and I also have an American watch that was given to me by my father, an old silver watch that I used in the Philippines in 1898 and it is still operating in fine shape.

Mr. PARTRIDGE. They make good watches, but they do not do so good a job as the Swiss. If you ask a jeweler to show you the best watch they have in stock, it will be Swiss.

Senator MARTIN. You have a jewelry business?

Mr. PARTRIDGE. Yes.

Senator MARTIN. Is it not also true that the man who operates a retail jewelry store can make about $16 more on the Swiss watch than he can on the American-made watch?

Mr. PARTRIDGE. He can make more money on the Swiss watch, yes; and many would rather sell that.

Senator MARTIN. He pushes it for that reason. That is human

nature.

Mr. PARTRIDGE. I think some of them do.

Senator MARTIN. When you get back to the real difference, I think our workmen are just as skilled as those of Switzerland, and we have the skill to make the machinery, but the real difference is the wage scale of the two countries.

We have to make up our minds in America as to whether we want to pull down our wage scale or not. I would like to put into effect the suggestion of the previous witness, that we get into force in these competing countries the same idea as that we have gotten in America, to improve the condition of the workingman by workmen's compensation and old-age benefits, and things like that.

I apologize for taking so much time, Mr. Chairman.

The CHAIRMAN. We have one other witness for today, and if the committee will sit awhile, we would like to call that witness now, if he is ready to go on.

That is Mr. Canfield of the American Paper and Pulp Association. We will hear you this morning so we will not have to sit in the afternoon.

Mr. CANFIELD. I appreciate that very much.

The CHAIRMAN. Will you give your name to the reporter and your association. You are representing the association?

STATEMENT OF ROBERT E. CANFIELD, REPRESENTING THE AMERICAN PAPER AND PULP ASSOCIATION, NEW YORK CITY, N. Y.

Mr. CANFIELD. I represent the American Paper and Pulp Association. My name is Robert E. Canfield, 122 East Forty-second Street, New York City. I am counsel for the American Paper and Pulp Association.

The manufacture of pulp, paper, and paperboard is the sixth largest industry in the country, having a capital investment of over $3,000,000,000 and annual production currently valued at about $4,000,000,000. I mention that only to show the fact that the industry is of some importance, and its views could be considered as something more important than purely individual views.

The statement I have prepared here is not specific with with reference to the paper industry, but it is addressed to the general proposition that I understood was before this committee: Should this particular bill under consideration be passed or should it not?

The CHAIRMAN. Yes, you are correct in your understanding of that. Mr. CANFIELD. The industry is opposed to the bill you are considering. It is opposed to it on two grounds: First, that it makes possible results not only not intended by Congress, but actually directly contrary to what Congress does intend, and second, that it constitutes an improper transference of legislative function from the legislative branch of the Government to the executive branch.

Let me take up the first of these objections, and give you examples of what I mean. I am confident that you will agree with me that when the act was first passed, it was the intention of Congress that duty rates could be cut as much as 50 percent but in no instance more. I wonder if you are aware of the fact that under that act, the original act, the duty on one commodity, at least, could have been cut 80 percent and in fact was reduced 60 percent.

With reference to the same commodity, the administration is now considering a 50-percent further reduction which would leave the duty rate at one-fifth of what it was under the act of 1930.

I am confident that you will agree with me that Congress did not intend that duties should be so reduced as to cause the shifting of the entire production of a commodity used in this country from this country to a foreign country. Yet, that has happened.

I am confident that you will agree with me that it never has been the intention of Congress that duty rates should be reduced on any commodity by an agreement pursuant to which the United States does not get in return the reciprocal treatment agreed upon. Yet, that situation exists.

I am equally confident that you will agree with me that Congress did not visualize that duty reductions would be of such magnitude as to cause imports of particular commodities to increase thousands of percent. Yet that has happened.

I am confident that Congress never intended that duty rates should go far below those in existence in the so-called Underwood Free-Trade Act of 1913. It has repeatedly been stated that the purposes of the act were to get away from the unduly high rates of the Smoot-Hawley Act of 1930 and to return toward those of the Underwood Act of 1913. Despite this fact, the average tariff today on paper under reciprocal-trade agreements is less than half what it was under the act of 1913, which was the all-time low until the Reciprocal Trade Acts started to operate.

I am confident that Congress never intended the Executive to have any power with reference to commodities on the free list and specifically intended that anything done with reference to such commodities was reserved to Congress. Yet, the Executive has, by international agreement, precluded Congress from exercising any power to determine whether or not cetain commodities should stay on the free list, and it has so arranged things that as a practical matter certain commodities on the duty list may come into this country on what amounts to a duty-free basis if the exporting country's government so desires.

These are just examples of what I meant when I said that the kind of law your predecessors passed, and which is now proposed to be reenacted, makes possible results contrary to the intent of Congress. As a matter of fact, I am amazed at the restraint of the statement.

Such results would appear from the record to be not only possible, but probable, if not virtually certain. I am sure the list could be multiplied many times over if all the facts from all industries were brought out here.

Those results lead right into the heart of the second part of our objection to the bill under consideration. That objection is that it constitutes an improper transference of legislative authority to the executive branch. That objection has been raised before this committee by me and by others, specifically on June 4, 1945, with no effect. It was raised by me a couple of weegs ago before the House Ways and Means Committee with no effect. Perhaps the reason it was not persuasive was that the discussion was in terms of the theory of constitutional law. I pointed out then that the power to determine duties was specifically vested by the Constitution in the Congress and that by all ordinary principles of constitutional law, something specifically reserved to Congress by the Constitution could not properly be given by Congress to someone else. I pointed out that Congress could, of course, delegate detailed work to an administrative agency but that what constituted proper delegation had been stated repeatedly by the Supreme Court. It requires that Congress state in general terms what it intends to be done and that it set forth specifically criteria pursuant to which the administrative agency to whom the job is delegated can determine what action to take under what circumstances. I further pointed out what is perfectly plain, that the proposed act does neither of these things. I hope that a consideration of the results obtained under an act which does not, set forth criteria which will assure the carry-out of congressional intent will be more persuasive than the statement of theory was by showing exactly why the Supreme Court has decided, as it has in the past, what constitutes proper delegation of congressional authority.

When Congress has the obligation, as it clearly has in connection. with duties, to determine what shall be done and when it shall be done, the mere granting of power to someone else to do those things within broad over-all limits, gives no assurance that the actions which would have been taken by Congress will, in fact, be taken by the authority to whom the power is delegated.

The facts I have recited demonstrate, I think conclusively, that when Congress does not in its delegating statute establish its policy specifically and establish the criteria to be followed in carrying out its policy, inevitably actions taken by the uninstructed delegate go far beyond what was intended.

For Congress to give away the power to determine duties with no statement of what changes are to be made, or to what extent they are to be made, or under what circumstances they are to be made, it is not delegation but abdication. It is no more reasonable to do it in the case of the problem of determining duty than it would be in the case of the problem of determining taxes or determining when and under what circumstances to declare war. I cannot quite visualize Congress passing a law which purports to give to the President the power at any time, for any reason, or no reason, on his own initiative and as his whim of the moment may dictate, to increase or decrease income taxes by 50 percent. I cannot quite conceive of Congress passing a law pur

porting to give to the President the right at any time, under any circumstances, as his whim of the moment may dictate, the power to declare war. Yet the bill you have under consideration proposes to do an exactly parallel thing. It purports to give to the Executive the right to determine, without reason and as his whim of the moment may dictate, what is to be done in another field just as specifically reserved by the Constitution to Congress as is the right to determine taxes and the right to declare war.

Senator MILLIKIN. You are aware, I am sure, that the President resents even having to make an explanation of what he does under the delegation.

Mr. CANFIELD. That, of course, is the primary reason for the proposed bill. That is the only basic change between the existing bill and the proposed one.

Senator MILLIKIN. That is correct.

Mr. CANFIELD. In the hearings before this committee in 1945 I stated my firm conviction and that of the industry I represent. I stated it in the same words recently before the House Ways and Means Committee. I would like to state it again here in the identical words: "It is our firm conviction that this is neither good law, good government, good democracy, nor good policy."

It does not make matters any easier that in most instances improper transference of authority from Congress to the Executive could be corrected by subsequent legislation. There is grave doubt that correction in this instance could be made even if Congress were to desire to do so. It has been held by the Supreme Court, as you gentlemen must be aware, that international agreements may transcend the power of the Congress and be binding commitments regardless of the subsequent desire of our National Legislature. Since the act before you has to do specifically with international commitments, it probably falls within that same category. It may be relatively easy under the pressure of political expediency to pass laws which are contrary to constitutional provisions, if one has a realization of the fact that the situation may at any time be reversed. It should not be so easy to persuade one's conscience to permit such action when there is the distinct possibility that the action once taken cannot be corrected.

There is no reason why the intent of Congress to facilitate international trade through reciprocally negotiated reduction of tariff barriers should not be carried out in an entirely constitutional and legal way. What is required in order to do it is for Congress first to determine specifically what its policy is and, second, to state that policy clearly in a statute which sets forth yardsticks sufficient to assure, through normal channels of judicial review of administrative actions taken, that the will of Congress shall be carried out.

It is my belief, and that of the industry I represent, that the best interests of everyone in the country demands truly democratic procedures with our own Government and that truly democratic procedures require government by law enacted by the duly elected representatives of the people in accordance with the Constitution approved by the people.

What we ask is not that Congress abandon the principle of negotiation of reciprocal tariff modifications, but that it pass laws establishing

such principles in accordance with the adjudicated standards for properly safeguarded delegation of congressional authority. Neither the present act, nor the proposed act accomplishes this result, although the present act is a hesitant step forward in the right direction. The CHAIRMAN. Any questions?

Senator MILLIKIN. I wish to congratulate the witness on his analysis of the situation. It has been so long since anyone has talked about the Constitution around here that you would have to get a page with a powerful microscope to discover the last instance.

Mr. CANFIELD. Perhaps the last instance was the last time that I spoke about it.

The CHAIRMAN. We will insert in the record of today a letter from Mr. Paul G. Hoffman, the Administrator of the Economic Cooperation Administration, bearing upon this subject before the committee, and also a letter from the Secretary of Commerce relating to H. R. 1211. (The letters are as follows:)

The Honorable WALTER F. GEORGE,

ECONOMIC COOPERATION ADMINISTRATION,
Washington 25, D. C., February 17, 1949.

Chairman, Senate Finance Committee, Room 342,
Senate Office Building, Washington, D. C.

DEAR SENATOR GEORGE: Enclosed please find a statement of ECA's views on the trade-agreements legislation now before Congress. A similar statement has already been sent to the chairman of the House Ways and Means Committee. Sincerely,

PAUL G. HOFFMAN, Administrator.

ECA'S POSITION IN REGARD TO THE FORTHCOMING RECIPROCAL TRADE AGREEMENTS LEGISLATION TO BE USED AS A STATEMENT TO BE SENT TO THE CHAIRMAN OF THE WAYS AND MEANS COMMITTEE ON OR SOON AFTER JANUARY 24, 1949

ECA strongly supports the trade-agreements legislation now before Congress. In line with the over-all objectives of the Foreign Assistance Act of 1948 ECA is especially concerned with accelerating the export of goods from European countries to all foreign markets including the United States, as a means of enabling these countries to balance their international payments and so reduce the assistance they require from the United States. We support the legislation now pending before Congress in that it aids in this effort.

ECA's interest in reciprocal-trade-agreements legislation stems from the basic objectives of the Foreign Assistance Act of 1948 which are to furnish materials and financial assistance to the participating countries "in such a manner as to aid them, through their own individual and concerted efforts, to become independent of extraordinary outside economic assistance within the period of operations under this title

* ** *

An increase in the world volume of trade is not only desirable but vitally necessary if the other countries are to recover their ability to pay their own way. The reciprocal-trade-agreements legislation now pending before Congress is a basic means to the expansion of world trade, for this legislation will give the President authority to adjust tariff rates and enter into tariff agreements (subject to definite limitations and procedures) for an extended period of time, thus affording continuity of action.

Six countries now receiving ECA assistance are already parties to the general agreement on tariffs and trade, a comprehensive tariff agreement entered into by the United States under the authority of the Trade Agreements Act. Four additional countries which now receive ECA assistance will participate in tariff negotiations this coming April, looking toward accession to the agreement. The potential for recovery inherent in these negotiations depends upon favorable action by Congress in establishing the proposed trade-agreements legislation now pending before Congress.