than 95 percent of the wheat moving in the world market, and with the Western allies controlling 90 percent of the world shipping to move it, should bail the Communists out of their difficulty without any political concession or quid pro quo other than a promise to pay on Khrushchev's terms.

It seems incredible that, after all the thorough studies, hearings, reports, and recommendations of congressional committees in recent years, and with all the experience, studies, and recommendations from the working levels in government, neither the United States unilaterally nor the Western allies collectively have developed any plans or organization or common strategy for dealing with these recurring crises of agricultural failures in the Communist countries.

Our NATO allies have so drastically reduced the items on the embargo list and relaxed the security controls, that the Soviets can now buy and are buying almost anything they want from the West, to the limit of their ability to pay.

In the continued failure of our allies to cooperate in a policy governing trade with the Communists, anything we attempt to do to hurt the Communists by withholding trade will be ineffective, because they can get it from our allies anyhow; and any benefits to them from the goods we may sell them will be unimportant, for the same reason.

In that situation might we not, for a change, consider doing the things that are in our own enlightened self-interest-surplus goods for surplus gold-on the barrelhead, not the cuff, until the U.S. Congress considers what our trade policy should be as a nation and in conjunction with our allies.

Thank you.

Senator CLARK. Thank you very much.

Senator Dominick?

Senator DOMINICK. Colonel, did you mention in the process of your statement-I thought you did—the amount of gold production of the Russians?

Colonel CLABAUGH. Estimated at not less than $200 million a year. Senator DOMINICK. Your figures are lower than those supplied by the Library of Congress and lower than the ones indicated by Secretary Dillon in his testimony.

Čolonel CLABAUGH. Yes, sir. I said that it was at least equal to the sale of gold. That is the only thing we have any information on. We know how much they sell, but we do not know how much they produce.

Senator DOMINICK. Is it your opinion from a study which you have done of the Soviets and their philosophy that if they want this wheat they will buy it for cash, if we do not permit credits?

Colonel CLABAUGH. Yes, sir. They did in the case of Canada. Senator DOMINICK. In the case of Canada they entered into an agreement, at a higher interest rate than we are asking, I think it is about half a percent higher, according to Secretary Dillon, for an 18-months credit, and this was agreed to by the Canadians.

Senator CLARK. I think it was 80 percent credit and 20 percent cash.

Senator DOMINICK. It may have been. But in any event, they paid 80 percent cash. That is the point I wanted to make. Now would you anticipate that they would do this same thing in this sale, if it goes through, with Export-Import Bank guarantees?

Colonel CLABAUGH. If they need the wheat, sir, and wished to make the purchase.

Senator DOMINICK. Wouldn't this then change the tenor of your testimony, that what they are looking for is credit?

Colonel CLABAUGH. I attempted to say that they want the credit, if they can get it, for the benefits it gives to them. It enables them to use their gold for paving their bathrooms, or other mischief making around the globe. Naturally if they can save their foreign currency, and their gold reserves, they would prefer to do it.

Senator DOMINICK. What I am trying to get at is, why do you think they didn't do it with Canada?

Čolonel CLABAUGH. The only assigned reason I saw was that they didn't like the interest rate.

Senator CLARK. Would the Senator yield?

Senator DOMINICK. Yes.

Senator CLARK. Actually, with an 18-months credit term, they are going to have to come up with the gold or cash pretty soon, aren't they?

Colonel CLABAUGH. Yes, sir, if they meet the obligation.

Senator CLARK. So it is really

Colonel CLABAUGH. And also they can sell us goods. As the Soviet commercial counsel already indicated, they hoped to pay us only the difference between their sales to us and the amount of the commitment.

Senator CLARK. But if this is a one-shot deal for wheat, and we don't make any other large commercial deal with them for other products, then they will have to come up with cash on the barrelhead by the end of 18 months. In fact, they would have to pay installments of 25 percent after 6 months and another 25 percent after 12 months, leaving only 25 percent to run for the full 18 months. Isn't this correct?

Colonel CLABAUGH. Yes, sir; if they meet their obligations.

Senator DOMINICK. Colonel, at what time, if you know, will the oil pipelines from the Russian oilfields into Western Europe be completed?

Colonel CLABAUGH. I am afraid to attempt to answer that question, but I noticed recently that they expect to have the pipeline, I think into East Germany, by next year. But I could be mistaken in that.

Senator DOMINICK. They have a number of agreements, as far as my knowledge goes, with Western European countries for sale of oil to the Western European countries when those pipelines are finished. Is this correct?

Colonel CLABAUGH. Yes, sir.

Senator DOMINICK. Is it possible they are planning on using some of the funds which they were to derive by this for supplementing their payments for the wheat?

Colonel CLABAUGH. They would expect to use their export of oil to reduce the adverse balance of their trade with these countries to whom they would sell it.

Senator DOMINICK. Thank you.

Senator CLARK. Thank you very much.

Senator CLARK. Our next witness is Mr. J. C. Frink.

STATEMENT OF JAMES C. FRINK, VICE PRESIDENT, TOBACCO
ASSOCIATES, INC.

Mr. FRINK. My name is James C. Frink. I am vice president of
Tobacco Associates, Inc., a trade association representing about half
a million growers of Flue-cured tobacco in the States of Virginia,
North Carolina, South Carolina, Georgia, Florida, and Alabama.

We want to register with this committee our opposition to S. 3210. We believe the enactment of this legislation would greatly discourage and could indeed render impossible the exportation of any substantial amounts of U.S. agricultural commodities to countries of the Soviet bloc at a time when such exports would be both to our political and economic advantage.

Increases in exports of our agricultural commodities at this time would result in improving the income of not only our farmers but the many other segments of our population who are engaged in such activities as handling, processing, and transporting farm commodities. Increased exports also would result in savings to the U.S. Government in storage, interest insurance, and related carrying charges, some of which are especially heavy at times. Increased foreign sales also would help to eliminate our balance-of-payments problem.

Furthermore, we believe that the present situation provides us with an unsurpassed opportunity to forcefully demonstrate to the disciples of communism that they cannot "bury us" as recently boasted but that, on the other hand, in their hour of need they must come to us “hat in hand" in order to obtain needed supplies.

In the type of conflict in which we are engaged with the Soviet Union and its satellites, it is advantageous to have at our disposal weapons of many types and categories. It could very well be that selling them our agricultural commodities under present conditions would be one of the most effective weapons we have yet found for helping settle basic issues in this conflict. It would emphasize to the whole world, including the "fence sitters," the contrasts between Soviet-dominated areas and the free world in economic capabilities.

Now, about tobacco. Tobacco is an important component of the foreign commerce of the United States and has been since earliest colonial times. Today, some 40 percent of the Flue-cured tobacco we produce depends on export movement for its outlet. This concerns sales to more than 100 foreign countries in a world market that is highly competitive.

Many of the countries of the Soviet bloc, including Russia, are producers of tobacco, but the quality of most of it is greatly inferior to that of our tobacco. There is an ever-present demand, therefore, in many of those countries, for our leaf which, by the way, is the best in the world.

Under existing circumstances, we see no objection to permitting the Export-Import Bank, or other similar agencies, to sell commercial insurance connected with the sale of our commodities, including tobacco, to Soviet bloc countries. We do not believe that the availability of such insurance would result in the consummation of sales to Soviet bloc countries on terms more favorable than those made to countries of the free world.

In closing, I should like to emphasize the fact that we have no sympathy whatever with the purposes or methods of the Communist gov

ernments and we would never knowingly advocate any action on the part of our Government or groups of our citizenry which would strengthen them.

Senator CLARK. Thank you very much.

Senator DOMINICK. Mr. Frink, did you have a board meeting, before you wrote this statement?

Mr. FRINK. Well, that depends on what you mean by "before." We had one some time ago.

Senator DOMINICK. Did you consult with the half million growers of tobacco, before you prepared this.

Mr. FRINK. No, sir.

Senator DOMINICK. What you are really interested in, Mr. Frink, is providing another market for the sale of surplus commodities, isn't that about it?

Mr. FRINK. Yes, sir.

Senator DOMINICK. If we can do that for cash, you would be just as much in favor of that as you would if we did it on credit?

Mr. FRINK. Yes, sir.

Senator DOMINICK. That is all.

Senator CLARK. Thank you very much, Mr. Frink.

Senator CLARK. Our last witness is E. Raymond Wilson.

STATEMENT OF E. RAYMOND WILSON, ON BEHALF OF THE FRIENDS COMMITTEE ON NATIONAL LEGISLATION

Mr. WILSON. Mr. Chairman, my name is E. Raymond Wilson. I am appearing in behalf of the Friends Committee on National Legislation, of which at present I am executive secretary emeritus, to oppose the enactment of S. 2310, which seeks to prevent the use of credits by the Export-Import Bank in facilitating the sale of wheat to the Soviet Union and its allies.

Because of its democratic organization and the cherished right of individual opinion in matters of religion and politics, no one can speak officially in matters of this kind for the entire Religious Society of Friends. But I do speak for the very representative Friends Committee on National Legislation, and I think for a large section of the Christian conscience of America, when I placed before this committee and the Senate the statement approved at the annual meeting of the Friends Committee on National Legislation in January 1963. This states, in part, that:

Food should not be used as a weapon in the cold war * * Assistance and food should be offered on the basis of need to all people regardless of the political or ideological nature of their government.

The current FCNL statement of legislative policy further says:

The development of freer trade and the mutual exchange of goods and services are important factors in achieving economic and political stability, and, in turn, world peace * * We recommend eliminating special restrictions on nonmilitary trade with Communist nations.

So our appeal to this committee to turn down this proposed bill is basically a religious and a humanitarian one. The people of the United States and the peoples of the Soviet Union and other Eastern European countries are deeply divided by political doctrines antithetical at many points, but we are all members of one great human family.

We who call ourselves Christians have been taught to pray in the Lord's Prayer, "Give us this day our daily bread." I think the "us" does not refer just to the United States, but to the entire human race. The World Food Congress which met in Washington in June drew together 1,330 delegates from 104 countries. The Congress adopted as its goal trying to overcome world hunger within the next 25 years. That means in Communist countries, too. The United States has made a notable contribution through the food-for-peace program and the operation of Public Law 480. But it still costs us as taxpayers about a million dollars a day to handle and store our wheat surplus. Granted that the Soviet system and the collectivization program have slowed down agricultural production. But apparently unfavorable weather was an important factor in the present shortage, and weather is no respecter of persons. Recent visitors to the Soviet Union have all testified to the innate friendliness of the Russian people to the Americans. Where is our common decency, let alone our supposed higher morality, if we seem insensitive to their hunger and plight? Senator Aiken said to me recently that he knew of no peoples who had ever been starved into democracy.

We are acutely conscious of the many conflicts which divide the Governments of the United States and the Soviet Union, of the difficulties of creating a climate of mutual understanding and trust, and of the many policies which need to be changed. But human institutions are not immutable, nor are human attitudes. To gain a little perspective, drop back to 1830-and I was sorry I couldn't lay my hands on this quotation this morning-when a spokesman commented on the waters which divided two groups, and the absolute impossibility of their ever uniting in common endeavor. He was speaking not of the United States and Russia, but of Brooklyn and New York City-now united in one metropolitan government.

Some years ago Walter Lippmann commented on the current U.S. policy at that time as predicated on the assumption that if sufficient political, economic, and military pressure were put on the Soviet Union and mainland China, their regimes would either collapse or surrender. He said that the evidence did not support either thesis and described this position on the part of our Government as not a policy but the absence of a policy.

As for the particular merits of the question before this committee, we welcome the efforts which have been made to negotiate a wheat sale or sales of other agricultural commodities to the Soviet Union or its allies. Our committee has testified on more than one occasion for removing the restrictions against sales or donations to Communist countries contained in Public Law 480. It would seem logical and desirable that the proposed wheat deal should have the benefit of the same kind of temporary commercial credits which are used in such transactions, and that the Export-Import Bank should not be denied the right to join in such guarantees if they are convinced that the arrangements, the timing, the size of the transactions, and other factors warrant such assurances.

What is involved here is not only the question whether the Soviets can dig up the very large amount of gold right now for a fully cash transaction, but the more touchy, delicate question whether, in commercial transactions, they are to be treated differently or discrimi