24800 CONGRESSIONAL RECORD- SENATE September 22, 1965 GEORGIA

Woodrow W. Gay, Cordele, in place of W. H. Johnston, retired.

James A. Howard, Jr., Dearing, in place or A. S. Mitchell, retired.

IOWA

Coline L. Morisky, Fostoria, in place of W. W. Terry, deceased.

Gerald F. Siebels, Minden, !n place of G .R. Patterson, Jr., transferred.

Clarence L. Busch, Persia, in place of J. M. Kuster, resigned.

KANSAS

. Louise L. Atwell, Kismet, in place of Ethel Prater, retired.

Earl K. Pennington, Rantoul, in place of E. D. Medlen, transferred.

KENTUCKY

Dallas L. Crace, Campbellsville, in place of L. H. Tarter, retired.

Mildred J. Jackson, Mayking, in place of M. E. Webb, retired.

MAINE

Wesley G. Oliver, Nobleboro, in place of S. P. Oliver, deceased.

NEBRASKA

Veronica E. Walsh, Ulysses, in place of W. R. Byam, retired.

NEW YORK

William M. Fleckenstein, Colden, in place of G. W. Miller, retired.

NORTH CAROLINA

Billy V. Overman, Rockwell, in place of F. W. Kluttz, retired.

OKLAHOMA

James A. Maddux, Cheyenne, in place of J. W. Chalfant, transferred.

PENNSYLVANIA

Woodrow W. Clapper, Bedford, in place of C. W. Allen, retired.

James E. Pontious, Edinboro, in place of Allan Rye, retired.

SOUTH CAROLINA

Stanmore T. McClain, Williston, in place of N. B. Birt, retired.

TEXAS

Orveta D. Generaux, Addison, in place of E. B. Lewis, retired.

Narvie L. Caperton, Cameron, in place of J. R. Hays, retired.

Frank N. Simpson, McLean, in place of B. R. Reeves, transferred.

Wynell c. Watson, Troy, in place of H. E. Weir, deceased.

Margaret L. Cooke, Waskom, in place of P. P. Pollard, retired.

VIRGINIA

Richard E. Durham, Millboro, in place of J. S. Clarkson, retired.

WISCONSIN

Donald E. Peters, Juneau, in place of P. A. Panetti, retired.

CONFIRMATIONS Executive nominations confirmed by

the Senate September 22 <legislative day of September 20), 1965:

DEPARTMENT OF STATE

Richard H. Davis, of the District of Colum­bia, a Foreign Service omcer of class 1, to be Ambassador Extraordinary and Plenipo­tentiary of the United States of America to Rumania.

John H. Burns, or Oklahoma, a Foreign Service omcer of class 1, to be Ambassador Extraordinary and Plenipotentiary of the United States of America to the United Re­public of Tanzania.

EXTENSIONS OF REMARKS

The New Republic

EXTENSION OF REMARKS OF

HON. JAMES R. GROVER, JR.

I was amazed and delighted to learn of some of these new projects. For ex­ample, in its research laboratories, Re­public has developed a tiny pump.-no

· larger than a half-dollar-that can be implanted into the head of a child suf-

oF NEw YORK fering from hydrocephalus, a dreaded IN THE HOUSE OF REPRESENTATIVES disease Of childhood known as "water on

the brain." The pump substitutes for Wednesday, Septembe-r: 22, 1965 the impaired body function and relieves

Mr. GROVER. Mr. Speaker, last the fiuid pressure. As a result, there is spring my colleague, Hon. OTIS PIKE and now hope for the thousands of new cases I sponsored two famous institutions in of hydrocephalus occurring in this coun­the House dining room; namely, straw- try each year. I understand that the berries and Long Island duckling. To- principle involved can also be extended day, I would like to say a few words about to other conditions, such as the auto­another famous Long Island institution- matic metering of insulin in diabetic Republic Aviation Corp. and its current patients. Products like this are being famous product, the F-105 Thunderchief developed at Republic as byproducts of fighter-bomber. the work it is doing for the manned space

I am very proud of Republic and the effort. F-105, which is doing such an outstand- Just as striking is the fact that Re­ing job in Vietnam. In some 2,000 sor- public's new attitude plus the excellence ties, the F-105 has had less than 3 per- of its retained technical capability are cent air and ground aborts, and it is op- beginning to show signs of producing erating on a close to 90 percent in-com- multifold benefits for the Nation. Again, mission rate. The Thunderchief is not for example, last July it was announced only on the job, it is doing the job. that Republic had won the phase II

Some months ago, my attention was hardware development program for the drawn to Republic by stories of the im- advanced orbiting solar observatory; pact that the withdrawal of the F-105 also, more recently, Republic qualified from production was having upon the along with three other weapon system local economy. With the phase-out of manufacturers to receive a study con­production of that aircraft, it became · tract that will lay the groundwork for the necessary to reduce employment dras- development of an advanced vertical tically. It also was necessary to con- takeoff aircraft. And Republic is a solidate facilities to control the cost of senior member of the team that helped doing business and to remain competi- General Electric to win its role in the tive. However, when I looked into the manned orbiting laboratory program. matter, I was gratified to find that Re- Beyond these, the next weapon system is public was facing up realistically to the somewhere on Republic's many drawing problems caused by the loss of F-105 boards, and these development efforts are production. The company was already being heavily directed toward advanced hard at work to retain its reputation as V/Stol fighter-bombers, tactical aircraft a quality designer and manufacturer of and hypersonic vehicles. military aircraft, meanwhile seeking new Though these recent successes are a business in many other areas. long way from replacing what was lost by

the phaseout of the F-105, they are a giant step in the right direction. Re­public has reacted positively to a reverse of fortune in the best tradition of Amer­ican enterprise by realistically assessing itself and its situation. Not unlike straw­berries and duckling, this is another Long Island institution I confidently ex­pect is going to be around a long time.

Community Believes in Self-Help

EXTENSION OF REMARKS OF

HON. WILLIAM G. BRAY OF INDIANA

IN THE HOUSE OF REPRESENTATIVES Wednesday, September 22, 1965

Mr. BRAY. Mr. Speaker, last Satur­day the community of Ellettsville in Monroe County, Ind., dedicated a new firehouse.

It was understandably a festive occa­sion, for they not only have an excellent new building for their fire trucks, but space was provided for an excellent com­munity hall as well.

What is truly commendable about this new structure however is the way it came into being. Every cent for the construc­tion of the building was dona ted by lo­cal people-none came from taxes of any variety.

In addition the townsmen contributed their labor for the construction, so that the money collected went primarily tor the building materials.

For many years the town of Ellettsville has been known as a wonderful commu­nity, exemplifying the best in Hoosier smalltown life. This latest achievement fits very well with the record of Elletts­ville.

September 22, 1965 CONGRESSIONAL ll.ECORD- SENATE 24801 It ~s also refreshing, in this age when

most cities and towns anxiously pursue every possible grant and each type of assistance, that this community provides for itself without even considering seek­ing State or Federal aid.

Salute to the Republic of Mali

EXTENSION OF REMARKS OF

HON. ADAM C. POWELL OF NEW YORK

IN THE HOUSE OF REPRESENTATIVES

Wednesday, September 22, 1965

Mr. POWELL. Mr. Speaker, the peo­ple of Mali celebrate today their fifth independence day. On this memorable occasion, we wish to extend warm felici­tations to His Excellency Modibo Keita, the President of the Republic of Mali; and to His Excellency Moussa Leo Keita, the Mali Ambassador to the United States.

Mali is usually considered a very young nation by the traditional measuring rods of international politics; however, the history of its people extends far back to the great Mali empire of West Africa which began in the 11th century and lasted through the middle of the 1800's. Those were the days when the great warrior emperor, Mansa Musa, led a mighty army to conquer the an­cient city of Tombouctou and the vast territories situated around the ·middle Niger. The legends of the old empire still relate his fantastic pilgrimage to Mecca, when he distributed 50,000 ounces of gold along the way · and brought back scores of Muslim scholars to enhance the culture and learning of his newly conquered cities.

Things have changed considerably since the exotic days of Mansa Musa; yet the traditions of the proud and in­dependent warriors of the Mali empire have survived in the people of the Mali Republic today. Some can still remem­ber the courageous 16-year war waged by Samory's Mandingo army against the French colonialists at the end of the last century; others have served with valor alongside of French forces in two World Wars.

Today the Republic of Mali faces the future with the determination and inde­pendence which have distinguished its proud people in the past. Already agri­culturally self-sufficient, the country is undertaking an extensive industrial de­velopment program to J:>egin develop­ment of a modern economy. A close eco­nomic relationship has been pursued with Ghana and Guinea in the Union of African States as well as close ties with the French and association with the Eu­ropean Economic Community.

In some ways the Government of Mali has demonstrated it has already pro­vided for some of the most important ad­vantages of a modern state. The Labor Code, passed in 1962, provides for such progressive measures as a 40-hour work­ing week, arbitration, the right to strike, children's allowances, annual leave, and

retirement with a' pension at age 55. Other programs provide for specl.al ma­ternity allowances and even classes in prenatal and infant care.

No doubt the road ahead for Mali will not always be a smooth one. The coun­try's rapid political and economic evo­lution and the consequent detribaliza­tion of its people have brought many of the inevitable problems of social change and modernization. Nonetheless, the past history of Mali, both ancient and modern, indicates that the people of Mali will continue to face the future with the independent courage and determination that distinguish their heritage. It is a pleasure for me to extend my congratu­lations to the Republic of Mali on its in­dependence day.

Barringer-Walker Post 139

EXTENSION OF REMARKS OF

HON. HENRY HELSTOSKI OF NEW JERSEY

IN THE HOUSE OF REPRESENTATIVES

Wednesday, September 22, 1965

Mr. HELSTOSKI. Mr. Speaker, I take this opportunity to pay tribute to a group of fine young men from my dis­trict who recently reached the finals of the national American Legion baseball championships.

Among the many worthwhile projects conducted by members of the American ·Legion, their baseball program stands high on the list. It provides healthy, wholesome activity for young men at a very critical period in their lives. As a byproduct, many have graduated from American Legion baseball to fame in the major leagues.

Recently, the Barringer-Walker Post 139 team from Lyndhurst, N.J., made a determined bid for national honors and came very close to reaching that goal. Lyndhurst, incidentally, is a sports­minded community and always has pro­duced outstanding teams and athletes. As an example, on three previous oc­casions Lyndhurst teams went as far as the State finals in the American Legion tournament.

This year, the team won even higher laurels. After winning the Bergen County district and State champion­ships, they swept past three other State champions to become eastern cham­pions.

They finally faltered upon reaching the national finals at Aberdeen, S.Dak., but it is to their credit that team mem­bers did not bemoan the loss of their best pitcher and an outstanding infielder when they returned home. They arrived home not victorious, but nevertheless welcomed by a large crowd of friends and neighbors delighted with their ac­complishments.

I take this opportunity to congratulate these fine boys, their coach, Lyndhurst Patrolman Bob Muhleisen, and John Hartigan, well-known Legionnaire and team manager, for a job that has made New Jersey quite proud. We cannot em-

phasize too much the value of the :fine adult leadership given these young men and feel that their accomplishments should be noted before this distinguished Congress.

Remarks of Hon. Richard L. Roudebush, of Indiana, Before the Federal Bar As­sociation

EXTENSION OF REMARKS OF

HON. RICHARD L. ·ROUDEBUSH OF INDIANA

IN THE HOUSE OF REPRESENTATIVES

Wednesday, September 22, 1965

Mr. ROUDEBUSH. Mr. Speaker, the Federal Bar Association has just com­pleted its annual convention in the city of Chicago. The association's meetings were well attended with excellent dis­cussion concerning many legal problems that we face as a nation. I am proud of the fact that I was invited to address the distinguished panel of the Patent, · Copyright, and Trademark Committee. I feel that my remarks there concerning our American patent system, and pur­chasing practices of our Government, should be of interest to the Members of this House. I therefore include them in the RECORD Of this date: REMARKS OF THE HONORABLE RICHARD L.

ROUDEBUSH, REPUBLICAN, OF INDIANA, BE­FORE .THE FEDERAL BAR AssOCIATION, SEP­TEMBER 17, 1965 Thank you so very much, Mr. Chairman.

I think that you will agree that it is some­what unusual for a nonprofessional man­whose knowledge of law was garnered dur­ing a few hours of business law courses in college--to address such a group as I see before me. My degree from the university is somewhat humble-as it is a mere BS de­gree in business administration.

Then why in heaven's name would such a nonprofessional attempt to address your group in the complex field of patent rights? For that matter, why would a nonlawyer even be interested in this field? I am sure that you will agree .that this requires some explaining.

My interest ln patent rights preceded my service in Congress. I have always admired the inventive mind and the role it plays in the free enterprise system in our Nation. I recall suffering through the accounts of the Kefauver hearings. That appeared in the public press. I recalled the vast contribu­tions of the pharmaceutical companies dur­ing the time that I served in World War II, and the fact that many of these companies made drug products for our Nation and proc­essed blood and at their exact costs. I felt this this was a vast and patriotic demonstra­tion.

I have always felt that America's pre­eminence as a nation-,-and much of its prestige throughout the world-came through the worldwide acceptance of its products.

I have felt that the patent system and the right of copyright are the very heart of our free enterprise system. It is not hard to envision-without certain guarantees for the exclusive use and licensing of various new processes-that there would be little incentive for the expression of inventive genius. Similarly, there would be little in­centive for many companies to invest untold m1llions in research to develop new products.

24802 CONGRESSIONAL RECORD- SENATE September 22, 1965 When I came to Congress--now 5 years

ago--I was amazed to find -that there was well-defined effort among some to neutralize our patent guarantees. I found Govenunent actually purchasing materials made by sources that used bona fide patents, without licensing from their proper owners, on the fiimsy argument that they were cheaper or the owner of .the patent was gouging the Government for their products. The lack of ethics of those who use the peculiarity of their own Nation's patent laws or lack of laws on certain type products, was com­pounded by our own Government purchasing these products.

I have combated this in every way that a Member of Congress can, by am.endments, by the introduction of legislation, by repeated speeches on the fioor of Congress, by appear­ances on television, via radio and the press. I have found many friends that support my stand, and conversely I have found many opponents. Regardless, I shall continue my efforts and, I might add, my admiration for those individuals or thooe vast companies which simply cannot be satisfied with things as they are, and know, in their individual or collective minds, that it is possible to make a better product, or it is possible to find a better way to do some task.

In order to promote the progress of science and useful arts, our forefathers made provi­sion in the Constitution (art. 1, sec. 8, clause 8) for the granting to inventors of exclusive rights for a limited time to their inventions.

The good life that we all share in this country is certainly due, in significant part, to our remarkaJble technological progress stimulated by the patent system. The wis­dom of the drafters of our Constitution, in providing for such an incentive system, is, therefore, apparent to us all.

How paradoXical it is that the patent system is being weakened by the purchasing policies of certain agencies of the Federal Government. These agencies have, on a number of occasions, deliberately infringed U.S. patents in order to obtain lower prices on certain purchases of goods.

This blatant conflict between the Consti­tution's patent provisions and such purchas­ing policies has led me, during the past three congressional sessions, to introduce bills which were intended to prevent de­liberate infringement of U.S. patents by the Federal Government, except where required by national security. My current bill, H.R. 150, was introduced on the opening day of this session. I am honored by the· fact that 17 of my fellow congressmen have introduced similar bills in this session.

rn the Senate my bill has been introduced by Senator Wn.LIAMS of New Jersey as S. 1047. The subcommittee on Patents, Copy­rights and Trademarks of the Senate Judi­ciary Committee, chaired by Senator JOHN McCLELLAN, has recently concluded a series of hearings on the Williams bill. I was priv­ileged to testify in support of that bill.

The Government agencies which have been buying patent infringing materials cite sub­section (a) of 28 U.S.C., section 1498, as au­thority for such purchases. As I am sure you all know, this subsection provides that, whenever an invention covered by a u.s. patent is used for manufacture the same, the patent owner's remedy shall be action for da.Illages against the United States in the court of claims. It is contended, in effect, by these Government agencies that this stat­ute constitutes a blanket authorization for the Federal Government to infringe U.S. patents, and this position of the agencies finds some support in an opinion of the Comptroller General (38 Comp. Gen. 276). The words of this statute, however, do not contain any such specific authorization, and its legislative history does not reveal a con­gressional intent to authorize willful dis­regard of such patent rights.

My b111 would make it clear that this statute is not intended to authorize the in­fringement of U.S. patents, except where re­quired by the national security. By adding to the end of this subsection (a) the fol­lowing language:

"Nothing in this subsection shall be con­strued to authorize the use or manufacture by or for the United States of any inven­tion described in and covered by a patent of the United States, which has not pre­viously been held invalid by an unappealed or unappealable judgment or decree of a court of competent jurisdiction. Without license of the owner, thereof, unless the Secretary of Defense, or his delegate, shall determine in the case of each invention that that national security of the United States requires such use of manufacture." BACKGROUND OF 28 UNITED STATES CODE 1498

The original Federal Statute (Act of June 25, 1910, c. 423, 36 Stat. 851) was enacted in 1910 not for the purpose of authoriZtng the Federal Government to infringe U.S. pat­ents, but to entitle the owner of a patent infringed by the Government to sue for compensation in the court of claims. With­out such a statute, of course, such a suit would have been barred by the doctrine of sovereign Immunity.

The House Report (H. Rept. No. 1288, 61st Cong., 2d sess.) accompanying the b111 (H.R. 24649, 61st Cong.) which became the Act of 1910 explained the purpose of the legisla­tion (at p. 2):

"The United States cannot be sued except where it has consented thereto by statute. And unless this or some similar bill shall be passed the owners of patents will con­tinue to be the only persons who are outside the protection of the fifth amendment to the Constitution. Which provides: 'Nor shall private property be taken for public use without just compensation.' "

By the act of July 1, 1918 (c. 114, 40 stat. 705) Congress amended the 1910 law to provide:

"That whenever an invention described in and covered by a patent of the United States shall hereafter be used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same. Such owner's remedy shall be by suit against the United States in the court of claims for the recovery of his reasonable and entire compensation for such use and manufacture."

In Richmond Screw Anchor Co. v. United States (275 U.S. 331, 343 (1928), the Supreme Court of the United States explained the purpose of this statute as follows:

"The intention and purpose of Congress in the Act of 1918 was to stimulate con­tractors to furnish what was needed for the war. Without fear of becoming liable themselves for infringements to inventors or the owners or assignees of patents.''

That 1910 statute underwent other amend­ments not material to this discussion and now appear as 28 U.S.C.A., section 1489.

Thus, the statute which Congress enacted to give a remedy to patentholders for the Government's inadvertent infringement of their patents, and which Congress amended to "stimulate contractors to furnish what was needed for war" has, over the years, come to be treated as an eminent domain statute encouraging the Federal Government to infringe any patent it chooses.

REASONS ADVANCED FOR GOVERNMENT PATENT INFRINGEMENTS

Patent infringing purchases by agencies of the Federal Government have attracted the most attention in the case of drugs imported from abroad, generally from Italy. The prin­cipal reason that has been advanced for such purchases is that prices quoted by the U.S. patent owners and their licensees. There is, of courses, nothing surprising in that for the following reasons: Italian and

domestic infringers hav.e incurred no re­search expenditures 'for these drugs, and are exploiting a market developed at consider­able expense by the U.S. patent owners. Furthermore, in the case of the Italian pro­ducers, they pay wages that are about one­quarter of the prevailing U.S. wage rates, and I understand that they have lower over­all costs generally.

As most of you know, Italy alone among the major countries of the free world pro­vides no patent protection for either drug products or processes. Surely, we cannot ignore the message clearly conveyed by that fact that Italy has produced not a single important drug discovery during, at least, the last 15 years, whereas the United States has become the world leader in the discovery of new drugs. Under the purchasing policies of certain Federal Government agencies, the U.S. patent owner finds himself in this re­markable situation-the U.S. Government issues him a patent which it says is the embodiment of the right to exclude others from making, using or selling that invention, but it adds parenthetically "except, of course, in the case of the U.S. Government."

Then, a foreign manufacturer copies the invention and since he incurred no research or market development expenses, and is not subject to U.S. social security or income taxes. Nor to other laws enacted to improve the situation of the American working man. He is in a position to offer the product of the invention to our Government at a price lower than that quoted by the U.S. patent owner. The U.S. QQvernment purchases from the foreign supplier assert that lower prices are the justification.

If the U.S. patent owner can afford to bring action in the court of claims and wait 2 to 4 years for a decision. And then possibly await the outcome of an appeal. He may be awarded limited damages. Meanwhile, the infringement of his patent continues by the very Government which granted the patent to him. . Such a situation cannot help but dis­

courage American research, the very opposite effect from that intended by the drafters of our Constitution. I feel very strongly that legislation such as the bill which I have introduced, should be enacted promptly to correct this deviation from the original con­~tituti~nal purpose.

THE SENATE HEARINGS

The majority of the testimony before the McClellan subcommittee was favorable to the provisions of my bill--or here I should say the Senate version of my bill-H.R. 150 and S. 1047-being exactly similar.

The three Government agencies which commented on the bill, however, opposed it in varying degrees. All three asserted that the Federal Government should have across­the-board rights to infringe patents. The principal argument advanced seemed to be that, without such rights, the Government would have the burden of ascertaining whether any patents are involved in con­templated purchases and the extent of cov_­erage of such patents.

It is difficult to see how the portion of that argument concerning the burden of discov­ering the existence of patents is any answer at all to the deliberate infringement of known patent rights. against which my bill is primarily directed. Furthermore, as to ~he burdens of interpreting the coverage of patents, why should the Federal Government be in a more favorable position than the private citizen who must make such deter­minations in connection with his everyday business affairs? It was surprising to find that the Departments of Commerce and De­fense expressed diametrically opposed views as to what the effect of this corrective legis­lation would be. The Commerce Depart­ment said that this legislation would take away the patent owner's rights under 28

Septemb_er 22, 1965 CONGRESSIONAL RECORD- SENATE 24803 U.S.C.A., 1498 to sue for compensation where the Government has infringed a patent. On the other hand, the Department of Defense testified that this legislation would enable the owner of the infringed patent to obtain an advantage.

I submit that both Departments are in error as to the effect of this legislation. It would not remove from 28 United States Code section 1498 any rights granted to patent owners so that, should a Government agency after enactment of this legislation, through inadvertence or otherwise, infringe a patent­the patent owner could sue for compensation under this statute. He would not, however, be able to enjoin the Federal Government. Furthermore, if there is any doubt as to the intended effect of this legislation, and I do not think there is, all such doubt could be removed by use of appropriate language in the committee reports.

CONCLUSION

The American economy is strengthened by its patent system and that system is weak­ened by the existence of deliberate infringe­ment of U.S. patents by certain Government agencies. As the result of such infringe­ments, incentive for research is discouraged. Where the infringing purchases involve im­ports, the result is loss of jobs by American labor, loss of American tax revenues and an adverse impact on the country's overall balance-of-payments situations.

I commend to you the pending House and Senate bills which are intended to prevent such infringement, except where required by the national security.

Rosh Hashana and Yom Kippur

EX~SION OF REMARKS OF

HON. DONALD J. IRWIN OF CONNECTICUT

IN THE HOUSE OF REPRESENTATIVES

Wednesday, September 22, 1965

Mr. IRWIN. Mr. Speaker, Sunday night marks the start of the Jewish High Holy Days of Rosh Hashana and Yom Kippur. And I wish to take this occa­sion to wish my colleagues of the Jewish faith and my constituents who are of that faith a happy and prosperous new year.

Rosh Hashana ushers in the year 5726 on the Jewish calendar. And it is a time that brings to mind how, through the centuries, people of the Jewish faith have followed the Lord's word, in the face of the most punishing and servile forms of tyranny. Despite their long suffering, they have never wavered in their stubborn attachment to ideas of strict morality, intellectual integrity, religious faith, and cultural identity.

America must never forget the prom­inent role Jews have played in our his­tory. Jewish people played active roles in the founding of our Nation. Jewish people have fought with valor in every one of our wars. The Old Testament principles, handed down to us by the Jewish people, figured in the thinking of those who formed our colonies, those who worked for our independence, and those who drew up our Constitution.

It is therefore not to strangers or visi­tors that we speak, but to brothers among us when we extend our best wishes to all Americans of the Jewish faith.

Legislation To Establish_ an International Home .Loan Bank

EXTENSION OF REMARKS OF

HON. RICHARD T. HANNA OF CALIFORNIA

IN THE HOUSE OF REPRESENTATIVES

Wednesday, September 22, 1965

Mr. HANNA. Mr. Speaker, I am to­day introducing legislation to establish an International Home Loan Bank with the hope that hearings may be held on this important measure in the near fu­ture and that the proposed bank will be enacted into law in 1966.

The purpose of the legislation is to create a central organization to provide a limited pool of capital from the United States to provide "seed" capital loans for the creation of thrift and home financ­ing institutions in the less developed nations of the world. The proposed bank would secure its funds from sav­ings and loan associations in the United States authorized by this legislation to invest up to 1 percent of their assets in the stock of the international bank.

Recently, in the Housing and Urban Development Act of 1965, Congress au­thorized federally chartered savings and loan associations to invest up to 1 per­cent of their assets in housing loans guaranteed under the foreign assistance program. Unfortunately, the amount of loan guarantees available from the Agency for International Development for this purpose amounts to no more than $20 million. Moreover, the loan guarantee program has been regarded as only a stopgap approach to the objec­tive of tapping savings institutions in the United States to help develop sister­type associations in the overseas areas of the world.

As of the present time, the AID agency working with savings and loan execu­tives in this country has through per­sistence developed a modest but amazing savings and loan program in less developed nations. At the end of May 1965, there were 88 savings and loan as­sociations operating in 7 nations of Latin America, Ethiopia, and eastern Nigeria. The Latin American nations included Chile, the Dominican Republic, Ecuador, El Salvador, Guatemala, Peru, and Venezuela.

These 88 institutions had accumulated the equivalent of $81,509,POO in local sav­ings funds from 282,713 savings account holders, according to statistics compiled by the National League of Insured Sav­ings Associations. These funds, together with loans from the AID agency, had enabled the new savings institutions to provide the equivalent of $147,508,000 in mortgage loans on 32,888 dwelling units in these countries. Incidentally, the average sales price on these homes was $5,600.

The record achieved by the new sav­ings institutions is truly remarkable when one considers that private thrift institutions were nonexistent only a few short years ago in the underdeveloped areas of the world and there was no real hope that savings of the people could

be attracted to these institutions to stim­ulate home construction operations. Bear in mind that the people of these nations historically have had little faith in savings· institutions and were, in fact, totally unfamiliar with our concepts of private thrift and homeownership.

With the experience of the last several years, it has become increasingly evident that savings money can be institutional­ized and put to work to help stimulate the development of many nations in Latin America, Africa, and Asia. The bill I am introducing today would hasten the achievement of this objective by harnessing the great savings and loan business of the United States on a limited basis to provide an. increasing flow of "seed" capital loans to new savings insti­tutions in these and other underdevel­oped nations of the world. Mr. Speaker, it is my belief that we have barely scratched the surface in bringing the realities of private home ownership to these people.

My bill to establish an International Home Loan Bank represents to a large extent the thinking of Mr. David Bell, the Administrator of the Agency for In­ternational Development. In testimony before the House Committee on Banking and Currency on September 12, 1963, Mr. Bell, representing the viewpoint of the administration, stated the following:

First we fully endorse legislation to permit private tr.S. savings and loan associations to invest, by pooling their resourc.es, in similar home financing institutions abroad. We rec­ommend only that these investments be limited to underdeveloped countries. Two considerations-the U.S. balance of payments and the potential impact on the domestic U.S. home financing market-cause us to op­pose any measure permitting substantial in­vestments in the developed countries of Eu-rope and elsewhere. ·

Second, we also endorse legislation to en­courage greater contacts between the U.S. home financing industry and its counterpart in underdeveloped countries. The experience and technical skills possessed by U.S. as­sociations. can make a vital contribution to the growth of adequate credit facilities for home financing in underdeveloped areas of the world.

Equally important to the long-term in­terests of the United States is the estab­lishment of continuing personal contacts on a working level between private American businessmen and businessmen abroad.

Third, while endorsing the objectives of the bills before the committee, we question the advisability of carrying out those objec­tives by establishing an International Home Loan Bank in the manner and form pro­posed. Rather, we would suggest an alter­native approach.

Instead of establishing a quasi-govern­mental institution, organized under govern­mental sponsorship, with permanent U.S. Government representation on the board of directors, and extending to the bank certain tax exemptions and the protection of cer­tain criminal statutes generally reserved for the protection of U.S. Government agencies, we suggest that the means best designed to achieve the objectives of the bill is to have private capital, under private manage­ment, take the normal risks of a private business venture.

We, therefore, recommend for considera­tion by the committee permissive legislation whereby two or more savings and loan as­sociations or home loan banks could, at their own initiative, establish under Federal charter a wholly private institution to invest

24804 CONGRESSIONAL RECORD- SENATE September 22, 1965 in home financing institutions in underde­veloped countries. Limitations on any one association's investment in a federally char­tered international institution would, of course, be appropriate and necessary.

Likewise, provision should be made for appropriate Federal Home Loan Bank Board regulation of each international institu­tion-simUar to the Board's regulation of federally chartered savings and loan asso­ciations in the United States. In essence, we believe that the vehicle chosen to carry out the objectives of the bill should refiect what seems to us the single, most important feature of the b111: The use of U.S. private capital under private management working with private business abroad to meet a very real need.

Mr. Bell's position has been embodied in the proposed International Home Loan Bank bill with the single exception that the bill provides for only one insti­tution of this type. From the beginning, the sponsors of the International Bank in the savings and loan industry have advocated a single institution to serve as a channel for the investment of the available supply of funds and this ap­proach is incorporated in my bill. I be­lieve that if experience proves a need for additional institutions of this type, the legislation may be amended subsequently by the Congress.

I call attention to the fact that the proposal for an International Home Loan Bank has wide endorsement in the United States and overseas. President Johnson in his foreign aid message to the Congress on January 14, 1965, noted that the Alliance for Progress had gen­erated the development of savings and loan associations and declared:

We are placing increasing emphasis on the role of private institutions and private enter­prise in the development process, and we shall continue to do so. Foreign aid cannot succeed if we view it as a job for Govern­ment alone. For Government can only do a small part of the job. We must bring to bear on the problems of the developing world, the knowledge and skills and good jUdgment of people from all walks of American life. The Agency for International Development provides the means for utilizing the re­sources of private business, of our univer­sities and colleges, of farm groups, labor unions, banks, cooperatives, savings and loan associations, and professional groups.

It is also significant, I think, that the AID Housing and Urban Development Advisory Committee has endorsed the concept of an International Home Loan Bank. The AID housing committee is made up of individuals representing the various segments of our housing econ­omy, including educators, city planners, savings and loan management, and labor unions. Overseas, the proposed Inter­national Home Loan Bank has received strong endorsement from the Interna­tional Union of Building Societies and Savings Associations and the Inter­American Savings and Loan Conference which consists of savings and loan man­agers from the United States and throughout Latin America.

Finally, the concept of the Interna­tional Bank has been endorsed by the United States Savings and Loan League and the National League of Insured Savings Associations which together rep­resent the Nation's savings and loan in­dustry. In this respect, the proposed

bank would, I believe, be supported by the savings and loan business in the United States and would make a valuable, long-term contribution to the future de­velopment of Latin America and other areas of the world.

Mr. Speaker, I call attention to an article in the Washington Evening Star of August 19, 1965, in w:Wch Charles Bartlett in an article on the Alliance for Progress points out that the establish­ment of savings and loan institutions in Peru has stimulated local initiative and action in improving housing conditions as contrasted with other approaches to this problem.

I include the text of the bill, together with a section-by-section analysis in the RECORD at this point. A bill to provide for the establishment of an

International Home Loan Bank, and for other purposes Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That this Act may be cited as the "International Home Loan Bank Act".

DEFINI,TIONS

SEc. 2. As used in this Act-(a) The term "Bank" means the Interna­

tional Home Loan Bank incorporated under this Act.

(b) The term "Board" means the Federal Home Loan Bank Board.

(c) The term "member", except Wlhere used with respect to a member of a Federal Home Loan Bank, means a member of the Bank.

(d) The term "stock" means capital stock of the Bank.

INTERNATIONAL HOME LOAN BANK

SEc. 3. The Board is hereby authorized and directed to provide, without regard to any other provision of law, for the incorpora­tion and organization of a corporation to be known as the International Home Loan Bank under a charter to be issued by the Board. The Board shall have authority to make and publish, as provided in the Administrative Procedure Act, regulations implementing this Act. The Board shall also have authority to supervise the Bank and to require that the­Bank conform to law and applicable regula­tions designed to encourage the development of thrift and home financing in less-devel­oped countries in order to carry out the pur­poses of this Act. The Board shall have au­thority to examine the books and records of the Bank at such times as the Board deter­mines, and the Bank shall make available to the Board upon its request for examination at the place where they are usually kept for business purposes all pertinent books and records of the Bank.

BOARD OF Dm.ECTORS

SEc. 4. (a) The Board of Directors of the Bank shall consist of sixteen persons who, at the time of taking omce, are cltlzens of the United States, and who shall be nominated and initially elected by the subscri:bing mem­bers at the organization meeting of the Bank and thereafter shall be nominated and elected by the members. Persons serving on the Board of Directors shall receive no compensa­tion as directors other than reimbursement for travel and per diem expenses for attend­ance at regular or special Board meetings. A term on the Board shall consist of two years. The nomination and the election of directors shall be in accordance with such provisions, including without limitation such provisions with respect to classUlcation of members, as the Board may prescribe and each member shall be permitted to cast one vote for each $100,000, or fraction thereof (but not less than $25,000) of the par value of stock held

by such holder: Provided, That no member shall be permitted to cast more than 10 votes. The exercise of such voting rights shall be as the Board may prescribe.

(b) The Board may provide as to (1) the exercise, through meetings or otherwise, of functions of the Board of Directors or of any committee or body of said Board or of the Bank, and (2) the nomination of directors where members fail to nominate and the ap­pointment of ditectors in case of vacancies. The Chairman shall be elected by the Board of Directors. Any function of the Board un­der this Act may be exercised by such person or persons as the Board may provide, and, to such extent as the Board may provide, but subject to such prohibitions, restrictions, and limitations as the Board may prescribe by regulation, any function of the Bank or of the Board of Directors or of the Chairman thereof may be exercised by such person or persons as the Bank may provide. Any such function or any function under this Act may be exercised without regard to whether any place at which it is exercised in whole or in part is or is not within the United States or subject to the jurisdiction of the United States.

CAPITAL STOCK

s:Ec. 5. The Bank shall have such capital stock as the Board shall authorize, and such stock shall be issued, and may be retired, at such times, under such cir<fumstances, and at such price or prices as the Board may pre­scribe. All stock shall be without preference or priority as to dividends or assets. Stock shall be evidenced in such manner, and shall be transferable only to such extent, to such transferees, and in such manner, as the Board may prescribe.

ELIGmLE STOCKHOLDERS

SEC. 6. (a) Subject to such restrictions, re­quirements, and exceptions as the Board may prescribe, ( 1) stock of the Bank may be pur­chased or otherwise acquired and held by any member of a Federal Home Loan Bank, or any State-chartered savings and loan as­sociation or building and loan association authorized by the law of that State to be a member of a Federal Home Loan Bank, and any mutual savings bank duly chartered by any State, or any trustee or trustees of pen­sion funds as defined under section 401 of the Internal Revenue Code of 1954, or any in­surance company licensed by any State and supervised by a regulatory agent or agency of such State, and (2) while holding such stock any such holder shall automatically be a member of the Bank.

(b) Notwithstanding and without regard to any provision of any other law, but sub­ject to such restrictions, requirements, and exceptions as the Board may prescribe, legal authority to be a member of the Bank and to purchase or otherwise acquire and to hold stock, obligations or other securities of the Bank is hereby conferred to the extent pos­sible under Federal law on any Federal sav­ings and loan association, or any State-char­tered savings and loan association or build­ing and loan association authorized by the law of that State to be members of a Fed­eral Home Loan Bank, or any mutual sav­ings bank duly chartered by any State, or any trustee or trustees of pension funds as defined under Section 401 of the Internal Revenue Code of 1954, or any insurance com­pany licensed by any State and supervised by a regulatory agent or agency of such State, and on any other Federal Home Loan Bank member, but nothing in this sentence shall (1) authorize any Federal savings and loan association or any State-chartered savings and loan association or building and loan association authorized by the law of that State to be a member of a Federal Home Loan Bank, or any mutual savings bank duly chartered by any State, or any such Fed­eral Home Loan Bank member to invest any of its funds in the purchase of any such stock

September 22, 1965 if, immediately after such purchase, the par value of the total amount of such stock owned by such association or member or savings bank would exceed 1 per centum of the assets of such association or such mem­ber, or savings bank; or (2) authorize any Federal savings and loan association or any such Federal Home Loan Bank member to invest any of its funds in the purchase of any such stock if, immediately prior to such purchase, its reserves and surplus are not at least equal to 5 per centum of its insured savings accounts.

OPERATIONS OF THE BANK

SEC. 7. (a) As used in this section, the term "foreign thrift and home-financing institution" means an institution as to which there is outstanding a determination by the Bank that such institution ( 1) has as primary purposes the receipt of savings and the financing of homes in less-developed ' countries, (2) is chartered for this purpose by an appropriate government agency of a less­developed country, and (3) does not have in the United States, or at or within any place subject to the jurisdiction of the United States, any office or agency, or any agent, for the receipt of savings or the making of loans, and the term "foreign home loan bank" means an institution as to which there is outstanding a determination by the Bank that such institution ( 1) is organized or incorporated by or under the laws of a less-develuped country and (2) has as a pri­mary purpose the making of loans or ad­vances to, or investments in, institutions organized or incorporated under the la.ws of such country and engaged, or authorized to engage, in such country in the receipt of savings and the financing of homes.

(b) The Ba.nk shall ha.ve (1) authority to invest in loa.ns at reasona.ble rates of inter­est or advances to. or in shares, accounts, deposits, or certificates of indebtedness of, foreign thrift and home-financing institu­tions and foreign home loan banks, or 1n interests in a.ny of the same; (2) a.ll the pow­ers and authority customary or appTOpriate to conduct a.n international banking orga­nization to serve such institutions and banks; (3) a.uthority to promote and assist in the esta;blishment and development in less-developed countries of institutions hav­ing as primary purposes the receipt of sav­ings and the financing of homes and the establishment and development in less-de­veloped countries of credit and financing facUlties far such institutions; (4) authority to make or procure such studies and investi­gations and such reports as it may deem to be necessary or appropriate to assist in car­rying out the purposes or provisions of this Act; and (5) authority to arrange for the training and education of persons from other countries in the principles of thrift and home financing. Funds of the Bank not invested pursuant to the foregoing provi­sions of this subsection ma.y be invested in such investments as the Board may approve. The Bank sha.ll a.1so establish reasona.ble reserves for losses or currency dev8.iluation.

(c) The Bank is hereby made eUgible to apply for guarantees of investments made under this Act under the guaranty program authorized by part I, chapter 2, title III, of the Foreign Assistance Act of 1965, amend­ing the Foreign Assistance Act of 1961.

BORROWINGS AND SECURrnES

SEC. 8. (a) The Bank is hereby authorized, upon such terms and conditions as the Board may prescribe, to borrow, to give se­curity, to pay interest or other return, and to issue notes, debentures, bonds, or other obligations, or other securities. The Bank shall not make any public offering of its obligations fqr sale, or sell any of its obli­gations otherwise than· by private place­ment, except with the approval of the Fed­era.! Home Loan Bank Board, but the pro­visions of this sentence shall not be appli-

CONGRESSIONAL RECORD -~SENATE 24805 cable to any offering or sale confined to Fed­eral Home Loan Banks or Federal Home Loan Bank members or stockholders of the Bank itself, provided that no Federal Home Loan Bank shall be eligible to purchase or hold any stock of the Bank. Any obligation or security of the Bank shall be va.lid and bind­ing notwithstanding that a person or per­sons purporting to have executed or attested the same may have died, become under dis­ability, or ceased to hold omce or employ­ment before the issuance thereof.

(b) Obligations of the Bank shall be law­ful investments, and may be accepted as se­curity, for all fiduciary, trust, and public, private, or other funds the investment of which sha.ll be under the authority or con­trol of the United States, the District of Co­lumbia, Puerto Rico, or any territory or pos­session of the United States, any public, private, or other corporation incorporated by or under any law of any of the foregoing, any county or municipality of any of the foregoing, any political subdivision of any of the foregoing, any court or any corporate or other agency or instrumenta.lity of any of the foregoing, or any officer or officers, em­ployee or employees, or agent or agents of any of the foregoing. Nothing in the sen­tence next preceding shall authorize the in­vestment of funds of any Federal Reserve bank 1n such obligations or securities, and nothing in said sentence shall authorize any national bank, in the exercise of any power vested in it pursuant to subsection (k) of section 11 of the Federal Reserve Act, as amended, to make any investment in contra­vention of any regulation of the Board of Governors of the Federal Reserve System is­sued pursuant to said subsection (k).

(c) Except as otherwise provided in this Act, no provision or requirement of or under any law relating to securities, securities ex­changes, investments, or proxies or powers, with respect to securities, shall be applicable to or with respect to any stock, obligation, or other security of the Bank.

(d) Every obligation issued by the Bank shall state on its face that it is neither is­sued nor guaranteed by the United States.

MISCELLANEOUS PROVISIONS

SEc. 9. (a) (1) The Federal Reserve Banks and the Federal Home Loan Banks are here­by authorized to act as depositaries and fiscal or other agents of the Bank, and the Bank is hereby authorized to use them as such and to pay them compensation therefor; (2) when designated for that purpose by the Secretary of the Treasury, the Bank shall be a depositary of public money, under such regulations as may be prescribed by the Sec­retary of the Treasury, and may also be em­ployed as fiscal or other agent of the United States, and it shall perform all such reason­able duties as such depositary or agent as may be required of it.

(b) Any expenses of the Board or of. the Federal Savings and Loan Insurance Corpora­tion in connection with services rendered to the Bank, and any expenses of the Board in connection with the exercise of any func­tion vested in or exercisable by the Board under this Act, shall be considered as non­administrative expenses. Nothing in this Act or any other provision of law shall be construed to prevent or affect the appoint­ment, employment, or provision for com­pensation or benefits, as an officer, director, employee, attorney or agent of the Bank, of any omcer, director, employee, attorney, agent or member of the Board or of such Corporation or stockholder of the Bank.

(c) All notes, bonds, debentures, or other obligations of the Bank, or other securities (including stock) of the Bank, and the in­terest, dividends, or other income therefrom, shall be exempt for twelve (12) years begin­ning With the date of incorporation from all taxation (except estate, income, inheritance, and gift taxes) now or hereafter imposed by

the United States, by any territory, depend­ency, or possession thereof, or by any State, county, municipality, or local taxing author­ity. The foregoing exemption from taxation, except as to taxation impOsed by the United States, shall include exemption from taxation measured by such obligations or securities or by such interest, dividends, or other income, and from inclusion of such obligations or securities, or such interest, dividends, or. other income, in the measure of any such taxation.

(d) The Bank, including its franchise, ac­tivities, capital, reserves, surplus, and in­come, shall be exempt for twelve (12) years beginning with the date of incorporation from all taxation now or hPreafter imposed by the United States, by any territory, de­pendency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the Bank shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed. Nothing in this sub­section shall affect the applicability of the Public Debt Act of 1941, ns amended. The provisions of this subsection shall be ap­plicable without regard to any other law, including, without limiting the generality of the foregoing, section 3301 of the Internal Revenue Code of 1954, except laws hereafter enacted by Congress expressly in limitation of this subsection.

PENAL PROVISIONS

SEC. 10. (a) Except as expressly authorized by statute of the United States or by regu­lations of the Board, no individual or organi­zation (except the Bank) shall use the term "International Home Loan Bank", or any combination of words inclUding the words "International" and "Home", as a name or part thereof under which any individua.l or organization does any business, but this sen­tence shall not make unlawful the use of any name under which business is being done on the date of the enactment of this Act. No individual or organization shall use or dis­play (1) any sign, device, or insigne, pre­scribed or approved by the Bank for use or display by the Bank or by members of the Bank, (2) any copy, reproduction, or- color­able imitation of any such sign, device, or insigne, or (3) any sign, device, or insigne reasonably calculated to convey the impres­sion that it is a sign, device, or msigne used by the Bank or prescribed or approved by the Bank, contrary to regulations of the Bank prohibiting, or limiting or restricting, such use or display by such .individual or organiza­tion. An organization violating this sub­section shall upon conviction for each viola­tion be punished by a fine of not more than $10,000. An officer or member of an organi­zation knowingly participating or knowing­ly acquiescing in any violation of this sub­section shall upon conviction be punished by a fine of not more than $5,000 or imprison­ment for not more than one year, or both. An individual violating this subsection shall upon conviction for each violation be pun­ished as set forth in the sentence next pre­ceding this sentence.

(b) The provisions of sections 220, 658, 1011, and 1014 of Title 18 of the United Sta.tes Code are hereby extended to apply to and with respect to the Bank; and for the purposes of said section 658 the term "any property mortgaged or pledged" as used therein shall, without limitation on its gen­erality, include any property subject to mort­gage, pledge, or lien acquired by the Bank by assignment or otherwise. The terms "agency" and "agencies" shall be deemed to include the Bank wherever used with refer­ence to an agency or agencies of the United States in sections 201, 202, 216, 283, 286, 287, 371, 506, 595, 602, 641, 654, 701, 872, 1001. 1002, 1016, 1017, 1361, 1505, and 2073 ·of said title 18. Any officer or employee of the Ba.nk shall be deemed to be a person 'mentioned in

24806 CONGRESSIONAL RE.€0RD·-· .. SENA~E

section 602 of sa.t:d Title 18, within the mean­ing of section 603 of sa.id ·title, and shall be deemed to be one of the officers or employees mentioned in section 602 of said title, within the meaning · of section 606 of said title.

(c) The term "bank examiner or assistant exruminer" aa used in section 655 of said title 18 shall include any examiner or assist­ant examiner who is an officer or employee of the Ba.nk and any person who makes or participates in the making of any examina­tion of or for the Bank, and the term "bank" as used ln said section 655 shall, without regard to any provision of said section with respect to membership or insu.rance, include the Bank and any institution examined by or for the Bank; and the last sentence of said section 655 shall not be applicable to said section 655 as extended by this sentence. The term "bank" as uSed in subsection (f) of section 2113 of said title 18 shall include the Bank, and any building used in whole or in part by the Bank shall be deemed to be used in whole or in part as a bank, within the meaning of said section 2113.

(d) The terms "obligation" and "security," whenever lliled (with or without the words "of the United States"). whether in the singular or ih the plural, in sections 471 tci 476, both inclusive, and section 492 of said title 18 are hereby extended to mean and to include any obllptlon or security of or issued by the Bank: Any reference in sections 474, 494, 495, and 642 of said title 18 to the United States, except in a territorial sense, or the secretary of the Treasury is hereby ex­tended to inc~ude the Bank. Section 477 of said ~iple 18 ~ hereby extended to apply with respect to section 476 of said title as extended by the first sentence of this sub­section (d) , and. for this purpose the term '.'United States" as used in said section 476 shall include tne Bank. ·

(3) References in this section to sections of title 18 of .. the United States Code shall be deemed to-be references to said sections as now or hereafter in force.

CONSTRUcTION AND SEPARABILITY SEc. 11. Except as otherwise provided in

this Act or as otherwise provided by the Board or by laws hereafter enacted by the Congress expressly in llmitatd.on of provi­sions of this Acl, the powers and functions of the Board, the Bank, or the Board of Di­rectors of the Bank shall be exercisable and the provisions of this Act shall be a~ppllca.ble and effective without regard to any provision of any other la~w. Notwithstanding any other evidence of the intention of Oongress, it is hereby declared to be the controlling intent of Congress that if any provision of this Aot, or the applica.tion thereof to any person or circumstances, is held invalid, the remainder of this Act, or the application of such pro­vision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

ANALYSIS OF AUGUST 18, 1965, DRAFT BILL ON INTERNATIONAL HOME LOAN BANK

Section 1, short title: International Home Loan Bank Act.

Section 2, definitions: Bank, Board, mem­ber, stock.

Section 3, International Home Loan Bank: The Federal Home Loan Bank Board is di­rected to provide for the incorporation and organiz!lition of a corporation to be known as the International Home Loan Bank. The Bank will operate under supervision of the Board to see that it conforms to law and regulations designed to encourage develop­ment of thrift and home financing in less­developed countries.

Section 4, Board of Directors: Section 4(a). A 16-man Board of Di­

rectors, all initially elected by the subscrib­ing meq1bers of' the Bank, shall thereafter be elected by the :t;nembers when the initial d~ectors' terms .expire. Voting rights of members are prescribed.

Section 4(b). The Board is granted authOr­ity to provide for the filling of vacancies and to determine the functions of and the exer­cise thereo.f by the Board of Directors. Pro­vides authority for the Board, the Bank, and the Board of Directors to delegate certain functions.

Section 5, capital stock; The Bank shall have capital stock, all of which shall be without preference. The amount, how it shall be evidenced, transferability, price at time of issue and retirement shall be de­termined by the Board.

Section 6, eligible stockholders: Section 6 (a) makes the following eligible

as stockholders: present Federal Home Loan Bank members or those eligible for member­ship, mutual savings banks, pension funds, and insurance companies. A holder of stock of the Bank is automatically a member there­of.

Section 6(b). A Federal savings and loan assoclation and any member of a Federal home loan bank, other than an insurance company, may purchase stock if its reserve and surplus equal 5 percent of savings ac­counts.

Associations and other members or asso­ci-ations eligible to become members of a Federal home loan bank are limited in their purchase of stock to 1 percent of assets.

Section 7~ oper!iltions of the Bank: Section 7 (a) defines "~oreign thrif·t and

home-financing ~nstitution" and "foreign home loan bank."

Section 7 (b) . The Bank is authorized to t.nvest in or lend to foreign mutual thrift and home-financing institutions in less de­veloped countries and foreigp. home loan banks in such countries which have as their primary purpose loans and advances to mu­tual thrift and home-financing institutions within the country in which organize.d.

The Bank is also granted the powers nec­essary to promote and assist in the estab-· lishment and development in less developed countries of mutual thrift and home-financ­ing institutions together with credit and financing facll1ties for such institutions.

Section. 7 (c) . The Bank is made eligible to apply for AID guarantees.

Section 8, borrowings and securities: Section 8 (a) . Under regulations prescribed

by the Board, the Bank is authorized to bor­row and otherwise finance its activities but any offering or sale of Lts obligB~tions to other than Federal home loan banks or members thereof must be approved by the Board.

Section 8(b). Obligations of the Bank are made lawful investments but authority to so invest is denied to Federal Reserve banks, and national banks may invest only 1f the Board of Governors of the Federal Re­serve System so authorizes.

Section 8 (c) . The Bank is exempted from Securities and Exchange Commission laws.

Section 8(d). Each Bank obligation must state it is not issued or guaranteed by the United States.

Section 9, miscellaneous provisions: Section 9 (a) ( 1) . Federal Reserve banks

and Federal home loan banks authorized to act as depositaries and fiscal agents of the Bank.

Section 9{b). Expenses of the Board and FSLIC in connection with the exercise of any function under this act are to be considered nonadministrative. Board and FSLIC offi­cials and employees as well as Bank stock­holders may be ofllcers, directors, employees, attorneys or agents of the Bank.

Section 9(c). Except for estate, income, in­heritance and gift taxes obligations of the Bank and the income therefrom are exempt from taxation for 12 years.

Section 9(d). The Bank and its assets are exempt from all taxation for 12 years.

Section 10, penal provisions: Section 10(a). The use of the term "Inter­

national Home Loan Bank" or the insigne of the Bank contrary· to statute or regulations of the Board is subject to a fine of $10,000 if

8epter(l-ber 22, 1965 an organization and $5,000 fine or imprison­ment !or not more than 1 year or both 11 a person. · .Sections 10(li) (c) (d) (e). Various provi-. sions of title 18 of the United States Code are extemied and applied to the Bank, bank exam.iner or assistant examiner, obligations and .securities of the Bank. · . Section 11, construction and separab1llty: Thls section would assure that the provisions of other laws would not limit the operation of the new act and would provide a separa­b1lity provision in customary form.

American Airpower -in South Vietnam

EXTENSION OF_ REMARKS OF

HON. DONALD J. IRWIN OF CONNECTICUT

IN THE HOUSE OF REPRESENTATIVES

Wednesday, September 22, 1965

Mr. ffiWIN. Mr. Speaker, I wish to call the attention of my colleagues to re­marks made this morning by Congress­man PIKE, of New York, chairman of the Special Subcommittee on Tactical Air Support of the House Armed Services Committee. Mr. PIKE's well-reasoned statement at the opening of subcommit­tee hearings on the question of why American airpower has been unable to find and destroy the Vietcong in South Vietnam sets the tone for the hearings. As he said in his statement:

They (the hearings) will not be accom­panied by spectacular press releases, nor will any of the issues to which we direct our at­tenti<?n be prejudged. It is our purpose to study, and if we can, to help solve them.

Congressman PIKE's statement fol­lows: STATEMENT BY HoN. OTIS G. PIKE, CHAIRMAN~

SPECIAL SUBCOMMITTEE ON TACTICAL Am SUPPORT OF HOUSE ARMED SERVICES COM­MIT'I'EE, AT OPENING OF HEARINGS, SEPTEM­BER 22, 1965

. In January 1961, in a report to a Commu­nist Party conference, Chairman Nikita Khrushchev set forth the doctrine by which Communist conquest was to be governed 1n the future. He described four kinds of war: (1) World wars, (2) local wars, (3) libera­tion wars, and (4) popular uprisings.

Mr. Khrushchev announced to the world that international communism was opposed to both world wars and local wars as being too dangerous for profitable utilization in a world armed with nuclear weapons.

With regard to what he referred to as wars of national liberation, however, he stated that the Communist movement would recog­nize and support such wars. With specific reference to the war in Vietnam., he said: "It is a sacred war."

For 4¥2 years we have been forewarned. What Khrushchev referred to as wars of na­tional liberation and described as "sacred,. in Vietnam have been translated on the bat­tlefield and in the cities and countryside into attacks by terrorists at night, the blowing up of restaurants and buses as well as bridges and barrack~. In a jungle environment at­tacks on government outposts are carried on most frequently by platoon or company-sized units at night. These s~all units are armed with mortars, recoilless rifles, machineguns, and automat1c weapons. They do not have tanks or armored personnel carriers, and they walk into battle. They would be hard to find in a jungle environment in the daytime. They are harder to find during the pight­time, which they claim for their own.

September 23, -'1965 CONGRESSIONAL RECORD-· . .SENATE 24807 Arrayed against the_se small' and elusive

units is the m111tary power of America. We have all the tanks that there are ln So-qth Vietnam. We have all the armored per­sonnel carriers that there are in South Viet­nam. We have almost all of the a.rt111ery; and we retain complete mastery of the skies. Over 20 different models of American air­craft, undisturbed by enemy aircraft, roam the skies of South Vietnam at wm, subject only to the danger of ground fire from con­ventional small arms.

Many voices have been raU?ed asking why our airpower is unable to find and destroy the Vietcong in South Vietnam. Chairman L. MENDEL RivERs has asked this subcommit­tee to look into this question. Due to the present pressing congressional obligations of the members and staff of the subcommittee, we wm have lim.ited opportunities to travel for the purpose of field investigations until recess of this session of Congr~ss. In addi­tion, the time allotted to the -subcommittee is not sufficient to allow us at this time · to inquire into every detail related to tactical air support, and therefore we must lim.it our investigations to the following aspects:

1. The adequacy of our close air support during the cowse of the war in Vietnam and today; - 2. The availab111ty of close air support 24 h6urs a day under all weather. conditions;

S. The quantities available, the cost and effectiveness of the various tactical aircraft being used in South Vietnam today; . , 4. The adequacy of liaison and communi­cations between the air forces and the ground forces in Vietnam;

5. The adequacy of existing logistic and support facilfties for tactical aircraft in Viet-nam; J .

6. The development of new tactics and techniques for close air support; .

7. Whether any progress has, been made in developing and producing a new type air-

·THURSDAY, SEPTEMBER 23, 1965

<Legislative day of Monday, September 20, 1965)

The Senate met at 11 o'clock a.m., on the expiration of the recess, and was called to order by Hon. DONALD -RUSSELL, a Senator from the State of South Caro­lina.

The Chaplain, Rev. Frederick Brown Harris, D.D., offered the following prayer:

0 God, high over all, pilgrims of the night, we would reach for Thy hand in the darkness. Even as the busy tribes of ftesh and blood, with all their cares and fears, are carried swiftly onward by the ftood of this tempestuous day, lead us who seek Thy face to still waters and green pastures where in some shrine of the spirit we may be assured of those values which are excellent and perma­nent and which assert their sovereignty in all life's changing scenes.

Etch deep in our hearts the suffering and pain of shepherdless multitudes, so wearied by the burden and the stress of life. Grant us such a vision of our needy world in this great day of our oppor­tunity as shall make us instant and eager sharers with Thee in its redemption. Redeem our failures, pardon our- trans­gressions, transform every task into a throne of service and .crown this day of

craft for close air · support in limited war situations;

8. The adequacy of .,.our training environ­ment to simulate conditions such as those found 'in Vietnam. '

For the purpose .of the subcommittee dur­ing these investigations we have adopted the Joint Chiefs of Staff definition of close air support: "Air action against hostile targets which are in close proximity to friendly forces and which require detailed integra­tion of each air mission with the fire and movement of those forces."

I believe that these hearings have a sig­nificance beyond our current confrontation in Vietnam. As we look at the globe we can see over much of its land surface other peoples who must be considered amenable to Communist propaganda, to Communist subversion, to Communist terror. We see people who remain hungry, who remain ill clothed, 111 housed, and uneducated. We can see at the outset that no amount of military power of any kind is the answer to their problems. We would be blind indeed, however, if. we could not also see, as we see in Vietnam, that no government can attack and solve these problems when it is the steady· victim of armed terror and armed insurrection aimed not at the solution of the · people's ·problems, but at the domina­tion of the people themselves. As we look at the globe we also find countless other areas where not only the ·economic and so­cial problems are the same as those in Viet­nam, but where the geography is the same. We find countless regions where small bands of armed guerrillas can operate effectively in jungles, as the Vietcong do in Vietnam, as Castro did in Cuba, and as is being done on the continents of Africa and South America today . .

'J;'he questio~ before us is, having been forewarned, have w:e adequately forearmed

labor with the benediction of Thy "well done."

We ask it in the dear Redeemer's name. Amen.

DESIGNATION OF ACTING PRESI­DENT PRO TEMPORE

The legislative clerk read the follow­ing lette·r:

U.S. SENATE, PRESIDENT PRO TEMPORE,

Washington, D.C., September 23, 1965. To the Senate:

Being tempora.rtly absent from the sen­ate, I appoint Hon. DONALD RussELL, a Sen­ator from the State of SOuth Carolina, to perform the duties of the Ohair during my aibsence.

CARL HAYDEN, President pro tempore.

Mr. RUSSELL of South Carolina . thereupon took the chair as Acting Pres­ident pro tempore.

FOREIGN ASSISTANCE AND RE­LATED AGENCIES APPROPRIA­TIONS FOR 1966 The ACTING PRESIDENT pro tem­

pore. The Chair lays before the Senate the unfinished business.

· The Senate resumed the considera­tion of the bill (H.R. 10871) making ap­propriations ·for foreign assistance and related ·agencies for the fiscal year end­f,ng June 30, 1966, and for other pur­poses.

ourselves? Have · we used· too much of our resources in preparing for the kind of war­fare · which Khrushchev has described as in­tolerable, and not enough of our resources in preparing for the kind of warfare he de­scribed as inevitable?

These hearings wm · of necessity be held almost exclusively in executive session. They will not be accompanied by spectacular press releases, nor wm any of the issues to which we direct our attention be prejudged. It is our purpose to study and; if we can, to help solve them. We are starting our hearings not with the testimony of planners in the Pentagon, who would-tell us how our system should work; we ar'e starting our testimony instead with witnesses who have been on the firing line in Vietnam and can tell us how it does work: Today · we will hear witnesses who have been on the ground, and who have needed air support; tomorrow we will hear those who have been in the air and have tried to provide it. It is obvious that any weaknesses in our system of close air support have not proved fatal to those whom we wm hear from. What others wbo called for air support and failed to receive it might have testified we can 'never know. In future ses­sions we wm hear from the men who plan· ou): tactics, procure and manufacture · our planes, and train our pilots. 'We w111 visit the bases and places where these activities are conducted.

I say to each of the witnesses that before we can help you, you will have to be candid with us. I enjoin each of the witnesses to speak freely and in his own words, to give an account of his personal combat experi­ences in Vietnam during which close air support' was requested. We are particularly interested in your personal evaluation of wha·t happened, or what should have hap-pened. ·

Mr. MANSFIELD. Mr. President, I ~ield myself 2 n;tinutes under .the _bill. It is my understanding that the ftoor manager of the bill will then yield 10 minutes to the distinguished Senator· from New York· [Mr. JAVITS].

THE JOURNAL On request of Mr. MANsFIELD, and by

unanimous consent, the reading of the Journal of the proceedings of Wednes­day, September 22, 1965, was dispensed with.

MESSAGES FROM THE PRESI­DENT-APPROVAL OF BILLS AND JOINT RESOLUTIONS Messages in writing from the Presi­

dent of the United States were communi­cated to the Senate by Mr. Geisler, one of his secretaries, and he announced that on September 21, 1965, the Presi­dent had approved and signed the fol­lowing acts and joint resolutions:

S. 20. An act to provide for the establish­ment of the Assateague Island National sea­shore in the States of Maryland and Virginia, and for other purposes;

S. 135. An act for the relief of Elizabeth KamOiHu;

S. 136. An act for the relief of Angel Lag­may;

S. 454. An act for the relief of Lee Hyang Na; · · · S. 521. An act for the relief of Marla Gio­

conda Femia; S. 828. An act for the relief of Cha Mi Hi;