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ships. For this reason, virtually all of our major companies have created trade development departments. Their endeavor is to apprise shippers of both export and import opportunities presently unknown to them or unexploited by them. Steamship management personnel overseas as well as those at home are dediIcated to this task. While the motives in so doing are clearly aimed at the improvement of the individual company's economic welfare, we have in the process become partners of other segments of our economy in factory, farm, and mine, participating directly or indirectly in foreign trade. For these reasons, we have necessarily come to be students of the issues now before this committee.

One additional point related to the foregoing which is of particular significance to the maritime industry. Developing new markets or maintaining established ones is far from a simple process. Many considerations are involved, not the least of which is the creation of reasonably stable trading conditions. Stability in meaningful proportions is seriously handicapped if our fundamental tariff policy is in serious question. One of the severest blows that could be struck at the American merchant marine's vessel modernization program (at present, in excess of $3 billion worth of new vessel construction is in view) would result from the rejection by Congress of the extension of the reciprocal trade agreements program. This surely would be interpreted by our customers and suppliers overseas as the end of an era of international trading cooperation. It would lead ultimately to entirely new patterns of international trade, the effect of which could be disastrous to our fleet and our national maritime policy.

Further, so that you may judge the experience with which we speak, it should be emphasized that no other American industry, to our knowledge, deals so consistently in a truly international market, meeting on every voyage, foreign competition of the most serious nature.

This perhaps requires some explanation. If an American industry (or individual producer) found that 15 or perhaps 25 percent of its domestic market was being satisfied from sources abroad, it would surely consider itself facing severe competition. The American maritime industry, however, now finds that not 25 percent, not 50 percent, but almost 80 percent of American demand for foreign trading shipping service is satisfied through the use of foreign bottoms. We know what foreign competition means.

The timeliness of the proposal for extending the reciprocal Trade Agreements Act manifests itself at once. Daily the press informs us of the tremendous concern in and out of the Congress with the growing army of unemployed. This has recently reached over 5.1 million-a record level since 1941. At the same time we are informed that 4.5 million jobs are created by our foreign trading activity. While some issue has been generated by the use of the word "created," we certainly feel that there is no question that at least 4.5 million Americans earn their livelihood because of our world trading activity. Actually, in our opinion, this latter figure is conservative. Our own experience in evaluating direct and indirect employment generated by the American merchant marine (in excess of a quarter of a million) leads us to conclude that this type of analysis is not subject to precise statistical determination, and estimates thereof reasonably prepared tend to be conservative.

The significance of our export trade to this country's total economy is perhaps more accurately, if less dramatically, revealed in the attached table. It depicts the significant portion of our total production of movable goods which enters into the export market, presently almost 10 percent. We would call your attention particularly to the last column and the relation, though not necessarily causal, between the peaks of our production prosperity and the changing level of exported portions of total production through the years past.

It is important to remember that part of our economic activity and employment in world trade is created under Government-generated programs of economic and military assistance and surplus disposal. I feel quite certain that every member of this committee is hopeful that these noncommercial activities will diminish over the years and ultimately totally disappear. With this diminution or disappearance will go the livelihood of some of these 4.5 million persons, unless in place of the vacuum thus created there is developed normal commercial trade of equal or greater volume. It is, therefore, particularly at this moment of recession, especially necessary that we seek not only to maintain our present level of private export trade but actually augment that activ

ity. No instrumentality of lesser total economic cost is available to us for this purpose than the reciprocal trade program.

It is apparent that organized labor recognizes this fact, as can be evidenced by the unanimous backing given the pending legislation by the AFL-CIO at its recent convention.

There are, however, many who would hope that our export volume can be maintained or even increased without maintaining our doors open to the goods of foreign nations through reciprocal trade. They urge that we forget the lessons of our past and move back a quarter century in time, before we learned, much to our sorrow, that a rigid and inflexible trade policy with a minimum of world trade was disastrous to American interests including the American maritime industry.

As proponents of the program, we are mindful that since its birth in 1933. the prime motivation for the program has had differing emphasis as the years moved on. Originally, purely dedicated to creating more trade in the midst of severe economic depression, it became closer allied, in the early postwar period, to overcoming the stifling effect of dollar shortages overseas. These shortages dictated that foreign nations reduce their spending for our merchandise. Clearly, in addition to foreign-aid considerations, the soundest and most direct way we could overcome the frustrated demands for our goods abroad was to purchase more from overseas.

Today, the reciprocal trade program, while still deeply rooted in many respects in what motivated its earlier support, has again shifted emphasis. The survival of western culture and traditions make it more necessary than ever to coordinate our trade policy and practices with our friends and allies abroad, both real and potential. This has been clearly recognized by the nations constituting the European Common Market.

We firmly believe that, sputniks notwithstanding, our Nation's stature as well as the cornerstone of world peace and democratic unity, are menaced today by the potential of Russia's new economic policies. Khrushchev publicly called it "a war on the United States in the peaceful field of trade." We dare not, by jettisoning the reciprocal trade program, announce to the free world that we dismiss that threat by leaving the arena of commercial international exchange. Since the close of World War II, ours has been a bipartisan, consistent and not inexpensive policy of creating closer economic ties with freedom-loving peoples overseas so that they could turn their backs on international communism. Frankly, we know of no basis on which you can soundly reverse that philosophy. Yet, a failure to extend the reciprocal trade program, which is now an intimate and necessary part of that policy, would be just such a reversal. While we are ever mindful of the American maritime industry's stake in the extension of the reciprocal trade program, we appreciate that an expanded import volume may require local adjustments in communities and industries meeting foreign competition. Our import volume last year of $13 billion was some $6 billion below our exports. But of that $13 billion import volume, virtually $11 billion was in goods totally noncompetitive with United States production, while $2 billion was in materials in mild or severe competition with United States products. We feel that reasonable safeguards against the aforementioned potential injuries are contained in the proposal before you. Moreover, we are certain that if additional safeguards are reasonably required, they will be provided.

Most of all, however, we cannot overemphasize that the greatest protection against such injury is the built-in self-adjustment which takes place in an overall expanding economy through increasing domestic purchasing power. The potential loss of domestic purchasing power which would be created by the failure to produce for a substantial export market offers us no solution. If you limit. by rejecting reciprocal trade, the expendable element of the domestic economy our world commerce affords, you may require fewer, minor "local" adjustments to foreign competition. By the same token, you will require more, major and nationwide adjustments to the disastrous effects of a declining export market. To be forced to attempt the latter under any circumstances could be dangerous. In the face of today's economic situation it may well prove catastrophic.

United States production of movable goods and the proportion exported

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Source: U. S. Department of Commerce, Exports in Relation to United States Production, 1956, World Trade Information Service, pt. 3, No. 57-36.

Senator HARRY F. BYRD,

Chairman, Senate Finance Committee:

BOSTON, MASS., June 24, 1958.

Were it not necessary to leave for Europe, I would request permission to testify before your committee on behalf of the President's reciprocal-trade program. Please refer to my testimony before subcommittee of House Ways and Means, December 13, 1957, and before House Ways and Means on March 12, 1958, because I believe that dividing the free world economically by trade barriers makes more difficult international political problems and mutual security. I urge the President's program be passed without crippling amendments. Specifically, I recommend we continue to reduce trade barriers, including tariffs, and that the President's trade-agreements authority be extended at least 5 years, with authorization to reduce rates, as requested by the administration. I strongly believe a liberal trade policy will contribute greatly to economic well-being of our people and those throughout the free world, and wish to have my position filed for the record of your committee.

THOMAS D. CABOT.

GALVESTON, TEX., June 23, 1958.

Hon. HARRY F. BYRD,

Chairman, Senate Finance Committee,
Washington, D. C.

DEAR SENATOR BYRD: The purpose of this letter is to express my support for H. R. 12591 as passed by the House of Representatives. I wish this year's renewal of the Trade Agreements Act could be much stronger than what that bill provides. H. R. 12591 is the least we can do in the field of foreign-trade policy. I strongly oppose any more weakening amendments-especially the substitution of a 3-year extension for a 5-year extension.

From every standpoint, there is a real need this year for a Trade Agreements Act that measures up to the reality of the challenge the Nation faces, both from the Soviet economic threat and from the fast-moving pace of economic developments in the free world itself. In the face of that challenge, even the kind of trade-agreements legislation passed in 1955 would not be adequate. It is nothing short of fantastic that, after nearly 25 years, the program of trade liberalization is still fighting for its life and that now, of all times, the threat to is continuation in a viable form is greater than it has ever been.

Why is this so? One might think that the American economy and the freeenterprise system that made it great were on the skids and did not have what it takes to move upward and onward to ever-rising standards of living. It certainly must look that way to our friends abroad. If more restrictive for

ity. No instrumentality of lesser total economic cost is available to us for th purpose than the reciprocal trade program.

It is apparent that organized labor recognizes this fact, as can be eviden by the unanimous backing given the pending legislation by the AFL-CIO at recent convention.

There are, however, many who would hope that our export volume ca maintained or even increased without maintaining our doors open to the of foreign nations through reciprocal trade. They urge that we forget the sons of our past and move back a quarter century in time, before we lear much to our sorrow, that a rigid and inflexible trade policy with a mini of world trade was disastrous to American interests including the Ame maritime industry.

As proponents of the program, we are mindful that since its birth in the prime motivation for the program has had differing emphasis as the moved on. Originally, purely dedicated to creating more trade in the m severe economic depression, it became closer allied, in the early postwar to overcoming the stifling effect of dollar shortages overseas. These sh dictated that foreign nations reduce their spending for our mere! Clearly, in addition to foreign-aid considerations, the soundest and most way we could overcome the frustrated demands for our goods abroad purchase more from overseas.

Today, the reciprocal trade program, while still deeply rooted in : spects in what motivated its earlier support, has again shifted emphas survival of western culture and traditions make it more necessary *! to coordinate our trade policy and practices with our friends and allicboth real and potential. This has been clearly recognized by the nat stituting the European Common Market.

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We firmly believe that, sputniks notwithstanding, our Nation's statu as the cornerstone of world peace and democratic unity, are meng the potential of Russia's new economic policies. Khrushchev p it "a war on the United States in the peaceful field of trade." by jettisoning the reciprocal trade program, announce to the free wo dismiss that threat by leaving the arena of commercial internation Since the close of World War II, ours has been a bipartisan, e not inexpensive policy of creating closer economic ties with i peoples overseas so that they could turn their backs on inter munism. Frankly, we know of no basis on which you can soun philosophy. Yet, a failure to extend the reciprocal trade progra· an intimate and necessary part of that policy, would be just s While we are ever mindful of the American maritime ini the extension of the reciprocal trade program, we appreciate t import volume may require local adjustments in communities meeting foreign competition. Our import volume last year f some $6 billion below our exports. But of that $13 billion virtually $11 billion was in goods totally noncompetitive w production, while $2 billion was in materials in mild or seven United States products. We feel that reasonable safeguard mentioned potential injuries are contained in the proposal over, we are certain that if additional safeguards are reaso will be provided.

Most of all, however, we cannot overemphasize that the against such injury is the built-in self-adjustment which tala expanding economy through increasing domestic purchasi tial loss of domestic purchasing power which would be to produce for a substantial export market offers us no by rejecting reciprocal trade, the expendable element of our world commerce affords, you may require fewer, mine to foreign competition. By the same token, you will r nationwide adjustments to the disastrous effects of a de To be forced to attempt the latter under any circumstance In the face of today's economic situation it may well

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HARRY F. BYRD,
Chairman, Senate Finance Com
Washington, D. C.

DEAR SENATOR BYRD: The purp H. R. 12591 as passed by the be wal of the Trade Agreement provides. H. R. 12591 is t 3. I strongly oppose an titution of a 3-year extensi From every standpoint, there rt that measures up to the the Soviet economic thre elopments in the free we e kind of trade-agreements is nothing short of fa ie liberalization is still reat to is continuation in Why is this so? One m terprise system that a akes to move upwar ertainly must look that

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