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There is also a statement prepared by Miss Eleanor Neff, associate secretary of the department of Christian social relations and local church activities of the Methodist Church, which will be inserted.

We have received a communication dated February 21, 1949, from the executive committee of the footwear division of the Rubber Manufacturers Associations, Inc., and signed by Charles H. Baker, of the Goodyear Footwear Corp., J. S. Barrie, of the Hood Rubber Co., E. H. White, of the United States Rubber Co., and by C. P. McFadden, of the Rubber Manufacturers Association, chairman of the footwear division.

We have likewise received a communication dated February 21, 1949, from John H. Davis, executive secretary of the National Council of Farmer Cooperatives, attached to which is a statement which we will submit for the record.

There is also a statement of Julian D. Conover, secretary of the American Mining Congress, which we will insert in the record at this point.

In addition we will insert Circular No. 53 from the Munitions Board entitled, "Current List of Strategic and Critical Materials"; also a statement submitted by the American Veterans Committee; and a statement of John G. Wright, president, Boston Wool Trade Association.

(The documents are as follows:)

STATEMENT OF HARRY B. HILTS TO THE FINANCE COMMITTEE OF THE U. S. SENATE, OPPOSING OIL IMPORT QUOTAS

My name is Harry B. Hilts. I am secretary of the Empire State Petroleum Association, Inc., and executive secretary of the Atlantic Coast Oil Conference, Inc., both of 122 East Forty-second Street, New York 17, N. Y.

The members of both associations are small-business men engaged in distribution and marketing of gasoline, heating oils, and other petroleum products in New York and in the States of the Atlantic seaboard from Virginia north to and including New Hampshire.

We are opposed to Government restrictions on petroleum imports. Our interest in this subject is both narrow and broad. It might be said that we are pleading special consideration for a particular segment of the industry. We are; but it so happens that the interests of these small-business men coincide not only with those of similar groups elsewhere but also with the interests of petroleum consumers. I doubt if there is a single person in this country who is not directly or indirectly a regular consumer of petroleum. So our interest has a broad

aspect-probably as broad as any which comes before Congress.

I might point out, in this respect, that the interest of the consumer is our paramount concern. We, as a component of the petroleum industry, are closer to the consumer than any other part; so much so that, in the competitive race for the consumer's acceptance of our industry's products, we must at all times be highly sensitive to his buying habits, his ability to purchase our products, and our ability to maintain an uninterrupted supply of products he uses.

At the same time, we, along with the manufacturers of oil-consuming devices, are responsible for creating the consumer demand for industry's products.

Therefore, our reasons for opposing import restrictions on petroleum are simple.

Firstly, we want to prevent any move which might result in the reimposition of allocations and quotas for our dealers and distributors. We want to be able, at all times, to obtain enough oil products to meet the needs and desires of our customers.

It seems to me that this coincides with the public interest. It also appears to me that this coincides with the original intent and purpose of the Reciprocal Trades Agreement Act as being in the public interest and not in the interest of any particular group.

Last winter's congressional investigations, the front-page newspaper stories, and the public clamor are evidence enough of the public interest in an oil supply sufficient to meet demand and at the same time furnish an adequate safety factor.

In this particular respect, I should like to publicly acknowledge our group's keen appreciation of the sympathetic understanding and assistance of those able men in the Eightieth Congress, such as Senator Tobey, of New Hampshire, Senator Brian McMahon, of Connecticut, and the present majority leader of the House, the Honorable John W. McCormack, and others too numerous to mention. Without the understanding of these broad-thinking men our ability to come through last year's trying period would have been more difficult than it was.

Secondly, there is the question of price. Our organizations do not want to see any possibility that the price of oil might be bid up because of an artificial scarcity. We would lose business to competing fuels-gas and coal. We would incur the ill will of our customers. If prices go up because of increased costs, this is elemental and can be easily explained. But price rises which might result from an artificial scarcity created through congressional action or by any other means are something we in the front lines of petroleum distribution would vigorously protest.

Need I point out that this narrow interest of ours in reasonable prices coincides with the interest of the consuming public.

There is at the present moment a slight surplus of productive capacity in the country. How, then, could import restrictions create an artificial shortage? In several ways:

First, the Texas Railroad Commission has already issued orders shutting down a number of oil fields where there is said to be an excessive waste of natural gas. These orders have not yet come into effect, pending review by the courts. However, the courts have recently upheld the Railroad Commission in one instance the Heyser field. It is possible that the other orders will be upheld in all or many cases.

It has both proposed to you that imports be limited to the estimated amount needed to supply estimated demands after producing all fields in the country at their estimated maximum efficient producing rates regardless of the gas wastage and uneconomical transportation involved. Such a limitation combined with the drop in Texas production, which would occur if the Railroad Commission's orders are carried out, would create a shortage surpassing any that this country has even experienced.

Second, suppose that the Railroad Commission should rescind or modify its orders and allow maximum production regardless of gas wastage. I have already mentioned that the proposed import restrictions would be based on estimates. We have had some experience with estimates, official and unofficial, in the past few years. The year of 1947 is a good example. At the beginning of the year, estimates of increased demand varied between 4 percent and 7 percent above 1946. Productive capacity appeared to be sufficient-so much so that the allowable production in January 1947 was cut below even the average of the previous year. The Independent Petroleum Association of America, which is now sponsoring limitations on imports, was vigorously campaigning for further reductions in allowable production. What happened? Demands increased sharply throughout the year averaging 11 percent above those of 1946 or 7 percent to 4 percent above the estimates. This increase in demand in the short period of 1 year was approximately 579,000 barrels daily. The increase alone was more than the total imports that year-or any other year before or since. The unexpected high demand of 1947 was followed by a cold winter. You all know what happened. We got through the winter only by the skin of our teeth, with the help of consumer conservation and voluntary allocations by the oil industry. Who can estimate the demand this year or next? Who can predict the weather and the many other factors which influence demand? Certainly not the Independent Petroleum Association of America or the Railroad Commission. Shall we unnecessarily risk a shortage by setting rigid limitations on supply based on estimates which can certainly be no better than those of early 1947? Can we afford to gamble with the health, comfort, and convenience of our people, and the maintenance of our full industrial and transportation capacity, when there is no need for such a gamble?

But perhaps there is a need. Perhaps the domestic oil producer is suffering, as implied by the Independent Petroleum Association of America. Let's examine the situation to see if perhaps this desperate gamble may not be desirable.

In 1941 domestic crude oil production averaged 3,842,000 barrels daily. Production then was at about 80 percent of capacity.

At present, after the recent cutbacks in allowable production, the output of crude is about 5,400,000 barrels daily. Production now is at about 95 percent of capacity.

Production is up 40 percent and unused productive capacity has dropped from 20 to 5 percent.

It is for you gentlemen to judge whether or not this suffering of the domestic producer justifies the gamble I have described.

Now let's examine another phase of this situation; crude inventory. A perusal of Bureau of Mines figures discloses some significant and startling facts.

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At the year-end of 1948 the above figures disclose we had a total (estimated) demand of 6,675,000 barrels daily, double the year 1936. The Nation had an estimated crude reserve (above ground) of 242,700,000 barrels, which was about 18,000,000 barrels above the year-end 1947 crude (above ground) reserve. This reserve (242,700,000 barrels) represents only about 4 days' safety factor above safe minimum stock working levels. While I am not prepared to say just what the safety factor should be in days' supply above safe working levels, obviously with the addition of increased dead storage as a result of pipeline development during the last several years, a 4-day safety factor is not enough for a nation with an oil consuming capacity such as we have.

Further, we should like to point out that the nonintegrated independent refiner is a very vital factor in our industry as a source of supply. For sometime in the past he also has had his troubles in obtaining a sufficient supply of crude at posted market prices to maintain constant and efficient operations. These operators must be preserved and they can be preserved if the industry is allowed to function free of artificial pressures and restrictions such as presently are being proposed to this committee.

The independent refiner would always be unable to cope with artificiality, such as presently exists in some of the oil compact States. This artificiality is the direct result of the cartel-like control over crude oil production presently being exercised by some of the oil compact States.

To substantiate this statement we quote from a published press interview with Texas Railroad Commissioner Thompson. In discussing the recent Texas cutbacks, he said, “because we just will not allow Texas oil to be produced when there is no market." He said these cutbacks had "saved" the price of crude while providing a reserve productive capacity that would be needed in the event of another war.

If any group of American businessmen had made the same statement, they would have immediately been indicted for monopolistic practices and price fixing. In fact, the World-Telegram of February 21 published an item reporting that eight companies are being sued because the State of Texas alleges they prevented a crude price increase.

The statement by the chairman of the Texas Railroad Commission, along with the above-mentioned Texas antitrust suit, has somewhat confirmed the suspicion that has been in the minds of many competent observers in the oil industry-that some of the oil compact States are more interested in price maintenance of crude oil than they are in conservation. And this, gentlemen, would be in direct violation of the permissive law creating the compact commission.

A further indication of the impact of this artificiality on the nonintegrated refiner, is the fact that at the present artificial crude price level, he is reported to be losing between 30 and 50 cents per barrel on refinery realization when based upon the low markets for cargo sales at the Gulf.

Yes, gentlemen, we have a vital consumer interest to protect. The States in which our members operate comprise the heaviest consuming demand area of the

Nation. We consume (approximately) 25 percent of all the gasoline produced, 49.8 percent of the kerosene production, 46.2 percent of the distillate oil production and 34.9 percent of the residual oil production.

Obviosuly, the consumers in this most important area have the right to demand of their Government the protection so vital to their welfare and comfort which is so dependent upon an uninterrupted continuous flow of supply.

The lethargic condition presently existing in the industry is the result of two important factors:

(a) The unusual warm winter prevailing in the heavy demand area the North Atlantic seaboard.

(b) Consumer resistance to high cost of fuel. (It should be pointed out, however, in this respect, that fuel oil prices are in their fifth round of reduction at the consumer level without any drop in the price of crude.)

One large importer of foreign oil has publicly reported cutbacks in their imports. The press release stated that, with the warm weather they do not need to import as much as originally planned.

We do not know, nor can anyone say, when conditions will change and we will again need to augment our own domestic supply. If there are no quota restrictions, here is a safety factor we cannot afford to throw away.

Gentlemen, we reiterate, we are opposed to Government controls of industry. One Government control always calls for another and then another. We are particularly opposed to any congressional action which would tend to create artificial shortages, and foster unwarranted price increases.

Yes, we in marketing have a selfish motive. We do not want to lose business nor incur the ill-will of our customers. At the same time, we think it is obvious that if your primary concern is to protect the American consumer, the decision will be to avoid any new artificial restrictions on petroleum imports and to consider elimination of those which already exist.

We have stated our position sincerely and objectively. It is for you gentlemen to judge whether or not the gamble proposed by the Independent Petroleum Association of America, in attempting to exploit the American oil consuming public, for their own selfish purposes, is justifiable and in the interest of the oil consuming public. We contend it is not. We respectfully thank you for the privilege of making this statement.

STATEMENT BY SENATOR FRANCIS J. MYERS OF PENNSYLVANIA TO UNITED STATES SENATE COMMITTEE ON FINANCE ON H. R. 1211, A BILL TO REPEAL THE ACT OF 1948 EXTENDING THE RECIPROCAL TRADE AGREEMENTS ACT FOR ONLY 1 YEAR IN MODIFIED FORM AND TO REENACT THE PREVIOUS RECIPROCAL TRADE ACT FOR 3 YEARS FROM JUNE 12, 1948,

At Philadelphia last July, the Democratic Party drafted a national platform which contained this unequivocal statement:

"We pledge ourselves to restore the reciprocal trade agreements program formulated in 1934 by Cordell Hull and operated successfully for 14 yearsuntil crippled by the Republican Eightieth Congress."

This bill, H. R. 1211, as reported by the House Ways and Means Committee and as passed by an overwhelming vote of the House on February 9, is the vehicle for carrying out that pledge. It repeals the Eightieth Congress act and extends the previous act for 3 years from last June.

The Democratic House in the Eighty-first Congress has done its part on this issue, and I am sure the Democratic Senate in this Congress will do likewise. As chairman of the committee which drafted that platform, I realize, of course, that not every pledge in the Democratic platform has the complete and enthusiastic backing of every Democratic Member of Congress. The platform, however, does represent the convictions of the majority of the delegates to our convention on every issue, and the almost unanimous opinion of the party's representatives in Congress on most issues.

This is one of those issues on which our party has stood united and strong over the years since the first Roosevelt administration.

All of us in the Democratic Party have welcomed the support of a great number of outstanding Republicans and of the great mass of the Republican rank-and-file of voters on the issue of reciprocal trade, which is recognized as an integral part of the bipartisan foreign policy, a foreign policy which is slowly but steadily winning the battle for a decent world in which men can be free.

As I listened to the debate in the Senate last year on the crippled reciprocal trade bill which was then before us, and as I have reread that debate from time to time since then, I became convinced that the responsible spokesmen for the bipartisan foreign policy on the Republican side of the aisle in the Senate were struggling desperately to save as much of the original act as possible but were forced to go along with this crippled bill out of a fear that any attempt to strengthen it as the then Senator Barkley and just about all of the Democrats sought to do-would result in a stalemate with the House leaving us with no reciprocal trade act at all.

This fear was indicated in the speeches of nearly all of those Republicans who have joined with us in a genuine defense of the bipartisan foreign policy.

The situation is entirely changed now. The House has given us a good billa bill which conforms in almost every detail with the original Cordell Hull program, a bill which adopts the principles which we attempted to put back in the act by means of the Barkley amendments of last year, all of which were defeated on strict party-line votes.

Every Democratic Senator, I firmly believe, who was here last year and who supported the Barkley amendments will support this bill as it came from the House this year. And the new Democratic Senators who ran on the Democratic platform are, I am sure, committed to the forthright pledge it contains on the reciprocal trade program.

The folly and fallacies of the bill passed last year by the Republican Eightieth Congress became obvious shortly after the bill was enacted. The State Department attempted to enter into negotiations with other nations for new trade agreements, reciprocally reducing tariffs and thereby stimulating international trade and thus stimulating one of the greatest avenues to the achievement of world peace.

It discovered, according to information which I obtained from the Department from time to time over the summer and fall, that it found great reluctance on the part of many nations even to join in initial conversations for the simple reason that the act under which these agreements were to be negotiated had a life of only 1 year-and that the first 9 or 10 months of that year would be consumed in preliminary procedures required under the truncated act.

Sure enough, after a number of nations did indicate a willingness to discuss reciprocal tariff reductions on a variety of products, the whole matter had to be turned over to the Tariff Commission for these seemingly endless investigations and studies in regard to so-called peril points. The Republican act of 1948 required that the Tariff Commission be given 4 months for this research. Thus, under this present act, it will be about April 1 before the State Department and the nations with which it has held preliminary discussions on new agreements can again sit down and resume negotiations on specific tariffs. That means that the 1-year program authorized by the Republican Eightieth Congress could not even result in its first new agreement before 10 or 11 months after its passage.

I am afraid that if the same party which had been in power in the Eightieth Congress had succeeded in capturing the Eighty-first Congress, the reciprocal trade program which was so badly battered in the Eightieth Congress would have been dealt the final death blow in the Eighty-first.

Most Americans genuinely concerned about our bipartisan foreign policy recognized that fact regardless of their political affiliations or views on domestic issues.

Throughout the Eightieth Congress, there was an obvious feeling of tension among supporters of our foreign policy that isolationism as reflected in such a large group of the majority party of the Eightieth Congress would destroy the careful groundwork which had been laid for world peace and world decency. This tension evaporated completely when the new Congress was elected. The American people were sure that this Congress would give more than lip-service to the bipartisan foreign policy but would implement it with legislation and, when necessary, with funds.

That is what we in the Democratic Party intend to do and that is what we will do.

I therefore sincerely urge that those Republican members of this committee and of the Senate who believe in the bipartisan foreign policy, as many do, join with the majority party in reporting out this bill favorably, without any of the unlamented provisions of the bill enacted last year, and help us to put this program back into operation along the lines it followed so successfully for 14 years.

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