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Senator MALONE. Because he was the first man ever to appear before the Interior and Insular Affairs Committee that had broken through that sound barrier at the White House and gotten them to admit that either a fixed price of subsidy above the world price to make the difference in the cost of production here and in the competitive nations, or a tariff to make that difference, was necessary. What it does is to deliberately divide the market with foreign nations by only subsidizing up to a certain percentage of the American market.

Ņou are familiar with the general plan; are you not?
Secretary DULLES. Yes.
Senator MALONE. Was it discussed in the Cabinet?
Secretary DULLES. Yes.

Senator MALONE. Then you know what I am talking about. Then you do believe that what we should do, the reason for the extension of this act is that the President then has the right to divide the American market with certain foreign nations in order to further the foreign policy which you mentioned awhile ago.

Secretary Dulles. He has the right to adopt policies which would permit the participation by foreign producers in our markets, yes.

Senator MALONE. To any percentage that he thought was necessary or advisable to round out his foreign policy.

Secretary DULLES. I am not quite clear about your question. Is it that the President arrives at some formula which says that the foreigners can have a certain percentage of the market?

Senator MALONE. No, that is not it. I will ask it again because I want to be very fair with you and I know you do with me.

You were a good witness when you were here before. You will remember you were here on the OTC and you were here on this Trade Agreements Act 3 years ago. I have no fault to find at all. We disagree but that is a right which we want to preserve in America.

All I want to do is have the record show what you want to do, to which I know you do not object.

That is right; is it not?
Secretary DULLES. That is correct.

Senator MALONE. Because I quote some of the testimony, and I have people say, "Well, he never said that."

I have my own people in Nevada. We have people west of the Mississippi River and we have other people on the Pacific coast whose interests seem to vary, which the framers of the Constitution knew about in advance, and which, of course, we hope always obtains.

When we finally vote in the Senate and the House of Representatives and the President signs whatever we pass, that is the law, is it not?

Secretary DULLES. Yes.
Senator MALONE. That is the policy of the United States.
Secretary DULLES. That is correct.

Senator MALONE. I know at one time when everybody was saying what the policy of the United States was going to be, I think the President was saying what it was going to be and several Congressmen and Senators were announcing what it was going to be, out in Nevada they asked me, and I said, “will tell you what it is going to be. It is going to be made by what Congress passes after it has had full debate and the President signs. That is what it is going to be." And that is it, isn't it? That is the policy of the United States.

Secretary DULLES. Whenever there is a law which the Congress passes and the President signs

Senator MALONE. That is it, isn't it?

Secretary DULLES. It becomes to that extent the policy of the United States.

Senator MALONE. Then the Constitution never said that the Congress should direct the President or the President should direct the Congress. It gave him a little authority so that he could veto it and cause us to vote again and maybe fail, but it never said he should come up here and force legislation through, did it? The Constitution does not say that.

Secretary DULLES. I do not think there is any such provision in the Constitution.

Senator MALONE. I do not think there is either, but there has been the greatest lobbying job and the greatest propaganda job on this bill in the history of the world so far as I know, and I think we have outdone Russia.

Secretary DULLES. Are you referring to the activities of industry? Senator MALONE. I am referring to the activities of the administration and the newspapers on the Atlantic coast.

Secretary DULLES. I thought you were referring to the activities of industry. Senator MALONE. Industry has to enter into it. Secretary DULLES. That is correct. Senator MALONE. And they do. Secretary DULLES. And it is entirely legitimate. Senator MALONE. That is right. Secretary DULLES. I am not raising any question about it. Senator MALONE. I am not, either.

Secretary DULLES. About people expressing their views on either side of this question. Senator MALONE. Neither am I.

Secretary DULLES. I got the impression from you that you thought you could only express views on one side. Senator MALONE. Oh no.

Secretary DULLES. And that views on the other side were reprehensible.

Senator MALONE. Mr. Secretary, you never did get that impression from me if you listened.

Secretary DULLES. I did, sir. Senator MALONE. What did I say? Secretary DULLES. You said that there was being done an extreme I forget your precise words. Senator MALONE. The greatest propaganda. Secretary DULLES. Lobbying propaganda job done and certainly the way in which you spoke of it indicated to me at least that you regarded that as something that was improper.

Senator MALONE. I do not think it is improper for you to send your people down and for the White House to call every Congressman and Senator on a certain thing.

No, I do not think that is improper. I think maybe it is going a little far afield. But these people up here, the industries register as lobbyists when they come in.

Secretary DULLES. If they are paid lobbyists; yes.

Senator MALONE. That is right.
Secretary DULLES. But if people
Senator MALONE. Already on the payroll, I think that is all right.

Secretary DULLES. You would not want to say and I would not want to say, Senator, that nobody is entitled to express their views unless they are paid to do it, would you?

Senator MALONE. Well, you are already paid to do it, and you are doing a very good job.

Secretary Dulles. I am not paid to do lobby work and I do not do it.

Senator MALONE. There are plenty of people in your Department that do. Do you know about it? If you do not, I'll get 2 or 3 cases, but I do not think it is improper, I think you can send anybody down here to the Halls of Congress and you are doing it.

Secretary DULLES. I am delighted that you feel that way.

Senator MALONE. Why of course, and you are doing it, aren't you? So the fact that you do not come down, you might attract too much attention.

Secretary DULLES. I am here, I am here.

Senator MALONE. No, no, I am talking about walking the Halls of Congress here. People do it. You would attract too much attention. That is all right, but I do say that it is the greatest propaganda job when you have got Eric Johnston here with his great propaganda machine. I did offer a resolution that he register as a lobbyist and tell us where he was getting the money.

Everybody else does it, and I think it would have been a good idea and we may yet get him before a committee if it keeps up.

But let's get back to this. What was the policy of the United States Government, the Congress of the United States, in foreign trade from the inception and adoption of the Constitution until 1934 in the fixing of tariffs that the Constitution called duties, and which in article I, section 8, fixes the constitutional responsibility of Congress to do the job? What was the policy of the country in regard to foreign trade until 1934?

Secretary DULLES. Prior to 1934?
Senator MALONE. Until 1934.

Secretary DULLES. Generally speaking, the tariffs were fixed by direct congressional action, not by limited delegation.

Senator MALONE. Well, on what policy? Was it fixed in order to bring in imports or fixed to equalize the difference in cost, generally speaking? What was the objective?

Secretary DULLES. I do not think you can give a single characterization to 150 years or more. It altered throughout that period.

Certainly during the early formative years when we were building up our industry, our tariff was very largely a protective tariff.

Senator MALONE. Well, were we still building up infant industries in 1930 when we passed the 1930 Tariff Act? I was not here when Congress passed a 1930 Tariff Act, but I have already put into the record the instructions that Congress gave its agent-the Tariff Ccmmission is its agent, isn't it?

Secretary DULLES. It is its creature; yes. It has created it.

Senator MALONE. Creature has a kind of a peculiar twang to it. I think that is about what they are now, they are creatures. I agree with you. But I would like to see it restored to something above a creature. And if we do not extend this Trade Agreements Act, the regulation of the tariff, does revert to the creatures, doesn't it? The adjustment of the tariffs for imports reverts to the body referred to as a creature.

Secretary DULLES. The Tariff Commission continues whether or not you renew the act.

Senator MALONE. No, the Tariff Commission is just as helpless as a baby now. I think you will agree with that, under the 1934 Trade Agreements Act. Secretary DULLES. No, sir, I do not agree with that.

Senator MALONE. How can they do anything or have anything adopted? What assurance have they that they are going to have anything adopted that they recommend?

Secretary DULLES. Well, they have a very heavy responsibility in fixing the peril point and indeed a decisive voice in that respect.

Never, as far as I know, has a finding of the Tariff Commission of a peril point been avoided.

Senator MALONE. But they have no authority to adjust that peril point when conditions change, do they?

Secretary DULLES. They then have authority if the escape clause is invoked to make their recommendations, which carry great weight.

Senator MALONE. And what happens to their recommendations?
Secretary DULLES. What happens to them?
Senator MALONE. Yes.

Secretary DULLES. Sometimes they are followed, sometimes they are not.

Senator Malone. Mostly not, isn't it? You have a very smart fellow sitting there behind you

Secretary DULLES. I do not know exactly what the figures are. I am sure they are on the record here. I do not recall. I think probably in a majority of cases they have not been followed, but I

Senator MALONE. I think you are right. That is good enough. Secretary DULLES. I am not certain. I think it is fairly close. Senator MALONE. No one really escapes except some semi-important industry, very important to the locality, but very small in the whole picture. That was outlined here yesterday, I think only a little over $100,000 worth of stuff was ever considered. You let the clothespins semiescape, as Mr. Flanders outlined. They did not escape but you opened a crack so they could see daylight. They are still going out of business.

But my question was does, the Tariff Commission now have no absolute authority or no reason to suppose that what they recommend is going to be taken, and they cannot take action on their own to recommend a tariff like they could under the 1930 Tariff Act or previously? That is true, isn't it?

Secretary DULLES. Yes.
Senator MALONE. That is better.
Now do you know what the Tariff Act of 1930 provides?
Secretary DULLES. 1930?
Senator MALONE. Yes.
Secretary DULLES. No.

Senator MALONE. I should think you your business you ought to know that, and I am going to recommend that you read the cross examination of Mr. Weeks.

I am not going into it all with you but I am going to tell you what it says, subject to the technical correction of the language, and that is that the Tariff Commission on their own motion, on invitation by Congress, the President, a producer or a consumer may consider any product at any time, and determine if the existing tariff makes up that difference in the cost of production here and in the chief competing country, not high or low cost in either case, but a reasonable cost, of producing an article here and that article or a like article in the chief competing foreign nation—that is what it says.

I want you to listen. Just tell me when you want to slack up a little bit. The Tariff Commission recommends that difference to be the tariff and that is the tariff. No one but Congress can veto it. That was the law and it was a flexible act so that the next day or the next month or 6 months or 6 years with the manipulation of money of a foreign nation or in any way manipulated to evade that duty, then they could take it up again.

Did you know that?

Secretary DULLES. I am not personally familiar with the act of 1930, but I do not in any way question your statement.

Senator MALONE. That is what it provides. Now then, under that act any American, he may be just getting out of school, maybe he had been in a business he didn't like or he saved a little money and had ambition, if he could find any place in America where he could compete with other Americans on any product, subject to the Tariff Commissions actions, that had been produced commercially, or whether it had or not, if he could borrow enough money or sell enough stock or get enough friends to put in money and either establish a manufacturing plant, a processing plant, a mine, or anything, if his judgment was good and he could compete with other Americans, then he was in business. Now under the 1934 act he has to know what the President is likely to do, what Geneva might do, and he cannot be safe unless he can compete with any nation in the world, regardless of their wages or conditions. He could not be safe in putting his money in that business, could he?

Secretary Dulles. Well, I think he can be safe, and the fact is that since the 1934 act has passed, millions and millions of Americans have put billions and billions of dollars into new industries that have been safe and our country and our economy is infinitely stronger than it was in 1930.

Senator MALONE. I will go with you up to that last statement. I think you are riding on a war economy and you are in the shakiesti position this country has been in since the Constitution of the United States was written. But that is a matter of your opinion and my opinion. But the other part of it, most of the money now, $50 billion of private capital, has gone abroad to the cheap labor nations; you know that, don't you, to build American plants with the best machinery in the world. And we would want them of course to do that and I do not blame these people. I blame a Congress that makes this profitable to compete with the people who are now going out of business in America.

And you do know many of them are going out of business, don't you?

Secretary DULLES. Many are going out of business, many are coming into business.

Senator MALONE. That is right.

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