every 200 citizens. Over here we have one for every two citizens. That is the standard of living we want to maintain in this country. That is what puts me in a quandary about this trade bill.

I am basically a free trader, I guess, through the years.

Mr. MEANY. We have been.

Senator BYRD. But we do not want to get ourselves in a position where we will have to lower our standard of living to meet the standard of some other countries.

And that is why I want to ask you your view as to how we can pass a trade bill, in what form we should pass a trade bill without undue trade restrictions, but at the same time, give some reasonable protection to the standard of living of the working people of our country?

Mr. MEANY. Well, we think that we have supported a bill here and Senator Hartke introduced it but we are willing to concede that since that bill was introduced, there has been a major change in the whole world situation. We certainly have the same objective as you just stated, Senator, and whether it is a quota system or some other system, I think this Congress can find-and must find-a way so that we can trade with the rest of the world on some other basis than the complete one-way system we have now. I just cannot understand American industrialists. I can understand their short-term attitude toward quick profits, but I cannot understand their long-term philosophy. If they are going to lose their consumer market here-and I repeat again. and I will repeat this just as often as I can-that the consumer market is the great mass of the American people. It is the American workers. You go through a little town in Germany outside of Bonn, you see a few television aerials. You will find out that here and there, there is a washing machine or a dishwasher or a refrigerator in these homes. But when you go out to one of our industrial cities, and in the residences there, there will not be a single home there that has not got all of these things.

So, the television sets and the refrigerators, they are purchased by the machinists, the auto workers, and the people that make them.

We have a situation where an auto worker can buy an automobile or a machinist can buy a refrigerator. So, we are the only country in the world that has this standard. We have the highest standard of living for our workers, no question. And I just cannot see giving it away. I think we should trade with all of these countries, and I have no objection to trading with the Soviet Union, but let us get something, and if we cannot get something economic, let us get something political. We can go a long way if they would just say that they would live up to their commitment to the United Nations.

They made a commitment to the United Nations in writing. In fact, they had a ceremony, and old smiling Gromyko was there when he delivered the document that any person, any citizen has a right to move without restriction from any country, including his own, to any other country on Earth.

Now, this is something that they could help us with. They can help us settle this Middle East thing. God Almighty, do not tell me that the Arabs are pushing the Russians around. You know, I do not think Saudi Arabia is calling the shots for the Kremlin. In fact, when you look at the military situation, suppose in Iran or Iraq that the Russians wanted to take that oil. Well, it might take them 24 hours to move

in, so they are the bosses there. They are the bosses in that area of the world.

This October war was started when they gave the signal, and it was so well coordinated that the minute the shooting started, they resupplied by planes. They knew their Arab friends. They knew their Arab friends well enough to know that the Israelis were going to knock out a lot of their equipment, so they had them resupplied. They were resupplying almost faster than they lost it. And what happened in those first few days? Where was détente in the first few days of that engagement over there?

Kissinger was begging for a meeting of the U.N. Security Council. They would not talk to him. They did not want to have anything to do with him because the Egyptians were doing quite well. The Israelis were getting it in the neck. But then when they turned around and they broke through and they cut across to the west bank of the Canal and split the Egyptian forces, boy, the Russians wanted a sudden meeting of the Security Council, and, boy, Henry obliged them right away, and he patted them on the back. There would have been no meeting of the Security Council if the Egyptian success had continued.

So this is détente, and détente is an absolute fraud. It is a fraud. The cold war-we talk about the cold war. The cold war was a Russian tactic. I showed you here why they dropped it. But the war is still on. But now the name of the war is détente, you see, that is the name of the war. It is détente and I do not think we can afford the luxury of selfdelusion. We cannot deceive ourselves. We have got to go by the record. We have got to know who we are dealing with, and the idea that a dietatorial form of government is going to deal with us on the basis of human values and human rights, they have no concept of human rights. And Senator, here is a map.

You have heard of Solzhenitsyn's book, "The Gulag Archipelago." Well, here is a map published by the American Federation of Labor showing the central Gulag controlled system, and when do you think this map was printed? Twenty-five years ago. Twenty-five years ago, we printed this map and we documented all of the slave labor camps there, and the slave labor is still there.

So we have got our great big industrialists and our great big bankers embracing these guys, sending American capital over, mixing American capital and slave labor. Good God, have we no principle

at all?

You know, in the days of Hitler, we heard a lot about Hitler's atrocities, but there was no validation of the gas chambers until the troops moved in, in the late days of the war. We heard a lot of rumors. We did not know about Dachau and a lot of these camps, but we heard a lot of rumors. But Franklin Roosevelt opted for human freedom. before we got in the war. He did not appease Hitler. He came to the British rescue. He helped the British with Lend-Lease, so we opted for human freedom even before we got in the war.

I would like to see this administration take a similar principle on the question of human freedom and human decency and deal with the Soviet Union and deal with them on the basis of give and take.

Our policy should be: we've got something, what have you got? What have you got to give? We sell, what have you got to sell?

Senator BYRD. Thank you very much, I believe Mr. Meany, you agree with my favorite politician, insofar as Russia is concerned, when Al Smith said, let's look at the record.

Mr. MEANY. That is right.

Senator BYRD. Thank you, Mr. Chairman.

The CHAIRMAN. Senator Roth?

Senator ROTH. Mr. Meany, I would like to say that I appreciate the forthright statement, and frankly agree with much that you say. I sort of have the feeling that rather than adopt new trade legislation, maybe we ought to just appoint you our chief negotiator as I feel that too often we have been out-negotiated.

One question I would like to ask you is not directly on trade, but relating to the current economic situation is that one of the reasons for the inflation, at least in the minds of some experts, is shortages of many types, not only agricultural, but we have fertilizer shortages and many other types of materials.

I wonder if you would have any comment to make about what we should do to try to increase production. For example, one suggestion has been thrown out, I believe it was by the chairman of the House Ways and Means Committee, is that we ought to give special depreciation to promote capital expansion at this time. In the recent years we have not increased facilities, and that is one of the causes of shortages.

I think the suggestion was this be granted on a 5-year basis.

Do you think there is any merit in trying to adopt special procedures?

Mr. MEANY. I do not know. I would have to look at it. But I thought that part of the policies of the past few years was to encourage this. This was certainly inherent in the restoration of the investment tax credit, and then in August of 1971 the President proposed more rapid depreciation allowance and so forth.

Now, certainly anything that would increase our capacity to produce, you know what I mean, and at the same time provide more jobs, we are for it. We are for making the system work better. But I am just wondering if there is a tax incentive needed at this time.

Now, of course, there is talk about an income tax cut and we are told that it would add to inflationary pressures and so on and so forth, and I am not an expert. I am not an economist, but do we have to have 10 percent money in this country?

Senator ROTH. That is a good question, but going back, if I mayMr. MEANY. Must we live with 10 percent money? Do homeowners have to pay 10 percent to the big corporations when they finance? I am just wondering if there is something basically wrong with the whole idea. You want to keep this in mind, that this whole upswing of money. inflation, unemployment, all started from a pretty decent base in February 1969, and Arthur Burns got his cottonpicking hands on the economy and we have been in trouble ever since.

Now, he is still there. He is still running the Federal Reserve Board. He is still talking about restricted credit. He is still talking about tight money and so on and so forth, and the net result is some kind of an economic miracle. We have got restrictive credit, we have got tight money, we have got tight interest rates, and we have got increased unemployment and inflation at the same time.

How we accomplished that, I do not know, but I feel that anything that will help American business has got to help us. This gets right back to what I said before.

Senator ROTH. Going back a moment to Russia and trading with her, I mentioned making you the chief negotiator. Are there any materials or things that we need from Russia that would be helpful to us? I think you did say that on the proper basis you favor trade. Do you see a mutual basis of—

Mr. MEANY. I do not know anything. I do not have all of the figures, but I do not know offhand of anything that they have that we need so bad that we have got to give them the Washington Monument. Senator ROTH. Let me ask you this question.

We have seen the consequences of the recent oil embargo, and many of the American people feel that this country ought to be able in some way to counteract such measures. It was said that the oil countries will be investing billions of dollars here in the future.

Would you see any merit to legislation to provide that in the event of future blackmail of that kind, this Government could take action against those assets to compensate for the adverse effect on our economy?

We did that during the war.

Mr. MEANY. You mean assets that are overseas?

Senator ROTH. No; the assets of the Arab countries in this country. Mr. MEANY. Well, I think we are justified in protecting our people and protecting our interests. I think on the whole question of energy, I think there should be a turnaround. I am quite sure that there is enough ingenuity in American management and American business to meet this problem, and I am for the Government encouraging-I think we ought to have more oil refineries here at home, but of course, we do have problems with the environmentalists and things like that, but we have got a lot of energy.

Now, I understand that there is going to be a slurry line built from Wyoming right into Arkansas, which is going to bring all of that coal down there. I think these things are all good, and I think our Government should encourage these things. We have always done

that.

I mean, this Government, you go back through the history. How did we get the railroads to the west coast? Through Government encouragement. How come that when World War II came around we had an airplane industry? We could not have had that airplane industry if, during the late 1920's and through the 1930's, the Government had not encouraged and subsidized this particular industry.

And if we are going to become self-sufficient in energy, I think the Government ought to be in there and be in there in a big way, but I think we ought to get the cooperation of these multinational corporations. I just cannot accept the fact that an American corporation, no matter what the circumstances, is going to take orders from an Arab chieftain who says, don't you supply the American fleet under a contract. He had a contract to supply the American fleet, and he stopped giving the oil. This is Exxon Corp., and as an American, I just cannot buy that under any circumstances.

There may be some justification from their point of view, but I

think the whole picture should be changed so things like that cannot happen.

Senator ROTH. Thank you, Mr. Chairman.

The CHAIRMAN. Senator Bentsen.

Senator BENTSEN. Thank you very much, Mr. Chairman.

Mr. Meany, I just read a book by Merl Miller about Harry Truman entitled, "Plain Speaking." I believe he could write one about you and give it the same title.

Mr. MEANY. I read it, too. But I do not use the language that Harry became so familiar with. [General laughter.]

I know the words, but I do not use them.

Senator BENTSEN. Mr. Meany, we have become a service-oriented society in this country of ours. Over 50 percent of our GNP is comprised of services, and I am proud of our American farmers who are productive and efficient and help so much in our balance of trade. But I also note that since 1971 we have become a net importer of manufactured products, and I think it will be a very serious mistake for this country if we let that trend continue because our jobs and our national defense depend on our manufacturing capacity in this country. I understand that it takes about $25,000 to create just one job in manufacturing in this country.

Mr. MEANY. I think it is more than that.

It is a little more than that.

Senator BENTSEN. The tax deferral approach for multinational corporations on their overseas earnings concerns me. Does that not in effect really create an incentive for them to invest that capital overseas instead of bringing it back home where we are short of capital for the creation of jobs and the expansion of industry within this country? Mr. MEANY. That would be my reaction that it does.

Senator BENTSEN. How do you feel about the types of contracts we have seen approved by our Government which allow the Japanese to come in here and buy our technology, as they did recently on the launching of satellites and rockets, supposedly for meteorological purposes, and spend some $100 million buying that technology and taking it to Japan?

Mr. MEANY. You are talking about the Thor Delta?

Senator BENTSEN. Yes.

Mr. MEANY. Well, we are very much upset by that and we do not like the idea at all. I get back to what I said before. Let us deal with these governments the way they deal with us. You could not do this in reverse with the Japanese or the Swedes or the Norwegians or anyone else.

Senator BENTSEN. I could not not agree with you more on the need for a mid pro quo when it comes to trade.

Mr. MEANY. So why should we give them a better deal than we could possibly get from them for ourselves?

Senator BENTSEN. Do you see any justification for a U.S. business which has a branch overseas paying full taxes on the earnings of that branch but, if they change the corporate structure a bit and call it a subsidiary corporation overseas, then being allowed to keep their earnings overseas and not pay the tax on it?

Do you see any justification for that?