gaining, which is really just another name for reciprocity. Reciprocity, under this act, merely attempts to institute the principles of collective bargaining on a world-wide basis, between nation and nation, in matters affecting international trading relations. It is an evolutionary, gradual process to lower trade bars in a reciprocal way, in a two-way street; in other words, to bargain. It means, essentially, that we will let the barriers down on this side provided country X will let the barriers down on that side, just as we work when we and our employers get around the conference table. Reciprocal trade is indeed international. collective bargaining.

Our union is in an industry which faces foreign competition from England, from other countries on the continent of Europe and from the Orient. Yet we know that our industry has nothing to fear from the textile industries of those countries. I have been to Europe and I have seen, for example, the British textile industry. It is inefficient; its machinery is old; its processes are outdated; the productivity per worker is low. They do not know the "round-theclock" production methods we use here. We are not afraid of their competition with our modern methods and our new and constantly improving machinery.

There was a time when our industry, the textile industry, had the protection of a high tariff. This was especially true during the period of the twenties and right up to the enactment of the Reciprocal Trade Act. And what were our conditions in the textile industry? Why, throughout that period the textile industry was a sick industry, a problem industry. We workers suffered especially. When we had a higher tariff on textiles, our wages were among the lowest for all industrial workers. Textile workers did not have enough money to buy a suit of clothes, even though they produced the textiles out of which the clothes were made. We had unsteady and irregular employment. We continually faced speed-ups and stretch-outs.

Today, after operating, under the Reciprocal Trade Act for over 10 years, our industry is no longer a sick industry. Indeed, it is one of the most prosperous industries in the country. Our workers now receive among the highest wages: for industrial workers. We no longer fear unemployment. We just can't produce enough textiles to meet the demands of the American public and the demands: of international trade.

All this does not mean that there is no need for protective measures and that we favor dropping all our tariff bars tomorrow. That is where reciprocity represents a practical procedure-it is not all-or-nothing; it represents the gradual approach to freer trade by a gradual adjustment of tariffs and trade barriers through international collective bargaining. This is not mere theory. It is exactly what happened in our experience. In those lines, where our products had to meet competition from unfair foreign production, that is, products produced by substandard labor or through unfair subsidization, etc., the machinery of the act was there to defend American industry and labor. But we are not afraid of fair competition-we welcome it. The world thrives on expanded trade and competition-fair competition-is still the life of trade. Not merely in the United States but also in the whole world.

That is why our organization is back of the Reciprocal Trade Act's renewal. The changes proposed by the House bill would undermine the proven procedure. Resort to the Tariff Commission would be an unwholesome reminder to the world of our isolationist Smoot-Hawley tariff days. Any attempt to eliminate executive discretion within standards set down by Congress in the act would be interpreted by the nations abroad as a warning that we will make agreements "with our tongues in our cheek," as every agreement will be a political football in Congress for special interests. The 1-year extension provision is a perfect illustration; as the bulk of its proponents want that clause in the hope that this year's election will result in a high-tariff Congress, which, in an off year like 1949, can without fear of political repercussions let the Reciprocal Agreements Act go into the discard. The other nations know that, just as we do.

This country had the foresight to launch the gigantic ERP to rebuild the shattered economy of Europe and restore world economic health, for their good and ours. I, for one, was proud of that. Now, this House bill threatens to withdraw with our left hand what we offered with our right hand. Frankly, that simply doesn't make sense. More important even, it doesn't make for international peace and cooperation.

If we are ever to achieve peace and unity for this country, we have to learn to work with the other nations of the world. If we have to sit down at the conference table with other nations of the world, as our unions do when they meet the

employers across the conference table, we must be able to meet them on a reciprocal basis. We cannot have the iron hand in the kid glove and say, "We have to have this done for our Nation and in return we will do nothing for you." That doesn't work in labor relations and won't work in international relations either.

We therefore urge that the Reciprocal Trade Agreements Act be renewed as an essential not only of economic prosperity and peace for our country, but of the successful solution of the great political and economic difficulties that plague our war-torn world.

The CHAIRMAN. A number of letters, statements, and telegrams were submitted for the record. They will be inserted at this point. (The letters, statements, and telegrams referred to follow :)

STATEMENT OF THE AMERICAN ASSOCIATION OF UNIVERSITY WOMEN

The American Association of University Women wishes to bring to the attention of the Finance Committee of the Senate the support of the Reciprocal Trade Agreements Act which the AAUW has given that program consistently since its inception.

The AAUW has over 96,000 members, organized in 1,044 branches, scattered throughout the 48 States and the Territories of the Union. The association sponsors serious study and analysis of the problems confronting the United States in its relations with other nations, giving support to those measures which, in its considered judgment, are essential to the continued well-being of the United States. The principle of the reciprocal trade agreements has been on the study agenda of the AAUW, and has been approved for legislative support, since the inception of the program. It has been thoroughly examined. The operation of this principle after the enactment of appropriate legislation by the Congress has been carefully observed and analyzed. It is not without significance, therefore, that the first biennial convention of the AAUW, held in April 1947 at Dallas, Tex., again voted to support the principle of reciprocal trade agreements.

This action was taken with full awareness of the demands of the American consumer, the need of war-expanded American business for increased markets, and the requirements of our national defense which could not be achieved within the framework of our national economy. It was taken in the belief that the free flow of trade was essential to economic stability and the return of peace; and that, in terms of the American constitutional system, the principle of reciprocal trade agreements as it has operated in the past has given the maximum opportunity to secure the best markets for American products and the best terms of import for commodities required either by the American consumer or the American businessman.

Events since April 1947 have served but to strengthen that conviction. The debates and arguments presented before the House Ways and Means Committee and before the House of Representatives have been thoroughly reviewed, but have disclosed no basis for change of our position. For these reasons, the American Association of University Women wishes to bring to your attention the continuing support of the association of the principle of reciprocal trade agreements, and urges your committee to maintain the principle of reciprocal trade agreements as it has operated in the past.

STATEMENT OF ALLAN B. KLINE, PRESIDENT OF THE AMERICAN FARM BUREAU FEDERATION

The American Farm Bureau Federation favors the extension of the Reciprocal Trade Agreements Act for a 2-year period. We believe this is an integral and essential part of the international program of this Nation. Our organization, with its 1,275,000 farm families in 45 States and Puerto Rico, is vitally interested in developing a sound international program, one which will prevent the chaos and anarchism which have been rampant in the world during the greater part of the current century. This calls for courageous leadership. In our democracy the citizens look to the Congress for leadership. May they not be disappointed.

Today we are engaged in an idealogical war. Many fear the basic differences may lead to armed conflict. These differences stem largely from a difference in

philosophy-ours which emphasizes the rights of the individual and his opportunities to engage in private enterprise, the other which holds the state supreme and the rights of the individual secondary. Philosophies in different parts of the world vary between these two extremes. Today many nations are in a position to veer either way. Wars breed controls. The emergencies of wars are so urgent that people relinquish their liberties to a centralized government. Most governments, having once obtained these powers, are reluctant to relinquish them— some for the sheer desire for power, others because conditions resulting from wars are so unfavorable that controls appear to be the only solution.

The country is currently spending billions of dollars with the hope of encouraging nations to adopt a democratic form of government. For example, the European recovery program recently enacted by Congress contains provisions that the European nations receiving the benefits of this plan must cooperate not only within their country, but also with other nations in removing barriers to international trade. It is recognized that freer trade is essential to the economic recovery of these nations. Perhaps it was further recognized by the Congress of the United States that it will be very difficult to have private enterprise operating within the country if the Government arbitrarily controls foreign trade. If we ourselves are to be consistent with the ideals we hold out to others, then as a nation we have no alternative but to extend the Reciprocal Trade Agreements Act. We cannot lead the other nations into a freer world economy if we do not set an example.

Today nations are choosing patterns of life and forms of government which will affect the destiny of the world for centuries to come. Once these patterns become set they will be difficult to change. The vital issue is the extent to which a nation will depend upon government control and regulation, and the extent to which private enterprise will carry on the business of the nation. We have the opportunity to affect these decisions by our leadership in the field of international commerce. Nationalistic trends in government often start with controls of foreign trade. If we lessen the likelihood of controls over foreign trade, we lessen the likelihood of government control of the domestic economy.

Since the end of the war we have expended billions of dollars in one form or another for foreign aid. Recently the Congress of the United States passed the European Recovery Act, which may eventually involve the expenditure of another $17,000,000,000. Our organization has supported the United States policy in these things. In 1947 our export of goods and services amounted to over $19,000,000,000 worth of products from this country. Our imports amounted to only about $8,000,000,000, leaving a deficit of around $11,000,000,000. Any thinking person knows that this cannot continue without disastrous results. The excess of exports over imports is a factor contributing to inflation. The only way we have a chance ever to get paid for what we send abroad is to develop foreign trade on a sound basis wherein the goods which we can produce advantageously are exchanged for the things this Nation needs, which can be produced advantageously by other countries. It is essential that we develop a policy of supplementing our exhaustible natural resources with imports of scarce materials in order to protect our national welfare.

The development of a sound foreign trade policy is one of the major problems facing this Nation. We are no longer a debtor nation. We are creditors. We must change our policy accordingly. We are no longer a nation just starting industrial development. We are the most powerful industrial nation the world has ever known. We must act accordingly. We are no longer a nation that can sit on the side lines in world politics. We have grave responsibilities in formulating world poliices. We must accept these responsibilities. We simply cannot return to economic isolationism and at the same time meet our obligations as the foremost world power.

We have not had a satisfactory foreign trade policy for at least a quarter of a century. During World War I, we shipped large amounts of goods to our allies. We tried to collect the war debts in dollars rather than in goods. This failed. During the 1920's we exported goods from this Nation on a credit basis. In 1929 this came to an abrupt end. We refused to accept payments in the form of goods. During the 1930's we accepted gold for our exports. We now hold a large percentage of the world's gold stocks. During World War II we supplied materials and food under lend-lease as a contribution to the war efforts of our allies. We are now embarking upon a 5-year foreign-aid plan. This plan provides us an opportunity to get our foreign-trade house in order. We must develop a policy of accepting goods and services from other nations in return for our

exports. The reciprocal trade program will help to develop a self-sustaining, mutually advantageous international trade policy.

If we repeat the mistakes of the 1920's, and maintain a false prosperity in this countary by unsound foreign trade policies, we will be laying the groundwork for another depression of the 1933 magnitude. If such a thing happens, it is likely to destroy the very foundation upon which our democracy is built. This would be very much to the liking of the enemies of democracy. In fact it is reported to be a part of their plans and secret hopes. We cannot afford to take the chance. We must face international trade problems realistically. Trade means exchange of goods. It is not a one-way street.

As the president of a great farm organization, I do not propose to be a party to sacrificing American agriculture upon the altar of trade. This program must be equitable among all segments of our economy. I believe this can be done. It will not be done unless we work at it. The reciprocal trade program is one of the practical tools that can be used to promote trade without unduly disrupting our domestic industries. It must be realized that while at one time agricultural products accounted for over 80 percent of our exports, just prior to World War II they amounted to only about 20 percent of our total exports. At the same time, agricultural commodities constituted about 50 percent of our total imports. This is a natural tendency as a nation becomes more industrialized. It suggests, however, that care must be taken to insure that the interests of agriculture be given fair consideration.

We believe the reciprocal-trade program should contain certain safeguards. One of the safeguards is the so-called escape clause, which should be included in all trade agreements. This escape clause provides that if as a result of unforeseen developments or concessions granted, imports of an article have increased to such an extent that it is causing serious injury to domestic producers, the Government may withdraw or modify the concession.

The agreements also contain provisions for quotas which are a protection against a flood of imports. Another protection as far as agriculture is concerned is contained in section 22, which is an amendment of the Agricultural Adjustment Act. This amendment gives the President authority to impose import quotas or fees on commodities covered in the act if after investigation he determines that the importation of these commodities is hindering the satisfactory conduct of domestic agricultural programs. Another very important protection is that Congress has the final authority under the trade-agreements program. It is necessary to return to Congress periodically for reenactment of trade-agreements legislation, which provides a recurring opportunity to appraise the program. This periodical review by Congress serves as a check to be sure the trade-agreements program is administered as Congress intended.

It

Another reason why the members of the American Farm Bureau Federation favor the reciprocal trade program is that they feel foreign trade can contribute significantly to maintain domestic prosperity, which is essential to provide satisfactory markets for agricultural products. A considerable proportion of the workers in many of our key industries are dependent upon export markets. is estimated that in 1939 the percent of our total employment dependent upon exports ranged from 8 to 23 percent in the various industries. Contrary to popular belief, the facts also show that the protected industries are not among those paying the highest wages to workers. Foreign trade provides an apportunity for employment of a larger number of our workers in the industries where the productivity per worker is highest, and consequently wages are the highest.

The American farmer needs foreign markets. In 1947 the production of agricultural products was 35 percent above the prewar level. The increase in the production of many of our products was much greater. During the prewar period of 1934-38, we exported one-third or more of our production of cotton, tobacco, and dried fruits. About 8 percent of our bread grains were exported. In the fiscal year ended June 1947 we exported over one-third of our production of wheat, rice, and dried milk, between 10 and 25 percent of our production of dried beans and peas, condensed and evaporated milk, and cheese. We also exported between 5 and 10 percent of our production of edible fats and oils, eggs, and fruits.

During the last year the Marshall plan, 1951-52, it is estimated that we will be exporting nearly 24 percent of our bread grains, 19 percent of our dried fruits, and nearly one-third of our production of cotton and tobacco. If a serious recession in agriculture is to be avoided, it is necessary for us to develop a

sound, long-time program whereby export markets can be maintained, especially for those products which historically have been dependent upon foreign outlets. Farmers know that the type of aid furnished in the Marshall plan cannot be continued indefinitely. That is why they are so vitally interested in the reciprocal trade program. Even the farmers who do not produce the export crops have a direct interest in the maintenance of trade. If markets cannot be maintained for wheat, cotton, and tobacco, then these farmers have no alternative but to turn to the production of other crops, which will compete directly with those producers now engaged in supplying the domestic market.

In conclusion, may I again reemphasize that the American Farm Bureau Federation earnestly requests the Congress of the United States to extend the Trade Agreements Act for a 2-year period. We believe it is in the best interest of our domestic economy, as well as being an absolute necessity in dealing with the present international situation.

[Telegram]

NEW YORK, N. Y., June 1, 1948.

Senator EUGENE D. MILLIKIN,

Chairman, Senate Finance Committee,

Senate Office Building, Washington, D. C.:

This association urges Finance Committee's favorable action on H. R. C556 with no changes. One-year extension of the Trade Agreements Act provides necessary period for congressional review of entire United States foreign trade policy and should make it probable that adequate and well considered legislation can be enacted by the next Congress which will coordinate the several nowpending programs. Procedures in this bill do not interfere with our foreign relations in making trade agreements but merely changes our internal procedures for consumating them and places responsibility of determining the effects that tariff rate and regulations changes will have on United States business with the Tariff Commission where it has always belonged. If international considerations require disregarding the Tariff Commission's recommendations then the Congress should share responsibility with the President as provided in H. R. 6556. We request that this telegram be included in the records of public hearing on the bill now being held by the Finance Committee.

AMERICAN GLASSWARE ASSOCIATION,
H. L. DILLINGHAM, Secretary.

COMMITTEE ON PUBLIC AFFAIRS,

June 1, 1948.

Mr. SHERWOOD B. STANLEY,

Clerk, Senate Finance Committee, Washington, D. C. DEAR SIR: Replying to your telegram, advising that schedule of hearings on H. R. 6556 had been closed but that you would be glad to insert a statement in the record, I would advise that the Committee on Public Affairs believes that a renewal of the reciprocal trade agreements in the same form and for a 3-year period is essential to the restoration of world trade on a stable basis without which the long-range objectives of the European Recovery Act cannot be accomplished.

At a time when the restoration of confidence and cooperation throughout the world is vital to prevent a third world war, it would be tragic if much of good which the European Recovery Act is beginning to produce would be undermined by a radical change in our trade-relations policy with year-to-year agreements subject to the delays and uncertainties of congressional approval.

The removal of the Tariff Commission from the proceedings of the interdepartmental committee would under H. R. 6556 eliminate an important safeguard which has in the past assured that all aspects of national interest be given full consideration.

When one considers the previous unsatisfactory record of the Tariff Commission culminating in the Smoot-Hawley Act with retaliatory measures abroad and stagnation of world trade in contrast to the progress in world trade under the reciprocal trade agreements, it would appear most unwise to make any radical