Does that answer it?

Mr. MALONEY. Yes.

Mr. Chairman, at this point I ask unanimous consent to have incorporated in the record, excerpts from an address by George S. Messersmith, Assistant Secretary of State, before the American Merchant Marine Conference, September 20, 1938.

The CHAIRMAN. Without objection it is so ordered. (The excerpts referred to follow :)

EXCERPTS FROM AN ADDRESS BY GEORGE S. MESSERSMITH, ASSISTANT SECRETARY OF STATE, BEFORE THE AMERICAN MERCHANT MARINE CONFERENCE, BALTIMORE, MD., SEPTEMBER 20, 1938

Those of you who are interested more particularly in the coastwise trade of this country have just as much interest in the work which the Department of State and its Foreign Service are doing for our merchant marine as as those of you who are particularly interested in our foreign-trade routes. I need not remind you that the volume and the field covered by our foreign trade will determine to a considerable extent the volume of cargo for our coastwise trade. As our foreign trade shrinks, the coastwise trade has invariably shrunk in proportion.

If the communications aspects of shipping as a trade negotiator have been absorbed by air and telegraphic communication, what then takes the place of the mail and business-negotiating functions of shipping? We believe that the answer lies in the vastly increased world traffic in goods which should exist through the increased needs of peoples brought about by higher standards of living; in the ability of ships to carry low-rate commodities at low cost; in the ability of ships to make the products of one part of the world the daily food of other parts of the world; and in the ability of ships to bring together materials, men, and machines at strategic points where this combination may most efficiently create an industrial product.

In thinking and planning for our merchant marine and finding ways to promote its growth and health, we need always to be on the alert to detect the subtle and devious ways in which proposals which are in the nature of economic nationalism parade in other clothing. A ripe field for this is in the field of trade restrictions. We cannot have foreign trade unless there are ships to carry the goods-no one will dispute that. Furthermore, we desire that these ships be American-flag vessels whenever possible. But when this point is used to support proposals which are primarily aimed at the diversion or restricting of trade, such as those which require goods to be shipped by more costly routes or less efficient lines by penalizing the most economical handling, then the proposition becomes just one more of the artificial barriers which are the very essence of economic nationalism. It is just such practices by foreign nations to which we object.

In no respect is this more clear than when we consider, from the point of view of those interested in the merchant marine, the policy of this Government in its attack upon excessive trade barriers through the reciprocal tradeagreements program upon which this Government has embarked. This is in many rsepects the most important single constructive program to bring back order in this chaotic world. It is too easy to go astray with the idea that since this is called a tariff-bargaining program we ought to bargain some special treatment for our shipping. A parallel idea can easily be raised in connection with many other economic interests. Our holders of foreign bonds could easily agree that we should bargain in these agreements for special treatment for them. The proponents of such ideas overlook the fundamental fact that the welfare of all these interests is based upon an adequate and profitable flow of trade back and forth. The bargaining power we have for use in negotiating these agreements is limited to the concessions we can wisely and safely make in our own tariffs and to the guaranties we can give of equal treatment; that is, most-favored-nation treatment. All of this bargaining power is needed for use in getting the concessions we need for our export trade and for the guaranties of equal treatment and progressive removal of discriminations so that our foreign trade, both import and export, can move more freely, keep going the wheels of industry, and provide the cargoes necessary to keep our vessels moving. We cannot afford to divert this bargaining power and effort in other and special channels. If we did so, a double loss would result: First, dissipation

of our bargaining power into side issues; and, second, the setting up of new special and restrictive arrangements when the essential need is to break down the existing excessive array of trade barriers.

In conception and in administration, the reciprocal trade-agreements program has kept closely to this basic consideration. All efforts to use it for special or sectional aims have been successfully resisted. It has been kept to the main issue, which is the reciprocal reduction of excessive trade barriers and a persistent bearing down upon all forms.of special preferential and bilateral trade agreements between nations to the end that private initiative, released from excessive and discriminatory restraints, may be more effectively applied to restoring the volume and value of our foreign trade on a sound and profitable economic basis.

TABLE 1.-Water-borne commerce of the United States through Atlantic, Gulf, and Pacific coast ports and Great Lakes ports, 1929–40

1 Includes New York State Barge Canal and Illinois Waterway traffic entering or departing from the Great Lakes.

Source: Annual Report of Chief of Engineers, United States Army, 1941, pt. 2, p. 4.

TABLE 2.-Water-borne commerce of New Orleans, La., 1929–40

Source: Corps of Engineers of the U. S. Army and U. S. Maritime Commission, "The Port of New Orleans, La.." Port Series No. 5, revised 1938, p. 171, for 1929 36, inclusive; Annual Reports of the Chiefs of Engineers, U. S. Army, pt. 2, 1938 to 1941, inclusive, for the years 1937 to 1940, inclusive.

TABLE 3.-Comparison of number and tonnage of American and foreign vessels entered from and cleared for trade-agreement and non-trade-agreement countries, in selected years, 1929 to 1940

Tonnage

Tonnage

sands)

sands)

Number (thou- Number (thou- Number (thou- Number (thou

Tonnage

Tonnage

sands)

sands)

1 Countries with which trade agreements were in effect on Feb. 1, 1943. Source: Compiled by the U. S. Tariff Commission from Foreign Commerce and Navigation of the United States (table 11, pt. 1).

TABLE 4.-Index numbers of employment and pay rolls in shipbuilding industry, annual, 1929-38 and January, April, June, and September, 1939

Source: U. S. Department of Labor, Bureau of Labor Statistics.

The CHAIRMAN. We thank you, Dr. Sayre, for the information you have given the committee.

Without objection, the committee will stand adjourned until tomorrow morning at 10 o'clock.

(Whereupon, at 5: 15 p. m., an adjournment was taken, to reconvene the following morning at 10 a. m.)

EXTENSION OF RECIPROCAL TRADE AGREEMENTS ACT

FRIDAY, APRIL 16, 1943

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

The committee met at 10 a. m., Hon. A. Willis Robertson presiding. Mr. ROBERTSON. The first witness today is the Honorable Lynn Edminster, Vice Chairman of the United States Tariff Commission. The committee will be glad to hear you, Mr. Edminster. Do you wish to proceed with your statement without interruption? Mr. EDMINSTER. Yes, sir; if you please.

Mr. ROBERTSON. You may do So.

STATEMENT OF HON. LYNN EDMINSTER, VICE CHAIRMAN, UNITED STATES TARIFF COMMISSION

Mr. EDMINSTER. Mr. Robertson and other members of the Ways and Means Committee; in considering the merits of the pending resolution to extend the life of the Trade Agreements Act, there are two basic questions that we need to ask ourselves. First, are the objectives of the act and the principles underlying it sound in conception? Second, is the act being administered in accord with the true spirit and intent of the statute and in conformity with the democratic processes upon which our Government rests? It is the second of these questions to which I wish primarily to address my remarks. But before doing so I do desire to make a few observations with regard to the first.

This is the third time that this question of extending the life of the act has come before you for consideration. Upon three previous occasions when the act was first passed in 1934, and again in 1937 and 1940-the conditions with which it seeks to deal and the need for granting to the Executive the limited and safeguarded powers which it confers were fully discussed before this committee and in the Congress. In the hearings now pending, Secretary Hull and others who have preceded me have reemphasized these considerations in the light of the situation with which this country will be faced in the difficult years which lie ahead. There is little that I need add; but I do wish to refer briefly to a few essential points.

The critical economic situation which prevailed in this country and throughout the entire world at the time of the original passage of the act in 1934 is something that none of us has forgotten. There had set in, at the end of the twenties, one of the severest economic depressions in scope, intensity, and duration-ever experienced. There were, of course, many contributing factors. But all authorities without exception, so far as I am aware, recognized from the very first that

the progressive undermining of sound international economic relations in the twenties and their virtual collapse into anarchy in the early thirties were among the root causes. Furthermore, they recognized that the rise of trade barriers throughout the world to ever more forbidding heights, accompanied by a precipitous decline in international trade, were in a large measure responsible for the general derangement. It was in the midst of this world-wide economic chaos, the dire effects of which had permeated all phases of our own economic life in the United States, that the Trade Agreements Act was passed. It was never expected or claimed that this act alone could be a cure-all for every economic ill here and abroad. But within the vitally important field in which it operated, it was a fundamentally constructive step, in which this country took the lead and set the course directed toward the gradual elimination of one of the basic causes of a world-wide affliction from which no single country could successfully isolate, or insulate, itself. It was born out of the lessons of bitter experience. It was an instrumentality carefully devised and well adapted to the requirements of the situation. It was designed to enable us to deal with foreign tariffs and trade barriers as well as our own, in order that foreign markets for American products, which had suffered so great a decline, might be safeguarded and expanded. It was framed on the basic principle of cooperation for mutual advantage, rather than the further intensification of the already too prevalent policies of economic warfare which were creating such havoc throughout the world.

I am personally convinced that the record of achievement under the act has more than justified its continuance in effect. Indeed, I will go further and say that, if we take into account that it was necessary from the first to carry on the program in the midst of a growing general deterioration of international relations which eventually culminated in another world war-if we take that into account, what has been accomplished is most gratifying and encouraging.

It is with the future, however, rather than the past, that we need to be most concerned just now. And when we come to look ahead, we run foursquare up against the fundamental question of whether we are going to make the same fatal mistakes after this war that we made after World War I; or whether we are going to recognize that international policies based upon the principle of cooperation for the common welfare are the only ones which can genuinely serve our national interests. The decision which the Congress reaches with respect to the pending resolution will be widely regarded as a weathervane in this crucial matter and will carry with it implications which will not be overlooked either here or abroad. The issue involved is not one of international generosity or largesse on our part. The issue is simply whether we are going to take a farsighted, common-sense view of our practical interests as a nation. Failure at this time to extend the life of the act would deprive us of a vital instrumentality for the future protection and promotion of those interests.

I come now to the second question which I raised at the outset, namely, is the Trade Agreements Act being administered in accord with the true spirit and intent of the law and in conformity with the democratic processes upon which our Government rests? This involves the whole question of principles and machinery of procedure under the act.