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prevail in the event the whole world went for free trade. I was not saying that any particular country had an advantage.
Mr. FROMER. If the whole country was set up on the basis of free trade, I think we would come out the gainer, Congressman. I think we would come out that much stronger, and I think that is why the policy of this country is toward a greater interchange of trade with our allies.
Mr. TALLE. Oh, I agree, because of our knowledge, but on the other hand, we will have to face up to the kind of world we are in. Just look at the world and then give me the answer, will you?
Mr. FROMER. Yes; I look at the world and I think it is a lot better for us to have our allies produce products which they can sell to us, instead of us giving them to them because they cannot buy from us, inasmuch as they cannot earn our dollars.
A thing appeared in one of the columns just the other day. That one of our European friends had to possibly turn to Poland to buy coal, because they were unable to sell us their cheese, and I would like to quote. This columnist said:
Ordinarily these countries would have turned down the Polish requestand that was that if they wanted to buy Polish coal they had to sell Poland some strategically important materialsand bought their coal from us, but after counting the dollars that they could earn by selling less cheese to the United States, and all the dollar aid they might receive in addition they found that they could not possibly afford to buy American coal.
And I would like to point out, with regard to the talk about restrictions in Denmark and these other countries, that the Department of State, I believe it was, issued a statement not too long ago, and listing the question of restrictions and pointed out that there are two types of restrictions,
One has to do with restrictions for currency purposes. And the other type of restriction would have to do with the protection of special domestic interests.
Now, the foreign countries from whom we take cheese-Mr. TALLE. If you will break that second one down, you will have a long array of items, I can assure you.
Mr. FROMER. But you would not have Denmark in there and you will not have Italy in there and you will not have Switzerland or France, and those are the countries who are our main sources of cheese supply
Mr. TALLE. Well, you are speaking only of cheese and I talk about the world.
Mr. FROMER. No, I
Mr. TALLE. Not all of the world is friendly to us, you must remember.
Mr. FROMER. No, I am talking here in favor of removing restrictions against the importation of cheese.
Mr. TALLE. You were talking about free trade earlier and that is what I am talking about.
Mr. FROMER. Yes; and that affects free trade. And your question to one of the witnesses was whether Denmark imposes restrictions against our products, and I would like to point out to you that the only type of restrictions in effect in Denmark, or the other countries,
which are the sources of our cheese, are only for the purpose of conserving currency because they do not have enough United States dollars.
For example, they do not have enough United States dollars to buy as many autos as they would like to buy. Perhaps if we bought more of their cheese they might be able to buy more of our autos, tobacco, cotton, and other agricultural products, perhaps.
Now, Congressman Dollinger asked one of the witnesses as to the difference between Mr. Paul's testimony and Mr. Kline's testimony. Mr. Kline, as you recall, represented the American Farm Bureau Federation.
Congressman, in my opinion, the difference is that the former is representing special-interest legislation—that is to protect a certain butter interest-while the latter, the American Farm Bureau Federation, expresses the interests of farmers as a whole and of agriculture and the Nation as a whole, and incidentally the National Farmers Union has also come out against this regulation.
A question was asked with reference to the price of Blue Cheese and I think that Mr. Swain said 40 cents was the price without the duty. I would like to correct that from actual knowledge. The price is 43 cents, plus a duty, plus a handling charge to the original importer.
With regard to the figures of 52 million pounds imported in 1942, even though we had import control I would like to point this out to you: The import controls became effective August 9, 1951.
Licenses were issued and then additional licenses were issued to be effective until June 30, 1952. Because of the pressing need and commitments that importers had made, they had used up most of their quota before the end of 1951, which accounts for the 52 million pounds imported in 1951.
Actually, the amount of imports authorized for the entire period was 39 million pounds and I believe that of that quantity there remained unused, by the beginning of this year, only slightly more than 10 million pounds, and assuming a reenactment of this statute and similar restrictions for the balance of 1952, the amount of imports would not total above 30 million pounds, and that is why this is so serious to these foreign countries. Not because of the difference of 56 million pounds in 1950 to 52 million in 1951, but because this year will see a drop of over 20 million pounds of cheese.
Mr. McDonough. What effect is it going to have on this country? You are expressing the effect it is going to have on other countries. What effect is it going to have on the economy of this country?
Mr. FROMER. I do not believe it is going to have any effect on the economy of this country if it is removed, for this reason: First of all, I would like to indicate to you that cheese imports have increased, in the past 20 years, from 492 million pounds to over 1,150 million pounds. Per capita consumption has increased proportionately in the same period. Imports are away down here, 62 million in 1931. They are less than that at the present time.
Now, the imports of cheese have stimulated production in this country. We never produced Blue Mold cheese in this country prior to 1937. We never produced Gruyere cheese prior to recently.
We export more cheese than we import, and the proportion that is actually paid for is considerably larger than indicated.
Mr. McDONOUGH. Where do we export it to?
Mr. FROMER. I can supply you a list of the various countries.
Mr. McDoNOUGH. I do not mean specifically. Generally to what countries?
Mr. FROMER. Generally, England, Greece, South America, Mexico--there is a long list of countries that have been purchasing our cheese. Some of it with the aid of our Government; yes.
Mr. McDonough. What percentage of that export is financed by the Government?
Mr. FROMER. I have indicated to you that 2 percent out of ECA if financed by the Government.
I would like to indicate the proportion the ratio of cheese import bears to production. In 1931 we imported 12 percent of our cheese production. Right now, in 1951 we are down to 4% percent of our production.
Now I say again, that there is a definite stimulative effect that imports have had, because we import primarily types of cheese that are foreign to this country. Our association is not interested particularly in Cheddar cheese, for example. But cheeses like the blue cheese, Swiss Gruyere cheese, and a long list of names that the stenographer will no doubt have a great deal of difficulty spelling, are the cheeses we are interested in, and in that connection I would like to comment about what Mr. Swain said, that his company started in 1935.
He had better check with his boss, Mr. Frederiksen, because Mr. Frederiksen testified 4 years ago, before the Federal Security Agency, and recently before the Tariff Commission, that he started in business in about 1936, started making some cheese in 1937, and in 1937, about a half million pounds of cheese was produced.
Contrast that to the fact that we had already been importing millions of pounds of cheese from Denmark at the time, and in 1937 were importing over 3,000,000 pounds of cheese, which is greater than the amount of cheese that we imported from Denmark at the time these restrictions were imposed.
Now, with regard to ceiling prices, I would like to point out that whereas the prices of these foreign types of cheeses have been enabled to move up, because of the regulation pertaining to products made from milk, that there is a ceiling price on imported products, so that the importer cannot make a larger margin, at the present time, than he made in the base period.
In other words, whatever his margin was in January of 1951, is what he can add to his net cost today. He cannot profit. He cannot take advantage of any short situation.
The same is not true with regard to the domestic situation, and evidently advantage has been taken of it as demonstrated in the substantially increased prices of domestic cheese.
A question was asked with regard to our sources of cheese, our principal sources. I have here tabulated, and will leave for the record, the countries and the quantity imported from various countries during 1951.
Italy is our principal source of supply. And we imported 14,993,000 pounds from Italy in 1951. New Zealand is second, Switzerland third, Denmark fourth, the Netherlands fifth, Argentina sixth. And I might say, with regard to Argentina, that that no doubt will fall considerably, because Argentina has no exportable cheese at the
present time, and has not exported any cheese at all to the United States during this current year.
(The tabulation referred to is as follows:)
Mr. FROMER. Now the question was asked with reference to why the National Cheese Institute was not here last year. Whether it was a slip or not, personally I would think they would never have dreamed that Congress would impose restrictions against the importation of cheese. But having a good thing—that is good from the point of view of special interests, regardless of the entire agricultural picture, naturally, I do not blame them. They want to hold onto it. I guess if we had the same advantage, we would no doubt act in the same way.
A question was asked by Congressman Gamble as to where this propaganda is coming from, where is all this noise coming from, why do we get so much mail against section 104.
I think it is quite simple. The President of the United States is against section 104. The Secretary of Agriculture, the Secretary of State, the Secretary of Commerce, the Senate Banking and Currency Committee-which has rendered a report in support of repeal and set forth eight very cogent reasons why it should be repealed. The farm organizations, such as the Farm Bureau Federation, the National Farmers Union; trade and industry organizations such as the American Cotton Shippers Association, American Cotton Council; tobacco; Chambers of Commerce of Boston, Philadelphia, New York, and other cities. The National Millers Federation, commerce and industry, and numerous domestic trade and industry organizations are against it.
Consumers are against it, and that is, Congressman, whom you said you were particularly interested in: The League of Women Voters,
the General Federation of Women's Clubs, the CIO, International Association of Machinists, and a multitude of other consumer organizations are against it. And the press has recognized the situation and is very strongly against it: The Times, The Herald Tribune, The Washington Post, and numerous other newspapers.
Why, only this morning in the Herald Tribune a very enlightening editorial appeared, and I would just like to read a small portion of it:
Congress has the power to impose a quota on cheese, but it does not have the power to set one on its responsibility to the Nation. It would be a default of that responsibility to renew the import quotas. If friendly nations are prevented from earning dollars by fair competition, over a tariff barrier, in commodities which Americans are pleased to buy, then those countries simply will not be able to maintain the defense efforts they have committed themselves to. They will be unable to maintain the living standards which provide the surest internal defense against subversion. They will be forced by American policy to reorient their trade from the west to the east. If consumer goods were flooding the American market, there would be reason to strengthen American producers. Yet, even then, not by relieving them of all the need to strive for efficiency, but this is not the situation.
Mr. Brown. How much more time will you need? We have four other witnesses who are from out of town.
Mr. FROMER. I just want to finish this and then that will be my conclusion.
Mr. BROWN. You might file it in order to save time.
Mr. FROMER. I have directed my statement to answering questions that have been raised.
Mr. Brown. Well, how much more time do you want?
Mr. FROMER. I will finish this and then you can ask whatever questions you want.
Mr. BROWN. All right, go ahead.
"Now our world leadership and the free world's economic defense are at stake. It is up to Congress to reaffirm that leadership by strengthening the international economy.”
I submit, gentlemen, that I have tried to answer things that were in your minds. I strongly urge that this section of the act should not, for all of these reasons and for many others which I mentioned in my statement, be reenacted. I will be glad to answer any questions.
Mr. GAMBLE. Do you know, by chance, whether the Senate did anything about section 104 yesterday when they were considering reporting out the bill? I have not seen anything in the papers.
Mr. FROMER. No, because the Senate voted on section 104 several
Mr. GAMBLE. That is right.
Mr. FROMER. Against renewing section 104. And my information is they had voted to reinstate section 590 of the Second War Powers Act, which contained certain restrictions on the importations of fats and oils and butter. And incidentally, butter was there specifically by name. But not the term "cheese” and other dairy products. Cheese and other dairy products was slipped in there, so to speak.
Mr. BROWN. Mr. Hull.
Mr. Hull. We have a lot of complaints about the farmers leaving the farms and going to the cities. Why do not the city people leave the cities and go to the farm and take in some of this easy money?