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Secretary HULL. What were they in 1932, under another condition of affairs here in the Government !
Mr. GEARHART. You took charge of this program when we had already made a tremendous gain in exports. Now I want to ask you this question, in the face of this report which has been placed in my hands only this morning: If that increase in imports of 57 percent, and that decrease of 30 percent of exports in agricultural products constitutes a carrying into execution of the very first line of the reciprocal trade agreements law, which reads, "for the purpose of expanding foreign markets for the products of the United States”?
Secretary HULL. The stump speech you were good enough to favor us with before asking me that question reminds me of a very important consideration that I think we should not overlook.
Mr. GEARHART. Let's just stick to the point.
Secretary HULL. I think every rational person will agree that during the past 20 years the statesmen and peoples of the important nations of the world, especially, made the greatest blunder in all the experience of the human race, and so here we are, the world on fire, the most critical military conflict in all the centuries
Mr. GEARHART. Do I understand by that that you want to use this reciprocal trade agreement program, which deals with commerce, for the purpose of attaining political, diplomatic objectives, entirely disassociated from commerce?
Secretary HULL. Whenever you are sure you are through I will proceed to answer your question. I want you to be content, though, before I proceed again.
Mr. GEARHART. You can proceed from where I interrupted you.
Secretary HULL. I was illustrating the complacency of many of our statesmen in the face of what we all must recognize has been the capital blunder of all the ages, otherwise the world wouldn't be in this unspeakable and unthinkable situation, where liberty and life everywhere are hanging by a thread. And yet the highest level that some of our statesmen can rise to is to dig up some of the old platitudes that were talked about under the era of extreme economic isolation.
Mr. GEARHART. All right, Mr. Hull; let's stop right there.
Secretary HULL. I would like to appeal to my friend to lift himself up to a little higher level in view of the extreme emergency situation that confronts our country.
Mr. GEARHART. Let's stop right there. You tell us how we should give consent to a further extension of the reciprocal trade agreement law, because of the war conditions at this moment. Only 3 years ago you were asking us to continue it in order to preserve the peace, and 3 years before that you were asking us to continue it to preserve the status quo; and before that you assured us in the first presentation of this bill that we were going to end for all time depression throughout the world, and recapture the markets which we had lost during those days of depression.
Now, if we are going to allow a different argument to be advanced' to meet the new conditions then existing, we are going to soon find ourselves in a condition where we have about one-tenth of 1 percent of the foreign trade we used to have, because that is the way it is going. I don't say that just now this 30 percent exists. I have not taken the 1941 and 1942 figures, because I know we had an abnormal war condition, but I took 1939 and 1910, and we had a situation all the time of the farmer being in a minus from every country, and getting worse.
Now, is foreign trade a matter of business or is it a matter of sentiment? Is foreign trade a matter of dollars and cents, or is it a matter of the good-neighbor policy?
Secretary HULL. Is the gentleman making me another stump speech, or is he asking me a question? I would like to know which.
Mr. GEARHART. Start right in and pick the one you like best.
Secretary HULL. I take the stump speech. That entitles me to make one while you remain silent.
I have all of these statistics about the old line of argument that statesmen and campaign speakers and pettifoggers have peddled over the Nation for some 40 years before we got into the more recent experience that we are in now.
Mr. GEARHART. I hope you are not personal when you say “pettifoggers."
Secretary HULL I mentioned "statesmen” when I was looking straight at the Congressman from California.
Mr. GEARHART. I want to explain to you in return, Mr. Hull, that you have a very statesmanlike attitude at all times. You would trade off our California and American farmers for a nickel in the interest of getting a lot in return in the way of a good-neighbor policy.
Secretary HULL. My friend and I agree on many things, and we get along well together, but I must request that I have one stump speech for every two that the gentleman makes during the examination, without interruption.
Mr. GEARHART. I haven't any doubt that the Secretary, when a Congressman, didn't learn all that can be done on this side of the bench as well as on the other.
Secretary HULL. I have felt that if we are going to drop the real problems immediately confronting us, in all their breadth and depth and their extreme emergency nature, and go back to haranguing each other over all the arguments we used to make under other conditions and under a policy of extreme narrowness and nationalism, that is a question for us to pass on. If we are going to go back there, then let's agree to go back there and forget about what is going on in the world
and what is ahead of us, as many of us and most of us see it. My friend from California would go straight back to that line of discussion, which in my judgment to a large extent was only intended to meet the political needs of the hour during those former years. I feel very profoundly that we have almost insoluble problems right before our faces that demand imperatively our attention, and that is why I am a little slow to get into discussions, long drawn-out discussions, over all of these former pros and cons that were brought out in connection with purely tariff controversies. I think the questions are immeasurably broader. I think all phases of that question will be absorbed in this broader undertaking that we have, and that we will all find ourselves gradually converging as we go forward in support of this broad constructive policy, which is intended as a substitute for the more narrow and the proven disastrous policies that were in operation, whether political, economic, or otherwise.
I have stated here that agriculture- I have all the figures scattered here and everywhere about me, but the Lord knows I see no benefit in going back there, when we once have said that under this program
agriculture has improved steadily from year to year and its interests, instead of having been injured, have, by the operation of this act, been steadily improved.
If the gentleman wants all the figures put in here, and desires that we go back and dwell mainly on the pre-war period of domestic arguments, which in the main are inapplicable, why then that is up to him. I hope he won't succeed in his purpose, in any event. · Mr. GEARHART. Well, I understand that the Secretary was once a judge, and a very able jurist. Now I think he will agree with me that if he were sitting as a judge, when proper motions were made, that he would rule out all of his answers on account of them not being responsive to any question I asked of him. Wouldn't you?
Secretary HULL. I would want to analyze very carefully what the gentleman really said before I passed on the other question.
Mr. GEARHART. Well now, Mr. Hull, answer this question, and this is the substance of everything I have said : Do you think that you have achieved the number 1 objective recited in the Reciprocal Trade Agreement Act, to wit, “for the purpose of expanding foreign markets for the products of the United States," when, in 1940, the American farmer finds that he has only two-thirds of the market he used to enjoy in 1934 as a result of the reciprocal trade agreement administration?
Secretary Hull. I think the Congressman-I am betraying no secret when I say that the Congressman recently addressed a letter to me setting out in the form of questions
Mr. GEARHART. I would like to have an answer to the question. I have restated it very simply, as to whether or not the remaining twothirds of the market of 1934 indicates you have achieved the objective of expanding the foreign markets of the United States.
Secretary HULL. Of course, I am not agreeing at all with the conclusions the Congressman makes on that point, and I am only hesitating to spend an hour or two here in wading through all the figures of that period back there, which will serve no purpose except perhaps not even to secure the approval of the Congressman.
I have here a lengthy letter from the Congressman to which I have made my reply. I don't know whether he has received it or not. In the letter a great many questions were brought up, and I answered the Congressman question by question. It is agreeable with me, if he desires, to put his letter and my answer in the record here.
Mr. GEARHART. That would be very beautiful, if you will let me have a copy as well, because if it goes in the record I won't see it for probably a week or 10 days. It will be in the hands of the printer.
Secretary HULL. The Congressman can have this copy. This answers all that long-drawn-out list of questions he asked me, and I think it covers all that he has been talking about and much more besides. Then, by agreement, those will both go in the record. (Communications above referred to follow:)
CONGRESS OF THE UNITED STATES,
HOUSE OF REPRESENTATIVES,
Washington, D. C., April 6, 1943. Hon. CORDELL HULL,
Secretary of State, Washington, D. C. MY DEAR MR. HULL: Now that the Ways and Means Committee is about to commence its hearings on the Doughton bill (H. J. Res. 111) to extend the authority of the President under section 350 of the Tariff Act of 1930, I am most anxious to inform myself as fully as possible in respect to that which has been accomplished under the so-called trade-agreement program. Encouraged to do so by your oft-repeated and most gracious assurances, I am constrained to propound the following questions:
In order that we may meet the question which is in the minds of everyone, the one which should be answered in detail at the outset, will you be so kind as to supply me with the dollar loss in United States custom receipts which the reduction of the tariffs on the various items dealt with under the several agreements consummated, year by year since the enactment of the Trade Agreement Act in 1934.
Likewise, will you be so kind as to furnish me with the dollar gain by the nationals of the United States as a consequence of tariff reduction by the countries with whom we have entered into trade agreements, this also by years. As I am quite sure that no agreements would have been recommended by you to the President without this information at your fingertips, I am assuming that its furnishing will not cause you any undue inconvenience.
Will you be so kind as to furnish me with a list of the countries with which we have a most-favored-nation treatment treaty? Since in the administration of the Trade Agreements Act, the President, acting through the State and Treasury Departments, has extended most-favored-nation treatment to every nation on the face of the earth, Germany alone excluded, will you be so kind as to advise me whether or not this generous treatment is accorded because of treaty obligation or because of policy?
And I would be interested in knowing whether or not all of the nations to whom we extend most-favored-nation treatment reciprocate in this regard. Do other nations which enter into reciprocal trade agreements among themselves uniformly extend the benefits granted to each other to the United States? If some do and some don't would you be so kind as to furnish me a list of each, outlining briefly, if possible, any special reasons which have inspired special treatment.
According to an item which appeared in the March 5 issue of the United States News, reciprocal trade agreements have been made between Brazil and Argentina, Venezuela and Chile, Argentina and Cuba, Peru and Argentina, Bolivia and Argentina, Chile and Uruguay, Brazil and Paraguay, Uruguay and Colombia, and Argentina and Chile. Also, I have been advised that Mexico and the Central American nations south of here have entered into numerous reciprocal trade agreements, each granting preferences in its own market to the other high contracting party. I am anxious to know whether or not the benefits conferred by these several agreements, those in all of them, or some of those in some of them, have been generalized under most-favored-nation treatment to the United States.
Likewise, I would be interested in knowing just how the United States has fared in its relation to the trade agreements which have been entered into between nations of the other hemisphere as well as under the trade agreements which have been entered into between nations, other than the United States, of the two hemispheres.
If there is any theory or policy underlying discriminations against the United States in the face of our policy of nondiscrimination, I would appreciate very much an outline of the reasons advanced, sound or unsound though they may be.
Then there are a few specific instances, true or untrue, which have been called to my attention, consequence of the making of or failure to enter into trade agreements, of which I would appreciate some information.
(a) I am told that in the Venezuela agreement we lowered the tariff on petroleum and petroleum products and that the Venezuelan Government immediately placed an export tariff on the same items, thereby translating American customs receipts into Venezuela custom receipts. Is this true?
(6) I have been advised that though the United States repeatedly suggested negotiations looking toward a trade agreement to Japan, Japan refused to enter into any arrangements with us whatsoever, contenting herself (until we denounced our ancient commercial treaty with her) to stand by while we entered into agreements with other nations and avail herself of the benefits we granted others as the several agreements consummated come into execution.
(c) I have learned from reliable source that an agreement with Italy granting concessions in our respective markets was reached between the negotiators representing each of these countries but that the formal signing of the agreement never occurred because Italy insisted that we, in that trade agreement, recognize the King of Italy as the Emperor of Ethiopia, an indirect recognition of the conquest which we were not then willing to grant, and,
(d) That notwithstanding the breaking off of negotiations with Italy, I am informed that a trade agreement was shortly thereafter negotiated with Turkey in which the Italian agreement concessions were granted to Turkey, which Italy immediately availed herself of without granting any concessions in her own market whatsoever.
There are many other questions which I would like to propound, the subjects of which I am carefully turning over in my mind, but, because of the undue length to which this letter has grown, I will withhold them for the time being.
Prompt response to this communication, a prompt consideration of the points I raise because of the approaching hearings before the Ways and Means Committee, would be very, very much appreciated indeed.
Trusting I am not imposing in asking this very, very great consideration on so very short a notice, I beg to remain, my dear Mr. Hull, Most cordially yours,
BERTRAND W. GEARHART,
Member of Congress.
DEPARTMENT OF STATE,
Washington, April 12, 1943. The Honorable BHRTRAND W. GEARHART,
House of Representatives. MY DEAR MR. GEARHART: Your letter of April 6, 1943, requesting prompt replies to various questions about international trade conditions, tariffs, and the effects of the reciprocal-trade-agreements program, has been received.
Your first question relates to what you describe as “the dollar loss in United States customs receipts which the reduction of the tariffs on the various items dealt with under the several agreements consummated.”
There has been no loss in United States customs receipts. On the contrary, there has been a substantial increase in such receipts since inauguration of the reciprocal-trade-agreements program, as would be expected from the increase in foreign trade in which the reciprocal-trade-agreements program has been a strong contributing influence. In 1933, the last year before the inauguration of the reciprocal-trade-agreements program, United States duties collected on imports for consumption amounted to $283,681,000. These collections, during the operation of the program, have been as follows: 1934, $301,168,000; 1935, $357,241,000; 1936, $408,127,000; 1937, $470,509,000; 1938, $301,375,000; 1939, $328,034,000; 1940, $317,711,000.
Any notion that high tariffs add to Government revenue by increasing customs receipts collapses into absurdity before the following simple facts: In 1929, the last year before the enactment of the Hawley-Smoot tariff, such receipts totaled $581,837,000; in 1931, the first full year during which the Hawley-Smoot tariff was in effect, they amounted to $370,771,000. This represented a "dollar loss” in United States revenue from customs receipts of $214,066,000 or more than onethird. In 1932 these receipts totaled only $259,600,000, a loss of more than onehaif. Tariff rates that shut out imports altogether or reduce them to a trickle do not produce customs receipts.
I suppose that your question was intended to relate to the difference between customs receipts actually collected under tariff rates in effect under the agreements, and those which would have been collected at the Hawley-Smoot rates. However, it cannot with reason be assumed that the very same quantities of the very same imports would have entered if the rates had remained where they
From the figures given above, it is clear that imports did not remain at the same level, but that they increased, and that customs receipts increased also, even though some of the rates were lower,
Your second question calls for the "dollar gain by the nationals of the United States as a consequence of tariff reductions by the countries with whom we have entered into trade agreements." If by this you mean the difference between the foreign duties collected on imports of United States goods under reciprocaltrade-agreement rates and the duties that would have been collected on them if the foreign duties had not been lowered through the agreements, your suggestion that I might have these figures at my fingertips is quite in error. No such data are available, for the very good reason that even if someone tried to com, pile them, the result would have no practical significance whatever.
I do have at my fingertips the following figures: In the 2-year period 1938–39. when 10 trade agreements were in effect, United States exports to the countries