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(The tables referred to are as follows:)
United States production of movable goods, proportion exported, and foreign aid,
selected years 1909-57
1 Covers changes in both long- and short-term claims of the U. S. Government on foreign countries.
2 Not available. (Prior to 1940, estimates of production of movable goods have been prepared only for years covered by a Census of Manufactures.)
3 Not available. (See note 2.) 4 Less than $50,000.
5 Military aid shipments under the war and postwar lend-lease and Greek Turkish aid programs are included in col. 5.
6 Excluding United States subscriptions of $323 million in 1946 and $3,062 million in 1947 to capital of International Bank and Monetary Fund.
Prepared from basic data of the Department of Commerce, June 1958.
The above chart was prepared in an effort to obtain an accurate picture of what portion of our movable goods is being shipped abroad through the normal processes of international trade and without the benefit of subsidies, grants, gifts, and credits extended to the countries receiving American products at the expense of the American taxpayer. This objective has not been completely accomplished, nor, in the absence of any Government central authority collecting and collating the contributions, loans, barter deals, special donations and exchanges of goods for foreign currencies made to or with foreign countries by our numerous and various Government agencies at the expense of the American taxpayer, does it appear that a true picture can be given.
For example, exports of farm products under the barter program authorized in title III of Public Law 480 are included in column 2, showing total exports, but nowhere appear in column 5 or 6 listing, respectively, grants other than military aid and Government loans. In 1957 more than $400 million worth of farm products were exported under the barter program. In 1956 barter "sales" totaled $299 million and the year previously $125 million.
In 1957, according to Department of Agriculture statistics, $1,279 million in farm products were exchanged for foreign currencies, and the year previously $783 million. Foreign currency sales are presumedly included in column 6 of the Department of Commerce table, but the totals in that table for the years 1957 and 1956 are only $961 million and $626 million, respectively.
Of the $4.7 billion in agricultural exports last year, $1.9 billion moved under Government-financed programs other than CCC credit sales, or in other words were not sold for dollars. Dollar exports totaled $2.8 billion, but of this $1.1 billion involved subsidies in which the producer was reimbursed by the Government under the CCC program and the product then made available for export through commercial channels at world prices considerably below the domestic price. These sales, however meritorious the program may be from the standpoint of reducing the agricultural surplus, cannot be considered normal transactions in our commercial foreign trade. Yet the full amount is included in the export total, and nowhere reflected in column 5, 6, or 7.
Each of these taxpayer-financed programs, if accurate figures could be obtained, would reduce the total value of exports actually sold abroad under conditions of normal commercial trade, and the percentages of our movable goods which are exported through normal commercial channels within the classical concept of international trade.
The showing that $20,630 million of American products, military or otherwise, were exported during 1957 presents a distorted picture, not only of our foreign trade but also of our economy. Thus, if half of our movable product were shipped abroad as a gift, or bartered for foreign goods we did not want or need, or exchanged for foreign currencies we cannot use, the administration could boast that our exports had increased to more than $100 billion and that were now exporting 50 percent of our entire movable product. This would not reflect, however, any increased prosperity for the United States; it would reflect disastrous losses to our economy.
The 1934 Trade Agreements Act has not increased the proportion of our national product sold abroad for dollars; it has decreased that proportion. Yet the 1934 act was sold to Congress and the public partially on the claim that it would increase the share of our national production exported to foreign countries. To even attempt to move a comparable share of our national product into foreign countries, it has been necessary since World War II, to give or loan $75 billion to those countries, thus paying for the goods they buy with our own dollars, and to further create devious programs designed to permit them to buy our goods with worthless foreign currencies or to "pay" for them with their own products of which they have a surplus or to which they attach none or little value.
As may be seen from the chart above, incomplete as it is, from $3.4 billion to $5.8 billion of our export trade each year since the end of World War II has been fictitious from any commercial standpoint and actually financed in its entirety by the American taxpayer.
Secretary WEEKS. May I inquire what those tables are, Senator? Senator MALONE. I want you to examine this table.
Secretary WEEKS. These tables were furnished to you by the Department?
Senator MALONE. Your Department furnished some of the information. However, it is so difficult to get any information from your Department on this subject that we have to dig it out the hard way.
I am going to make a statement to you that is contrary to all the propaganda spread over the United States by your Department and the State Department. I have never seen so much propaganda of it on anything. The Atlantic seaboard papers have an editorial at least three times a week on it.
If you subtract the money we give foreign nations and we have given them $70 billion since World War II, we have underwritten private investments in foreign countries against certain losses, and so on, the Import-Export Bank is loaning money at a very low rate of interest to these nations to build plants to compete with us. You and I can continue to study the foreign expense and with a little more promptness on the part of your Department we could come to a conclusion.
When you subtract all these giveaway items, cash and subsidies you arrive at an amount of profitable foreign trade even less percentage of our exportable goods that this Nation enjoyed in 1934 when the act was first passed. In this committee (the two committees of which I am a member cover a pretty wide field, I am the ranking Republican member of the Interior and Insular Affairs Committee and No. 4 on this side of table here), there was much talk about the sugar bill yesterday. I think the sugar bill has worked very well, The Congress of the United States can examine any product they care to giving it special consideration, could they not?
Secretary WEEKS. Yes, sir.
Senator MALONE. And in this division or allocation of the production of sugar to foreign nations for import, after we allocate the amount of cane sugar and the amount of beet sugar to the people of the United States and the amount of cane sugar to Hawaii and Puerto Rico, then to the Philippines, the foreign nations including Cuba and Peru, are allocated the remainder of our consumption.
We consume more sugar than we produce in the United States. The State Department was adamant that we retain for Cuba the 93.5 percent of the quota allotted to foreign countries, that Cuba produce the sugar and sell to us.
I have been in Peru as well as all of the nations of the Western Hemisphere. I knew that 1 percent would mean a lot, say, to Peru, but the State Department remained adamant that the amount allocated to Cuba be not reduced. And I asked, “Why?”
They said, “Because Cuba buys our wheat.”
I said, “Now that is very interesting. What price do they pay for the wheat, our American support price or the world price?" There was a little hesitation and they said, “The world price.”
Then I said, “Now, that is very interesting. What do we pay them for their sugar, our American support price or the world price where they sell the remainder of their sugar and make considerable
There was more hesitation and then they said, "We pay the support
And then and there, Mr. Secretary, I computed the difference it is in the record, every 100 pounds of wheat we sell to Cuba costs the taxpayers of America $1.35—and you call it foreign trade.
If all such items are subtracted, you get the figures in this table and you come right back to the 5 to 772 percent profitable foreign trade, percent exported of our exportable goods that you had in 1934 when you passed the act. Did you know that?
Secretary WEEKS. I think there are two sides to that question.
Senator MALONE. I know there are two sides, and I have heard your side, where you call everything that you pay to export foreign trade. If you want to go into it again, go right ahead.
I have read your side in every paper east of the Alleghenies. Out west of the Mississippi sometimes they publish it with amazement. I say to you, Mr. Secretary, if you had had this law so-called reciprocal trade law 50 years ago, there would be nothing west of the Mississippi and not very much east of the Potomac and the Hudson Rivers. There is nothing that can survive there under this act. And if you can just name some industry that can survive without a subsidy, I will be very thankful to you, because many of my people would like to find a new business that can survive in competition against the low-wage foreign competitor.
Secretary WEEKS. Are you talking about raw materials or agricultural products?
Senator MALONE. I am talking about everything. You cannot even make monkey wrenches in this country in competition with American machinery in $2-a-day labor countries.
Secretary WEEKS. We are doing very well in our trade in manufactured products. I do not see how you can go behind those figures.
Senator MALONE. I do go behind them because your figures do not take into account the billions of dollars of subsidies with which you are buying your foreign trade.
Secretary WEEKS. We have figured every dollar.
(The Secretary of Commerce subsequently forwarded to the committee for insertion in the record the following information on a point raised by Senator Malone:) United States total exports, finished manufactures exports, and Government grant-aid
to foreign countries, 1951-57
It is both statistically and theoretically impossible to allocate United States foreign-aid expenditures (mary of them in lump-cash sums) unequivocally to specific classes of United States exports. The problem is analogous to that of a man who gets part of his income from a salary and part from dividends, and who is asked to specify how many of his lunches during a year he bought out of his salary and how many out of his dividend income. He can answer the question only on an arbitrary view as to which source of income he used for particular outlays. Similarly, the amounts of United States exports of manufactured goods which were financed from foreign aid funds can be specified only on an arbitrary view as to particular foreign uses of dollar receipts from various sources, including aid.
The residual export figures shown in lines 7 and 9, above, may be viewed as absolute minimum estimates of'unaided" exports of finished manufactures on the arbitrarily extreme assumption that all net grants to foreign countries were spent for such goods. This assumption, of course, seriously exaggerates the value of exports of finished manufactures financed through foreign aid, since sizable proportions of the grants were in fact used for other types of merchandise, such as agricultural products, or for services, such as ocean freight. Moreover, substantial amounts of aid have been authorized for expenditure by the recipients in other foreign countries, which may have used the funds for debt retirement or dollar asset accumulation, as well as for [rocurement of United States goods or services, but where these dollars were unidentifiably merged with those obtained from other sources,
Since the deduction based on all net grants is seriously overstated in application to exports of manufactured goods alone, net Government loans to foreign countries which in any event have consisted during the past few years primarily of foreign currency claims accumulated specifically through disposal of surplus agricultural commodities-are omitted from these calculations.
Relationship between above tabulation and preceding table, inserted in the record by Senator Malone, entitled United States Production of Movable Goods, Proportion Exported, and Foreign Aid, Selected Years, 1909-57°: With regard to the United States export and foreign-aid statistics, these 2 tabulations are based upon essentially the same approach and in large measure upon the same basic data. The difference is simply that one deals with total United States exports, while the other focuses upon exports of finished man. ufactures alone.
More specifically, the data listed in lines 1, 4, and 6, above, are identical with those shown for correspondng years in cols. 2, 4, and 5, respectively, of the preceding table; and the residual figures in line 7, above constitute a component of the residual totals for corresponding years in col. 8 of the other table,
Senator MALONE. I do not want to spend too much time on this. I will ask you first if in your negotiations for a bilateral or a multilateral trade agreement, whether or not the Tariff Commission is asked to determine what the so-called peril point might be. Then if the President of the United States can trade a part or all of any industry if he believes that it will further his foreign policy regardless of any peril point recommendation by the Tariff Commission.
Secretary WEEKS. You mean regardless of the peril-point recommendation?
Senator MALONE. Yes.
Senator MALONE. I beg leave to differ with you. Of course it is! well known that he has not recognized the recommendations of the Commission whenever he wanted to trade a part of the industry for his foreign policy.
Secretary WEEKS. The peril point established by the Tariff Commission has never been penetrated since we have had the peril-point procedure, with one possible exception of a technical nature,
Senator MALONE. What is that?
Secretary WEEKS. It happened in the fall of 1953, Venezuela petroleum.
Senator MALONE. I have some news for you then. You have your lead and zinc case pending now.
The Tariff Commission has made a recommendation. You have not taken cognizance of it.
Secretary WEEKS. For the good and sufficient reason that the President wants to see if Congress takes any action on the proposals he has made for stabilization.
Senator MalONE. You are not here telling me that every time the Tariff Commission has figured these peril points, that the President has always conformed to them. Are you telling me this?
Secretary WEEKS. I say the peril point has not been penetrated by the present occupant of the White House, not once, and if it was penetrated in the case of Venezuelan petroleum it was by the previous occupant of the White House.
Senator MALONE. I am going to talk to you next about the peril point. That is the greatest boax ever sold to an unsuspecting public. Let me ask you this question now so we will save time. If he wants to do it, he can make any trade agreement he cares to make, if he thinks it will further his foreign policy, can he not?
Secretary WEEKS. Within the limits set down by the statute.
Senator MALONE. That is right, and he does not need to consult Congress or the Tariff Commission or anybody else.
Secretary WEEKS. So long as he conforms to the rules and regulations and the statute.
Senator MALONE. That is right, and that means first within 50 percent and then another 50 percent, and now it is an additional 15 percent at 5 percent a year, and you are currently asking for a 25 percent further reduction, and that would be within the limits, would it not?
Secretary WEEKS. Yes, sir.
Senator MALONE. And he could do that regardless, could he not, without consulting anybody, except his own Cabinet?