their grievance. That is where we are drawing the line on these things. We cannot afford to buy rubber and some of these things that we never want to be short of again and keep them on the free list for the next 3 years, as is requested in this resolution. Some of those things we know now are for our own national defense. They are being paid for by human lives, by our boys being slaughtered and slaughtered wholesale, because of this inept attempt to curry favor with some of these foreign nations. We paid a big price for that sort of policy. That is all, Mr. Chairman. The CHAIRMAN. Back in the days referred to by Mr. Reed when he quoted the statements made by Thomas Jefferson, Henry Clay, and Andrew Jackson, this country was in swaddling clothes, and before our industries grew long beards, was it not? Mr. EDMINSTER. That is correct. The CHAIRMAN. If the industries were infants then, what are they now? No doubt conditions then were entirely different as far as the necessity of protection is concerned. Protection was needed because they were infants. Now, when they are grown up and have long beards and long hair, I think it is an entirely different situation. Mr. EDMINSTER. May I just follow that up for a moment? That point is, I think, extremely well taken. The question is not one of opening the floodgates, as you often hear it said, to imports after the war in such a way as to swamp our market. The question is one of following a reasonable policy of taking care of the legitimate needs of protected industries, while at the same time endeavoring to get as good treatment as possible for our export trade; and, in line with that idea, getting the best possible treatment for our export trade means employing more people in the United States in our factories and on the farms, because the number of people employed in export industries, both agricultural and manufacturing, in this country far exceeds the other group. By "export industries" I mean, of course, industries that are ordinarily on an export basis. While I would not for a moment want to see employees in the other industries recklessly sacrificed in any tariff slashing, I do think we ought to consider also the people who work in the export industries and the export branches of agriculture. We have become a more-mature nation industrially and in every other way, and we have to look to foreign markets, as Mr. Sayre rightly pointed out, for the disposition of large surpluses of agricultural and manufactured products; and I am just as much concerned as Congressman Reed with the need for following a program after the war that will stimulate employment. I think that if the thing is done in a reasonable way, that can be accomplished under this tradeagreement policy. But if we follow a policy of shutting out everything, except bananas and coffee and things like that, that will be a first-class way to cause a large amount of unemployment. That is all I have to say on that. Mr. ROBERTSON. Mr. Chairman. The CHAIRMAN. Mr. Robertson. Mr. ROBERTSON. The gentleman from New York, Mr. Reed, has referred to the Tariff Act of 1828 as one that brought peace, happiness, and prosperity to the Nation. What did the people of that day and time call the Tariff Act of 1828? Mr. EDMINSTER. The "tariff of abominations," if my memory serves me correctly. Mr. ROBERTSON. And it has been known in history ever since as the tariff of abominations. The gentleman referred to the Tariff Act of 1824 as a protection for industry. He did not quote the great Daniel Webster, speaking on a tariff which was not a high tariff but a very low tariff, and in support of that low tariff the great Daniel Webster had this to say about the tariff of 1824: With me it is a fundamental action; it is interwoven with all of my opinions that the great interests of the country are united and inseparable; that agriculture, commerce, and manufactures will prosper together or languish together; and that all legislation is dangerous which proposes to benefit one of these without looking to the consequences which may fall on the others. Mr. REED. I remember that. Mr. ROBERTSON. But you did not quote it. Mr. REED. That was when he was a free trader. Mr. ROBERTSON. Well, I will admit he changed his position and he voted in 1828 for the Tariff of Abominations, and later he was twitted by Hayne of South Carolina for doing that, and that touched off his great speech. When Hayne said that the people of the South had stood for all the tariff they were going to stand for, Webster, foreseeing the tragedy that was coming, but lacking the statesmanship to avert it, made a wonderful speech in which he said that he hoped he would never live to see the day when the sun in heaven would be shining upon the broken and dishonored fragments of a once glorious Union; upon a land torn by civil strife and drenched, perhaps, in fraternal blood. Mr. REED. Do you remember when Calhoun went up into Massachusetts while campaigning and took credit for the efficient mill that was erected there under his protective policy. He changed his position and became a free trader just as you did with Virginia turkeys. Mr. KNUTSON. I think we have heard all we should about turkeys. The CHAIRMAN. Mr. Knutson. Mr: KNUTSON. I will give way to Mr. Dewey. Mr. DEWEY. I would like to ask this question. Mr. Robertson has spoken about the escape clauses. Will you outline a little, historically, how they are actually operated? Mr. EDMINSTER. There are various safeguarding provisions in these agreements, and there have been so-called escape clauses in the agreements. They have all had clauses of that sort. There have been changes and improvements from time to time, however, and the one that I would like to refer to at the moment as representing, I think, the latest development of this form of clause is article XI of the Mexican agreement, recently negotiated. It is not long. May I read it to you? Mr. DEWEY. Please. Mr. EDMINSTER. It says (reading): 1. If, as a result of unforeseen developments and of the concession granted on any article enumerated and described in the Schedules annexed to this Agreement such article is being imported in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers of like or similar articles, the Government of either country shall be free to withdraw the concession, in whole or in part, or to modify it to the extent and for such time as may be necessary to prevent such injury. Accordingly, if the President of the United States of America finds as a fact that imports of any article enumerated and described in Schedule II or Schedule III are entering the United States of America under the circumstances specified in the preceding sentence, he shall determine whether the withdrawal, in whole or part, of the concession with regard to the article, or any modification of the concession, by the imposition of quantitative regulations or otherwise, is necessary to prevent such injury, and he shall, if he finds that the public interest will be served thereby, proclaim such finding and determination, and on and after the effective date specified in such proclamation, and so long as such proclamation remains in effect, imports of the article into the United States of America shall be subject to the customs treatment so determined to be necessary to prevent such injury. Similarly, if the Government of United Mexican States finds as a fact that any article enumerated and described in Schedule I is being imported into the United Mexican States under the circumstances specified, it may, if it finds that the public interest will be served thereby, withdraw in whole or in part the concession with regard to the article, or modify the concession by the imposition of quantitative regulations or otherwise, to the extent and for such time as may be necessary to prevent such injury. 2. Before the Government of either country shall withdraw or modify a concession pursuant to the provisions of paragraph 1 of this Article, it shall give notice in writing to the Government of the other country as far in advance as may be practicable, and shall afford such other Government an opportunity to consult with it in respect of the proposed action; and if agreement with respect thereto is not reached the Government which proposes to take such action shall, nevertheless, be free to do so and the other Government shall be free within 30 days after such action is taken to terminate this Agreement in whole or in part on 30 days' written notice. That is the main escape clause. There are other safeguarding provisions. Mr. DEWEY. In general, that is similar to the ones that are in all the agreements that exist? Mr. EDMINSTER. There have been escape clauses in all of the agreements. The earlier ones, being directed to specific problems, were not as comprehensive as that currently used which I have just quoted. The clause has been improved with experience in dealing with this problem. The clause in the Mexican agreement is the best representation of the idea which we have thus far been able to evolve. Mr. DEWEY. My friend and colleague, Mr. West, spoke about the shipments of oil from Mexico at the present time. I think yesterday, while inquiring of Dr. Sayre, it was brought out by Dr. Sayre that that was a war measure. Now, if at any time after it is found the Mexican Trade Agreement was interfering with the production of oil in Texas, there could be put into effect the escape clause and, on 30 days' notice, the importation of oil could be stopped? Mr. EDMINSTER. If a situation developed as described in this escape clause, the clause could be invoked, yes. Mr. DEWEY. Mr. West brought out that it was creating a great deal of hardship on the oil producers in Texas. Mr. EDMINSTER. Yes. Mr. DEWEY. Is it incumbent upon our country to show that it is a hardship to our producers, or could our country come out our State Department, or whoever negotiated the matter-the President, as a matter of fact-and just make a statement that they are going to nullify those provisions with regard to the importation of oil without tariffs from Mexico? Mr. EDMINSTER. Well, I would have to go back, Congressman, to the language of the provision. It says: If, as a result of unforeseen developments and of the concession granted on any article enumerated and described in the Schedules annexed to this Agreement, such article is being imported in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers of like or similar articles, the Government may So and so. Mr. DEWEY. I should think that would be broad enough. Mr. EDMINSTER. It seems to be broad enough to cover any situation that really threatens to cause or does cause serious injury. Mr. DEWEY. As I understand you, they can pick out any part of the agreement. It says "in whole or in part." Mr. EDMINSTER. The President can modify the concession on the item in question to the extent that he desires; but as the language that I read to you under section 2 of article XI shows, if the other country is dissatisfied it can terminate the whole agreement or any part of it. That is the liability side of the ledger. Mr. DEWEY. Thank you very much. Mr. COOPER (presiding). Are there any further questions? Mr. COOPER. Mr. Woodruff from Michigan. Mr. WOODRUFF. Mr. Sayre said the other day-yesterday, I believe it was-that the reductions of tariffs in these agreements were made only after having information from the Tariff Commission, and that the tariffs were not reduced below that point where competitive conditions would exist. In other words, he said, or gave as an example, that before fixing their reductions they had information from the Tariff Commission which would justify the reductions they made on the basis of bringing about competitive conditions between goods imported from abroad and those produced here. Is that the policy? Mr. EDMINSTER. I do not recall just what he said. If that is what he said Mr. WOODRUFF. That is the way I understood it. I may have been mistaken, but I do not think I was. Now, there were approximately 1,050 items in the British trade agreement. Mr. EDMINSTER. That may be right. Certainly there were a lot of them. Mr. WOODRUFF. How many of those different items were investigated by the Tariff Commission and what advice did the Tariff Commission pass on to those arriving at the figure that would justify the rates in that agreement? Mr. EDMINSTER. Well, Congressman, I could not give you a detailed answer to that. Mr. WOODRUFF. I should not have expected anyone to have had that answer. Mr. EDMINSTER. I could not answer that all in one. 86405-43-24 Mr. WOODRUFF. Mr. Morgan, Secretary of the Tariff Commission, testified before the Appropriations Committee that Mr. EDMINSTER. May I interrupt? Mr. whom, did you say? Mr. WOODRUFF. Mr. Morgan. Is he not Secretary of the Tariff Commission? Mr. EDMINSTER. Oh, yes. Now on military leave. Mr. WOODRUFF. He testified that the difference in the cost of producing sugar in this country and the importing countries south of us was one and a half cents per pound. Now, Mr. Sayre assured us that these tariffs were not reduced beyond the point where competitive conditions would exist; but according to this report from the United States Tariff Commission, entitled "Changes in Import Duties Since 1930" this book is as of February 1, 1943-discloses the fact that the tariff on sugar has been reduced from $2.50 per hundred pounds to 63 cents per hundred pounds, which is substantially below 50 percent and also substantially below the point where competitive conditions exist as between imported sugar and the domestic sugar. Mr. EDMINSTER. Are you through? Mr. WOODRUFF. Yes. Mr. EDMINSTER. With regard to the statement that the tariff was reduced by-what was it? Mr. WOODRUFF. The tariff on sugar was $2.50 per hundred pounds. Mr. EDMINSTER. I can assure you, sir, that there was no tariff reduction on sugar or any other item which exceeded the legal authority under the trade-agreements statute. There is apparently something out of line with regard to those figures as applied to your point. Mr. WOODRUFF. I will explain your figures to you. The original reduction in tariff was made under the flexible clause of the HawleySmoot and other Republican tariff bills, and that reduction was made just 4 days before this act went into effect. Mr. EDMINSTER. That is correct. Mr. WOODRUFF. Yes; I know it is correct. I say, that action was taken 4 days before this act went into effect; and it must be apparent to anyone who knows the situation that that was deliberately done for the purpose of being able, under the provisions of this act, to reduce the tariff down to its present point, and perhaps even below that before they get through with it. Mr. KNUTSON. Would there be any objection to my asking you to yield? Mr. COOPER. It is against the rules, but there is no objection. Mr. KNUTSON. Is that the action that resulted in a gain of about $40,000,000 to the two New York banks? Mr. WOODRUFF. Something of that order; yes. Mr. EDMINSTER. May I say, Congressman, that I recall the testimony yesterday in which it was pointed out that the Attorney General had held that it was legal to reduce the rate existing at the time when the Trade Agreement Act was passed. Mr. WOODRUFF. Yes. Mr. EDMINSTER. But as to your second point, I can give you no useful information. I had no connection with the Tariff Commission in those days. I think it is safe to say, however, that the Tariff |