and in such cases-still quoting from him—

the only thing to do is to use the plan as outlined here and come as near to the cost of production as possible.

I quote from the Congressional Record, Sixty-seventh Congress, second session, volume 67, part 11, page 11218.

Or again, the late Mr. Chief Justice Taft, the author of the Hampton opinion, which upheld the flexible tariff provision, said:

we must realize that the precise difference in cost of production sought for is not capable of definite ascertainment, and that all that even the most scientific person can do in his investigation is, after consideration of many facts which he learns, to exercise his best judgment in reaching a conclusion.

Now, I could give you, sir, quotation after quotation. I do not want to weary you with them. My whole point is that the cost of production, obviously, is not a mathematical, precise standard, by any means. It depends upon the best judgment one can reach in determining costs in perhaps 20 different areas under different conditions varying from year to year, especially when you get into products which perhaps are incidental products in a long process of manufacture.

As the former chairman of the Tariff Commission said, it is utterly impossible to determine what the cost of production is.

Mr. REED. That brings us right back again to the fact that the Court did demand a formula.

Mr. SAYRE. It did speak of an "intelligible principle."

Mr. REED. It seems to me that if Secretary Hull thought that the flexible tariff provisions-which involve no actual delegation of legislative authority-were unconstitutional, he would shudder at the delegation of authority contained in the Trade Agreement Act because it shows that they are not carrying out the standard, because you are arguing here now that it cannot be done, that we cannot obey the mandate of the Court.

Mr. SAYRE. I beg your pardon, sir. I am arguing that a formula based on the differences in the costs of production, though it sounds like a precise formula, is not such. That matter did arise before the Supreme Court, and the Supreme Court said in spite of the fact that it is not definite, it is not mathematical, it is not precise, nevertheless, it does show the general policy which Congress seeks and is sufficiently definite so that the Court was able to find that the flexible tariff provision legislation was entirely constitutional. That was the case of the Hampton Co. against the United States, decided in 1928, upholding the constitutionality of section 315 of the Tariff Act of 1922.

Mr. REED. Dr. Sayre, since we are putting in authorities, I want to call your attention to this statement which also refers to the flexible tariff provisions of the 1930 Tariff Act. I quote:

The administrative features are subversive of our system, idea, and ideals of government; and if enacted into law will be a violation of the fundamental principles upon which it rests.

The fathers who framed the Constitution, wisely, in my opinion, left to Congress the initiation and enactment of laws raising revenue. The flexible provisions giving the President the power to raise or lower tariff rates to the amount of 50 percent render nugatory in spirit and in practical effect this provision of the Constitution.

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In my opinion, we have gone a long way too far already in the centralization of power in the Executive head of the Government and if this bill is enacted into law he will have the power of life and death over industry, all manufacturing enterprises, and complete autocratic power affecting agriculture. My friends, this is too dangerous and alarming to contemplate. With all this power vested in the President of the United States, he becomes a colossus. It is too much power and authority to lodge in any man who ever has been, is now, or ever will be, President of the United States. In fact, with all this unrestricted and unlimited power, he would be in a better position to overthrow our form of government and proclaim himself king than was the First Consul of France, the great Napoleon, when he overthrew the French Government and proclaimed himself emperor.

It seems that the more power men are given the more they are obsessed with a morbid gluttony for increased power. My friends, it is time to pause and call a halt, to stop, think, look, and listen before we go over the yawning precipice just ahead of us.

That is pretty strong authority.

Mr. SAYRE. That is very eloquent, sir.

Mr. REED. The present chairman of the Ways and Means Committee made that statement. I consider him pretty good authority. Mr. SAYRE. That is very eloquent, sir.

Mr. REED. There is no reflection on him at all because he knows that I am very fond of him.

Mr. SAYRE. He was discussing the flexible tariff provision.

Mr. REED. He is usually right, as you know, when he is not too excited, and he was very calm there.

Mr. SAYRE. Well now, I just want to go on and give the quotations on which I think your argument hangs, the quotation from the Hampton case, in which the Supreme Court said, and I quote from page 409 of 276 U. S.:

The same principle that permits Congress to exercise its rate-making power in interstate commerce, by declaring the rule which shall prevail in the legislative fixing of rates, and enables it to remit to a rate-making body created in accordance with its provisions the fixing of such rates, justifies a similar provision for the fixing of customs duties on imported merchandise. If Congress shall lay down by legislative act-

and I think this is the language on which, Mr. Reed, you hang your

case

If Congress shall lay down by legislative act an intelligible principle to which the person or body authorized to fix such rates is directed to conform, such legislative action is not a forbidden delegation of legislative power.

In other words, the Supreme Court says that the Congress must lay down an "intelligible principle."

Now, I think it is very clear that in the Trade Agreements Act the Congress does lay down such an intelligible principle. It lays down a general principle or policy, it sets up certain standards, and directs the Executive to carry out that policy within certain limits as set out in the law. What are those standards and those limits?

In the first place, the law requires that the cutting of the tariff shall not be by more than 50 percent. In this respect, it is similar to the limitation prescribed in the flexible tariff provision.

In the second place, there is a prohibition against the transfer of articles from the free list to the dutiable list, and vice versa.

Mr. REED. I was going to read from the same opinion. It may be that it is difficult to fix with exactness this difference, but the difference which is sought in the statute is perfectly clear and perfectly intelligible because the difficulty is in determining what that difference is.

Congress seems to have doubted that the information in its possession was such as to enable it to make the adjustment accurately and also to have apprehended that with changing conditions difficulties may vary in such a way that some readjustment would be necessary to give effect to the principle on which the statute proceeds. To avoid such difficulties, Congress adopted in section 315 the method of describing with clarity what its policy and plan was, and then authorized a member of the executive branch to carry out its policy and plan, to define the change or difference from time to time, and make the adjustment necessary to conform the duties to the standard underlying that policy and plan.

Now, if it is possible to determine the cost of production, it is a dangerous thing to give that power and delegate it to a group of interdepartmental men.

Mr. SAYRE. Nevertheless, Congress delegated it to the President, who acted after investigation and recommendation by the Tariff Commission, and the Supreme Court upheld that power. Indefinite and unprecise as that standard was in the Cost of Production case, the Supreme Court upheld it.

Mr. REED. That is a fact-finding body?

Mr. SAYRE. Yes.

Mr. REED. Just where do you find all this authority? Just where do you find it?

Mr. SAYRE. Congress delegated the authority, and the Supreme Court said that was constitutional delegation.

Mr. REED. Provided they lived up to the formula; provided they followed the formula.

Mr. SAYRE. Surely, they had to follow the formula, but the formula is so lax, it is so impossible to administer precisely, as everyone who has dealt with it testifies, that it certainly was not a mathematical formula.

Mr. REED. Here is the point: This act that you are operating under has never been before the Court.

Mr. SAYRE. It has in some incidental connections.

Mr. REED. But nowhere that this question could be passed on by the Supreme Court.

Mr. SAYRE. The Supreme Court has not yet passed on its constitutionality.

Mr. REED. That is what I wanted to develop here. As we have led up to it, the Supreme Court has laid down a formula which has not been followed, and now, of course, it has not been tested in the courts. Mr. SAYRE. One moment, Mr. Reed. With regard to the first part of that statement, those administering the act have followed congressional provisions very faithfully and very painstakingly.

Mr. REED. Well, of course, we have a right to differ on that point. Mr. SAYRE. I am prepared to prove that is the case, and if you bring forward any single instance in which it is felt that the congressional mandate has been departed from, or even forgotten, I shall be glad to take it up with you, and I think prove that the assumption is incorrect.

Mr. REED. I think we will reach that point a little later.

Mr. SAYRE. All right.

Mr. REED. You will offer proof on one side and I can on the other. I would like to ask you another question.

Mr. SAYRE. May I go on, sir, with the point that I was trying to develop. I think we are both agreed, Mr. Reed, that the flexible tariff provision did lay down a standard which was indefinite and not precise; nevertheless, one which the Supreme Court, as indicated by the passages I have read, did say was constitutional and within the powers of the Congress to delegate; and the point which I am now making is that the standards set up by Congress in the Trade Agreements Act were even more precise and even more definite than the flexible tariff provision formula.

As I was saying a moment ago, you have, first, definite limitations similar to those in the flexible tariff provision, namely, the 50 percent limit and the fact that you shall not take articles from the free list and transfer them to the dutiable list, or vice versa.

Mr. REED. Pardon me. I will have to challenge you that that is not a formula. What I would like to have you do is to find out definitely, and in definite language, the formula which the interdepartmental group is following to see just how clear and near you are to the formula laid down by the Supreme Court.

Mr. SAYRE. That is exactly what I am going to say, sir. Now, under the act Congress laid it down that the procedure for adjusting these tariffs shall be by international tariff bargaining. That is, it is not a matter resting upon the caprice of the President. He has to act within definite limits, and those limits and the methods of operating are circumscribed by the language of the act which bases this adjustment upon international tariff bargaining.

Now, what does that mean? It means, in the first place, that concessions cannot be just given away. Let me say, concessions cannot be given except in return for concessions obtained. That is to say, there must be a rough kind of equivalent between the sum total of concessions given on the one hand and the sum total of concessions obtained on the other, so that the President is not free to cut capriciously. He can cut only when he gets compensatory value in return for the profit and benefit of an American export.

Second, the act prescribes that the adjustment must be in accordance with the needs of American industry.

Mr. REED. Right at that point I am interested.. How do you know whether to cut 10, 20, 50 percent, or just how much?

Mr. SAYRE. That depends upon this second point that I am going to mention. May I go into the second point and come back to that? Mr. REED. Go ahead.

Mr. SAYRE. The second limitation is that these cuts, these adjustments, must be in conformity-to use the act's own language-"in accordance with the characteristics and needs of various branches of American production." In other words, this is not an act for 50 percent free trade; no. One of the prime requisites of those negotiating these agreements is to find ways and means of securing benefits for American exports by a method and in a way which will not prove unduly injurious to American home producers who are competing, perhaps, with foreign imports.

Mr. REED. Pardon me. Is that the formula you are following with reference to industries? Is that the formula?

Mr. SAYRE. It is in the act, sir; if you want the language, I think that I can find it in just a moment.

Mr. REED. See if you can find there on that point a definite, intelligible formula.

Mr. SAYRE. I read, sir, from the first paragraph of the act, about the middle of the paragraph, where, following the parentheses, you see the words:

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by regulating the admission of foreign goods into the United States in accordance with the characteristics and needs of various branches of American production

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Mr. REED. What are the characteristics and needs? Just give us something definite on that.

Mr. SAYRE. I think that they are very clear. The characteristics and needs of American industry relate to the whole history of the development of American production.

Now, for instance, on the export side, take our cotton production. We have for many years produced surpluses of cotton and we must seek in some way to find market outlets for that surplus cotton. Or take the automobile industry. We have for many years produced automobiles which we can sell advantageously in foreign markets and for lower prices than automobiles produced in foreign countries. There again is a characteristic and need with respect to the American automobile industry; that is, this surplus production for which foreign market outlets must be found, if possible.

Again, on the import side, take other industries, industry by industry. I do not want to weary you, but they certainly have developed characteristics and needs, and I think that anyone dealing in these matters at once recognizes the characteristics and how great those needs are.

Now, our object in adjusting tariffs is to find ways and means for securing foreign concessions, and trading off for them reductions in our own tariff's in such a way that we do not injure our domestic producers, and I think the proof that this is not just a fairy tale is in the fact that American producers have not been injured through the 9 years in which we have operated. The Ways and Means Committee report said specifically that

Mr. REED. That is just a general statement of the committee, but what you have not shown me yet is that you have a definite standard. You are working along on the opinions of your interdepartmental people, but you have not developed anything in the way of a definite formula.

Mr. SAYRE. I think we have, sir. In the first place, as I have said, you cannot cut any tariff rate below 50 percent. In the second place, and still more definite, you are limited by the provision in the act that the adjustments shall be made, as I have said, in accordance with the characteristics and needs of various branches of American production. And in the third place, you cannot make cuts except insofar as you get rough equivalents, that is to say, in the terms of the act "corresponding market opportunities" in return for concessions granted to foreign nations.

Mr. REED. That is purely supposition. You are just simply not within the purview of the formula laid down by Congress as interpreted by the Supreme Court.

Mr. SAYRE. I beg to differ with you, sir. We are more nearly within it and the standards laid down are more definite than in the