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Crude Oil Output In Texas
Has Risen Despite The Cuts
In "allowable Producing
Days" By R.r Commission

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Exhibit X

In their eagerness to put the blame on imports for all their problems, t producers and State officials of Texas have put too much stress on the statistic yardstick known as allowable production days. This formula relates to t absolute maximum wells can produce without irreparably harming the res vnlr—a production level permitted only in wartime emergency. A 19-d allowable is fairly normal. Furthermore, not all oil wells are subject to rlw allowables. Thus statistics show that even when the allowables are redu« the many wells exempted from these restrictions can result In the actual lei of production continuing to rise, and current output with a 9-day allows! is not far below production at 21 days in 1952.

Crude oil production in Texat durin-g recent years


Representations that the State has suffered great loss of actual revenue fm curtailed allowable production days has given rise to rumors of Texas havil a deficit of $100 million. But on June 19, Gov. I'rice Daniel denied such defici said Texas is operating on n balanced budget with $12,392,000 in the gener nd a further $250 million in special funds.

Senator Frear. Mr. John Gallagher, American Chamber of Commerce of Venezuela.

Mr. Ellis. I have received a communication from Mr. Gallagher in Caracas, Mr. Chairman. Mr. Gallagher is involved in working out some labor disputes, and is unable to be here, and has asked that the statement of the chamber be included in the record at this point.

Senator Frear. Thank you, Mr. Ellis. It will be included in the record at this point.

(The statement of Mr. John Gallagher in behalf of the American Chamber of Commerce of Venezuela follows: )

Statement On American Chamber Of Commerce Of Venezuela

The American Chamber of Commerce of Venezuela has more than 200 members, the majority of whom are American citizens. The membership of the chamber, together with their affiliates, represents hundreds of United States eitizens and corporations whose products, services and facilities are sold throughout Venezuela. A listing of the companies and organizations represented by our membership reads like a Who's Who of United States financial, industrial, and commercial enterprise.

None of the American oil companies doing business in Venezuela are members of the chamber. Although we do not speak for nor purport to represent their interests, it would be impossible to discuss trade and commerce between the United States and Venezuela without discussing Venezuelan oil exports since oil is in reality the principal medium of exchange used to support the commerce between the two nations.

We recognize that the Congress, as well as the executive branch, is under considerable pressure to change our present laws and policies with reference to trade reciprocity to the end of either specifically restricting imports of some commodities, such as oil, or to change the Trade Agreements Act in such a manner as would permit or require other branches of our Government to impose more restrictive measures on imports.

The possibility of such changes is of concern to nil Americans engaged in the highly competitive field of foreign trade as it exists today. It is particularly alarming to those of us who nre in the foreign-trnde "front lines" engaged in trying to not only maintain but expand American interests in Venezuela. Venezuela is one of our best foreign markers and the reciprocal-trade relationship existing between the tw:o countries is in effect a model example of the real benefits of free enterprise and trade reciprocity working at its best.

We strongly recommend that the Congress extend the Trade Agreements Act in a form that will not impair our present advantageous trade relations with Venezuela and by example encourage the expansion of similar trade relationships with other nations throughout the Western Hemisphere. As American citizens we believe that such trade relationships are to the best interest of the greatest number of Americans. As American businessmen we are interested in preserving a business climate in which we have invested a substantial portion of our working life, our capital, and our future business security.

Let us review the growth of the trnde relationship between the two countries and attempt to appraise the basis, implications, and potentials of this relationship from the standpoint of economics, national security, and furtherance of international trade and friendship throughout the Western Hemisphere.


Venezuela is our closest South American neighbor, being 1,800 miles from Florida and within 8 hours' flying time from New York. Venezuela has been a friend and ally of the United States in times of peace as well as conflict since her liberation in 1821 under the leadership of the patriot Simon Bolivar. Oil was discovered in Venezuela in 1914 and by the late 1930's Venezuela began to

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be an important market for American products. As will be noted from t following table, United States exports of goods and commodities to Venezue have increased from $19 million in 1935 to approximately $1 billion in 1957:

Oroictk of merchandise exports from the United States to Venezuela, 1935

(includes reexports)


1 Estimated on basis of 11 months' data.

Source: U. 8. Department of Commerce Reports No. FT 420. United States Exports of Domestic i Foreign Merchandise. Country of Destination by Subgroup.

It should be noted that these figures do not include the value of invisible intangible exports and benefits which in 1957 are estimated to be betwe $500 million and $000 million, making a grand total for that year of appro: mately $1,500 million to $1,600 million. This contrasts to our purchases fn Venezuela for the same year amounting to approximately $900 million.

Your attention is specifically directed to the significant increase in Ameriu exports to Venezuela after the two countries entered into a bilateral tra agreement in 193!), within the framework of our Trade Agreements Act of 1R Under the terms of that agreement the United States granted concessions only 2 commodities of consequence, crude petroleum and fuel oil, and in retu Venezuela granted concessions on approximately 100 items of various typ« This is a working example of a bilateral trade agreement wherein the Unit States received beneficial concessions in return for beneficial concessions grand This, gentlemen, we understand is the true intent of the Trade Agreements A

This trade agreement with Venezuela was renegotiated in 1952 at which ti the United States received concessions on approximately 100 items in retii for further <-oncessions on imports of crude oil and fuel oil froui Venezuela. is noteworthy that since that time commodity exports to Venezuela increat from $500 million to $1 billion.

Probably very few Americans are aware of the existence of this agreeuu which has been the basis for the expansion of trade between our two countri but we can assure you the great majority of Venezuelans are aware of it a vitally concerned.

If our Nation in its wisdom finds that oil imports from Venezuela should restricted, surely we should proceed to this end not by unilateral action but accordance with the terms and provisions of this contract which is so uiutua advantageous. If we must retreat from our International commitments, us do so with caution and in accordance with the provisions of those «x» mitments.


The people of every State in the Union benefit directly or indirectly from o trade with Venezuela. The 10 leading States in order of importance of modify exports are: New York, Michigan. Ohio, New Jersey, Pennsylvania, U nois, California. Indiana, Wisconsin, and Texas.

When it comes to changing laws and governmental regulations it is i normal for people to ask, "How does this affect me?" We presume that t\i gressmen are concerned with the question. "How does this affect my const it ents?" We submit to you information which will answer some of those «ni«

1 We arc advised that the major portion of oil exports to the United States consixt* ln-nv.v commercial fuel oil. renliltinl, and heavy crude oil. which xupplementii but do*1* i KUpplant domestic oil production.

tions. We refer you to exhibit 1 to our testimony which shows the United States exports of domestic merchandise to Venezuela for the year 1937 by categories and amounts. Those familiar with the various agricultural products, goods, and commodities produced in their States can from this report get some idea as to what Venezuela is using that is produced in their home section. A study was completed in 1950 by Econometric Specialties, Inc., of New York, N*. Y., wherein they traced 61) jwrcent of American exports to-Venezuela to their source of origin. Their findings, as reflected by exhibit 2, show by city and State some of the various commodities exported to Venezuela. You can well imagine how much greater this showing would be if the 100 percent of our exports to Venezuela were traced to their source for the year 1957 when our market expanded to more than $1 billion.

We think it is further noteworthy that Venezuela is our second largest world customer on a per capita basis: this ranks Venezuela ahead of other important customers, such as the United Kingdom, France, Western Germany, and Japan— second only to Canada among all nations.

In addition to those who benefit directly from exports of commodities, there are the millions of American stockholders who hold an interest in companies that either engage in business in Venezuela or sell products to Venezuela. Added to this are the thousands of people who participate in shipping and transportation of these commodities, as well as being employed in insurance companies, banks, and service organizations that finance, insure, and service this trade. When we review the specifics of this particular export market—as distinguished from generalized figures—we soon see the widespread nature of the benefits to the citizens of our country from this advantageous market in Venezuela.

Now let us examine how Venezuela benefits from exports to the United States. Since oil is the principal export some would infer that only the persons employed by the oil companies are the beneficiaries. This is far from the truth. Since Venezuela is primarily a one crop country, that crop being oil, oil production and refining is the backbone of its economy and this industry directly and indirectly accounts for a substantial portion of the jobs in Venezuela. Such is not the case in the United States with our highly diversified economy wherein the oil industry is only one segment.

If oil imports from Venezuela were restricted the principal beneficiaries in the T'nited States would be a part of the indejtendent producing segment of the domestic oil and coal Industry, and those who incidentally benefit therefrom. These benefits could at the most only be in proportion to the amount of oil imports restricted.

Certainly we can conceive of no one in Venezuela benefiting from restrictions on Venezuelan oil imports into the United States. Without this oil export market and the dollar return therefrom. Venezuela would necessarily have to curb its purchases from the United States, thus affecting thousands of producers and laborers throughout our country. The only possible foreign beneficiary of restrictions on our trade with Venezuela would be those other nations of the world wTith whom Venezuela may be forced to trade because of curtailment of its American markets.

After a cold analysis of these facts and factors it appears to our chamber that from the standpoint of economics any action which would place undue or unreasonable restraint on Venezuelan exports to the United States would in turn decrease our exports to that country and discourage further investment with the result of imposing adverse effects on more Americans, not to mention Venezuelans, than would ever be benefited.

The United States has set itself up as the champion of trade reciprocity, increased and liberalized international trade, and private investment, free enterprise development of our neighbors in the Western Hemisphere. Private American investment in Venezuela is some $3,500 million, second only to our investments in Canada.

Our experience in Venezuela, where this private capital has operated within a climate of free enterprise and equitable treatment, provides a classic example of the mutual benefits that can be derived from a common sense utilization of foreign capital by a country gifted with great natural resources. The facts and figures amply confirm this. Furthermore, this has all been done within the framework of private initiative, with absolutely no government aid from abroad and in turn no burden to the American taxpayer. Even today Venezuela asks

nothing from us other than that we buy from them In order that they may b from us—In other words, they want to do business with us in accordance wi the spirit and letter of the trade agreement which exists between the two t tions. This Ib not an unreasonable request.


Apparently most domestic groups who seek protection against foreign impoi sooner or later seek to show that such restrictions are not only necessary f« an economic standpoint but are also vital to the national security. Most pi ponents for oil import restrictions are no exception to this rule—as a matter fact it is the basis for their principal argument and likewise is the basis which the current system of voluntary quotas is predicated.

Let us examine the situation as to national defense or national security related to oil imports. It is consistently stated that "there is no security foreign oil." Apparently those who make these observations are unaware the historical facts that refute this, in the case of Venezuelan oil, since we ha depended upon this oil in the past during World War II, during the post* fuel shortage along the Atlantic seaboard, during the Korean war and the reef Suer. crisis.

Furthermore, we have had the assurance that we could depend upon this because of the geographical and historically friendly ties uniting us to Yen uela. At the outbreak of the Formosa crisis, the Venezuelan Foreign Minis stated his country's position: "In view of the problem faced by the free woi and in particular the I'nited States of America as a result of the tensi created by the situation in Formosa. I would like to reaffirm to our sis nation to the north, ui the name of the Government and the Venezuelan pe«i our sentiments of sincere and traditional friendship, our firm moral supp and assure them that the natural and strategic resources of Venezuela. es| dally the petroleum and iron ore. will be available to the cla\ise which 1 obliged President Kisenhower to solicit from Congress special powers safeguarding the ideals of liberty and justice."

In spite of historical refutation, if we still assume there is no security foreign oil, are we also to assume there is no security in foreign bauxl manganese, tin, tungsten and many other strategic materials which we und stand the United States does not possess in enough abundance to wage all-out war? Should we ignore that Venezuelan iron ore, mined by Anieric companies, is combined with Pennsylvania coal to produce steel in Penns vania mills, and would be vital to a future war effort? If we carry their ar ment that strategic materials from foreign sources will be unavailable in tt of war to its logical conclusion, does this mean that we should gracefo surrender now, or does it mean that perhaps we should reasonably conserve i own inadequate resources and supplement them more heavily in normal tit from foreign sources? Let us not through legislative mandate Jeopardise in any manner impair the availability of these necessary raw materials fr whatever source they must come.


This committee is faced with the problem of trying to find a solution solutions to this problem of how we can balance imports and domestic prod tivity in such a way us to insure our domestic economic stability as well our national security. In the process of doing this we are sure that the cr mittpe is also concerned with achieving these solutions in such a manner will minimize, or eliminate if possible, impairment of our foreign trade. T Is not an easy task. Admittedly those of us who present our positions to .1 do so with viewpoints that are flavored In one degree or another by our" interests. Kach witness feels that his viewpoint or position is equitable 3 we are no exception. We recognize that this committee has a difficult t* in reconciling self-interest with that, which is for the greatest good of • people. We have tried to demonstrate with facts plus conclusions drawn fr those facts that a continuation of our previous policies on reciprocal tn have definitely worked, in the case of our relationship with Venezuela. 1 the greatest, good of the most people. We do not profess to be experts on I results of this program as It. applies to other nations In the world: howev we definitely have seen its benefits in the Western Hemisphere. AVe beli< that if those policies are continued the ultimate result will be a furtl

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