Mr. MULTER. They have very strong controls on credit. Mr. PUTNAM. Yes, very strong. The indirect controls, as I said,. are very strong. But they have had more inflation than we have had, almost double. Mr. WOLCOTT. Will you yield? If the Canadian situation is so bad, why this terrific flight of American capital in the last sixty days to Canada? Mr. PUTNAM. I think the great flight of capital has been trying to invest in cheap Canadian oil stocks in the Northwest. I did not think it was a flight of capital. I thought it was a quick speculation. Mr. WOLCOTT. In the industrial Midwest, we are concerned about our factories going over there. I have heard a lot about that. Mr. ARNALL. They don't have a capital gains tax in Canada, do they? Mr. WOLCOTT. They don't have nearly as high an excess profits: tax as we do, either. Mr. PUTNAM. On the other hand, speaking of automobiles Mr. WOLCOTT. They have balanced their budget, their money is more valuable than ours, so American capital is thinking about investing over there. We are confronted with a very serious situation in Michigan. Mr. PUTNAM. You realize, too, their tightness of indirect controls. On an automobile you have to pay 50 percent down and pay off the rest in 12 months. They have got indirect controls that we would not stand for. Mr. BETTS. But they are able to impose those indirect controls without the establishment of any big agency. Mr. PUTNAM. But they have paid a price in that their cost of living has gone up almost twice as much as ours. Mr. BETTS. That leads to my second question: Speaking of the price they have to pay, is there any one of you gentlemen who can tell us what it costs the American tax payer to finance the control agencies that we have set up, and how many people are employed by all of them, and what is the expense of the cars you operate, the buildings you have and so on. Mr. ARNALL. I just know this one statistic that I will give you with pleasure, Congressman Betts: OPS cost, last year, $1.50 per American. Mr. BETTS. Well, that is one portion of it. There is NPAMr. ARNALL. Oh, they are arguing with me. is too high. They say the cost is 35 cents. Mr. COLE. Will you yield? Mr. BETTS. I yield. They say my figure Mr. COLE. Governor Arnall, in that connection, then, I may say to you, to warn you a little bit about this, that the question I am going to ask you is a bit of partisan politics. But it is important, however, and I think you will agree with me that the implication is fair. I would like to know the official status of your special assistants or liaison officers, and whether or not they are entitled to engage in partisan politics, or seek public office? Mr. ARNALL. I don't know, Congress Cole. I don't know. Mr. COLE. This is what I would like to ask for the record. I would like to know their salaries, I would like to know their travel accounts, and where they are going, how much vacation time is allowed, how much time former members of the Congress employed by your agencies are now spending in their districts, at the expense of the Government. Mr. ARNALL. You want those figures for the Office of Price Stabilization? Mr. COLE. Yes, sir. Mr. ARNALL. We will-have we got any former Congressmen? Mr. MULTER. If you have specific people in mind, Mr. Cole, why not give him those names and let him give you the information? Mr. ARNALL. No, I will give it to you. I will be glad to. (The information referred to is as follows:) INFORMATION SUPPLIED BY GOVERNOR ARNALL, AS REQUESTED BY CONGRESSMAN COLE ON FRIDAY, MAY 2, 1952, IN HEARINGS OF THE HOUSE BANKING AND CURRENCY COMMITTEE The special assistants or liaison officers in the Office of Price Stabilization work under the same regulations in regard to engaging in partisan politics or seeking public office as do other civil-service employees. At present, I have one special assistant and two principal liaison officers. The special assistant receives $12,000 per year and the liaison officers a salary of $10,800 per year. No staff member has a special travel account. Each request from the field, which entails travel, is considered on its own merits, as we have made every effort to keep travel within a minimum, consistent with the requirements of efficient operation. From January 1 to April 30, 1952, travel vouchers approved for the above officers covered trips to the following places: Dallas, Tex.; Minneapolis, Minn.; and Fargo, N. Dak.; Hartford, Conn. (2); New York City; Syracuse and Binghamton, N. Y.; Wilmington, Del.; Detroit, Mich.; and Newark, N. J. Vacation time is prescribed by law. Federal employees may accrue 13, 20, or 26 days per annum, according to their length of service. There is only one former Member of Congress on my staff. No time has been spent in the former Member's former district at the expense of the Government with the exception of one noon talk made at the invitation of a civic organization and one radio interview, both in connection with a field trip in the nearby area and involving no additional expense. Mr. WOLCOTT. Also the number of people employed in the stabilization effort. Mr. ARNALL. I will be glad to put that in. (The information referred to is as follows:) Size of staff of Economic Stabilization Agency as of Mar. 31, 1952 You have to Mr. BETTS. I think we ought to know a little more. operate buildings all over the country, to operate your agencies. Mr. ARNALL. Don't call them my agencies. These are set up by congressional action. You did it. I didn't. Mr. MULTER. I am sure none of the agencies is spending more than we have appropriated. If we have a certain amount appropriated, that is all they can spend. Mr. ARNALL. I will be delighted to give the Congress the full expense of the agencies which they have created. Mr. PUTNAM. I might say that all members of my agency give to your "watchdog" committee Mr. BETTS. Now you call it your agency. Mr. PUTNAM. All right. Mr. ARNALL. That is your agency. Mr. BETTS. Whose agency? Mr. PUTNAM. Of the ESA, the "watchdog" committee that was mentioned earlier, gets a monthly report with all these figures in it. They are available, to you, I am sure, Congressman, but we will give you any figures you want. Mr. BETTS. Just to go a step further, I notice here we get in the mail something that is called The Defense Production Record, which has pictures on it. Who puts that out? Mr. ARNALL. I don't know where that comes from. Mr. PUTNAM. It is not put out by any one of us in the stabilization program. It is the Defense Production Agency. Mr. BETTS. Well, it is the Defense Production Authority apparently. It has to do with orders of NPA, and so on. Mr. ARNALL. I think that is Mr. Wilson's publication, that of his agency. Mr. BETTS. Then there are such news items as Mr. PUTNAM. I think incidentally for the record- Mr. PUTNAM. That is sold to businessmen. The DPA may even make money on it, for all I know. Mr. BETTS. The Government sells them. Mr. PUTNAM. I think so. It is not this part of the mobilization program that puts that out; it is the production side. Mr. BETTS. I just wanted to know the status of it. You gentlemen, and the agencies which you work for, have nothing to do with this publication? Mr. PUTNAM. No, sir. Mr. BROWN. Do you have anything further, Mr. Betts? Mr. PUTNAM. The Office of Defense Mobilization may have something to do with the publication but not the Economic Stabilization Agency, the OPS or the Wage Stabilization Board. Mr. BETTS. Who could we ask? Mr. PUTNAM. I think you are going to have Mr. Fleischmann before you sometime soon. You can ask him, either Mr. Fleischmann or Mr. Fowler. Mr. BROWN. I am going to excuse these witnesses in a few minutes. If you have any other questions I hope you will ask them now. Mr. BETTS. I guess that is all. Mr. BROWN. Gentlemen, on behalf of the committee I thank you for your testimony and you may be excused. We will meet this afternoon to hear one witness, Mr. Thorp, Assistant Secretary of State, who will testify on fats and oils. We will convene at 2:30. 97026-52-pt. 1——17 Mr. PUTNAM. Before leaving, Mr. Chairman, may I thank you and the members of the committee for your very courteous and understanding treatment of us. On behalf of myself and my col leagues, we appreciate it very, very much. Mr. BROWN. Thank you, Mr. Putnam. We will recess to reconvene at 2:30. (Whereupon, at 1:25 p. m., the committee was recessed, to reconvene at 2:30 p. m., the same day.) AFTERNOON SESSION (The committee met at 2:30 p. m., pursuant to its recess.) Present: Chairman Spence (presiding), Messrs. Brown, Multer' Bolling, Fugate, Wolcott, Talle, Kilburn, Cole, Hull, Nicholson, McDonough, and Betts. The CHAIRMAN. The committee will be in order. We have with us this afternoon, Mr. Thorp, Assistant Secretary of State. Mr. Thorp, you may proceed with your statement. STATEMENT OF WILLARD L. THORP, ASSISTANT SECRETARY OF STATE FOR ECONOMIC AFFAIRS Mr. THORP. Mr. Chairman and members of the committee, my name is Willard L. Thorp, Assistant Secretary of State for Economic Affairs. I wish to thank the committee for the opportunity of testifying with respect to this bill. My testimony will cover only two problems related to the bill, namely, the provision of H. R. 6546, which would delete section 104 of the Defense Production Act, and the proposal in H. R. 6843 to limit imports of commodities which contain scarce materials. As to section 104, I shall first make a few comments in support of the proposal to delete section 104, which deals with the imposition of quota restrictions on the imports of various products, notably fats, oils, and dairy products. Some members of the committee may recall that last fall I testified here on a bill to repeal section 104. At that time, as you may remember, the Department of State foresaw that the section was bound to have damaging effects on the ability of foreign countries to earn the dollars they need to put them on a self-supporting basis. We are now even more convinced that action on our part which deprives friendly countries of the opportunity to sell their products in this market will add to their difficulties in earning the dollars they need to maintain minimum living standards and to shoulder their part of the defense burden. Furthermore, we are still convinced that, in the end, these measures will hurt American agriculture much more than they will help, since foreign countries would have to cut down on their purchases of American agricultural products as their dollar earnings fall off. We are convinced that restrictive action in this limited field will have a much wider effect upon the future of our foreign trade. We are concerned also at the fact that section 104 requires the United States to take action inconsistent with the provisions of agreements with other governments which had been entered into under the Trade Agreements Act, and is contrary to the objective, frequently stated by the Congress, of a self-supporting Europe. Certainly, section 104 is contrary to our basic policy of developing trade among the friendly countries of the free world so that businessmen can buy and sell their goods with a minimum of governmental interference in their activities. Inconsistencies of this sort tend to undermine the basis and effectiveness of our foreign policy, by raising. fundamental doubts in the minds of other countries of the free world. as to our sense of responsibility and the nature of our goals. We have now had about 9 months in which to appraise the developments in the international field which have occurred as a result of section 104. These developments have convinced us that the Department's original estimate of the effect of section 104 on other countries, if it erred at all, erred in the direction of understatement. It is clear now that Canada and Western Europe have been profoundly disturbed by the implications of these restrictions. It is not so much the immediate dollar loss involved in these restrictions which concerns them, though that is serious enough for some of them. Much more important is the uncertainty which these measures have created, uncertainty as to the conditions under which trade will be permitted with the United States, and the possibility that an increase in sales to us, even if the percentage is small, may result in new trade restrictions. The effort to enter the American market often requires a substantial investment, and naturally is very sensitive to the possibility that the rules of the game may be changed. Our friends in Europe and elsewhere, whether they produce cheese or not, have begun to wonder whether the imposition of these restrictions is not an indication that the United States proposes to revert to a policy of raising tradebarriers regardless of agreements and even though such action may weaken the collective economic strength of the free world. This deep concern on the part of Canada and Western Europe has been evident in a number of ways. Last October, at Geneva, at a meeting of the contracting parties of the General Agreement on Tariffs and Trade, nine governments formally protested against our restrictions under section 104, charging that this Government was acting inconsistently with its trade-agreement undertakings. The countries filing the complaint were Australia, Canada, Denmark, Finland, France, Italy, the Netherlands, New Zealand, and Norway. The filing of a complaint of this sort is not done lightly; it is a fairly important political step on the part of any government. In this case, it was concluded at the meeting that our action establishing quota restrictions on the import of cheese, was in fact inconsistent with the general agreement. The action taken, however, went on to counsel the countries affected to withhold any offsetting actions on their part for the time being until it was clearer what steps the United States: Government might take to rectify the situation. There have been other developments since that meeting which are worth noting. The Dutch Government has announced that it is consulting with its partners in the Benelux Union, Belgium, and Luxem-burg, on increasing its duties against American goods in order to cut down the expenditure of its scarce dollars. The French have informed us that their loss of dollar income resulting from our cheese restrictions |