ducted the trade-agreements program have not spent their time discussing the philosophy of Adam Smith, or any other philosophy. They have examined our foreign trade and our internal business life in detail, industry by industry and product by product, to determine the detailed arrangements under which foreign trade could be expanded without undue disturbance to any domestic interest. The increases in our commerce with the trade-agreement countries, and the absence of any showing of real damage to any American domestic interest, are the best proof that the work has been well and carefully done.

The Vice Chairman of the Tariff Commission, who is also the chairman of the Committee for Reciprocity Information, will describe the procedure that is followed. I wish only to say this: The people who ascribe the administration of the program, either in praise or blame, to the Department of State alone do a very great injustice to the expertness and the patience and the wisdom and the plain hard work of the officers and staffs of the Tariff Commission, of the Department of Commerce, of the Department of Agriculture, and of the Treasury Department. It is they who provide the knowledge and the figures and a great part of the business judgment that lie at the basis of the program. The Department of State participates chiefly as the coordinator and negotiator, but the job is a combined one, as the law says it shall be, and the results are the results of teamwork.

The program has worked uncommonly well-in fact with striking and outstanding success considering the tremendous difficulties faced. It is no longer an experiment. It has been tried in the fire of experience. It has produced results. It has brought to America increased trade and increased employment without working injury to any branch of American agriculture or American industry. These were the conclusions reached by this committee and by the Finance, Committee of the Senate, after exhaustive hearings, in 1940. They were confirmed by the Congress by the renewal of the act.

The hearings before this committee on this subject in 1940 were exhaustive and the discussion of it occupies over 20 pages of the committee's report. The figures then before the committee came down through November 1939. It is quite clear that no figures since then could throw any further light upon the issues, for the world has been at war and trade has been dominated by war supply and war blockade, the submarine campaign, the incursions of the enemy, the strategic use of scarce shipping, and the necessities of military operations. The movements of goods have not been controlled by costs, prices, profits, and tariffs, as they are in time of peace. Statistics gathered since the outbreak of the war can throw no light either way on the question now before you.

As this committee said in 1940, the agreements "have been highly beneficial to this country".

Mr. KNUTSON. Pardon me; that is from the majority report?

Mr. SAYRE. The majority report, which is the report of the committee.

Mr. KNUTSON. But it was not a unanimous report?

Mr. SAYRE. True.

Mr. KNUTSON. I think you should have stated that.

Mr. SAYRE. I will be very glad to see that these remarks will go into the record.

Mr. COOPER. But it is the report of the committee.

Mr. KNUTSON. No; of the majority.

The CHAIRMAN. The report speaks for itself. Proceed, Doctor.

Mr. SAYRE. To resume the quotation, the committee said the agreements "have been highly beneficial to this country. Both agriculture and industry have shared in these benefits." Now, that conclusion is still valid.

May I touch next upon one feature of the program which has been sharply criticized and widely misunderstood, and yet which is based upon one of the most deeply rooted and characteristic of our American traditions-the policy of equal treatment to all without special favor and without discrimination, commonly known by the somewhat misleading name of the most-favored-nation policy. The policy means nothing more nor less than treating each nation upon a basis of absolute equality provided only each nation does the same to us. Since one fundamental objective of the Trade Agreements Act is to expand foreign markets for American products, and since a policy of discrimination inevitably results in retaliation and heightened trade barriers, the provision of the act directing the President to treat all nations alike on a basis of equality and nondiscrimination-in other words, to follow the unconditional most-favored-nation policy in the administration of the act-is of keystone importance.

Most of the opposition which has been directed against the mostfavored-nation policy in connection with the trade-agreements program has been due to a complete misunderstanding of what that policy really is. It does not mean giving away something for nothing. We do not extend trade-agreement concessions to third countries for no return. We extend them only if the country in question does not discriminate willfully and seriously against our products. In other words, we give our lowest tariff and freedom from discrimination in return for the other country's lowest tariff and freedom from discrimi nation.

This carries out the principle of the single-column tariff which the United States has followed from the time of President Washington, and it accords with the specific decision which Secretary of State Hughes and President Harding and the Foreign Relations Committee of the Senate made in 1924. As their published correspondence of that date makes clear, the United States cannot expect the open door and freedom from discrimination abroad if it discriminates itself among competing selling countries.

From the policy of nondiscrimination comes decided advantage. Experience has proved that the freedom from foreign discrimination which our own practice enables us to demand and to receive is of enormous value in dollars and cents to American exports.

No one claims that as a result of the trade-agreements program and of our power to withhold the benefits of trade concessions from countries which discriminate against American commerce all discriminations have been wiped out. One thing is sure. One thing is sure. Fewer discriminations exist against American exports than would be the case were there no trade-agreements program.

Let me give one or two concrete examples. In the case of France before the war, for instance, many French tariff duties varied from

minimum rates through intermediate to maximum rates, depending upon the position enjoyed by the exporting nation. Prior to our French trade agreement, United States exports were compelled to pay maximum French rates with respect to hundreds of tariff items and intermediate French rates with respect to several thousand other items. By virtue of the most-favored-nation provisions in the trade agreement we obtained the lowest French rates with respect to the entire French tariff structure, apart from a few exceptions relatively unimportant to American trade. In the same way, in the Canadian trade agreement of 1935, by virtue of the most-favored-foreign-nation pledge in that agreement American products immediately and automatically gained the advantage of lower Canadian tariffs with respect to approximately 600 Canadian tariff items. Among this large number of products, which had for years been paying higher Canadian duties than similar products from certain other countries, were many important American agricultural and industrial exports. Together they accounted in the past for about 30 percent of total Canadian imports from the United States. Our program and policy have paid dividends also in the case of countries with which we have no trade agreements and no treaty obligations to accord equality of tariff

treatment.

One cannot reach any different conclusion when one studies closely these problems of international trade and seeks the interest of American working men and American farmers. These countries, in general, have lessened or removed discriminations against us. Their discriminations would have multiplied had we not pursued the policy we have. Because of Germany's flagrant discriminations and refusal to mitigate or remove them the benefits of our trade agreements have been denied to that country since 1935. For a time they were denied to Australia.

The only alternative to the most-favored-nation policy is that of granting exclusive preferences in return for exclusive preferences. But every exclusive preference constitutes in its very essence discrimination against all other nations. And discrimination inescapably leads to retaliation and mounting trade barriers since nations whose income and whose economies are dependent upon the sale abroad of their surplus products cannot remain passive if these sales are menaced or prevented by preferences granted to their competitors or by discriminations directed against them.

Such a policy makes for sudden, arbitrary, and uneconomic shifts in the currents of trade, for unending business uncertainty and instability, for bitter struggles to hold onto diminishing foreign markets, for tariff warfare and increasing economic conflict. Upon such foundations no peace can ever be made secure. The only practical way for the United States to attain its objective of increased markets for American export products is through trade-barrier reduction coupled with the unconditional most-favored-nation policy.

The Republican Party, recognizing the fundamental soundness of this policy, wisely wrote into the party platform of 1932 the following declaration:

The historic American policy known as the most-favored-nation principle has been our guiding program, and we believe that policy to be the only one consistent with a full development of international trade, the only one suitable for

a country having as wide and diverse a commerce as America, and the one most appropriate for us in view of the great variety of our industrial, agricultural, and mineral products and the traditions of our people.

There is no difference between the two great parties on this question. America could not be true to her traditions or her interests and follow any other course.

The issue which we now face is no longer merely a question of commercial policy. It is no longer merely an issue between various special groups and interests within the United States.

America is at war. We are fighting for our lives. We are fighting also for freedom and for a decent world for our children and for our children's children. In this fight, more devastating, more cruel, more terrible, than any struggle which America has ever known, we are all one, pursuing common ends. There is no room for partisan differences or sectional disputes. All of us are Americans. All of us alike seek a post-war world free from growing mass unemployment and free from the destroying fires of recurrent and constantly. threatening warfare. There is only one direction toward which America can turn to gain these objectives. That is in the direction of increased and increasing international cooperation and international trade. As to this there can be no difference of opinion. It is a matter of supreme foreign policy.

In other words, the trade-agreements program must be considered today against an altogether different background from that of 9 years ago. Then it was a question of commercial policy, of high tariffs versus low tariffs, of dollars-and-cents profit or loss for this sectional group or for that. Today we live in a different world. Increased foreign trade is now a crucial issue of foreign policy. Today we stand at the fork of the road with the eyes of all nations upon us. Will America, with her towering power and incomparable strength, the acknowledged leader of post-war economic life, now move in the direction of economic self-sufficiency regardless of the cost to us and to others, the policy which Germany pursued, and which drove us all into the Second World War, or will America move in the direction of international cooperation and increased trade, upon which alone lasting peace can be built? Here is an issue of crucial foreign policy upon which there is no room for difference of opinion between Republicans and Democrats.

The vote of Congress upon the bill now before you will be regarded by other nations as the acid test of America's future intentions. If we move in the direction of economic isolation other nations closely watching us today will be forced to move accordingly in a desperate effort to get along without our help. In that event there can be no other outcome but increasing economic struggle and growing bitterness, lowered national standards of living, increasing expenditures for armament, and eventually a third world war. One thing is sure. It is utterly impossible, and will always be impossible, to build international cooperation upon economic isolation.

Once this stubborn fact is realized, the nature of the economic foundations required for a stable peace becomes clear. Today the standards of living, if not the very lives, of entire populations are dependent upon a steady flow of raw materials, foodstuffs, and manufactures at prices unenhanced by prohibitive economic barriers, and

also upon a steady sale of their own exportable production in foreign markets for a remunerative return.

If we are to have peace, we must build for it; and now is the time to lay the foundations. If we allow short-sighted local and sectional demands for monopolistic privilege to dominate our thinking and our action, then no matter how ardently we may desire peace we shall not obtain it. Economic isolation leads inevitably to lowered standards of living and increased unemployment, to nation competing against nation in bitter struggle for shrunken markets, to competitive armaments and eventual war.

If we are to achieve a lasting peace we must consciously and courageously move to overcome this drift. No nation can make the peace secure singlehanded. But it can be done through international cooperation. Neither will any single measure be sufficient. Lasting peace can be achieved only through a combination of measures. Not the least of these must be increased international trade.

The bill before you, Mr. Chairman and members of the committee, is in very truth one of the foundation stones-and a vastly important one-for the coming peace. Future Americans will look back upon this question now before you as one of the really critical issues of the war. A wrong decision will deprive us of the fruits of victorywill make impossible the attainment of our war objectives. I feel supremely confident that the members of our Congress will decide this issue, not as sectional leaders, but as Americans, true to American traditions, leading in the battle for human progress.

The CHAIRMAN. Does that complete your main statement?
Mr. SAYRE. It does, sir.

The CHAIRMAN. How long, Dr. Sayre, have you been giving this matter of international trade careful study, and what connection have you had with the administration of the law since the policy was adopted? Will you give us some outline of that? You have been before us on previous occasions and always have handled the subject in a most comprehensive manner, but I would just like you to give us a statement as to your familiarity with this subject, and your ability to discuss it as a qualified witness.

Mr. SAYRE. I have studied foreign trade for many years, sir, and when I came down to Washington in 1933 to act as Assistant Secretary of State, Secretary Hull asked me to make particular study of this problem and to proceed to some kind of solution of it that would be practical and to which we could look for results. At that time the Executive Committee on Commercial Policy was inaugurated. and I was asked to act as chairman of that committee.

Central both in my thoughts and in those of the committee was the supreme importance of finding some way to meet the problem of foreign trade. Remember, that was a time following the disastrous fall of foreign trade, when our American export markets had been cut; when, as a result, our mills, many of them, were idle, our employment had fallen off. We were faced with very serious and grave conditions in this country.

The Executive Committee on Commercial Policy, as I say, turned its attention to this as one of the most important issues to which it should address itself. As a result of the work of that committee, we hammered out the first draft for this Trade Agreements Act, and that