Senator HARRY BYRD,

Chairman, Senate Finance Committee,

LOS ANGELES, CALIF., July 1, 1958.

Senate Office Building, Washington, D. C.:

Having recently served 2 years as Assistant Secretary of Commerce for International Affairs and also having served in variety of offices for American private industry during recent years claim responsibility knowledge reciprocal trade program and its importance to our economy. In interest of continued healthy expansion American business and industry and to create new jobs for growing population and toward extending United States prosperity into future years vigorously urge approval Extension Trade Agreements Act as provided H. R. 12591. Personally consider 5-year clause extremely important. After traveling in 32 foreign countries working in several, am convinced foreign nations trading with United States need minimum 5 years as basis for planning and developing sound trade patterns. Sincerely believe 5-year extension will work strongly to United States advantage in making equitable mutual profitable trade possible. For the record.

DEAR CHAIRMAN BYRD: Acting in the role of an interested private citizen I would like to make known to the Senate Finance Committee my unqualified support of the Trade Agreements Extension Act of 1958 (H. R. 12591) in the form in which it was overwhelmingly passed by the House of Representatives on June 11, 1958.

It is my sincere belief that the passage of this act, without further amendment, is in the best interests of our Nation as a whole. This belief is based on many years of experience as a banker, and in particular as an international banker with wide opportunities to observe firsthand the effectiveness of the reciprocal trade agreements program in past years.

On March 11, 1958, I appeared before the House Ways and Means Committee and outlined in some detail my reasons for supporting the reciprocal trade agreements program, as well as my answers to some of the criticism which has been directed against the program. I prefer not to burden the records of the Senate Finance Committee with a repetition of my testimony and therefore respectfully direct the attention of your committee to my earlier statement which is now a part of the record of the House hearings on this bill.

In this connection it would seem appropriate that the Senate Finance Committee recognize the volume of testimony both for and against the bill presented before the House and Ways Committee. These hearings and those recorded at the time of earlier extensions of the act contain repeated affirmations of the basic considerations involved. It is suggested that your committee refer to this record and that it should, to the greatest extent possible, avoid duplicating this procedure again.

It is recognized that the purpose of holding hearings on pending legislation is to give those most concerned an opportunity to express their views. In the case of the Reciprocal Trade Agreements Act, however, virtually every citizen is concerned. Because they are not organized and because they are indirectly affected millions of Americans would not be heard regardless of how long and how extensive congressional hearings might be. As I am sure you are aware, I am referring to the millions of American consumers who have benefited under the reciprocal trade agreements program and in whose best interests the program should be continued.

For this reason it is believed that the vote of the House of Representatives of 317 to 98 in passing this bill is particularly significant and should be so recognized by the Senate. Because the members of the House are elected on the basis of population they can be expected to be sensitive to the needs and wishes of their individual constituents. Indeed, this is the primary function of the Junior House under our bicameral legislative system. Therefore, it would follow that

many millions of citizens who do not appear, or were unrepresented, at the hearings held on this bill both by the House and the Senate do in fact support it. In testimony before the House Ways and Means Committee I stressed what was considered to be the main reasons for a 5-year extension of the act. Subsequent to my testimony the President on March 27 before the national conference of Organizations of International Trade Policy in Washington, D. C., made the following statement: "There is a mistaken belief spread among some people that the 5-year proposal was merely introduced as a bargaining position. I should like to set the record straight. It is a proposal dictated by the facts." As certain Senators have recently stated that they believed the President would be satisfied with something less than a 5-year extension, I would like to again call your committee's attention to the above quotation.

In conclusion I again quote from the above-referred-to statement of the President: "The good of America will not be served by just any kind of an extension bill. It must be a good bill. It must be an effective bill. Such a bill is before Congress."

It would be appreciated if you would insert this letter in the record of the current hearings. I trust your committee will report favorably upon the proposed extension of the act in the form in which it was passed by the House.

MY DEAR SENATOR: I understand that statements will be accepted by your committee for review in its hearings on renewal of the Trade Agreements Act. I should like to avail myself of this privilege by submitting the following statement:

Standard Oil Company of New Jersey is a worldwide organization engaging in all branches of the oil industry, either directly or through subsidiaries and affiliates. Our domestic business history dates back more than threequarters of a century, and we have been active in foreign fields since the 1920's. Consequently, I believe that we have better than average qualifications and experience upon which to base a conviction regarding the Trade Agreements Act.

Members of the committee are familiar with the principal issues under consideration. Accordingly, this statement will be confined to two issues on which our experience enables us to make an authoritative contribution. They have to do, first, with the question of whether specific legislative action to curb imports of petroleum is desirable, and second, the significance of the act to our country's foreign relations and national security.

First, concerning the oil imports issue:

Spokesmen for domestic producer groups have contended that imports of foreign oil into the United States are responsible for the present economic difficulties of the domestic producer and, concurrently, that these imports thus threaten the national defense by diminishing incentives for future oil exploration and development in this country. It is also alleged that the voluntary imports program, formulated specifically to safeguard the national security, has fallen short of its objective and that its provisions should be made mandatory through inclusion in the Trade Agreements Act. We disagree categorically with these contentions.

To begin with, the decline of domestic production witnessed in recent months is by no means simply a reflection of competition from foreign imports. It is, far more directly, the consequence of several factors entirely unrelated to imports.

Foremost of these, in our view, has been the unprecedented growth of naturalgas production and transmission facilities over the past decade. This development, as the recent history of the petroleum industry shows, has been responsible for drying up a sizable share of the market for domestic oil.

Figures on the relative growth of consumption of natural gas and petroleum tell the story:

In 1947, gas consumption, in terms of oil equivalent, amounted to 2,100,000 barrels per day, or 27 percent of the total petroleum and natural gas requirements of the United States. Consumption of petroleum, in the same year, totaled 5,500,000 barrels per day, about 73 percent of the total.

By 1957, the proportion had altered substantially. Natural gas' share of the market was 36 percent (4,900,000 barrels per day), compared to 64 percent for petroleum (8,600,000 barrels per day). In other words, natural gas had increased its share of the market by a third, while petroleum's share had noticeably declined. (This trend, furthermore, is continuing. In the current year, while oil demand is expected to remain virtually unchanged, natural gas sales are expected to increase by an estimated 5.5 percent.)

Significantly, oil imports' share of the market in 1957 amounted to only 12 percent (versus natural gas' 36 percent); and this year imports' share is expected to drop to 10 percent, while gas consumption continues to grow. It should be readily apparent from this comparison that it is natural gas which has been primarily responsible for the displacement of domestic crude oil in the market place.

Against this backdrop of long-term encroachment by natural gas into oil's traditional markets, there have occurred in the last year two other developments to aggravate the domestic oil demand situation. First, this country has been experiencing an economic recession, which has checked the growth in consumption of oil. Second, there has been a continuing liquidation of high crude oil inventories which were built up in the months immediately after last year's Suez crisis.

Liquidation of these excess inventories, now virtually completed, will necessitate a sizable increase in domestic crude production in the immediate future. In addition, although consumption continues to be depressed, the revival of general business activity, confidently expected before the end of the year, will likewise afford the relief which domestic producers desire. Thus it seems both futile and unnecessary, in our opinion, to seek such relief through a legislative measure to control imports.

As to the question of the effect of imports on national defense, we believe that the administration's voluntary control program is already safeguarding our national security to the fullest extent.

It is a matter of record that our company was not in full agreement with the recommendations of the President's Committee which prescribed the original voluntary imports quotas. However, we did feel then-and do now-that it was incumbent upon us to go along with any reasonable attempt to solve the imports problem by cooperative means. We are continuing to cooperate even though reserving our right to disagree-for this same reason.

By any reasonable standards, the voluntary imports program is working. Substantially all importers are in compliance. Still, because of isolated incidents of noncompliance and the temporary depression in demand for crude oil, domestic producers now demand that even more stringent controls be written into the Trade Agreements Act.

Our company is strongly opposed to such action. The voluntary program, as it stands, has the flexibility that is characteristic of an administrative program, as opposed to the rigidity that is inherent in legislation. It is, in fact, a most pertinent illustration of the flexibility and practicability of the Trade Agreements Act itself. What need is there for amending this act, or incorporating oil imports controls into its provisions, when it has been demonstrated clearly that the President can cope effectively with the imports question within the existing framework of the measure?

It is our conviction that no such need has been demonstrated, that the act is an effective instrument as it stands. In our opinion, the only thing that would be accomplished by encumbering this legislation with restrictive amendments on oil would be to jeopardize our relations with other free world oil producing countries. These foreign countries are already disturbed by the present voluntary control program. They recognize, however, that the United States is undergoing a business decline and that certain reasonable adjustments must be made to sustain the health of the domestic industry. But they would not recognize the validity of legislation designed primarily to bar the doors, in the tradition of the pre-McKinley era. If we succumb to pressures urging that course upon our country, we shall be doing its security irreparable harm.

This brings me to the second basic point I wish to take up in this statement, the matter of the Trade Agreements Act and its fundamental position in our entire pattern of foreign relations.

Over the past quarter century in which our company has been engaging in overseas ventures, one fact of our experience stands out. It is that the Trade Agreements Act has come to be regarded as symbolic of economic cooperation in the free world and epitomizes this Nation's willingness to promote and participate in that cooperation. The need for continued assurance that this willingness persists is more pressing today than at any time in recent years, because of the growing evidence of efforts by other blocs to wage economic warfare.

The peoples of foreign lands with whom we have done business are prepared and willing to be our allies in the economic and political arenas, provided they are properly recognized as our full partners in the free world community. This means, practically speaking, that they insist upon their right to deal with us at arm's length, unhindered by any commitments or obligations which would tend to restrict their freedom of choice.

Where then does the Trade Agreements Act fit into this pattern of our international relations? It is perhaps one of the most fundamental methods of preserving the "arm's length" doctrine. Through trade, self-evidently, foreign countries are able to promote their own economic independence. Under the ideal condition of balanced international trade and investment, these countries have the opportunity to become economically independent, free from the political encumbrances that are inevitably tied to aid proferred by wealthier nations. It is not unreasonable to expect that having achieved this ideal economic status, they would be most likely to select the route of democracy and private enterprise. To continue a heavy emphasis on aid today, in preference to trade, is to deny our foreign friends the opportunity of becoming economically independent. Trade-not aid-is their ticket to self-reliance and self-determination, both qualities that are prerequisite before democracy can flourish. Anything short of the trade freedom prescribed by the Trade Agreements Act must inevitably limit the ability of other countries to discharge their obligations to us, and thus subject our motives to critical scrutiny.

To summarize, it is essential to recognize that foreign trade-and the Trade Agreements Act which encourages it—are no longer solely economic instruments. They are, far more importantly, vital organs in the free world's body politic. It is no longer sufficient to appraise the importance of foreign trade in terms of its impact upon competitive domestic goods. One must take into consideration the impact upon the larger interest of United States citizens.

Viewing the issue from the latter vantage point, it becomes clear that the larger interest of American citizens is served by a trade policy which promotes the evolution of strong and independent allies abroad, and which, at the same time, will curtail demands upon our taxpayers for more funds to send aid abroad-aid which, it should be stressed, is only grudgingly accepted as a poor substitute for the opportunity to trade.

Your committee, dedicated as it is to the larger interests of the Nation, has been called upon to make a determination which will be of surpassing importance to all of us. We believe, upon the basis of our experience, that a thorough review of the issues must lead to this one conclusion, which we respectfully submit: That the larger interests of all are best served by a perpetuation of the Trade Agreements Act in the form and for the length of time recommended by the President.

We wish to express our appreciation for this opportunity to present our views, and stand ready to provide any further comment or testimony required at the discretion of the committee.

Sincerely yours,

T. S. PETERSEN.

UNITED STATES SAFETY SERVICE CO.,
Kansas City, Mo., July 1, 1958.

Re reciprocity trade extension bill, H. R. 1259.
HARRY FLOOD BYRD,

Committee Chairman, Senate Office Building,
Washington, D. C.

DEAR MR. BYRD: Here is one man's idea relative to the obsolete idea of economic protection against imports.

For many years the British fleet unintentionally enforced the Monroe Doctrine and thereby gave to young America the temporary and perhaps questionable security of optional isolation from the rest of the world, a world which was at least 200 times as large as it is today measured by travel, communication and

transportation time. However today millions of Americans still think and act as though they were still living in such a large world, long gone and forever. Today an attempt to separate the United States from any part of the world politically, economically or culturally is as futile as trying to separate Kansas City from Missouri, Minneapolis from Minnesota and Chicago from Illinois. Modern technology has brought all people so close together that it has revealed to the impoverished, long-exploited 14 billion of the world's population that starvation is something to be avoided and does not have to be endured; that colonialism and economic exploitation is something to be rid of, even by force and revolution if necessary; that the white race cannot indefinitely hold a monopoly on the know-how of better living. It has also revealed to them that if as much effort and skill are devoted to the global distribution of goods as are now being devoted to the production of goods the human race can be on it's way to a much higher standard of living.

Tonight half of the world's population is going to bed hungry while we have hundreds of miles of steel bins full of Government-purchased wheat and rice going sour. They are less than half clothed while we have hundreds of thousands of bales of cotton in Government warehouses. Half the world is starving for fats while we have a trainload of butter 50 miles long. The world is asking the question "Why?" If we Americans do not now have the answer it is to our permanent interest to find that answer.

Certainly the time has arrived, in fact it is long past due, when men, especially American businessmen and men in high office take a little time out from this busy business of ours and work at the business of informing ourselves, the hard way if necessary, relative to the basic principles of production, distribution, wages and prices on a national and on an international basis and then collective ly and objectively do something about it. It certainly is time for us to sift the great mass of political chaff, jargon and this eternal scare propaganda and really find out what is wrong with our bunglesome method of distribution of the products of our rampaging productive economy.

A businessman may think he can separate himself and his business from world business but that is about as rational an approach to the curret business environment as trying to separate oneself from the atmosphere and hope to stay alive.

The irresistible laws of economy have proven time without number that private business can be but little, if any, better than total business and today total business indisputably means total global business. If we make no intelligent and constructive contribution toward the creation of an environment that is favorable to total global business we are all going to awaken one of these mornings and find our private business striving for survival in an environment totally unfavorable to it. You and your business are definitely a part of global business today even though you may be running a popcorn stand. The success or the failure of private business is permanently hitched to the success or failure of total global business. I dare any American to disbelieve that statement at the peril of his own business and at the peril of the financial structure of his Nation.

If American private enterprise is to outlive the century this concept of business must be universally accepted and immediately acted upon by the worldminded, informed, activated businessmen along the Main Streets and the fields of America. Wide distribution of the necessities of life, especially of food, can put communism on the run and out of business for keeps.

I invite you and other committee members to investigate the trouble spots of the world today and name one which could not be resolved to a peaceful solution by allowing people "self-determination" and by giving them an opportunity to sell the products of their own labor in the free markets of the world so that they would be able to buy those things necessary for a decent physical existence. Dissension, communism, rebellion, and revolution thrive on arbitrary exploitation and its resulting poverty. Around the world today we are, in most cases, backing the wrong people and at home, from home base, we are antagonizing too much of the world with our thoroughly obsolete "protective economic isolation."

I am thoroughly familiar with the traditional arguments for so-called "protection."

1. "You don't want to lower the standard of living of the American laboring man to that of the Chinese, do you? How can American industry compete with such cheap labor?"

2. "You don't want to ruin existing business do you by allowing cheap foreign goods to flood the American market?"