a wave of opposition expressed by trade groups and industrialists throughout the United States. The Detroit Board of Trade published a statement of policy on November 1, 1952, which characterizes the quota system as "the most vicious type of trade restriction," and goes on to state: Perhaps the worst example of the use of the quota system is contained in section 104 of the Defense Production Act of 1951. In this legislation Congress placed extreme restrictions upon the importation of various cheeses from European countries-primarily the Scandinavian nations, Holland and Switzerland **** The effect of this legislation upon our friends in Europe was most severe. Through the Marshall plan we had spent tremendous sums of American tax dollars in order to improve the dairy industry of these various nations so that they would be able to sell these natural products to the United States, thus obtaining dollar credits to exchange for those manufactured goods they so badly reed to import from this Nation. Section 104 of the Defense Production Act nullified much of the good accomplished by foreign aid and American tax dollars over the past 4 years * * * The establishment of quota restrictions within the United States makes it virtually impossible for us to argue or to fight against quota restrictions placed by other nations on American products. The quota system is contrary to every principle of private business and free enterprise. The National Foreign Trade Council, at its 39th convention in November 1952, published a declaration of policy which pointed out that increased imports are necessary also in order to enable other friendly nations to pay for the goods and services they need from this country, thus helping to preserve and expand the foreign markets upon which our future export volume will depend. Industrialists and banking institutions, including Henry Ford II and Winthrop W. Aldrich, formerly chairman of the Chase National Bank, previously Ambassador to England, have called upon the abandonment of the import-quota system, which is contrary to every principle of free enterprise. The policy of "Trade, not aid" has been heralded throughout the country as the way to greater security and economic stability in the free world. The State Department, recognizing the validity of "Trade, not aid," is continuing that policy in the present administration. In the press of March 4, 1953, Mr. A. Z. Gardiner, economic adviser in the Department of State, was quoted as making the following statement before a meeting of the Tea Association of the United States: We can hope for a continuation of a policy which originated in the thirties and which looks to the removal of restrictions in our import program and in the import programs of other countries-elimination of barriers to trade which provide an undesirable and unwarranted degree of protection for domestic markets If other countries are to earn our dollars, which they need to enable them to purchase our exports, they must be able, in turn, to sell more freely to the United States. The State Department but recently issued a very informative booklet under the title "Together We Are Strong," which, in very simple and direct language, points out that import restrictions stifle trade to the detriment of the country as a whole. We quote from this publication as follows: In 1951 we sold to other countries $4 billion worth more of goods than we bought from them. Since 1920 our sales have been approximately $70 billion more than our purchases. The difference has been made up largely by the United States giving or lending these other countries the dollars to buy our goods. The net result has been, in effect, a subsidy of our export business. Without this, our export business would have been cut way down. Out cotton, tobacco, and wheat farmers, our machine-tool, chemistry, and oil-product industries would have lost the market for a large part of their total output. On a permanent basis this kind of subsidy is not a satisfactory way of doing things. The other nations do not care for it. We do not. It is necessary under prevailing conditions, but only as a temporary expedient. These other nations must be given a fair chance to earn the dollars they need. ** * Most of these nations produce goods of some kind. They would like to sell these goods to us. So. The catch has been that we, in many cases, have refused to permit them to do *** We have preached increased productivity to these nations. Higher produc tivity as the way to prosperity and therefore to peace is the theme song of our mutual-aid programs More goods and more jobs as a better life for more people. But without increased international trade, increased productivity makes little sense. To increase productivity countries usually have to buy goods from other nations, and to pay for them they have to sell their own products. No nation is self-sufficient, and so failure to increase trade between countries really stifles rather than helps greater production. The goods these nations wish to sell us are limited in quantities. Against our own gross national product of over $325 billion a year they are barely more than a trickle. This trickle is, however, of tremendous importance to the producing nations. Frequently it is the margin between being able to pay for United States goods or not being able to pay for them. And they need our goods. They must have them. Otherwise the defense program and the "brave new world" program both will fall flat on their faces. The effect of the imposition of restrictions against cheese imports can be determined by comparing figures for the fiscal year July 1950-51 with the fiscal year July 1951-52. In the former year, while there were no import restrictions, cheese imports totaled 60,670,000 pounds, or approximately the same volume as prior to the war, for a total value of $25,449,000. Under import controls in the fiscal year 1951-52, imports were cut to 43,928,000 pounds, the value of which was $19,304,000, or a reduction of $6,145,000 (source: U. S. Department of Agriculture, O. F. A. R.). While this volume is inconsequential with regard to our own economy, it is of enormous importance to the countries exporting cheese, which countries have found it necessary to "retaliate" by spending less dollars for our own products. The Dutch and the Canadians have both announced that they will be able to take less American wheat and flour. Similarly, the other countries, including New Zealand, Australia, Denmark, Italy, and the rest of the countries affected, have protested these restrictions. As stated in this committee's Report No. 790, referred to above, 10 nations protested the enactment of section 104. These nations have since then protested again and again the continuance of these restrictions, and the pro-Communist elements in these countries have been laying great stress upon the fact that the United States preaches one policy but practices another. In conclusion, we request that the import restrictions contained in section 104 of the Defense Production Act be ended. The enormous injury to our own economy and to the friendly world is such that the protection of a particular group does not justify the continuation of such restrictions. This is especially true in the case of cheese, where we have endeavored to show there is no compelling necessity for the imposition of such restrictions. We have, naturally, dwelt upon cheese, as it is the product with which we are particularly concerned. However, the general principle applies with reference to all products. Trade is the lifeblood of this Nation. We had as well add briar pipes—and all of the other "briar pipes" products-to the list of restricted products. If each country adopted the policy that the products it makes must be protected against imports, our foreign trade would be destroyed. If we don't buy the products of other nations, they cannot have the dollars with which to buy our products. This includes our farm products as well as our automobiles, typewriters, machinery, and other diversified products. We cannot forever "prime the pump" by giving away money, at enormous cost to our taxpayers, to subsidize our exports. As pointed out in the various publications above, a strong economy demands a minimum of trade restrictions. The termination of the restrictions contained in section 104 of the Defense Production Act is an important and indispensable step in that direction. I want to thank this committee for the opportunity availed us of appearing here today in connection with S. 753. My statement and testimony concerns itself with the controls embodied in section 104 of the Defense Production Act, restricting the importation of cheese. Our association is vigorously opposed to the continuance of these restrictions. I have submitted this statement containing a brief summary of the background of the legislation in question and the pertinent statistics with regard to domestic manufacture of cheese, imports and exports of cheese, consumption of cheese, and comparative prices. I would like at this time to demonstrate some of the points made in our brief. First, I would like to submit to you two graphs, which I herewith hand to the reporter. The CHAIRMAN. Without objection, they will be inserted in the record at this point. (The graphs referred to are as follows:) |