Senator MALONE. Do you have an organization here in Washington? Do you maintain offices here?

Mr. BLOUGH. There is a Washington office here for observation and to get information.

Senator MALONE. You mean just to observe Senators and Congressmen?

Mr. BLOUGH. Well, it is a service office to the main office, which is in New York.

Senator MALONE. Can a Senator or Congressman inquire from them at any time for information relative to the organization? Are they here for that purpose?

Mr. BLOUGH. Oh, surely.

Senator MALONE. They have a secretary and a director?

Mr. BLOUGH. They have somebody on the staff.

Senator MALONE. Who is the director?

Mr. BLOUGH. Well, I am not too familiar with this Washington office.

Senator MALONE. You just furnish it for the record. I do not want to waste the time of the committee or your time.

Mr. BLOUGH. I would be very glad to, Senator.

(The information referred to follows:)

Staff members of the National Council of Churches' Washington, D. C., office, 122 Maryland Avenue NE., Washington, D. C.:

Assistant General Secretary: The Rev. Fred S. Buschmeyer
Assistant Director: Miss Nadine Blair

Senator MALONE. I want to ask you 3 or 4 questions here which should not take very long, which I believe not only you, if you are not familiar, but your membership throughout the country should know the actual condition and what your answer is.

First, I will ask you this: Do you know the Constitution of the United States pointedly separates the regulation of the national economy through the adjustment of the duties, imposts, and excises that we call tariffs, and the regulation of foreign commerce-it pointedly separates that field, in a separation of powers in the three branches of Government, from the fixing of foreign policy?

Mr. BLOUGH. I am familiar with the Constitution, if that is your question, Senator.

Senator MALONE. Well, do you know that?

Mr. BLOUGH. The form

Senator MALONE. If you do not or do you?

Mr. BLOUGH. The direct responsibility for setting import duties is on Congress, and the direct responsibility for carrying on the foreign policy of the United States is on the President.

Senator MALONE. That is right.

So the Constitution pointedly separates them, does it not? Article I, section 8, says that the Congress shall-it does not say "maybe"regulate foreign trade, foreign commerce, shall adjust the duties, imposts, and excises; does it not?

Mr. BLOUGH. Yes.

Senator MALONE. Then that regulates the national economy; does it not?

Mr. BLOUGH. To the extent that this is a regulation of the national economy, yes.

Senator MALONE. Why, of course.

And the regulation of the imports always has had perhaps the major part in regulating the national economy; has it not? Mr. BLOUGH. I would question that, sir.

Senator MALONE. Well, if you-

Mr. BLOUGH. I would say other powers of Congress are perhaps more important than this one.

Senator MALONE. Well, powers of Congress. But the legislative branch is charged with the regulation of the national economy.

Mr. BLOUGH. The regulation of the national economy does not appear in the Constitution, but the powers of Congress as specified in the Constitution certainly are the major powers with respect to regulating the economy.

Senator MALONE. You knew your Columbia language would be even better than mine, and I do not boast about my language. I have used it in the engineering business for 30 years, but nobody ever misunderstands me. I will go that far with you.

Now, if that is the case that is in article I, section a, that major provision; is it not?

Mr. BLOUGH. It is my recollection; yes.

Senator MALONE. Well, nobody reads the Constitution any more. If you go downtown to buy a copy of the Constitution, the chances are that a clerk will look at you in amazement and take it on order. There is a sound barrier on the Potomac, and, I think, on the Hudson, that no public sentiment ever penetrates, and if you stay east of the Hudson or east of the Potomac for 60 days without getting your feet on the ground out there someplace where they earn these taxes that we levy all the time, and raise almost all the time, in my opinion, you are not even competent to discuss what the country is talking about, because you just do not know except theoretically.

There is no question but that theoretical free trade is right, and I am for free trade on the basis that the Constitution sets down, of regulating the duty or tariff to make the difference in the costs of production. It is called an evener-that is not the word, but that is about what it means in the tariff act-to make the difference in effective labor costs and the cost of doing business here and in the chief competing country, and that is what the Tariff Commission was charged with in 1930. Mr. BLOUGH. I believe so.

Senator MALONE. And to lower it they could examine it every month, every year, every 6 years, whenever they had reason to believe the relationship had changed. And if the chief competing country had raised its standard of living, labor and costs, the Tariff Commission could lower it.

Mr. BLOUGH. I believe they had that power.

Senator MALONE. It was not within their power at all. They were directed to do it.

Mr. BLOUGH. Well, it was, more or less, a discretionary power on their part.

Senator MALONE. It was not discretionary. It says they "shall" examine it.

Mr. BLOUGH. Yes.

Senator MALONE. It is only discretionary when they examined it. But when they examined it-they could do it by their own motion, or at the request of the Congress, the President, or by you, as an exporter or importer, but when they examined it they had no discretion, did they?

Mr. BLOUGH. They had the discretion to make the findings, and their findings determined their action, presumably.

Senator MALONE. They had a discretion like the Supreme Court, did they not, that what they found to be the facts, what they found to be the law, that is what the decision was supposed to be.

Mr. BLOUGH. Yes; that is right.

Senator MALONE. All right.

I could write a book about it, too, but when you are going right down to it, you do not need a book. The law is as I said it was. They are to determine the difference, not the high cost or the low cost, that is all poppycock, but the reasonable costs.

And our Tariff Commission consists of people who know how to do it. Sometime you ought to talk to Mr. Brossard, one of the men who has been on there the longest. He knows what he is doing, and they have an organization that knows what they are doing. But we do not let them do it. The 1934 act dehorned them. The 1934 act dehorned them. They have no more authority than my grandson, and he is 8 years old. That is clear, is it not? And you know that, do you not? They have no authority at all now.

Mr. BLOUGH. It depends on what you mean by "authority."
Senator MALONE. They do not-

Mr. BLOUGH. They do not have the last word.

Senator MALONE. They do not have any authority to put what they find into operation.

Mr. BLOUGH. The President puts it into operation.

Senator MALONE. He does not put it into operation. That is what I am getting at. He can, if he wants to, but he does not do it, and the record shows, as far as your escape clause is concerned, they do not escape anything of any magnitude. The peril point can be killed; by juggling foreign currency in terms of the dollar, you can kill the peril point in 24 hours, can you not? You are an economist. Mr. BLOUGH. I do not quite see how the peril point enters into this picture.

Senator MALONE. It does not, really, but that is all the Tariff Commission can do when they are asked to do it.

Mr. BLOUGH. Well, the Tariff Commission I do not believe really is dealing with the peril-point provision, Senator, in these escapeclause cases. The peril-point provision, as I recall it, is a provision by which the Tariff Commission can give advice to the negotiating officers of the State Department with respect to the industries which are in difficulties, and the State Department is then, more or less, warned not to negotiate lower rates for those industries.

Senator MALONE. Well, you are putting a lot of nice language in saying it is not there.

Mr. BLOUGH. But the escape clause is really the one that the Tariff Commission works with.

Senator MALONE. Is it your understanding

Mr. BLOUGH. It is my understanding.

Senator MALONE. It may be your understanding, but it is a misunderstanding. They work with the peril point, too, and, when they are asked by the President of the United States or a committee of Congress, they determine what losses at a certain point would endanger that industry.

Mr. BLOUGH. Yes; I see what you mean.

Senator MALONE. Then what happens? They have no authority to put it into operation, do they?

Mr. BLOUGH. That is correct.

Senator MALONE. That is what I asked you a while ago.

Under the Tariff Act of 1930, and there had been progression over the years; I think by 1915 they set up a Tariff Commission as an agent of Congress to carry out their work, but the last tariff act, the last law is always the one you go by, because it is the most highly developed, and so on. The 1930 act says, and I will correct the language so that it is technically correct, that, when they make this examination, they determine the cost of producing an article in this country and the cost of producing that article or a like article in the chief competing foreign nation, and recommend that difference to be the tariff.

Do you remember about that?

Mr. BLOUGH. Yes; I think that is correct.

Senator MALONE. They then can take that up on their own motion, upon the request of a consumer or a producer or any interested party, is what it says, and, of course, the President, the Congress, or almost anybody, for any reason. And they could do that the next day, or in 6 months or 6 years, could they not?

Mr. BLOUGH. I believe so.

Senator MALONE. And, according to their judgment, if they think the relationship between the costs of the chief competing nation on a protected product and our own had changed, then they could readjust it, up or down, could they not?

Mr. BLOUGH. That is my recollection.

Senator MALONE. Were they directed to do that?

Mr. BLOUGH. I think so.

Senator MALONE. They were. That is a fact. Now, then, if every nation were living about like we are, free trade would be automatic, would it not?

if

Mr. BLOUGH. No.

Senator MALONE. In that particular product.

Mr. BLOUGH. You mean under this particular provision?

Senator MALONE. Well, under the law to which you would revert you do not extend the 1934 act.

Mr. BLOUGH. But the Tariff Commission was operating within limits. It could not put an article on the free list as a result of this. Senator MALONE. We, Congress, determine that, do we not? Mr. BLOUGH. That is right.

Senator MALONE. So, if Congress wanted to amend it tomorrow, they could do it.

Mr. BLOUGH. Oh, yes; surely.

Senator MALONE. They are also limited to 50 percent up and 50 percent down; but, at that time, under the statutory rate, it was probably plenty of room for our keeping abreast of the changes.

Now, with the dollar worth 48 cents, according to testimony here of the officials, and in my opinion probably about 35 cents, any fixed tariff is lowered in relation to the inflation, is it not?

Mr. BLOUGH. Those that are specific rates and not ad valorem rates; that is correct.

Senator MALONE. That is right.

27629-58-pt. 1-20

Well, you agree with me that a fixed rate is lowered in proportion to inflation?

Mr. BLOUGH. If you mean, by a fixed rate, 10 percent; no. If you mean, by a fixed rate, 2 cents

Senator MALONE. I am talking not about ad valorem rates, but about a fixed tariff.

Mr. BLOUGH. You are talking about specific rates?

Senator MALONE. Yes.

That means, in other words, it is lowered in accordance with inflation.

Mr. BLOUGH. Yes, surely.

Senator MALONE. Then, with the dollar being worth somewhere between 35 cents and 48 cents, 35 to 48 percent of what it was worth at that time, all fixed tariffs have been lowered in proportion, have they not?

Mr. BLOUGH. Yes; unless some step has been taken to raise them, they have been lowered proportionately.

Senator MALONE. Do you know of any where steps have been taken to raise them?

Mr. BLOUGH. No, except for a few in the escape clauses.

Senator MALONE. About three, and they did not amount to anything, like clothespins in southern Maine. I mean over to the overall

economy.

Now, then, on that basis, whenever they were living about like us and their expenses and their costs were comparable, it would be free trade on that product; would it not?

Mr. BLOUGH. You mean if Congress took away the limitations? Senator MALONE. Why, yes, or if they did not need the limitation. The limitation would work if they began to raise their standard of living. They probably would come within the 50 percent because, you see, if you do not extend this act it dies midnight June 30, and then within 2 months' notice to the nations party to multilateral agreements, all those products revert to the Tariff Commission, as an agent of Congress. With 6 months' notice to the bilateral treaty nations, all the parties to the agreement revert to the statutory rate. You understand that, too; do you not?

Mr. BLOUGH. Yes.

Senator MALONE. Well, perhaps the 50 percent might be all right if these nations begin to pay attention to their own economy and let their wages go up and create a market in their own country; might it not?

Mr. BLOUGH. The basic reason their wages do not go up is because their people are not sufficiently productive.

Senator MALONE. Well, of course, there all you have to do is examine the record. They produce just as much copper and just as much of many other products. I just got through examining on that basis. And you admit if they work as hard in Japan, they produce

more.

Mr. BLOUGH. With respect to specific types of production, that is quite correct.

Senator MALONE. Why, of course. In other words, if the workers are comparably competent. And they do not make an entire pound of copper, they each do a certain specific thing. I worked in a mill and was no better than a green hand while I was in college. I did