Mr. HAYS. That is because they know better than Congress. The thing to do is to knock off their money. Mrs. KELLY. This is what I am coming to. You mentioned our turning our back on the 5-year authorization. This is why I am not going to vote even for a 2-year program. You already neglected to do what we in Congress specified just last year. Mr. HAYS. They didn't neglect to do it. They deliberately didn't do it. It was not neglect. It was deliberate. Mrs. KELLY. Will you tell me how many applications you picked up under the new money authorized last year, if any? You said "None." Mr. BRONHEIM. That is right. Mrs. KELLY. How many applications were on file before we authorized this money? Mr. BRONHEIM. I don't have the exact answer, which we could submit for the record. As you know, we have been processing Mrs. KELLY. You had almost 5,000 when we gave you this money last year the money which you neglected to pick up. Chairman MORGAN. Do you mean 5,000 applications? Mrs. KELLY. Applications. Chairman MORGAN. 5,000 applications? Mrs. KELLY. That is what I was told. This may include inquiries as well as formal applications. But I don't care how many you take off or add. The fact remains that of the carryover applications filed in prior years, you didn't even pick up one, did you? Mr. BRONHEIM. I am not sure I know exactly how you define the applications. Mrs. KELLY. I will start all over again. Last year in the program we increased the authorization for the housing guarantee program. At that point you had a carryover of unapproved applications. How many of those did you pick up? Mr. BRONHEIM. We haven't picked up any. We have been processing 15 applications that are not yet under contract under the old authorization and an additional 19 which have not yet been authorized, for a total of 34, which have been under process and which have not been signed. That is the point I was trying to make. Mrs. KELLY. How many years have you been processing all of those old applications? Your former backlog, not applications filed against the new money. Mr. BRONHEIM. I would guess many of them have been worked on for about 212 years. Mrs. KELLY. Then I want submitted for the record, how many applications received from the start when the Alliance for Progress came into being, how many you had acted upon and so on right up to date. Mr. BRONHEIM. We can submit that. (The information follows:) NUMBER OF HOUSING GUARANTEE APPLICATIONS AID HAS RECEIVED SINCE ALLIANCE BEGAN On May 15, 1964, AID had received 164 applications for housing guarantees. No applications have been taken since then. Fifty of these applications, for a total dollar value of $240 million, are now being processed. Of this 50, 16 with a dollar value of $89.7 million are under contract, 15 with a dollar value of $74.7 million are in contract negotiations, and 19 with a dollar value of $75.6 million are in earlier stages of processing. Mrs. KELLY. That is all. Chairman MORGAN. Mr. Whalley. Mr. WHALLEY. Thank you, Mr. Chairman. Good morning, Mr. Secretary. I want to compliment Secretary Gordon on his work at the annual Alliance for Progress meeting just held, especially when you realize he is a new man on the job. He put in countless hours, including a session that lasted to 4 a.m. in preparation. He explained clearly the U.S. position. His special talk to the Latin American businessmen signified that the Alliance for Progress program was a two-way street. I would like to say that Mr. Gordon continually stressed the necessity for Latin American self-help and their responsibility in the Alliance for Progress program. Mr. GORDON. Thank you, Mr. Congressman. Chairman MORGAN. Mr. Hays. Mr. HAYS. Thank you, Mr. Chairman. You are formerly a professor of economics, Mr. Secretary? Mr. GORDON. Yes. Mr. HAYS. Harvard? Mr. GORDON. Yes, sir. Mr. HAYS. You have heard my story about the economics professor, haven't you? Mr. GORDON. No, sir. Mr. HAYS. After 25 years I went back to my university and I found out he was there and still giving the same 10 questions in the final exam. I asked if the kids were stupid, and he said no, he changes the answers every year. Mr. GORDON. We like to believe that this is a field of study in which we learn something from year to year, Mr. Congressman. Mr. HAYS. I would like to believe that, too, but I don't know whether I can apply that to the aid program or not. I don't know if they have learned anything. My guess is they haven't. I detect from your presentation-I don't want to get too rough on you the first time you are here-that it fits a pattern this year that you are going to try to wear us down by putting us all to sleep. Mr. GORDON. I am sorry, sir. Mr. HAYS. I want to tell you as far as I am concerned that is not going to work because it will make me vote against the program. Mr. GORDON. That was not the objective, Mr. Congressman. I am sorry if it had that effect. Mr. HAYS. It was entirely too long and it precludes a good many members of the committee having a chance to ask any questions. I go around my district making speeches and I try to keep the speech down to 15 minutes and let them ask questions. I find it is good for me, and good for them. Mr. Bronheim, you are the Deputy U.S. Coordinator for the Alliance for Progress. What is a Deputy U.S. Coordinator, could you tell me briefly? Mr. BRONHEIM. I try to assist Mr. Gordon in the aid program. Mr. GORDON. I am. Mr. HAYS. Are you assisting him in the housing program by dragging it out that you have been on some 16 applications for as long as two and a half years? Do you call that assisting him, or is that part of your function, or do you feel any responsibility to speed this up! Mr. BRONHEIM. I feel great responsibility and I work very hard to try to speed these up. In many cases they have not gone as fast as many of us would like. This is a terribly complex program. I Mr. HAYS. There is nothing complex about it, Mr. Bronheim, except you people make it complex. Do you think that if the average man who wants to build an apartment building or the average corporation who wants to build an apartment building in Washington had to spend as much time getting his funds approved as you make these people spend, do you think there would be any apartment buildings here? We would all be sleeping in tents. There is no excuse for it. It is ridiculous. Mr. GORDON. Mr. Congressman, if I might comment on this. Mr. HAYS. You go right ahead, Mr. Secretary, and comment and then I will have some more comments if you don't use up all my time. Mr. GORDON. I have been living in the largest country in Latin America for the last four and a half years. I can say that construction generally isn't done there the way it is in Washington. It is a complex process to have dollar-financed housing, much of which is, unfortunately, not very low cost, in Latin American countries, imposing a very substantial dollar repayment obligation in countries where the balance-of-payments situation already is very difficult. There are problems of relationships with the actual builders and contractors. There are problems of the desires of the promoters for certain types of expansion of guarantees. They are in fact very complex. There is not a lack of good will on our part in trying to use this authority sensibly to promote the purposes of the Alliance for Progress. Mr. HAYS. Let me tell you something about loaning money. I happen to do a little of it. I am chairman of the board of directors at a couple of banks. If we took one-tenth as long to decide to make a loan as you people do on these housing loans, we would be out of business, because nobody would wait around. They would go someplace else. The only reason these people don't go someplace else is that there isn't any other place to go. If I ever saw a case of fiddling while Rome burns, this is it. I read an article in one of the Sunday papers there is going to be five or six more Vietnams in Latin America by 1967 and I believe that there probably will be, and you and the State Department and the AID can share the blame equally as far as I am concerned. That is all, Mr. Chairman. Chairman MORGAN. Mr. Gross. Mr. GROSS. Thank you, Mr. Chairman. Mr. Gordon, you speak of the happy circumstances that may arise and paint a glowing picture. Are there never any failures in this program that you people and your counterparts in other areas of the world can tell us about? Do we always have to extract from you people the failures, or read about them in the papers and magazines? I don't understand how you can come before this committee today and say everything is lovely and the goose hangs high in Latin America, because that is not the case, and I am sure you know it. U.S. News & World Report last week carried this item: "Latin American nations are reported to be preparing a new list of handouts running into the billions which they want from the United States." Commented a U.S. official, "It is time that someone starts telling the truth about these Latin governments, how they don't believe in selfhelp, how they resist the idea of competition-economic crutch supplied by someone else. They outvote us 20 to 1 in the Organization of American States." In the briefing book, Brazil, Colombia, Chile will receive program loans. On page 98 it is stated that Brazil's debt-servicing costs run around $400 million annually. On page 113 it is set forth that Chile had to reschedule its loans. The question I want to ask you is what is the debt-servicing cost annually for all of Latin American countries? Mr. GORDON. I don't have that in my head. Mr. Congressman. I will be glad to provide it. (The information follows:) 1 Above, excepting Haiti, are actual payments. Data for debt with an original or extended maturity of 1 year or more. Includes private debt guaranteed by debtor's government, usually a Central Bank guarantee as to the availability of foreign exchange. Excludes IMF transactions, unguaranteed private debts, debts payable in local currency or with maturities of less than 1 year. 2 Amortization and interest not known; total estimated. Source: IBRD. Mr. GROSS. You didn't anticipate being asked a question of that kind, I assume. Are these countries being loaded with loans beyond their reasonable capacity to service them, thus impairing their credit? Mr. GORDON. This is one of the problems we have very clearly in mind. Indeed, this is one of the problems with the housing guarantee program that both Mrs. Kelly and Congressman Hays mentioned before. Indeed, it is the principal reason that we are before you and have been before you year by year asking that a portion of the necessary capital for investment in Latin America be made available on these very long terms of years up to 40 years, as you know, and at modest interest rates. It is also the reason why one of the principal purposes of the economic projects that we are promoting is to improve their export earning potential. This is true with both publicly financed and private investments. Mr. GROSS. Have any loans in your area been converted to grants? Mr. GORDON. No. The proportion of grants has become extremely small as you know. I mentioned the few remaining supporting assistance cases and there is a modest amount of technical assistance. The rest of the program is loans. Mr. GROSS. Your answer is a categorical "No" to the conversion of loans to grants in the Latin American area? Mr. GORDON. Excuse me. I am told there was one case in the Dominican Republic which was related to the special critical circumstances there last year. Can I make one comment on failures, by the way, in response Mr. GROSS. If you don't take all of the 5 minutes to answer. Mr. GORDON. I will not. Of course there are failures in a program of this kind, just as there are in space research or medical research or any other complicated activity. We are engaged in the process of trying to help out development which is a very complicated business. To me, the surprise is that the proportion of failures is so low. Mr. GROSS. Although most loans to Latin America may not technically be in default, do you regard repayments on all loans to Latin America to be sound and likely to be repaid in dollars? Mr. GORDON. Nobody can predict what the balance of payments situation of any country is going to be over a period of 30 or 40 years into the future. But we try to exercise reasonable prudence on this problem. I think we have been exercising such prudence. Mr. GROSS. By virtue of inflation, we have already suffered some serious losses. Mr. GORDON. Not with respect to dollar loans because they are repayable in dollars; with respect to local currencies Mr. GROSS. If they are ever repaid, they are repayable in dollars. Why shouldn't aid to British Guiana be left to the British? How do you justify $450,000 of U.S. assistance? Mr. GORDON. It is becoming an independent country on May 26. Mr. GROSS. I am not interested in their being an independent country on May 26. I want to know why the British don't take care of their own real estate and people? Mr. GORDON. It ceases to be British real estate, just as the United States did 175 years ago. The British are continuing a substantial program of assistance there which is larger than ours. Mr. GROSS. How do you justify $5 million in assistance for Trinidad? Mr. GORDON. On the same basis. In the case of Trinidad, Mr. Congressman, there is the special interest of ours of the base rights. Mr. GROSS. Again we come back to this business that if we happen to need a piece of real estate in some country, they get preferential treatment. A country that doesn't ask us for handouts or a piece of real estate that we need we give them the back of our hand, don't we? |