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pay freight all the way over and all the way back, so there is not enough margin to pay the same wage in Memphis after paying all the freight, I don't think.
Senator Long. My question is, do you think you would feel the same way about that matter if everything you had was invested in the cotton textile business?
Mr. SPARBOE. I can't prove it; but, yes, sir, absolutely as a purist, a foreign trader, I would have to feel that way or I should not be sitting here talking the way I am doing.
Senator Long. You feel those people should get into some other business?
Mr. SPARBOE. I would say this: Get as efficient as possible because I know this in my own business, we lose markets that we can do nothing about, but if in spite of everything we can conceivably do others can do cheaper or better, under given circumstances we succumb to that. Or we would not believe in a competitive system.
Senator LONG. Would you qualify your views on free trade when it came to a point at which the production of any given commodity was necessary for defense requirements ?
Mr. SPARBOE. Oh, yes. Security seems to me superimposed on anything because without that it does not make much difference whether we have got the inflation Senator Flanders worries about, or what you worry about or I do.
Senator Long. You do recognize the need of maintaining the production of any commodity that would be necessary in the event of war?
Mr. SPARBOE. I would hope the people would have the capacity to do it or else a degree of accommodation to sacrifice.
But there would be some sacrifice involved.
Senator CARLSON. Mr. Chairman, Senator Flanders raised such an interesting question with regard to inflation on our trade and with the future increasing the inflationary trend in this Nation and among the nations of the world that I sent out and got the last evening's Washington Star which contains on the financial page an article entitled “Your Money's Worth” by this great financial writer, Sylvia Porter, and it is an interesting thing and I am going to have it placed in the record, but I think it is interesting to note in view of the discussion this morning that—and I quote:
In terms of strength, the American dollar stands fourth on the list of the world's currencies.
Our money has lost purchasing power at an annual rate of 2.2 percent in the past 10 years. That seemingly modest 2.2-percent yearly rate of depreciation, compounded, means that the 100 cents earned in 1947 buys only 80 cents of goods and services today. What countries have done better than us?
Switzerland has chalked up the best record of all-with an annual rate of decline in the purchasing power of her franc of 1.2 percent. Germany and Venezuela come in second and third with an annual rate of loss in each currency of 1.5 percent.
In other words, we are fourth among this group of nations which was most interesting. It was an interesting discussion.
Then it goes into the other countries.
· I believe it was mentioned here I am not going to read all of them—United Kingdom has lost 4710 percent; meaning that a hundred cents of money earned in 1947 buys 62 cents worth of goods. France is down to 6.2; Argentina to 16.5 percent.
Mr. Chairman, I ask unanimous consent that this article may be placed in the record, because it was an interesting topic and one that I think has much bearing on the future of not only our trade but I was pleased to note that despite the fact we complain greatly about inflation we are still fourth among the nations of the world in this field. Senator FREAR. Without objection, it will be placed in the record. (The article in full is as follows:)
YOUR MONEY'S WORTH
By Sylvia Porter
In terms of strength, the American dollar stands fourth on the list of the world's currencies.
Our money has lost purchasing power at an annual rate of 2.2 percent in the past 10 years. That seemingly modest 2.2 percent yearly rate of depreciation, compounded, means that the 100 cents earned in 1947 buys only 80 cents of goods and services today.
What countries have done better than us?
Switzerland has chalked up the best record of all—with an annual rate of decline in the purchasing power of her franc of 1.2 percent. Germany and Venezuela come in second and third with an annual rate of loss in each currency of 1.5 percent.
Then, after us, come the currencies of the rest of the nations of the free world, and as you go down the list the percentage losses in their purchasing power year after year begin to mount at a steep pace.
We have not been alone. The depreciation in the buying power of paper currencies in the last 10 years has been global.
Not 1 of the currencies of 24 nations studied by the First National City Bank of New York has gained in value in this period.
Here is a record of some of the currencies which underlines the trend. In each case, the depreciation of the money is measured by the rise in the country's official cost of living or consumer price index.
Italy: An annual rate of loss of 3 percent-meaning 100 cents earned in Italy in 1947 now buys 74 cents of goods and services.
Canada : An annual rate of loss of 312 percent-meaning 100 cents earned in 1947 buys 70 cents of goods there today.
Sweden: An annual rate of loss of 4.2 percent-meaning 100 cents of 1947 buys 65 cents of Swedish goods now.
United Kingdom: An annual rate of loss of 4.7 percent-meaning the 100 cents of money earned in 1947 buys 62 cents of British goods today.
France: An annual rate of loss of 6.2 percent-meaning the 100-cent franc of 1947 has a 56-cent value in the marketplace now.
Argentina: An annual rate of loss of 164 percent-meaning the 100 cents of 1947 pesos is worth 16 cents today.
And Chile: An annual rate of depreciation of 2542 percent-meaning the 100cent peso of 1947 is now worth only a nickel.
Stacked against this record, the American dollar's depreciation doesn't look so awful. Anyway, we're still in the first five. (Provocatively enough, India is in fifth place with a yearly depreciation only slightly worse than ours-2.3 percent.)
But the warnings of this report cannot be ignored.
For while there is no certainty that “what's past is prologue" in currency history, the odds are staggeringly against real stabilization of the dollar's value in the next 10 years. Massive forces are built into our economy which will be working toward higher prices over the long term ; it's not very probable that the dollar you are saving in June 1958 will buy as much overall in June 1968.
Senator CARLSON. I just want to say I appreciate very much your statement this morning representing this great Midwest section as you do. I am sure you realize and I do, too, the value of this program to not only industry but agriculture as a whole and I could get into that in great detail but I am not going to take the time.
I just thank you. Mr. SPARBOE. Mr. Chairman, I should remind the good Senator from Louisiana, Senator Long, that we, as the United States Chamber of Commerce, strongly support all escape clauses and peril-point procedures which would undertake to deal with the problem that you posed, including defense essentiality.
The Chamber of Commerce of the United States is not for free trade or anything of the sort. The are for the beneficial expansion of trade.
Senator Long. I think your statement was very consistent, Mr. Sparboe.
Mr. SPARBOE. Thank you, sir.
Senator Long. I take it there would be some of the agricultural leaders who would not agree with you but you were not speaking for them today.
Mr. SPARBOE. We were not talking about them today.
Senator Carlson is for agriculture and I don't think we are very far apart.
Senator Long. Thank you. Senator FREAR. Thank you. Mr. Philip Cortney, of the United States Council of the International Chamber of Commerce, Inc. Mr. CORTNEY?
You may proceed, sir. STATEMENT OF PHILIP CORTNEY, UNITED STATES COUNCIL OF
THE INTERNATIONAL CHAMBER OF COMMERCE, INC. Mr. CORTNEY. Mr. Chairman, and members of the committee, my name is Philip Cortney. I am appearing here today as chairman of the United States Council of the International Chamber of Commerce to testify in support of the bill, H. R. 12591, to extend the Trade Agreements Act. In business life I am the president of Coty, Inc.
The United States council is a private business organization whose membership includes firms and organizations in all fields of American business. The council has long taken an active interest in the question of international trade and has published a number of authoritative studies on various aspects of this question.
The United States council believes that the enactment of the Trade Agreements Extension Act of 1958 as passed by the House is in the national interest, even though it falls short of what the national interest requires.
The case for a liberal foreign trade policy has been presented and documented in detail by other witnesses. I shall therefore take only a few minutes of the committee's time to try to present the case in broader perspective.
The basic facts which would shape American trade policy, if we carefully consulted our own interest, are as follows:
The economy of the United States is heavily dependent on the rest of the world and is steadily becoming more so with the increasing demands of a growing population and with the depletion of our own resources.
Our prosperity has come to depend, and will increasingly depend, on our trade with the rest of the world. Our policy should therefore seek to facilitate international trade.
Our involvement in the world economy is a necessity; a fact and not a theory. This was true in 1934. It is vastly more true today. It was true in 1930 when we overlooked this fact and tried to use trade restriction to cure a depression. It had the opposite effect then. It would be even more certain to have the opposite effect now.
The rest of the world is heavily dependent on us. This is a second basic fact to be taken into account in considering our trade policy. The rest of the world is heavily dependent on us as a supplier, as a market, and as a source of capital.
Other nations watch the ups and downs of American business activity with a concern equal to our own. They also watch our trade policy and are necessarily influenced by it in shaping their own polices.
If our market is restricted they also must fall back on restricted national or regional, markets. If this occurs our access to the mar. kets and resources of the world is correspondingly restricted.
In order to document this last point the United States council conducted a survey last fall among the businessmen associated with the international chamber in other countries. These men are staunch advocates of the free-enterprise system and they are among our best foreign friends.
They are also important customers of, and suppliers to, this nation. I would like to submit for the record as part of this statement a copy of the summary which we made of their replies.
Senator FREAR. Yes, we have that, and it will be made a part of the record.
(The information is as follows:)
As OTHERS SEE Us
INTRODUCTION The issues involved in the renewal of the Trade Agreements Act in 1958 are different in many ways from those in previous renewals. Most notable are the following. The need for cooperation among free nations has been greatly increased by the growing economic and military power of the Soviet bloc. The Common Market in Western Europe will create an economic force in the free world with a power comparable to our own. Many more Americans are dependent for their livelihood on foreign trade than ever before in modern times. United States requirements for foreign raw materials are steadily increasing.
Each of these new factors means that the United States in its own self-interest must give more attention to the views of other friendly nations than before. In the field of trade policy this is particularly so. By its very nature trade between nations depends on international agreement as to the conditions for carrying on that trade. The United States can regulate the movement of goods in and out of this country, but the United States Congress cannot dictate the terms on which other countries will permit our goods to enter their territories or the terms on which they will sell goods to us.
It should hardly need to be pointed out that trade between nations has a powerful influence on their political relations. Any country will be likely to strive for friendly relations with the nations which are important customers or suppliers. Conversely if a country restricts the sales of another country this will be a cause of irritation between the two.
The United States council felt that it would be valuable to obtain from the business groups in other friendly countries, similarly associated in the International Chamber of Commerce, their honest appraisal of United States trade policy. These views are summarized here for the added light they shed on the current discussion of United States foreign trade policy.
National committees in 17 other countries, including 8 of our major trading partners, have given us their comments. Together these 17 countries bought half our exports in 1957. The responding national committees include those in highly developed countries as well as those which are less industrialized. Replies from Europe, North America, and Asia were received.
THE POWER AND RESPONSIBILITY OF THE UNITED STATES
The very central position played by the United States in the world was emphasized by many of the other national groups in the ICC. Many noted explicitly that the weight of the United States was such that its policies inevitably would exercise a strong influence on the economic welfare and trade policies of the entire free world.
The Canadian Council of the ICC states, “As the most important creditor nation of modern times, the United States has both responsibility and opportunity.”
The German national committee of the ICC had this to say: "The burden of responsibility upon the Government of the United States of America is particularly heavy since * * * most countries of the Western World regard their [the United States) attitude in matters relating to economic policy as setting the lead. The economic well-being of the free world is closely linked with the decisions on commercial policy taken by the United States of America."
The Indian national committee made the same point in this way:
"In modern times, no nation can afford to live in isolation and the policies of governments have a vital influence not only on international trade, but also on economic and commercial relations generally. By virtue of the important position which your country occupies, politically and economically, in the comity of nations, your government's policies have more than ordinary significance."
Many other national committees commented in a similar vein. For example, the Japanese committee pointed out, “It is the belief of the Japanese national committee that there can be no solution other than the United States, in its position of world economic leadership, to promote the conditions necessary for freer and expanded world trade." The British national committee spoke of the United States as "the greatest creditor country in the world."
The great economic power of the United States often makes it hard for this country to appreciate the extent to which its actions affect other countries. The Canadian Council in its comments brought this point out clearly as follows:
"Exceptions to general policy, which may have appeared of minor import to the United States Government, have often had a major impact on the economies of the countries affected. Canada's total trade (exports plus imports), with the United States, for instance, equals 22 percent of Canada's gross national product, but only 2 percent of the American gross national product. It is quite clear, therefore, that the trade between the two countries is much more important to Canada than to the United States. Nevertheless, Canada is by far the United States' best customer and there is grave doubt in the minds of Canadians that this is recognized by the United States people or by their representatives in the Congress. Each Canadian spends over $15 on American goods for every dollar spent by an American on Canadian goods."
The critical importance of United States trade policy to other friendly nations impels them to keep well informed about developments in this country. The scope and detail of knowledge abroad about the evolution of United States com mercial policy stands out in most of the replies received. Many national committee's showed that they had an extensive knowledge of the nature of United States legislation and the actions taken pursuant to this legislation. Many were thoroughly familiar with the recommendations contained in the major reviews of United States commercial policy which have been conducted in recent years.
1 Replies were received from the national committees listed below (the first eight of these are major trading partners) : Belgium, Canada, Germany, India, Italy, Japan, Netherlands, United Kingdom, Australia, Austria, Belgian Congo, Cambodia, Morocco, Portugal, Spain. Turkey, and Yugoslavia.
ndia, Italy, Japan, Netherlands