The Honorable WALTER F. GEORGE, THE SECRETARY OF COMMERCE, Washington 25, D. C., February 18, 1949. Chairman, Senate Finance Committee, United States Senate, Washington, D. C. DEAR SENATOR GEORGE: I understand that your committee has begun public hearings on H. R. 1211, the reciprocal-trade-agreements legislation. Although I do not care to appear before the committee to speak on the bill, I do wish to have the views of the Department of Commerce included in the record of the hearings. The history of this legislation is well known to your committee and the policies it represents need not be elaborated. There is no doubt but what the disturbed conditions of world trade arising from World War II and the conditions which have existed since then have not been peculiarly favorable toward securing the fullest benefits from these policies. However, it does seem clear that the tariff adjustments which have resulted have benefited our consumers at a time when supplies were short. The concessions received from other countries have also been of significance to some of our exporters. I should like to urge that the authority to conclude trade agreements under this legislation be extended for at least 3 years from June 30, 1948. I also endorse the proposal that this extension be in substantially the same form as the act prior to the 1-year renewal last spring. The former act was tested in practice and enabled the administration to carry out effectively the intent of the Congress. Sincerely yours, CHARLES SAWYER, Secretary of Commerce. The CHAIRMAN. I believe that that concludes all of the scheduled witnesses for today. The committee will recess until Monday at 10 o'clock. (Whereupon, at 1:05 p. m., the committee recessed until 10 a. m., of Monday, February 21, 1949.) EXTENSION OF RECIPROCAL TRADE AGREEMENTS ACT MONDAY, FEBRUARY 21, 1949 UNITED STATES SENATE, The committee met at 10 a. m., pursuant to adjournment, in room 312, Senate Office Building, Senator Walter F. George, chairman, presiding. Present: Senators George (chairman), Connally, Lucas, Hoey, McGrath, Millikin, Butler, Brewster, Martin, and Williams. The CHAIRMAN. The committee will come to order. The first witness scheduled for this morning is Mr. H. L. Coe of the Bicycle Institute of America. Senator CONNALLY. Mr. Chairman, may I interrupt? I have a telegram here from one of these witnesses scheduled, and he will not be here. He wants this telegram put in the record, if I may have consent to do that. The telegram is from Mr. Ernest O. Thompson, member of the Railroad Commission of Texas. The CHAIRMAN. Yes, Senator, you may put it in the record. Mr. Russell Brown, here, has more or less charge of the arrangements for the entire petroleum group, but you may put this into the record. Senator CONNALLY. I will not quote it all: My interest in protecting the general economy of my State is connected with the conservation of oil and gas. Any importation of foreign oil that would seriously curtail the demand for oil produced in Texas under strict conservation measures would necessarily be harmful to this State's economy. That is the view. I would like to put the whole telegram, explaining this, in the record. The CHAIRMAN. Yes, it will be inserted in the record. (The telegram referred to is as follows:) Senator Toм CONNALLY, Senate Office Building, Washington, D. C.: Just returned to Austin in time to get wire from Senate Finance Committee Clerk Elizabeth Springer advising me Governor Jester had asked that I appear before Senate Finance Committee hearings Monday, February 21, on extension of reciprocal trade matters outlined in H. R. 1211. Since it will be impossible for me to appear I will appreciate your getting into the record the following statement: "My interest in protecting the general economy of my State is connected with the conservation of oil and gas. Any importation of foreign oil that would seriously curtail the demand for oil produced in Texas under strict conservation measures would necessarily be harmful to this State's economy." I am sure that you appreciate this just as much as I do. Am sorry that the invitation reached me too late to comply with the Governor's request. I appreciate the committee's courtesy. ERNEST O. THOMPSON, Member, Railroad Commission of Texas. Senator CONNALLY. Mr. Thompson, as I said, is a member of the Texas Railroad Commission, and is very active in all railroad matters. The CHAIRMAN. Is Mr. H. L. Coe here? (No response.) Dr. John L. Coulter? Dr. Coulter, you are appearing in behalf of the National Renderers Association? STATEMENT OF DR. JOHN LEE COULTER, CONSULTING ECONOMIST, WASHINGTON, D. C., IN BEHALF OF NATIONAL RENDERERS ASSOCIATION Dr. COULTER. Yes, sir. The CHAIRMAN. You may have a seat and proceed with your prepared statement, if you have one. Dr. COULTER. I have a relatively short statement, which I would like to present at the outset, and then develop any phase of the subject the committee may wish to explore by questioning. The CHAIRMAN. Yes, sir. You may proceed. Dr. COULTER. My name is John Lee Coulter, and I am a consulting economist, speaking on behalf of the National Renderers Association. The National Renderers Association is a nonprofit trade organization with headquarters at 945 Pennsylvania Avenue NW., Washington, D. C. This organization has a total of approximately 275 member companies scattered from the Atlantic to the Pacific coasts, and from the Canadian border to the Gulf of Mexico. These companies, largely single, independently operating establishments, are primarily engaged in the production of inedible tallow and grease but have as major joint products hides and skins, protein foods, tankage, bones, dried blood, and so forth. This entire industry is built around the recovering of oil- and fatbearing materials resulting from livestock industry operations. In turn, the United States is perhaps unquestionably the leading nation of the world from the standpoint of number and classes of livestock, including poultry. Many different kinds of animals are produced in great numbers in practically every one of the 3,000 counties of the United States and on most of the more than 6,000,000 farms. Livestock of all classes are an important part of the domestic economy, not only for the edible commodities they yield, such as meat, dairy and poultry products, but also because joint products, such as fats and oils, hides and skins, protein feeds, tankage, bones, dried blood, glands, and so forth have a perfectly tremendous value when recovered properly. It is not within the power of those engaged in this industry, or within the power of the Government, to artifically restrict the number or classes of animals produced on farms, or slaughtered, or which fall from accident or disease, or to control the percentages of most fats and oils, or the yield of other joint products or byproducts which naturally flow from the livestock industry. In other words, it is not a flexible industry. It is not easily controlled by individual farmers or individual rendering plants, or individual packers. They have to take the result of the weather and the grass and the animals, and so forth. Therefore, when we bind ourselves in trade agreements not to impose tariffs or excise taxes or to restrict imports except as a part of an agricultural program, unless we agree to reduce domestic production pro rata we are promising to do the impossible. This is one of the reasons why we are vitally interested in the pending bill, H. R. 1211, to amend and extend the Trade Agreements Act. Senator MILLIKIN. Dr. Coulter, I would like to ask you a question about that last paragraph. You say: Therefore, when we bind ourselves in trade agreements not to impose tariffs or excise taxes or to restrict imports except as a part of an agricultural program, unless we agree to reduce domestic production pro rata we are promising to do the impossible. The impossible in what respect? Dr. COULTER. In the respect that we could not promise to reduce pro rata our production as a part of an agreement with another country; and unless we did promise to restrict our production we would be binding ourselves not to impose a tariff or an excise or processing tax or a quota. Senator MILLIKIN. And we cannot do that, because Dr. COULTER. Because of the nature of the business; the livestock business being spread over every part of the Nation, every county in the Nation. And we would be binding ourselves as if we were saying "We never will ask for any concessions in any agreement." CONSERVATION AND UTILIZATION OF USEFUL PRODUCTS OF It is to be remembered that about half of the land in the United States is not in farms but is waste or forest land. Furthermore, fully half of all land in farms is primarily devoted to the production of pasture, hay, and forage crops. Most of this land is not adapted to the direct production of such human foods as cereals, grains, seeds, fruits, nuts, and vegetables, vegetable fats and oils, cotton, tobacco, and other commercial crops. Furthermore, such crops as are grown commercially as feed for livestock are almost universally produced in rotation with cereals and other food or fiber crops, and it has been scientifically ascertained that the original soils under cultivation would have more rapidly deteriorated as a result of overcropping and exhaustion, and loss from that process would have been supplemented by wind and water erosion, had it not been for the livestock economy. In other words, the livestock industry is the sine qua non for the preservation of soil fertility as well as the food supplies and many other useful commodities for the human race. HEALTH AND SANITATION The major function of members of the National Renderers Association is the production of inedible tallow and grease, animal proteins, and other products from literally billions of pounds of material which would otherwise become a sanitation and health hazard. It is a matter of record that the operations of the industry are very closely supervised and regulated by city, county, or State health authorities and it is now a general practice that members of the industry be bonded and otherwise licensed to assure diligent performance of this 86697-49-pt. 1-24 special type of assignment. Moreover, were it not for existence of this industry, city, county, or State units of government would have to provide for collection and disposal of such materials at great additional expense to the taxpayer. While eliminating the possibility of extra local tax assessments by their operations, members of the association also pay very large sums of money annually to farmers, ranchers, feed-lot operators, meat packers, slaughtering establishments, retail meat shops and chain stores, hotels, restaurants, institutions, military establishments, and even the homes of the Nation-through the household grease salvage program— for the privilege of collecting these oil- and fat-bearing animal materials. Payments of this nature actually have the effect of lowering the cost to consumers of such primary articles as meat, dairy, and poultry products, and also result in a somewhat increased return to the producer of the animals. CONSTITUTIONAL DUTY OF CONGRESS TO REGULATE FOREIGN TRADE I think there is no need to consume time in discussion of the general proposition that during periods of war or other extraordinary emergencies it is a proper function of the National Government to provide such regulation of foreign trade as may be necessary in order to maintain economic stability in this country or in the world. Section 8 of article I of the Constitution specifically provides that it shall be the duty of Congress to regulate the trade of the United States with foreign countries. Senator MILLIKIN. Will you not have a large increase in your business in the snow-bound areas? Dr. COULTER. That is unquestionably going to be one of the things which we will be confronted with. Senator MILLIKIN. So if you are going to regulate that part of it, you would have to regulate the snow. Dr. COULTER. We would have to regulate the amount of grass and the amount of fat which the animals put on their bodies. And if you do that, and limit your livestock, you immediately are encouraging erosion. It is nothing but the livestock industry in the pastures, the hay, and so forth, that now makes possible prevention of erosion. The CHAIRMAN. Where are you taking up now, Doctor? Dr. COULTER. On page 4. INTERCHANGEABILITY OF ANIMAL, VEGETABLE, AND MARINE FATS AND OILS Animal fats and oils of domestic origin over any considerable period of years normally provide substantially more than one-half of the total quantity of fats and oils derived from all sources and used for all purposes in the United States. It is well known that butter, lard, tallow, and grease are the major items in this group of commodities derived from the livestock industry. One-third or more of the total animal fats and oils comes within the classification of tallow and grease. Production of those items has for a number of years been in the neighborhood of 2,000,000,000 pounds annually. It is this item with which the National Renderers Association is most directly concerned. It must be added at once, however, that indirectly we are |