Senator KERR. You say it is just as true, but is it true?
Secretary WEEKS. It is true. It is bound to be true.

What we have paid them over the years or what we have sold them, they pay us back, and those two lines follow almost identical

Senator KERR. How much more benefit is it to this country as a whole to have dollar balances in foreign countries with which they can buy our goods than it is to have dollar balances in such foreign areas as Oklahoma and Texas and Arkansas and Louisiana with which they can buy your goods?

How much better is it for "other countries" than it is for "other States"? Secretary WEEKS. Well, I can only answer that, Mr. Chairman, by saying that we have built up there are many companies in this country

Senator KERR. I grant that.

that.

Secretary WEEKS. Yes.

I grant that, I am not disputing

Senator KERR. I am just talking about the relative merit or worth or value of trade as between countries and as between States.

Secretary WEEKS. Well, I do not really myself think you can compare the two because we have to buy

Senator KERR. Well, here, you know that for instance, right now, in Texas an oil producer can only produce his oil well 8 days a month. Secretary WEEKS. Is it eight now?

I thought it was nine.

Senator KERR. That nine order is for next month.

You ought to keep current on this. And that is not K-e-r-r-e-n-t. [Laughter.]

How much more is it worth to this country to spend dollars for oil, let's say, in Saudi Arabia or Iraq or Venezuela than it is to spend that same dollar for oil in Oklahoma or Texas or Arkansas or Louisiana?

Secretary WEEKS. Well, I believe, myself, if you could completely take a country and completely isolate it your theory might work out satisfactorily. But we have to trade. We have many raw materials that we have to buy and to bring into this country, and

Senator KERR. Mr. Secretary, you are engaging in an old senatorial custom known as evasion-detouring and filibustering and that is all right.

Secretary WEEKS. I do not mean to.

Senator KERR. How much more valuable is it to send a dollar to Venezuela for oil insofar as our total economy is concerned than it is to send that same dollar to Oklahoma and Texas?

Secretary WEEKS. Well, I think when you send a dollar or wherever you send it to, if you get value received if you can get a better value. here than there

Senator KERR. Let's say you get the same identical product, the same amount. Is it worth more to increase your dollar trade balances in favor of a foreign country or of a domestic area?

Secretary WEEKS. Well, I do not think I can answer your question. Senator KERR. I do not think so either.

Secretary WEEKS. Because it ties right into every relationship that we enjoy with other countries.

Senator KERR. If you want to go on that, let's tie it into some relationships.

Let's say that an oil producer in Texas that has a hundred thousand barrels of oil to sell, if he sells it there he has got to pay somebody there to produce it, hasn't he?

Secretary WEEKS. Yes, sir.

Senator KERR. If he makes any money there he is going to pay taxes there, isn't he?

Secretary WEEKS. Yes, sir.

Senator KERR. Now the same thing is true if somebody in Venezuela has a hundred thousand barrels of oil to sell.

Secretary WEEKS. Yes, sir.

Senator KERR. He has got to pay somebody there to produce it. He has got to pay taxes there.

Secretary WEEKS. Yes.

Senator KERR. He has got to engage in activities there which build a local community and a national economy hasn't he? Secretary WEEKS. Yes, sir.

Senator KERR. Those are all related matters, aren't they?
Secretary WEEKS. Yes, sir.

(The following supplemental statement is submitted for insertion at this point following Secretary Weeks' reply.)

In considering the effect of buying a given amount of petroleum from a domestic source or from abroad, there are at least three different aspects of the matter which must be separately discussed.

(1) The effect on the national security.

(2) The effect on the level of activity and prosperity of the domestic petroleum-producing industry.

(3) The effect on the economy as a whole.

The first two considerations relate to the special effect of the action on the American petroleum industry, while the third relates to its economic effect in the economy as a whole as distinct from the particular effects in the petroleum field

1. EFFECT UPON THE NATIONAL SECURITY

The question of whether, solely from this standpoint, it is preferable that a given amount of petroleum be purchased domestically or imported depends upon a detailed examination of the levels of activity in domestic petroleum production, the relation of domestic and foreign capacity to probable national defense requirements, and the consequent effect of domestic purchases versus imports upon the ability of the economy to meet mobilization requirements. The "national security provision" (sec. 2 of the act of July 1, 1954) provides for the investigation of such questions and the adoption of measures necessary to insure that imports of any product do not impair the national security. In the case of petroleum, this section has been invoked and the President, acting on the recommendations of a Cabinet committee which studied the question, has imposed limitations on petroleum imports in order to protect the national security.

2. COMMERCIAL DAMAGE TO DOMESTIC PETROLEUM INDUSTRY

The "escape clause (sec. 7 of the Trade Agreements Extension Act of 1951) provides procedures by which any industry which believes it is threatened by serious injury as the result of imports resulting from trade-agreements concessions may apply to the United States Traiff Commission for relief. The petroleum industry has to date not made application under the escape clause but if at any time it believes that the level of imports of petroleum threaten such damage, it would be free to do so. (Such an application was filed in 1949 under an earlier procedure then in force. The 1949 application was dismissed by the Tariff Commission after preliminary inquiry.)

3. OVERALL EFFECT UPON NATIONAL ECONOMY

Over and beyond the questions covered in (1) and (2) above, is the question of how, independent of the particular effects on the domestic petroleum industry, the national economy is affected when a given amount of petroleum is imported or

when it is purchased. It has been pointed out in this connection that a purchase of petroleum from domestic sources results in the domestic petroleum producer employing labor, paying taxes, and otherwise contributing to the development of the domestic economy. It would be quite incorrect, however, to assume that if the petroleum were imported rather than purchased domestically there would be no similar results. The fact is that when petroleum is imported, the dollars earned by the nation selling the petroleum are in turn used to purchase United States exports. The producers of the United States goods exported in turn employ labor, pay taxes, and otherwise contribute to the development of the United States domestic economy in exactly the same fashion as the domestic oil producer. Thus a buyer's choice between domestic purchase and import does not make any difference as far as the end result of domestic United States employment, production, and economic activity are concerned. This takes place in either case. The buyer's choice will, of course, affect the question of what type of labor is employed, what type of product is made, and conceivably in what part of the nation this economic activity takes place. In the case of a domestic purchase of petroleum the employment and other effects would occur in oilproducing regions and in the petroleum industry. In the case of a decision to import, these effects may be felt by United States farmers, United States machinery producers, or other United States industries, depending entirely upon the type of export which the oil-producing foreign country chooses to purchase in the United States with the money received from its oil sales.

In the long run, in a free-enterprise economy such as the United States, the buyer's decision as to whether he purchases domestically or imports will largely depend on which source supplies him at the lowest cost. If the domestic producer is the more economically efficient, he will get the business and if not, there will be a long-run tendency, subject to appropriate levels of tariff protection, for the overseas producer to get the business. If the domestic producer gets the business, then the expansion of the United States domestic economy will take place in his industry. If on the other hand the foreign producer gets the business, then the expansion of United States industry resulting from the import will take place in those United States industries which are, by virtue of their economic efficiency in the best position to compete for export sales to the foreign country.

Subject to the special safeguards described in (1) and (2) above, to prevent serious injury to a domestic industry or a threat to national security, the overall interest of the United States economy is better served by the expansion of efficient United States firms and industries than it would be by the expansion of less efficient United States industries when the latter takes place at the expense of inhibiting such expansion by our more efficient industries.

Senator KERR. Which is the better to do, to build it in Venezuela or in Texas or Oklahoma or Arkansas or in Louisiana?

Secretary WEEKS. I think it is better to do-and we are confronted with facts as they are, I think

Senator KERR. Well, now, one of the facts you are confronted with is this: that a Texan is allowed to produce 8 days a month, at an average rate of 13 barrels a day per well.

Can you multiply 8 by 13?

Secretary WEEKS. Yes, sir; I can.
Senator KERR. How much is it?

Secretary WEEKS. 104.

Senator KERR. 104 a month.

In Venezuela the average is over 150 barrels a day and he produces

every day.

Can you multiply that?

Secretary WEEKS. 150 barrels a month.

Senator KERR. A day.

Secretary WEEKS. A day, and he produces every day.

Senator KERR. Yes.

Secretary WEEKS. Well, that sounds to me like about 4,500 barrels. Senator KERR. That is right.

Now in Saudi Arabia and Iraq it averages about 5,000 to 6,000 barrels a day, and he produces every day.

Do you know how long it would take a Texas operator to produce a well that would get as much oil out if it to send into this country as one of those wells do in a day?

Secretary WEEKS. Not offhand; no, sir.

Senator KERR. Well, you said it was 104 barrels a month.
Secretary WEEKS. Yes.

Senator KERR. How many months will it take him to produce what they produce over there in a day? About 40 or 50 months? Secretary WEEKS. Yes.

Senator KERR. Four or five years?

Secretary WEEKS. Well, this, Mr. Chairman

Senator KERR. Do you think, that is a wholesome result for a trade program?

Secretary WEEKS. Well, this, Mr. Chairman, everything in life is a question of degree and this is why

Senator KERR. Well, I know there are those who say you can cut a dog's tail off an inch at a time and not hurt him as bad as if you cut it off all at once. You know it is question of degree.

Secretary WEEKS. This is why under section 7 a certification was made that the national security was in jeopardy, and the President called a committee together and appointed me Chairman and that is why they took the action.

Senator KERR. I am glad you took the action but I am trying to get you in your own mind and in your own words, to arrive at a conclusion and state which is a better thing for this country to increase its imports of oil from the Southwest or from foreign countries.

Secretary WEEKS. Well, I think that this country is today a creditor nation. I think the thing for us to do is to build the foreign trade. Senator KERR. Well, there are $800 billion internal debt. There are a lot of creditors in this country and debtors, too; aren't there? Secretary WEEKS. Yes, sir.

Senator KERR. Now is it any more important to relieve the situation of the debtor in a foreign country than in this country?

Secretary WEEKS. Well

Senator KERR. I am talking about it as a contribution to the national economy.

Secretary WEEKS. Well, the import of your line of thought would carry you to a complete isolation from trade

Senator KERR. No, no. I do not think so, but the extent of your thought would carry it to a total exclusion.

Secretary WEEKS. Exclusion of what, sir?

Senator KERR. Well, do you think that the present situation of 8 days a month for a Texas operator, at 13 barrels a day as compared to 30 days a month at 160 barrels a day for a Venezuelan well and operator is a situation that is equitable and properly adjusted?

Secretary WEEKS. Well, I am not able to say why

Senator KERR. Wait a minute. You are Chairman of the Committee that decides that, and, therefore, I think we are entitled to know what you think about it.

Secretary WEEKS. Well, the Committee

Senator KERR. I think the President has put a pretty good man in charge, and I am trying to demonstrate it. Secretary WEEKS. Thank you, sir.

Senator KERR. But I cannot do it if you tell the committee you don't know.

Secretary WEEKS. We have got a man here, my Assistant Secretary, Mr. Mueller, who knows, if I do not. But let let me

Senator KERR. You mean he knows whether you know or not? What do you mean by that?

Tell us, does the Secretary know?

Mr. MUELLER. He certainly knows.

Senator KERR. I thought he did, too, and that is the reason I have given him an opportunity to tell us.

Mr. MUELLER. May I help you, sir?
Secretary WEEKS. Go ahead.

Senator MALONE. What is his name?

Senator KERR. Mueller. Identify yourself.

Mr. MUELLER. I am Assistant Secretary of Commerce for Domestic Affairs,

Senator KERR. That is commercial affairs.

Senator MALONE. I knew somebody had a hold of it, but I did not know who.

Mr. MUELLER. You posed, first, a question of why would not it be better.

Senator KERR. I did not ask you why. I just asked him if it I asked him which was better, to fix it so that the oil producer in the Southwest would import more oil into the rest of the country or the importer in a foreign country; which is better for the American. economy,

Mr. MUELLER. I don't think you can answer it categorically. Senator KERR. Well, if you cannot, you said you were going to. Mr. MUELLER. No; I said I was going to answer

Senator KERR. The Secretary was in the posture of being unable to answer it. If you are in the posture of being unable to answer it, how are you helping him?

Secretary WEEKS. I will answer it this way, if I may. I will say this: As I said before, everything in life is a question of degree. We cut down, on a voluntary basis, we endeavored to cut down the imports of crude to 12 percent of the production in this country, and this we did last summer, and we pulled back the total again in March of this year.

Senator KERR. Mr. Secretary, are you telling this committee that the foreign imports are only 12 percent of the total domestic? Secretary WEEKS. Of the crude production; yes, sir.

Mr. MUELLER. Crude.

Senator KERR. Have you got figures of what they are?

Mr. MUELLER. The crude production right now is about 61⁄2 million barrels a day.

Senator KERR, But he said last summer

Secretary WEEKS. And again I was about to say that we made another study and another recommendation on March 25 of this year. We held to the same percentage, and we reduced the imports, on a voluntary basis, from about 771 to about 713.

Mr. MUELLER. In regions 1 to 4.

Secretary WEEKS, And in regions 1 to 4.

Senator KERR. Well, this is the whole country.

Secretary WEEKS. No; that is all except the Pacific coast.