the
Senator from Nebraska [Mr. HausxA]
is necessarily absent and, if present and
voting, would vote "yea."
The Senator from Arizona [Mr. GOLD-
WATER] is detained on official business.
The result was announced-yeas 44,
nays 48, as follows:
[No. 533 Leg.]
VEAS-44
Allott Bible Byrd, W. Va.
Bartlett Boggs Cotton
Beall Burdick Curtis
Bennett Byrd, Va. Dirksen
1961 figure.
5 Grant component is expenditure figure.
Dominick
Eastland
Ellender
Ervin
Fong
Gore
Gruening
Hill
Johnston
Jordan, N.C.
Jordan, Idaho
Aiken
Bayh
Brewster
Carlson
Case
Church
Cooper
Dodd
Douglas
Fulbright
Hart
Hartke
Hayden
Hickenlooper
Holland
Humphrey
Anderson
Cannon
Clark
Lausche
McClellan
Mechem
Morse
Moss
Mundt
Pearson
Proxmire
Ribicoff
Robertson
Russell
NAYS 18
Inouye
Jackson
Javits
Keating
Kuchel
Long, Mo.
Magnuson
Mansfield
McCarthy
McGee
McGovern
McIntyre
McNamara
Metcalf
Miller
Monroney
Simpson
Stennis
Symington
Talmadge
Thurmond
Tower
Walters
Williams, Del.
Yarborough
Young, N. Dak.
Morton
Muskie
Nelson
Neuberger
Pastore
Pell
Prouty '
Randolph
Salinger
Saltonstall
Scott
Smathers
Smith
Sparkman
Williams, N.J.
Young, Ohio
NOT VOTING-8
Edmondson Kennedy
Goldwater Long, La.
Hruska
So Mr. GRUENING'S amendment was
rejected.
Mr. HUMPHREY. Mr. President, I
move that the Senate reconsider the vote
by which the amendment was rejected.
Mr. SPARKMAN. Mr. President, I
move to lay that motion on the table.
The motion to lay on the table was
agreed to.
Mr. ELL.ENDER. Mr. President, I send
an amendment to the desk and ask that
it be stated.
The PRESIDING OFFICER. The
clerk will state the amendment.
The chief clerk stated the amendment
as follows:
On page 6, beginning with line 12, strike
out through line 3 on page 7, as follows:
18439
'(a) Amend section 503, which relates to
general authority, as follows:
"(1) In subsection (c) strike out 'and' at
the end thereof and in subsection (d) strike
out the period at the end thereof and substi-
tute '; and'.
"(2) Add the following new subsection
(e) :
"(e) guarantying, insuring, coinsuring,
and reinsuring any individual, corporation,
partnership, or other association doing busi-
ness in the United States against political
and credit risks of nonpayment arising in
connection with credit sales financed by such
individual, corporation, partnership or other
association for defense articles and defense
services procured in the United States by
such friendly country or international orga-
nization.'"
On page 7, line 4, strike out "(b)" and
insert " (a) ".
On page 7, line 15, strike out "(c)" and
insert "(b)".
On page 8, beginning with line 3, strike
out through line 2 on page 9, as follows:
"(d) Amend section 509, which relates to
exchanges, as follows:
"(1) The section heading is amended to
read as follows: 'EXCHANGES AND GUARANTIES'.
"(2)
After
the section heading insert
' (a) '.
"(3)
Add
the following new
subsection
(b) :
"'(b)
In
issuing guaranties,
insurance,
coinsurance, and reinsurance, the President
may enter into contracts with exporters, in-
surance companies, financial institutions, or
others, or groups thereof, and where appro-
priate may employ any of the same to act as
agent in the issuance and servicing of such
guaranties, insurance, coinsurance, and re-
insurance, and the adjustment of claims
arising thereunder. Fees and premiums shall
be charged in connection with contracts of
guaranty, insurance, coinsurance, and rein-
surance. Obligations shall be recorded
against the funds available for credit sales
under this part in an amount not less than
25 per centum of the contractual liability
related to any guaranty, insurance, coinsur-
ance, and reinsurance issued pursuant to
this part and the funds so obligated together
with fees and premiums shall constitute a
single reserve for the payment of claims
under such contracts. Any guaranties, in-
surance, coinsurance, and reinsurance issued
pursuant to this part shall be considered
contingent obligations backed by the full
faith and credit of the United States of
America.'"
On page 9, line 3, strike out "(e)" and
insert "(c)".
On page 9, line 6, strike out "(f)" and
insert "(d)".
Mr. KUCHEL. Mr. President, may we
have order.
The PRESIDING OFFICER,. The
Senate will be in order.
Mr. ELLENDER. Mr. President, I ask
for the yeas and nays on the amend-
ment.
The yeas and nays were ordered.
Mr. ELLENDER. Mr. President, I wish
to state that a conference will be held,
beginning at 2 o'clock, on the independ-
? ent offices appropriation bill and I am
one of the conferees. So if Senators will
remain in the Chamber for just a short
while, I believe we can easily dispose of
my amendment within 15 or 20 minutes.
My amendment will simple delete from
the bill the new language that has been
included therein to provide for guaran-
tees of credit sales of military equip-
ment. Specifically it deletes the lan-
guage that has 'been added under sec-
tion 503 and section 509 of the act. Sec-
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18440 CONGRESSIONAL RECORD ? SENATE
tion 503, which is concerned with the
general authority, includes language
under subsection e which authorizes
the President to issue guarantees against
both political and credit risks of. -non-
payment in connection with sales of mil-
itary equipment to eligible foreign and
international organizations.
Section 509 of the Foreign Assistance
Act of 1961 has been further amended
by the addition of a new subsection
which authorizes the President to enter
into contracts with exporters, insurance
companies, financial institutions, and so
forth, whereby such groups can be em-
ployed to act as agents in the servicing
of the aforementioned guaranty con-
tracts. The additional language in this
subsection provides that fees and premi-
ums are to be charged for the guaranties;
that a reserve of 25 percent is to be
established for the contingent liability,
and that the guaranty is backed by the
full faith and credit of the United States.
Mr. President, there are countless rea-
sons for deleting the military sales guar-
antee program from the bill.
Among those reasons, it would appear
to be a direct contravention of existing
American policy toward the granting of
military aid to the countries of Africa
and Latin America.
As will be recalled, last year's act put a
$25 million ceiling on military sgrant aid
to African countries, and a $55 million
ceiling on the granting of military aid to
Latin American countries. Under the
language now in the bill foreign coun-
tries in dire economic circumstances
could purchase military hardware from
our American military industrial com-
plex and have these purchases guaran-
teed by the full faith and credit of our
Government. Naturally this would tend
to encourage military arms buildup in
Latin American and African countries,
while at the same time encouraging
American production of these arma-
ments.
Furthermore, on page 20 of the Senate
Foreign Relations Committee report in
reference to the guarantee provisions, it
is stated:
A numbdr of countries are now capable of
purchasing the military equipment that
heretofore they have received under the mili-
tary aid program, but commercial sources
of credit are unwilling to extend credit to
many of them owing to underlying political
instability and uncertainty.
I submit, Mr. President, that we have
no business encouraging a further build-
up of arms in countries to which this
definition applies.
The language in the bill is so broad it
would appear that false fronts could be
established by foreign governments, per-
haps aided and abetted by our own man-
ufacturing concerns, to buy military
goods and hardware. Once these were
established they could then buy the com-
panies' output with? the sales being
guaranteed by our Government. This is
no doubt open to abuse. In other words,
why should Fairchild, Douglas, General
Motors or the other -large suppliers to
our arsenal be allowed to encourage the
sales of hardware to foreign nations on
their own terms, and with a full guar-
antee of the U.S. Government?
Needless to say, Mr. President, it is
discriminatory against business in gen-
eral to extend subsidies to our armament
manufacturers, which is what would be
the case if this guarantee by the Federal
/Government of privately, financed sale
of military equinment is permitted to
remain in this bill.
In justifying the inclusion of the guar-
antee provision in .the bill, the Senate
Foreign Relations Committee pointed
out that it is also consistent with efforts
to reduce the deficit in the U.S. balance
of payments. It is submitted that while
the objective of reducing the deficit in
our balance of payments is most de-
sirable, it certainly is not necessary for
our country to use such a means as is
proposed here to obtain this laudable
goal. The reduction of the deficit in our
balance of payments through the sale of
armaments of war, which necessarily
amounts to nothing but waste and a
depletion of the economic resources of
our country, is no way to obtain a better
balance-of-payments position.
While there is much concern expressed
over obtaining a worldwide disarmament
and while in this very connection the
Congress has appropriated in the past
few years almost $25 million to finance
the disarmament agency, it is indeed
contradictory to set up in this bill an
agency that would further the military
industrial complex in our country. There
is no question but that if the military
industrial complex is permitted to ex-
pand thusly, world disarmament will
be taken that much further from our
grasp.
I believe that we should think a long
time before doing such a thing. In the
past we have limited the amount of
military equipment and hardware that is
to be given to the countries of Latin
America and Africa. But here we are
opening the door wide to permit the mili-
tary industrial complex to sell military
hardware to anyone the President may
select.
I believe this is a step in the wrong
direction. In the past we have gotten
into a great deal of trouble because we
gave certain countries military assist-
ance. We are suffering from that in
many areas of the world. If the military
sales guaranty provisions remain in this
bill, I can foresee a great deal of mili-
tary equipment being sold to Israel and
to certain Arab countries, which will no
doubt create a situation, whereby we may
be called in to try to stop a war.
Mr. AIKEN. Mr. President, will the
Senator yield?
Mr. ELLENDER. I yield.
Mr. AIKEN. I merely wish to say that
I did not raise any objection when the
bill was reported to the Senate, although,
like -other members of the committee, I
reserved the right to vote for any amend-
ments which might be offered to it.
I am very apprehensive about this new
section in the bill, which authorizes the
President to guarantee payment for sales
made by munitions makers to foreign
countries. I believe if we guarantee gun-
running, or whatever it may be called,
or sales of munitions, or the means of
making war by other countries, we will
likely find some people encouraging con-
August 11
flicts between countries, possibly between
friendly countries, in order to make large
sales of munitions and; with this guar-
antee by the U.S. Government, we can
possibly see them working countries like
Turkey and Greece to the limit to in-
crease their sales.
Mr. LTENDER. The Senator is
exactly correct.
Mr. AIKEN. This provision of the bill
would guarantee them against loss.
Mr. ELLENDER. That is exactly cor-
rect. That was a point I failed to em-
phasize, but I wish all Senators would
take note of it.
Mr. AIKEN. I shall support the Sen-
ator's amendment.
Mr. ELLENDER. I hope not only that
the Senator from Vermont will support
it, but that every Senator will support
Mr. AIKEN. We cannot go into the
business of guaranteeing people who stir
up wars against any loss if some of their
equipment becomes lost or destroyed on
the way to delivery, or if their customer
winds up on the short end of the conflict.
Mr. ELLENDER. The language is so
broad that the hardware could be sold
to almost any country in Latin America,
for example, and then resold to other
countries within that area of the world.
It could also be done in Africa and in
other areas of the world. I say, as the
Senator from Vermont has just said, that
we should not permit our Government to
be an agent of the munitions companies
in the movement and sale of their mili-
tary equipment and hardware. I urge
the adoption of my amendment.
Mr. SPARKMAN. Mr. President, I
shall speak briefly on the amendment.
I am sorry that the Senator from Ver-
mont [Mr. AIKEN] has left the Chamber.
I do not believe he has given the proper
interpretation to the proposal that its
contained in the bill. It is not to assist
private gunrunners; it is a part of our
regular military assistance program. In
other words, these contracts would be let
just as they would be let whether there
was a guarantee or not, but only to the
countries to which we are extending mili-
tary assistance. Then, when the con-
tract was let, let us say, to an airplane
manufacturer to sell airplanes of a cer-
tain type to a certain country, under this
plan, the Government would guarantee
the payment of the contract. Without
this plan being written into the law, the
Government would pay the company
cash. This arrangement would permit
more flexibility in the handling of the
funds. In my opinion, it is good business.
I am disturbed by the statement of the
Senator as to the broadness of the lan-
guage. The chairman of the committee
is away from the Chamber now, but if
the Senator from Louisiana will with-
draw his request for the yeas and nays,
I shall be glad to accept the amendment
and take it to conference. I remind him
that the language which he proposes to
strike out is contained in the House bill
and will be in conference regardless.
But, at least, it will give us an oppor-
tunity to explore the situation more and
perhaps agree upon Afferent language.
In that event, we should be glad to
have suggestions from the Senator from
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196-4 CONGRESSIONAL RECORD? SENATE
Louisiana, to help us work out a good
business arrangement, for that is what
the intent of the language really is. This
arrangement is to be used in only cer-
tain countries. We have been given a
list of the countries in which it is pro-
posed to be used, together with the
amount of money that will be allocated
to each country. There are only seven:
Argentina, Peru, India, Iran, Iraq, Israel,
and Saudi Arabia.
Mr. ELLENDER. Some of those are
countries that I had named when I
spoke on my amendment. The Senator
from Alabama knows very well what
could happen.
Mr. SPARKMAN. I heard the Sena-
tor's remarks. I realize the truth of what
he says. But I believe it would be well
for us to have in the RECORD a statement
of the intent.
It is not a case of saying to gunrun-
ners, "If you sell to this country, that
country, or some other country, the
United States will guarantee your sales."
It is not a gunrunning program. It is a
program, first of all, that would have to
be authorized under the military assist-
ance program. Second, export licenses
would have to be issued by the govern-
ment. It could ,.not be a gunrunning
program, by any means.
I am willing to let the language be
stricken and to go to conference with the
situation as it would then be.
Mr. ELLENDER. My purpose in pre-
senting the amendment to the Senate is
to have that language stricken.
Mr. SPARKMAN. We cannot strike
it finally; the Senator understands that,
does he not?
Mr. ELLENDER. I understand that;
but I wish, at least, to strike the lan-
guage from the Senate bill. That is my
purpose.
Mr. SPARKMAN. I am willing to do
that.
Mr. ELLENDER. Mr. President, under
those conditions, I ask unanimous con-
sent that the order for the yeas and nays
on this amendment may be rescinded
and that the Senate may be permitted to
vote. In that event, I shall ask for the
approval of the amendment.
The PRESIDING OFFICER. With-
out objection, the order for the yeas and
nays is -rescinded. The question is on
agreeing to the amendment of the Sen-
ator from Louisiana.
The amendment was agreed to.
Mr. ELLENDER. Mr. President, I
move that the Senate reconsider the vote
by which the amendment was agreed to.
Mr. MORSE. I move to lay that mo-
tion on the table.
The motion to lay on the table was
agreed to.
MESSAGE FROM THE HOUSE
A message from the House of Repre-
sentatives, by Mr. Hackney, one of its
reading clerks, announced that the
House had agreed to the amendments of
the Senate to the bill (H.R. 7301) to
amend section 341 of the Internal Reve-
nue Code of 1954.
The message also announced that the
House had agreed to the amendment of
the Senate to the bill (H.R. 9653) to ex-
tend the authority of the Postmaster
General to enter into leases of real prop-
erty for periods not exceeding 30 years,
and for other purposes.
The message further announced that
the House had disagreed to the amend-
ments of the Senate to the bill (H.R.
1839) to amend the Tariff Act of 1930 to
provide for the free importation of wild
animals and wild birds which are in-
tended for exhibition in the 'United
States; asked a conference with the Sen-
ate on the disagreeing votes of the two
Houses thereon, and that Mr. Mims, Mr.
KING of California, Mr. BOGGS, Mr.
BYRNES of Wisconsin, and Mr. CURTIS
were appointed managers on the part of
the House at the conference.
The message also announced that the
House had disagreed to the amendments
of the Senate to the bill (H.R. 4649) to
amend the Internal Revenue Code of
1954 to authorize the use of certain vola-
tile fruit-flavor concentrates in the cel-
ler treatment of wine; asked a confer-
ence with the Senate on the disagreeing
votes of the two Houses thereon, and
that Mr. Mims, Mr. KING of California,
Mr. BOGGS, Mr. BYRNES of Wisconsin, and
Mr. CURTIS were appointed managers on
the part of the House at the conference.
The message further announced that
the House had disagreed to the amend-
ments of the Senate to the bill (H.R.
8000) to amend the Internal Revenue
Code of 1954 to impose a tax on acqui-
sitions of certain foreign securities in
order to equalize costs of longer-term
financing in the United States and in
markets abroad, and for other purposes;
agreed to the conference asked by the
Senate on the disagreeing votes of the
two Houses thereon, and that Mr. MILLS,
Mr. KING of California, Mr. BOGGS, Mr.
BYRNES Of Wisconsin, and Mr. CURTIS
were appointed managers on the part of
the House at the conference.
The message also announced that the
House had disagreed to the amendments
of the Senate to the bill (H.R. 8864) to
carry out the obligations of the United
States under the International Coffee
Agreement, 1962, signed at New York on
September 28, 1962, and for other pur-
poses; asked a conference with the Sen-
ate on the disagreeing votes of the two
Houses, and that Mr. Mims, Mr. KING
of California, Mr. BOGGS, Mr. BYRNES of
Wisconsin, and Mr. CURTIS were ap-
pointed managers on the part of the
House at the conference.
The message further announced that
the House had agreed to the amend-
ments of the Senate to the bill (H.R.
10222) to strengthen the agricultural
economy; to help to achieve a fuller and
more effective use of food abundances;
to provide for improved levels of nutri-
tion among economically needy house-
holds through a cooperative Federal-
State program of food assistance to be
operated through normal channels of
trade; and for other purposes.
The message also announced that the
House had disagreed to the amendments
of the Senate to the bill (H.R. 11296)
making appropriations for sundry in-
dependent executive bureaus, boards,
commissions, corporations, agencies, and
18441
offices for the fiscal year ending June
30, 1965, and for other purposes; agreed
to the conference asked by the Senate
on the disagreeing votes of the two
Houses thereon, and that Mr. THOMAS,
Mr. EVINS, Mr. MAHON, Mr. OSTERTAG,
and Mr. JONAS were appointed managers
on the part of the House at the con-
ference.
The message further announced that
the House had disagreed to the amend-
ments of the Senate to the bill (H.R.
11369) making appropriations for mill-
try construction for the Department of
Defense for the fiscal year ending June
30, 1965, and for other purposes; agreed
to the conference asked by the Senate on
the disagreeing votes of the two Houses
thereon, and that Mr. SHEPPARD, Mr.
SINES, Mr. MAHON, Mr. JONAS, and Mr.
CEDERBERG were appointed managers on
the part of the House at the conference.
ORDER FOR RECESS UNTIL 10 A.M.
TOMORROW
Mr. MANSFIELD. Mr. President, I
ask unanimous consent that when the
Senate completes its business tonight,
it stand in adjournment until 10 o'clock
tomorrow morning.
The PRESIDING OFFICER. Without
objection, it is so ordered.
AMENDMENT OF FOREIGN ASSIST-
ANCE ACT OF 1961
The Senate resumed the consideration
of the bill (H.R. 11380) to amend fur-
ther the Foreign Assistance Act of 1961,
as amended, and for other purposes.
Mr. MORSE. Mr. President, I call up
my amendment No. 1211 and ask that it
be read.
The PRESIDING OFFICER (Mr. Rim-
COFF in the chair) . The amendment will
be stated.
The Chief Clerk read as follows:
On page 13, between lines 13 and 14, insert
the following new subsection:
"(g) At the end thereof add the following
new section:
,
"'Sze. 621. LIMITATION ON AGGREGATE AII-
THORIZATICiN FOR USE IN FISCAL YEAR 1965.?
Notwithstanding any other provision of this
Act, the aggregate of the total amounts au-
thorized to be appropriated for use during
the fiscal year 1965 for furnishing assistance
and for administrative expenses under this
Act shall not exceed $3,000,000,000.' "
Mr. MORSE. Mr. President, before I
ask for the yeas and nays, I wish to make
a unanimous-consent request. Legisla-
tive counsel has informed me that a tech-
nical change should be made in the
amendment. "Section 621" should read,
instead, "Section 620(A) ." I ask unani-
mous consent that the technical change
be made.
The PRESIDING OFFICER. The
Senator from Oregon has a right to
modify his amendment.
Mr. MORSE. Mr. President, I should
like to have the attention of the distin-
guished majority leader for a moment.
It will make -a great deal of difference in
the presentation of my amendment if I
may have a yea-and-nay vote on the
amendment. I should like to have a suf-
ficient number of Senators in the Cham-
Declassified and Approved For Release 2014/05/20: CIA-RDP66B00403R000300080044-4