years. We feel this is essential to carry us over the long period of negotiation with the developing trade programs in western Europe, and that a shorter extension would be a tragic mistake.

Second: While we support the bill, we would actually like a more liberal bill. We feel that it is a step backward to allow an increase of tariffs to 50 percent over the 1934 rate.

This was the highest point in recent American history and was a direct result of the Smoot-Hawley Tariff Act.

If there is injury to an industry, or to an area, or to a segment of the American people, there are better ways to take care of that injury. Third: The Cooperative League would be very happy to support an amendment to the Reciprocal Agreements Act which would provide machinery for adjustments in the case of injury to an industry.

A series of bills have been introduced which would provide for such adjustment. Although one of the strongest supporters of an adjustment bill is the AFL-CIO, this is by no means a "labor" measure. It is important for small business, as well as some larger businesses that might be affected, and it is extremely important for protecting the consumer interest.

The chairman this morning indicated that there had not been very much support for such bills.

Actually there is a great deal of support by important national organizations for such an adjustment act.

The proposals which are before this committee in various forms would provide assistance to communities, industries, and individuals to facilitate adjustment made necessary by the trade policy of the United States.

This would include technical advice and Government loans to industry, plus possible rapid amortization of investment in new equipment. Supplementary unemployment compensation, retraining, transportation to new employment opportunities, and early retirement benefits would be provided for labor.

The intent of the adjustment amendments is to make a transition possible for a business which must move into another line in which it can compete economically and successfully on the open domestic market.

Protectionist spokesmen who try to make it appear that the only way to protect American industry is through tariffs and quotas make a serious mistake. The cost of any adjustment which is necessary in the national interest should be borne by the taxpayers of the United States as a whole.

Compensation should be made directly to the industry which is hurt, if that is necessary.

This is a cheaper way to meet our problems than to put on a tariff which is an indirect tax on the consumer for every item which is purchased in this field.

A tariff becomes a direct and regressive form of taxation, paid for by the American consumer to benefit a small segment of the American population.

For these reasons we are in strong support for trade adjustment legislation which will meet our problems directly and spread the cost of any such transition to the taxpayers as a whole.

The total cost to the United States will be much smaller than the cost of the tariff.

Fourth, the Cooperative League continues its long standing support for the creation of an Organization for Trade Cooperation, the OTC, which would serve as a housekeeping mechanism for the agreements which have been made and are subject to continuing negotiation under the General Agreements on Tariffs and Trade.

Multilateral negotiations through which these agreements are reached make it possible for the United States to secure concessions from other countries for any tariff reduction which we make.

The general level of tariffs may be reduced and a high level of trade may be attained through such procedures.

In other words, the negotiations under GATT allowed for shrewd Yankee bargaining to see that we achieve a measure of freer trade accomplished over a long period of time.

Fifth, the Cooperative League believes that the national interest calls for a continuing increase of imports and exports as an effective program to increase the strength of the free world.

Our imports have grown from $2 billion per year in 1935, when the reciprocal trade program was launched, to $13 billion last year.

Our exports which stood at $2.3 billion in 1935 have grown even faster than our imports. Last year they had climbed to $20 billion. The reduction in our tariffs by an average of 75 percent since 1934 has produced no overwhelming flood of imports. It has provided a substantial growth in both imports and exports.

Actually our exports have risen more rapidly than have our imports. Countries around the world can buy American products only if they have an opportunity to sell to us. We should make an all-out effort to increase the flow of international trade among the countries of the free world.

As this committee is painfully aware the Soviet Union has launched an all-out drive of economic competition. This Soviet penetration can be met most effectively if we engage in a stepped-up program of freer trade among the free nations.

It is impossible to achieve free trade in the immediate future, but national and international policy would indicate that we should move gradually in that direction.

This is the most healthy way to meet Soviet competition. It is a constructive way to build our economies at home and abroad for the greatest possible good for the democratic forces of the world.

As the Cooperative League pointed out in its earlier testimony: No man is an island unto himself, and neither is any nation. We are part of the democratic free world, engaged in an intense struggle with the forces of communism. We need friends and allies as much as they need us; and we are not, if we can help it, going to let any part of the free world go by default

There is one suggestion I would like to make, Mr. Chairman, if I may, which has grown out of the discussions which have been held here this morning.

Back in 1951, just before the Korean war, the Government had launched a study on the "dollar gap." Because of the Korean war, much of the "dollar gap" disappeared, because we automatically were forcing so many things abroad through our defense program.

That dollar-gap program, the study of the dollar-gap problem, drew a great deal of support from the economic organizations of the country which wanted to do something about it.

We were all disappointed that the study was abandoned.

Actually one of the great problems in getting more trade around the world is to get at that problem of the dollar gap, and I wish some committee of the Congress, perhaps this committee, would initiate a study of that very serious problem so we could get down to another of the fundamentals.

In the meantime we need to expend the present reciprocal agreements in order to hold the line.

Senator CARLSON. Well, Mr. Campbell, we appreciate very much your statement.

I was interested in your comment regarding this dollar-gap study. At the opening of this hearing last Friday, Senator Flanders of Vermont, stressed the fact that he was offering an amendment to this bill which would provide a 2-year study by people who were competent to get into this field of trade and international trade and domestic problems with regard to trade, and hoped that it would be a part of this bill, and that the study would be made. I assume if that is approved by the committee and approved by the Congress that this dollar-gap situation would be given consideration.

Mr. CAMPBELL. Very fine.

Senator CARLSON. And I gathered from the discussion around the dais here there was a lot of interest at least in Senator Flanders' proposals.

Mr. CAMPBELL. Very good.

Senator CARLSON. I do not happen to have a copy of your statement, but the Cooperative League, I think you mentioned the organizations that are involved at the beginning.

Would you repeat that for me?

Mr. CAMPBELL. Yes. It is an organization made up of consumer and purchasing and service-type cooperatives which include a great number of the farm supply co-ops, consumer goods co-ops, insurance organizations and credit, farm supply, housing, and medical care.

It is a general organization that carries forward education, promotion, and development work for 13 million families that are members of the Cooperative League through these various types of cooperatives; Senator CARLSON. We have a very fine cooperative organization in the Middle West, in Kansas City headed by Mr. Cowden. Is that group a member?

Mr. CAMPBELL. It is not a member of the Cooperative League but Mr. Cowden was vice president of our organization for many years and we hope he will be associated with us again soon.

We are very happy, Senator, that you recommended a man from his organization, Mr. Dwight Townsend, as director of cooperative housing in the FHA.

You will be pleased to know that the cooperative housing program has moved forward very rapidly during the last couple of years, part of it at least as a result of your recommendation for that appointment. Senator CARLSON. Well, I was very pleased to recommend this man for this appointment in this place and I understand he is doing a very fine piece of work.

Mr. CAMPBELL. That is right.

Senator CARLSON. One other thing that you suggested I thought was of great interest and I think it is going to be of more continuing interest and that is in regard to this adjustment act with making plans to take care of some of the injuries to industry. I think we

have had problems in the past but I am not so sure we will not continue to have more of them in the future.

Mr. CAMPBELL. That is right.

Senator CARLSON. I have a feeling we will have to devote some time to that and that should be included in a study if we should have

one.

Mr. CAMPBELL. I believe that should be done at the present time. Some minimum step should be taken at least at this session to get the principle of the adjustments made. No matter what happens in the flow of an economy this size somebody is bound to be hurt, and there ought to be adjustments.

Senator CARLSON. That is right.

Mr. CAMPBELL. This would be a kind of an insurance policy to take care of any injured industry or injured group of workers in the change of economic policy just as we have in any other form of loss to an individual or group or to the economy.

Senator CARLSON. Mr. Campbell, I appreciate your statement and I think you made a very fine statement and I thank you. Mr. CAMPBELL. Thank you very much.

Senator CARLSON. Mr. James R. Sharp, Imported Hardwood Plywood Association and American Association of Hardwood Plywood Users.

Mr. Sharp?

Mr. SHARP. Yes, Mr. Chairman.

Senator CARLSON. Mr. Sharp, we are very happy to have you here, and we will be glad to have your testimony. You may read your statement or you may have your statement placed in the record and talk extemporaneusly, any way you wish to handle it.

STATEMENT OF JAMES R. SHARP, SHARP & BOGAN, ATTORNEYS AT LAW, WASHINGTON, D. C., REPRESENTING VARIOUS IMPORTER GROUPS

Mr. SHARP. Thank you, Mr. Chairman.

Since I have a fairly well worked out statement and will attempt to be quite brief, I will at least cover in general the statement which I I have prepared.

My name is James R. Sharp. I am an attorney with offices at 1108 16th Street NW, Washington, D. C. My firm, Sharp & Bogan, represents numerous associations and companies who have a vital stake in the trade between the United States and other countries.

Many of our clients are both exporters and importers. These firms have thus been in a position of witnessing at first hand the immediate effect which the volume of United States imports has had upon our volume of exports. Day to day, month to month, and year to year, they wrestle with the problem of the shortage of dollars needed by foreign purchasers to pay for United States exports produced in United States manufacturing plants by the United States labor force.

Others of our clients are associations of importers and users of imported products who have banded together to support a United States trade policy which will provide long-range certainty and stability in our trade relations with other free world nations as well as to expose the frequently false or grossly exaggerated claims of United States industries as to the effect of imports upon their businesses.

I am not here to speak in relation to specific commodities, but instead to urge you to support H. R. 12591, as passed by the House. However, to give you an idea of the diversity of interests for whom I speak today, I may say that they include, among others, the following: The Imported Hardwood Plywood Association.

The Plywood Group of National Council of American Importers. The American Association of Hardwood Plywood Users.

I should like to delete the next, which is The American Importers of Brass & Copper Mill Products, since I do not represent them now. The American Importers of Malleable Pipe Fittings.

The American Association of European Carpet Importers.
The American Association of Wood Pulp Importers.
The Importers of Swedish Hardboard, and

The Scandinavian Mink Importers.

Gentlemen, H. R. 12591 is an outgrowth of one of the most thorough and extensive studies the Committee on Ways and Means of the House, the Democratic and Republican leaders of the House, and the administration have ever conducted on the subject of our foreign trade policy. While no one can claim the bill is perfect, it is nevertheless a good bill which commands your wholehearted support, and I urge that you give it that support.

The most important consideration is the fact that the bill arms this Nation with an effective weapon with which to fight the international economic and trade war which Nikita Khrushchev publicly declared upon us a short time ago.

In this respect the bill provides a means for long-range cooperation with our friends in the free world, permits us to combat the Soviet offensive and to assure mutual prosperity. It provides a means with which to halt the insidious Soviet penetration and possible eventual absorption of our historic export markets.

It provides both the means and the needed time with which to deal effectively and intelligently with the regional common markets and customs unions which have been formed or which are in the process of negotiation.

But while doing so, the bill carries safeguards beyond those in the existing statute for the protection of those industries who may suffer or be threatened with serious injury by reason of imports.

In the House committee and on the floor, a substitute bill was offered for H. R. 12591. This was the so-called Simpson bill, which was backed by a large and diverse number of special interests. In my opinion it violated the Constitution. As I was the only witness before the Committee on Ways and Means who raised this issue in my testimony, it was indeed gratifying to me to find that the constitutional defect in the Simpson proposal was so clearly and forcefully brought to light during the course which H. R. took through the Ways and Means Committee and the House of Representatives.

The fundamental issue that is, the lack of congressional authority to legislate in a vacuum without the participation of the Presidentwas clearly and succinctly discussed by both the majority and the minority of the Committee on Ways and Means in the report accompanying H. R. 12591. This is one issue, I might say, on which the divided Ways and Means Committee agreed.

As many of the special interests who back this proposal in the House are among those who will testify before this committee, a pro