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Senator Long. Now some people have tried to make the argument, and to me those who have made it just did not understand anything about the oil and gas industry, that it was a good idea to keep bringing in these foreign imports and to save our oil in the ground.

What those people were failing to realize every step of the way is that if you have got to fight a war the fact that you have got reserves is not going to do you any good unless you have got holes down in the ground to get to the oil and steel pipe laid down there so the oil can come to the surface.

And if you have got to spend 4 or 5 years drilling for it, the war might be over before you ever get it. Now that is something you well recognize, do you not, Mr. Secretary?

Secretary WEEKS. Yes, sir.

Senator Long. And the amount of oil that you can produce come an emergency, just like Suez, when you are called upon to produce what you can get right then and there as an immediate expansion of production and what you can make available to meet your emergency, that is what you count on to fight a war, not some reserve that you might be able to go drill for and fully develop if you have 5 or 6 years to do it.

Secretary WEEKS. That is correct.

Senator Long. Thank you very much, Mr. Secretary. I appreciate your courtesy. I know we have kept you here for some time and Senator Malone has got a lot of questions to ask. I feel that I have imposed enough on you today.

Senator MALONE. We stand adjourned until 9 o'clock in the morning. Mr. Weeks will be here at 9 and then the Secretary of State at 10.

(Whereupon, at 5:10 p. m., the committee adjourned to reconvene at 9 a. m., Saturday, June 21, 1958.)

TRADE AGREEMENTS ACT EXTENSION

SATURDAY, JUNE 21, 1958

UNITED STATES SENATE,
COMMITTEE ON FINANCE,

Washington, D. C. The committee met, pursuant to recess, at 9 a. m., in room 312 Senate Office Building, Senator Clinton P. Anderson presiding.

Present: Senators Anderson, Malone, and Carlson. Also present: Elizabeth B. Springer, chief clerk. Senator ANDERSON. The committee will be in order. Mr. Secretary, we are sorry that we have to have a Saturday session for you, but there are some members of the committee who did not get a chance on the opening day.

We did not finish with Senator Malone yesterday so we appreciate the fact that we are here early this morning. I believe when the committee terminated yesterday it was engaged in examination by Senator Malone.

Senator, do you have additional questions? Senator MALONE. Mr. Chairman, you know that you and I are not too high on the totem pole.

Senator ANDERSON. I found that out many times.
Senator MALONE. So they did not get to me yesterday.
Senator ANDERSON. I beg your pardon?

Senator MALONE. It was 6:30 and the Secretary had been on the stand all afternoon and you and I had been trying to attend two committee meetings, the Senate Interior and Insular Affairs Committee, in addition to the Finance Committee and also attend the Senate.

The record may show just how efficient a job we did yesterday on all the fronts, but I could see the Secretary was tired and so we adjourned until 9 this morning.

Senator ANDERSON. I want to say, Mr. Secretary, if this goes on to 6:30 this afternoon, whoever examines you will be alone.

Senator MALONE. Some of us started our day at 6 o'clock yesterday morning and at 6 o'clock last night I suggested to the Senator from Louisiana, who had just finished cross-examination, that we might start at 9 this morning and finish in time to take Mr. Dulles at 10. Everybody agreed.

Senator ANDERSON. If there is no objection, then, when Secretary Dulles comes, we will start with him at 10 o'clock.

Senator MALONE. Mr. Secretary, you and I have been acquainted for a long time. I have admired you for a long time; the work that you have done in your manufacturing, in private business, and now in Washington as a member of the Cabinet of the first Republican administration we have had in the memory of some of the younger Republican voters. I wish you the best of luck in your work.

Whether you and I always agree or not, I want you to have a successful tenure in office. I will try not to repeat too many of the questions that I have already asked Mr. Dulles because I presume that you and Mr. Dulles are in agreement on practically everything, at least on this bill.

STATEMENT OF HON. SINCLAIR WEEKS, SECRETARY OF

COMMERCE, ACCOMPANIED BY HENRY KEARNS, ASSISTANT SECRETARY OF COMMERCE FOR INTERNATIONAL AFFAIRS; J. ALLEN OVERTON, JR., DEPUTY GENERAL COUNSEL; ROBERT SIMPSON, DIRECTOR OF OFFICE OF ECONOMIC AFFAIRS, BUREAU FOREIGN COMMERCE; AND CARL BLACKWELL, DIRECTOR, INTERNATIONAL ECONOMIC ANALYSIS DIVISION, BUREAU OF FOREIGN COMMERCE-Resumed

Secretary WEEKS. Yes, sir.

Senator MALONE. For 100 years the Republican Party always advocated a duty or tariff to equalize wages and the cost of doing business here and in the chief competing nations on each product. I am saying this to emphasize saying the fundamental difference in the philosophy of the two parties. What was our policy in regard to foreign trade-trade with foreign nations since the inception of the party, starting with Abraham Lincoln?

Secretary WEEKS. You mean as between the two political parties?

Senator MALONE. No, not between the parties. Just what was our philosophy?

Secretary WEEKS. You mean the country's philosophy?

Senator MALONE. Ours, Republicans, whether we were in power or not, it was the country's policy when we were in power.

Secretary WEEKS. Generally speaking as our industries developed over the years we leaned more to the protectionist side.

However, almost every President, Republican Presidents I speak of now, from McKinley on, urged the establishment of reciprocal trade agreement legislation.

Senator MALONE. Could you tell me what McKinley's policy really was? He has been quoted quite a few times. Do you know actually what it was?

Secretary WEEKS. I only know what he said about reciprocal trade.
Senator MALONE. What did he say?
Secretary WEEKS. I haven't got the quotation here, sir.

Senator MalONE. Would you mind, then, looking it up and inserting it in the record ?

Secretary WEEKS. I certainly will, yes, sir.

Senator MALONE. I ask permission that the Secretary be allowed to do that and I will do the same thing.

Senator ANDERSON. We Democrats are glad to welcome into the record any reference to McKinley.

(The Secretary of Commerce subsequently forwarded to the committee for insertion in the record the following excerpt from the last speech of William McKinley, delivered at the Pan-American Exposition at Buffalo, September 5, 1901.)

By sensible trade arrangements, which will not interrupt our home product, we shall extend the outlets for our increasing surplus. A system which provides a mutual exchange of commodities is manifestly essential to the continued and healthful growth of our export trade. We must not repose in fancied security that we can forever sell everything and buy little or nothing. If such a thing were possible, it would not be best for us or for those with whom we deal. We should take from our customers such of their products as we can use without harm to our industries and labor. Reciprocity is the natural outgrowth of our wonderful industrial development under the domestic policy now firmly established * * *.

The period of exclusiveness is past. The expansion of our trade and commerce is the pressing problem. Commercial wars are unprofitable. A policy of good will and friendly trade relations will prevent reprisals. Reciprocity treaties are in harmony with the spirit of the times; measures of retaliation are not

If perchance some of our tariffs are no longer needed for revenue or to encourage and protect our industries at home, why should they not be employed to extend and promote our markets abroad?

Senator MALONE. As a matter of fact, McKinley was a protectionist, was he not?

Secretary WEEKS. Generally speaking I guess he was.

Senator MALONE. You do not need to guess. I think you know he was, do you not?

Secretary WEEKS. I think he was, yes.

Senator MALONE. Will you just answer that "yes" or "no"? I think it can be done. Secretary WEEKS. To the best of my knowledge and belief, yes.

Senator MALONE. That is a little better. It will save time in this committee and I do not want to subject you to a long grilling here, but the record we are about to make is important.

Now as a matter of fact, do you know what the 1930 Tariff Act, passed by the Congress and signed by the President in 1930 under Republican guidance really was? Do you know what the 1930 Tariff Act provided? Secretary WEEKS. I know in a general way of course.

Senator MALONE. Don't you know a little better than in a general way?

Secretary WEEKS. I cannot recite every rate that was cited in the Smoot-Hawley bill.

Senator MALONE. I did not ask for specific rates. Do you know what the general policy was?

Secretary WEEKS. Yes, sir. Senator MALONE. What was it? Secretary WEEKS. It was a protectionist policy. Senator MALONE. It protected American workingmen's jobs and investors investments with a flexible tariff adjusted to represent the difference in such costs. What did it say in general, not the specific language, but can you tell me the policy laid down by the act?

Secretary WEEKS. Not without referring to the

Senator MALONE. Would you mind if I tell you just to refresh your memory.

Secretary WEEKS. No, sir.

Senator MALONE. It was a protective policy, section 336 of the 1930 Tariff Act, called Equalization of Costs of Production, excerpts from section 336, Tariff Act 1930, Public Law 3621. I will quote pertinent parts of the section and ask that it be put in the record.

Senator ANDERSON. That will be done.

(The excerpts from section 336 and the letters from the Tariff Commission are as follows:)

THE TARIFF Act of 1930, Public Law 361

(Excerpts from sec. 336.) Sec. 336. EQUALIZATION OF Costs oF PRODUCTION.

(a) CHANGE OF CLASSIFICATION OR DUTIES.-In order to put into force and effect the policy of Congress by this Act intended, the commission (1) upon request of the President, or (2) upon resolution of either or both Houses of Congress, or (3) upon its own motion, or (4) when in the judgment of the commission there is good and sufficient reason therefor, upon application of any interested party, shall investigate the differences in the costs of production of any domestic article and of any like or similar foreign article. In the course of the investigation the commission shall hold hearings and give reasonable public notice thereof, and shall afford reasonable opportunity for parties interested to be present, to produce evidence, and to be heard at such hearings. The commission is authorized to adopt such reasonable procedure and rules and regulations as it deems necessary to execute its functions under this section. The commission shall report to the President the results of the investigation and its findings with respect to such differences in costs of production. If the commission finds it shown by the investigation that the duties expressly fixed by statute do not equalize the differences in the costs of production of the domestic article and the like or similar foreign article when produced in the principal competing country, the commission shall specify in its report such increases or decreases in rates of duty expressly fixed by statute (including any necessary change in classification) as it finds shown by the investigation to be necessary to equalize such differences. In no case shall the total increase or decrease of such rates of duty exceed 50 per centum of the rates expressly fixed by statute.

(b) CHANGE TO AMERICAN SELLING PRICE.-If the commission finds upon any such investigation that such differences cannot be equalized by proceeding as hereinbefore provided, it shall so state in its report to the President and shall specify therein such ad valorem rates of duty based upon the American selling price (as defined in section 402 (g)) of the domestic article, as it finds shown by the investigation to be necessary to equalize such differences. In no case shall the total decrease of such rates of duty exceed 50 per centum of the rates expressly fixed by statute, and no such rate shall be increased.

(c) PROCLAMATION BY THE PRESIDENT.--- The President shall by proclamatior approve the rates of duty and changes in classification and in basis of the value specified in any report of the commission under this section, if in his judgment such rates of duty and changes are shown by such investigation of the commission to be necessary to equalize such differences in costs of production.

(d) EFFECTIVE DATE OF RATES AND CHANGES.--Commencing thirty days afte the date of any presidential proclamation of approval the increased or decease rates of duty and changes in classification or in basis of value specified in th report of the commission shall take effect.

(e) AscERTAINMENT OF DIFFERENCES IN COSTS OF PRODUCTION.-In ascertain ing under this section the differences in costs of production, the commission shal take into consideration, in so far as it finds it practicable:

(1) IN THE CASE OF A DOMESTIC ARTICLE.-(A) The cost of production a hereinafter in this section defined; (B) transportation costs and other cost incident to delivery to the principal market or markets of the United State for the article; and (C) other relevant factors that constitute an advantag or disadvantage in competition.

(2) IN THE CASE OF A FOREIGN ARTICLE.--(A) The cost of production & hereinafter in this section defined, or, if the commission finds that such cor is not readily ascertainable, the commission may accept as evidence thereo or as supplemental thereto, the weighted average of the invoice prices values for a representative period and/or the average wholesale selling pric for a representative period (which price shall be that at which the article freely offered for sale to all purchasers in the principal market or markets i the principal competing country or countries in the ordinary course of trad and in the usual wholesale quantities in such market or markets); (B) tran portation costs and other costs incident to delivery to the principal mark or markets of the United States for the article; (C) other relevant facto that constitute an advantage or disadvantage in competition, including al vantages granted to the foreign producers by a government, person, partne ship, corporation, or association in a foreign country. * * *

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