amendment.

The consumer seems to have been overlooked in the effort to favor certain privileged interests. Lastly, we may point out that there is a statute that protects American producers from limitless foreign competition in the form of the countervailing duties commonly known as the antidumping law, and that there is provided in the statute an orderly, intelligent method for the application of this protection. It is our considered opinion that the inclusion of this amendment in the Defense Production Act was a whimsical, irresponsible bit of legislation, submitted perhaps in innocence, but which has for its effect the circumventing of the authority of the United States Tariff Commission, the authority of the State Department, and the President of the United States, who have pledged by international agreement with the approval of the United States Senate, certain trade arrangements under the International Trade Organization, and violates the spirit of reciprocal trade agreements now in effect. We favor legislation that allows fair, normal competition; we believe that this law should be abolished because in place of fair competition it in fact establishes monopoly to the detriment of the American people.

Summing up, the opposition of our chamber is embodied in the following points: 1. The law was adopted without public hearings.

2. The law violates the spirit, if not the letter, of reciprocal trade agreements now in effect.

3. This law may incite retaliatory measures by other countries which would affect the export of surplus American products.

4. This law substitutes irresponsible, whimsical legislation for a reasoned appraisal by the United States Tariff Commission, heretofore used to protect American industry against unfair foreign competition.

5. The inclusion of cheese and dairy products, not previously provided for in the Defense Production Act of 1950, serves notice on the world that we will play the game of international trade within narrow and selfish limits, belying our oft proclaimed intentions to free trade from the grip of governmental quasi-monopolistic practices.

6. The chamber does not consider normal, fair competition-whether in the domestic or in the international arena-a shibboleth to serve as excuse for legislation establishing conditions favorable to monopoly or likely to mulct the Ameri

can consumer.

7. The chamber does not accept the philosophy that each of us should be guaranteed a profit by law.

Senator FULBRIGHT. There are six others who have asked to be heard: The National Milk Producers' Association; Switzerland Cheese Association, Inc.; E. W. Gaumnitz of the National Milk Institute; L. D. Schreiber Co.; Stellar Cheese Co.; and the National Farmers' Union.

Does it happen that any of them are present and ready to testify now? It might save time if any one of those people are in the room. We have a little more time if you care to come up and give your testimony now.

There being no one, the meeting is recessed until tomorrow morning at 10 o'clock.

I would like to state for the information of those who wish to speak that I think we should have had more witnesses today. We will have to move rapidly tomorrow on those witnesses.

(Whereupon, at 11:20 a. m., the subcommittee recessed, to reconvene at 10 a. m., Friday, September 14, 1951.)

REPEAL OF SECTION 104 (FATS AND OILS)

FRIDAY, SEPTEMBER 14, 1951

UNITED STATES SENATE,

SPECIAL SUBCOMMITTEE OF THE COMMITTEE

ON BANKING AND CURRENCY,

Washington, D. C.

The subcommittee met, pursuant to notice, at 10:05 a. m., Senator J. William Fulbright (chairman of the subcommittee) presiding. Present: Senators Fulbright, Moody, Ives, and Dirksen. Also present: Senator Aiken.

Senator FULBRIGHT. The committee will come to order.

I wish to insert in the record a telegram received from Mr. Will Clayton, formerly Under Secretary of State, urging the repeal of section 104.

Also I have a telegram from Mr. J. B. Hutson, by J. C. Frink, from Tobacco Associated, urging repeal of section 104 because of its bad effect upon the export of tobacco.

I also have a letter from the American Farm Bureau Federation, signed by Mr. Allan B. Kline, urging the repeal of section 104, and giving some very interesting arguments in support of his position. Finally, I have a letter from the National Council of Farmer Cooperatives, by Mr. John J. Riggle, urging the retention of section 104 of the Defense Production Act.

The reporter will put all of those in the record. (The documents referred to follow:)

Hon. WILLIAM FULBRIGHT,

Senate Office Building:

WASHINGTON, D. C., September 14, 1951.

Regret unable appear in person before your committee in support of Senator' Maybank's bill S. 2104 repealing section 104 of Defense Production Act.

I strongly favor this bill, believing that the imposition of quotas on imports is very bad practice inviting retaliation and that it conflicts with the broad objectives of our foreign policy.

That policy is based on the necessity of holding the free world together, and under it we should take measures to promote a great increase in the volume of international trade rather than the adoption of restrictions and limitations on such trade.

WILL CLAYTON.

WASHINGTON, D. C., September 13, 1951.

SENATE BANKING AND CURRENCY COMMITTEE,

United States Senate Building, Washington, D. C.:

Attention: (Senator Fulbright.)

United States tobacco exports to certain West European countries are seriously threatened by the implementation of section 104 of the Defense Production Act of 1950, as amended. Tobacco Associated which represents the growers, warehouseman, and exporters of flue-cured tobacco, urgently recommend the repeal of this amendment as provided by S. 2104.

J. B. HUTSON, By J. C. FRINK,

AMERICAN FARM BUREAU FEDERATION,
Washington, D. C., September 13, 1951.

Hon. J. W. FULBRIGHT,

Chairman, Banking and Currency Subcommittee,

United States Senate, Washington, D. C.

DEAR CHAIRMAN FULBRIGHT: On behalf of the 1,500,000 farm families, who are its members, we wish to express the views of the American Farm Bureau Federation with regard to section 104 of the Defense Production Act of 1950, as amended, and to recommend approval of S. 2104 to repeal this section.

The American Farm Bureau Federation has well-established policies in support of the principles and objectives of the reciprocal trade agreements program, the general agreement on tariffs and trade, and other measures designed to increase world trade on a sound and continuing basis.

The exports of United States products have increased steadily over the past few years. Agriculture currently is enjoying a high rate of exports. A continued high volume of exports is necessary if we are to continue to have an expanding and productive economy in the United States, and in the long run exports, obviously, depend on imports.

Not only are agricultural exports high, but exports of dairy products, including cheese, far exceed the imports of these products into the United States. While the ratio of value of exports to imports has been declining, still in 1950 exports of dairy products from the United States was 21⁄2 times imports. It also should be pointed out that the countries most adversely affected by section 104 of the Defense Production Act of 1950, as amended, are in western Europe and that these countries import far more agricultural products from the United States than they export to the United States. These western European countries together with Canada are our principal buyers of bread grain, feed grain, cotton, fruits, and many other agricultural commodities. It is in the best interest of the United States to maintain these markets. Arbitrary restrictions on imports such as are authorized by section 104 invite retaliatory action by other countries of a sort which would seriously reduce our own agricultural exports.

The Congress is currently deliberating the enactment of the Mutual Security Act which is designed to strengthen the economies of other countries, to increase their ability to withstand communism internally, and to increase the production and exports of these countries. It should be part of our policy in this conneciton to replace annual grants or funds by the United States by the receipt of goodsand services, and by such means to minimize the drain upon our economic resources. The larger the volume of goods and services received from participating countries, the more rapidly direct grants-in-aid may be replaced by trade on a continuing basis. The provisions of section 104 of the Defense Production Act of 1950, as amended, are inconsistent with the objectives of the Mutual Security Act.

During the recent congressional deliberations on the Reciprocal Trade Agreements Extension Act (Public Law 50 of the 82d Cong.), we proposed certain amendments which were accepted by the Congress. Section 22 of the Agricultural Adjustment Act was amended to restore the original intent of this law. The two major changes in this law consistent with our policies are as follows:

1. Authority was granted to restrict imports which interfere or threaten to interfere materially with any price support program of the Department of Agriculture notwithstanding the provisions of the trade agreements or other international agreements heretofore or hereafter entered into by the United States. 2. Provision was made for emergency treatment for perishable commodities in order that these producers may get necessary relief in the shortest possible time where imports cause serious difficulty.

We believe that the authority contained in Public Law 50, Eighty-second Congress, together with the “escape clause" provisions of the general agreement on tariffs and trade, if judiciously carried out by the administrative agencies of our Government, give agriculture adequate protection from excessive imports.

To exclude imports as provided in section 104 of Public Law 96, Eighty-second Congress, without reference to the procedures established provided for in section 22 of the Agricultural Adjustment Act, the trade agreements escape clause and Public Law 50, Eighty-second Congress, for the handling of such matters, presents two Government policies that are in direct conflict. Public Law 50 and related provisions of law and international agreements provide a more appropriate and judicious approach to import problems on a basis consistent with increasing world trade. We therefore recommend approval of S. 2104.

We respectfully request that this letter be made a part of the record in connection with the hearings on S. 2104.

Sincerely yours,

ALLAN B. KLINE, President.

NATIONAL COUNCIL OF FARMER COOPERATIVES,

Hon. J. WILLIAM FULBRIGHT,

Washington 6, D. C., September 12, 1951.

Chairman, Subcommittee on Import Controls,
Banking and Currency Committee,

United States Senate, Washington, D. C.

DEAR SENATOR FULBRIGHT: The National Council of Farmer Cooperatives is opposed to the repeal or modification of section 104 of the Defense Production Act. As presently worded, this section requires the Secretary of Agriculture to determine at what levels domestic production of the ennumerated commodities should be maintained; and to protect the national domestic production at that level until June 30, 1952, against undercutting by imports which will destroy the domestic price incentive.

These

It will also protect the price support programs of the United States. have been found necessary to maintain a balanced domestic economy which can be wrecked if agricultural production and price incentives are destroyed by an unorderly flow of imports. It has been our observation that after an imported article gets control of the domestic market, the price is controlled from abroad, as witness the present wool situation, and a very unstable supply situation results. At any time that the Secretary finds that domestic supply is not being maintained at necessary levels, import controls can be adjusted under section 104 to provide entry of imported supplies.

Other countries of the world than the United States are suffering from lack of foodstuffs and other agricultural commodities. They should be trading for these with each. If we are to continue to furnish economic and military aid to these countries we will have to maintain a broad domestic income base to furnish the tax revenue necessary to provide such aid.

We trust that section 104 of the act will be maintained.

Respectfully yours,

JOHN J. RIGGLE, Assistant Secretary.

Senator FULBRIGHT. The first witness this morning will be Mr. Garstang of the National Milk Producers Federation.

Mr. Garstang, will you come forward, please.

STATEMENT OF M. R. GARSTANG, COUNSEL, NATIONAL MILK PRODUCERS FEDERATION

Senator FULBRIGHT. Do you have a summary of your statement, Mr. Garstang?

Mr. GARSTANG. Yes.

Senator FULBRIGHT. Will you proceed in your own way, please. Mr. GARSTANG. It might save the committee's time if I read the statement. It is rather concise and direct. I will summarize it if you prefer.

Senator FULBRIGHT. We have several witnesses. As you can see, we are holding hearings simultaneously with various other subcommittees. There are only two of us here. I thought perhaps you could summarize it and then we could ask questions and develop it. The printed statement will be available to the committee anyway. I believe that would be more helpful for the record, if you would just summarize it, state your position and tell why.

Senator IVES. Mr. Chairman, may I ask a question?

Senator FULBRIGHT. Certainly.

Senator IVES. Mr. Garstang, were you here yesterday when the witnesses were testifying?

Mr. GARSTANG. No; I was not.

Senator IVES. Are you acquainted with the testimony given yesterday?

Mr. GARSTANG. No.

Senator IVES. It occurred to me that perhaps you could speak to the testimony given yesterday and reply, if you desired to make reply. Mr. GARSTANG. We were scheduled to appear before the House Ways and Means Committee yesterday and had to be over there. The National Milk Producers Federation is a Nation-wide organization of dairy cooperatives. We have 92 direct member associations, and about 600 submember groups who belong to the Federation.

We represent approximately 500,000 dairy farm families and the cooperatives which they own and operate and through which they process and market their products.

About one-fifth of the milk sold from farms in the United States is processed and marketed through cooperatives connected with our organization.

Senator FULBRIGHT. Are you for or against the repeal of the section? Mr. GARSTANG. We are against the repeal of section 104.

Senator FULBRIGHT. The measure had its birth with your organization?

Mr. GARSTANG. That is right.

Senator FULBRIGHT. You promoted it?

Mr. GARSTANG. Yes, sir. We helped Mr. Andresen prepare it. Before section 104 was passed, we had brought home to us rather sharply the situation we might be in if we did not have some protection against imports. In 1942, the Second War Powers Act was passed which had a provision in it authorizing allocations. This power was used during the war to control imports, for the purpose of keeping butter and some other fats and oils from coming to this country when they were needed in other allied countries.

That continued in effect until after the war, and when most of the Second War Powers Act was permitted to expire that part was kept alive for the purpose of controlling some imports including butter, fats and oils, flax, rice, and a few other products.

The basis of the control in the last extension of that power, was to permit the liquidation of surplus stocks then owned by the Govern

ment.

Public Law 590, Eighty-first Congress, was due to expire July 1, 1951. Since the surplus stocks owned by the Government—at least the butter and cheese-had fairly well been disposed of, the basis for continuing it on that ground had disappeared.

It was quite apparent that the Secretary of Agriculture would not ask for a continuation of Public Law 590. He had issued some import orders, just prior to July 1, 1951, which shifted the import control of flax and rice over to section 101 of the Defense Production Act, which also contains the broad power of allocation.

The Secretary did not set up import controls on butter, cheese, or fats and oils at the same time he set up the controls on flax and rice, and apparently the controls on our products were scheduled to expire on July 1.

We were able to get a temporary extension of Public Law 590 for 1 month, along with the other temporary extension of the wage and price controls, and before that month expired section 104 was enacted.

The thing that concerned us so very much was that the price support level on grade A butter is 66 cents a pound. That price is calculated to return to dairy farmers about 90 percent of parity or possibly a little under 90 percent of parity.