Mr. KNUTSON. But I would like to have a statement from you as to what you think we ought to do with this $650,000,000 synthetic-rubber industry that we are building up here when the war ends.

Mr. SAYRE. As I said before

Mr. KNUTSON (interposing). Should we scrap it in order to build up goodwill with the rubber-producing countries?

Mr. SAYRE. No. Now, again and again I have heard the suggestion made by various gentlemen that this trade-agreements program is something to cultivate good will, that we are giving away American goods and American commodities and American rights for the sake of good will. Now, that is not so.

Mr. KNUTSON. That is what they told us, when the first bill was up here, and you came and told us that it was one way to insure peace. I recall your testimony because it touched my heart.

Mr. SAYRE. I am glad it did. I hope that I touch your heart again. It is necessary, I believe thoroughly, with all of my heart, as a foundation to build for peace. It will not insure peace. I think it is necessary because you cannot have lasting peace and economic conflict. The two do not mix. I think that you must have trade and freedom from economic conflict.

Now, because of that I think it is a necessary foundation for peace, but remember the objective is increased trade; not increased good will, but increased trade.

Mr. KNUTSON. You folks did not mention anything as sordid as that the first time that you were up here.

Mr. SAYRE. I am sure we talked about increased trade.

Mr. KNUTSON. It was then on a high, altruistic plane, and you made a great appeal to me. If I had not had a head on my shoulders, I would have gone along with you.

Mr. SAYRE. I am hoping that you will go along with us now, because we now talk about the achievements during these past 9 years, achievements in dollars and cents. I am not saying that they have not created good will also, but I am saying that the justification for the program is not merely and simply good will; that we have achieved results in dollars and cents.

We have also built for peace and we have also built for friendship and understanding, and we have also reduced economic conflict, but those are not the only justifications for that program, and if your head exceeds your heart and you want to talk hard dollars and cents, brass tacks stuff, all right, we are prepared to meet you on that ground, too. Mr. KNUTSON. Well, you have not yet.

Mr. SAYRE. You have not let me answer your question of this morning.

Mr. KNUTSON. All right, please do that.

Mr. SAYRE. You asked the question this morning, what the effects were on the trade, international trade, of the trade-agreements program.

I have the figures before me of the increase of foreign trade since. 1932. I could insert those in the record, but they would not be too convincing because our whole trade trend was going up. We increased our exports and our imports after 1932 in an ascending scale. What I think is of significance is to compare the percentage of increased exports and imports as between the trade-agreement countries on one

side and the nontrade agreement countries on the other side. I have before me a table which I would like to insert in the record showing the comparison between two 2-year averages, that is, the average of 1934 and 1935 on the one hand and the average of 1939 and 1940 on the other. I have not gone beyond 1940 because then we were under war conditions, exporting armaments and munitions and so forth.

Mr. KNUTSON. Are those figures broken down so that we can separate the war business from the normal peacetime business?

Mr. SAYRE. Well, in these particular figures the war munitions are not separated. Of course, if you are referring to lend-lease, those I have break-downs of and can tell you about.

This particular table which I have here shows that of the tradeagreement countries in respect to exports made during the years 1934 to 1935, the total value in millions of dollars was 1,238.

That is, we exported $1,238,000,000, and comparing that with the 1939-40 average, we exported then $2,319,000,000; that is an increase of 87 percent.

Compare with those figures the exports with the non-trade-agreement countries.

In 1934 and 1935, we exported $970,000,000 and in 1939 and 1940, $1.280,000,000, showing an increase of 32 percent.

In other words, the increase in exports as between trade-agreement and non-trade-agreement countries was this:

To trade-agreement countries our exports increased by 87 percent and to non-trade-agreement countries by 32 percent.

Mr. KNUTSON. Would you permit an interruption right there? I find that the increase in exports of iron and steel scrap increased from $19,188,000 in 1934 to $47,840,000 in 1940.

Mr. SAYRE. To what country?

Mr. KNUTSON. Well, what country did buy scrap?

Mr. SAYRE. I am thinking of Japan, are you?

Mr. KNUTSON. Yes; and Germany and Italy.

Mr. SAYRE. Those are non-trade-agreement countries and therefore those figures are included in the 32 percent, whereas we increased our exports to trade-agreement countries by 87 percent, so that I think that that is not too happy a reference.

Mr. KNUTSON. In that period we show an increase of exports of explosives, fuses, and so on, from $2,152,000 to $20,869,000. Your biggest items are gasoline, automobile parts, and accessories.

Mr. SAYRE. We are very happy to export automobiles and accessories. Mr. KNUTSON. Now, I do not know how you are going to make a comparison that is fair unless you fully break it down so that you separate the war material from the nonwar material. The increase in exports does not mean anything and does not bear out your case unless you can show that we have increased our exports in nonwar material. Mr. SAYRE. I am glad to do that, sir.

Mr. KNUTSON. Is not that true?

Mr. SAYRE. I think that it is not altogether true; no; because I think that you will find that the exports to Japan, Germany, and Italy will be as great as the exports to trade-agreement countries. I suspect that, but I will be glad to have those figures broken down for you, sir, and put in the record, if you like.

Mr. KNUTSON. To a question propounded by Mr. Jenkins, I understood you to say that the number of items that we had cut the tariff by

50 percent or the maximum that you can cut it under the law was negligible.

Mr. SAYRE. No; I beg your pardon. I said that we did not cut all tariffs down to a 50-percent limit. I said that instead our whole conception of the program was a selective cutting, cutting only those tariffs which did not have sound economic justification, and there are still many tariffs uncut and untouched, and others cut only maybe 20 percent, and some cut only 10 percent.

Mr. KNUTSON. The record shows that you have reduced by 50 percent 67.8 percent of all of the items that you negotiated on; that is pretty good.

Mr. SAYRE. If it is true and can be done without injury, it shows that the existing tariff then had still less justification, economically, than I thought.

Remember that that cutting has been done without injury to domestic producers.

Mr. KNUTSON. Well, you say, without injury, and that is what you think.

Mr. SAYRE. And that is what this committee concluded at the 1940 hearings.

Mr. KNUTSON. Well, some members of this committee, I think, sort of regret the votes that they have cast on this thing.

Mr. SAYRE. I can read it to you in your own reports, sir.

Now, may I complete what I was stating in answer to your other question?

Mr. KNUTSON. Yes, sir.

Mr. SAYRE. A comparison is also in order between the years 1939 and 1940, as to the effects of trade agreements on exports. I will not bother to read you the totals but suffice it to say that the increase to trade-agreement countries in 1940 over 1939 exports by value was 36 percent.

The increase to non-trade-agreement countries was only 12 percent. We have tried to gather these statistics from many different angles, and I do not want to weary you with them, but in almost every case it comes out a rather effective showing for the percentage of increase in foreign trade with trade-agreement countries, as compared with non-trade-agreement countries.

Mr. KNUTSON. How about exports of agricultural products?

Mr. SAYRE. The same is true; I have them, too. I will be glad to put them in the record.

Mr. KNUTSON. Will you let us have them? I do not know as I am going to have time to read all of these hearings. It will save time, I think, by having them read now.

Mr. SAYRE. Shall I read this aloud, sir?

Mr. KNUTSON. I think that it would help me more, if you would. Mr. SAYRE. This is a table showing the agricultural and nonagricultural exports to trade-agreement and non-trade-agreement countries.

Mr. KNUTSON. Just confine yourself to agricultural products then, and I will read the industrial.

Mr. SAYRE. To trade-agreement countries, agricultural exports increased by 49.9 percent.

Mr. KNUTSON. From when?

Mr. SAYRE. From 1934 to 1935, a 2-year average, as compared with 1938 to 1939, a 2-year average.

Then as compared with that figure of 49.9 percent, agricultural exports to non-trade-agreement countries decreased by 26.4 percent.

That is, the comparison is an increase to trade-agreement countries of 49.9 and agricultural exports to non-trade-agreement countries which actually decreased by 26.4, and may I add that if cotton exports are excluded from those agricultural exports that figure of 49.9 becomes very much more striking, it becomes 98.9.

Mr. KNUTSON. Well, now, I have a table here, which shows that agricultural exports to non-trade-agreement countries, to all countries, decreased 30 percent and to trade-agreement countries, 10 percent, it decreased, from 1934 to 1940.

Now, here I have it for your convenience, these are from the Tariff Commission and I think that these figures would be quite illuminating especially to the gentleman from Texas, and a few others who are interested in the farmer.

Mr. ROBERTSON. This is the second time they have been introduced in 3 days.

Mr. KNUTSON. You do not know how much pleasure I take in reintroducing.

Mr. SAYRE. I have a copy of those; I will be glad to comment on those.

Mr. KNUTSON. I wish that you would.

Mr. SAYRE. I will be happy to.

This is what you were interested in, Mr. Gearhart, also.

The figure that you point out is a 30 percent decline in agricultural exports, in 1940; is that the figure that you wanted?

Mr. KNUTSON. Yes.

Mr. SAYRE. Let me say first that 1940 is not too good a year to take because of the fact that in the year 1940 you have your blockade, and you have Great Britain restricting its purchases because of war conditions, so that 1939 is a much better year, but if you choose to take the year 1940, all right.

Look at that table. The agricultural products, the export of agricultural products to trade-agreement countries in that year 1940 declined by 10 percent.

The agricultural products to non-trade-agreement countries as you will see at the bottom of that same table decreased in the year 1940 by 53 percent.

In other words, the decrease of actual agricultural exports as between trade-agreement and non-trade-agreement countries was in the first case 10 percent decline, and in the second case 53 percent decline.

Now, I have said that 1940 is an unfavorable and unfair year, because of war conditions.

If you take 1939 you will see that the decrease in agricultural exports to all countries was not 30 percent but only 11 percent, and if from that 11 percent decline you subtract cotton, which was being governed by very different conditions, you have instead of an 11 percent decline, a 14 percent increase.

Mr. KNUTSON. Why should we subtract cotton?

Mr. SAYRE. Well, you will remember that, while it is an agricultural product, its export and import are governed by conditions which are

really quite apart from trade agreements. In a number of our trade agreements we did secure the binding of the free entry of cotton, but whether cotton travels across the ocean or not depends on many factors, such as price conditions and export subsidies, and a lot of other elements enter in there which I think are foreign to our particular discussion.

Whether you exclude cotton or not, I think that this very table that you point to illustrates as clearly as any table which you could have, the benefit of the trade-agreement program in securing an increase of agricultural exports to foreign countries and you see the figures here for these other years are very striking; using this same table you see that for instance in the year 1937, which is the first year for which percentages are given, whereas the export of agricultural commodities to trade-agreement countries increased by 34 percent_compared to 1934, in that same year, 1937, the export of agricultural commodities to non-trade-agreement countries declined by 21 percent, and in the following year, 1938, whereas agricultural exports to tradeagreement countries increased by 46 percent, and agricultural exports to non-trade-agreement countries declined by 27 percent.

In the following year, 1939, you have an increase to trade-agreement countries of 14 percent and an actual decline to non-trade-agreement countries of 41 percent.

So I think that this very table is very effective to show what the result of trade agreements has been on agricultural exports.

Mr. KNUTSON. Of course, the rates have been pretty well generalized.

Mr. SAYRE. Well, our exporters have taken advantage of concessions which foreign countries have given to us.

Mr. KNUTSON. Now, there is just one more question, and then I am going to-—

Mr. SAYRE (interposing). You are going to let me off?

Mr. KNUTSON. I hope that you have enjoyed it as much as I have. Mr. SAYRE. I have, sir; a little more, I think.

Mr. KNUTSON. Well, that is possible.

The CHAIRMAN. That is reciprocity.

Mr. KNUTSON. Of course, I take it that you believe in open covenants openly arrived at.

Mr. SAYRE. Yes.

Mr. KNUTSON. Why is it that you folks turn the key in the door whenever you meet and you never let any of us know what you are doing or what you are going to do to us until it has been signed, sealed, and delivered?

Mr. SAYRE. Mr. Knutson, my door is always open to you.

Mr. KNUTSON. I am not talking about your office door. I am talking about your conference room door where you meet and trade the American farmer down the river.

Mr. SAYRE. I have been showing you that he has been reaping manifest advantages.

Mr. KNUTSON. Why don't you have open hearings?

Mr. SAYRE. We do.

Mr. KNUTSON. And let the American Farm Bureau, the American Federation of Labor, and all of similar organizations that represent the producer, why not give them an oportunity to come in and be heard.