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the tariff, if it is too high, the independent operator in this country would have a chance to compete on the basis of merit, wouldn't he?

Mr. GAUNT. Yes, sir.

Mr. ROBERTSON. I don't believe you have ever really been in favor of the reciprocal trade agreement program, have you!

Mr. Gaunt. If it is honestly, and truly reciprocal, I am by all means in favor of it, if we can help the other fellow without depressing our own economy, Mr. Robertson.

Mr. ROBERTSON. You didn't support the program in 1934, though, did you? Mr. Gaunt. Didn't support the program? Mr. ROBERTSON. Yes; in 1934.

Mr. GAUNT. I don't recall that I made any recorded stand one way or the other.

Mr. ROBERTSON. Well, how about 1937?
Mr. GAUNT. In 1937 I was opposed to it.
Mr. ROBERTSON. And in 1940 you opposed it ?
Mr. GAUNT. In 1940 I was opposed.

Mr. ROBERTSON. And in 1934 you were opposed, and in 1943 you are opposed ?

Mr. Gaunt. I am still opposed, as far as they injure our economy.

Mr. ROBERTSON. And that just illustrates my observation, that in nearly 2 weeks of hearings we have not had a single witness that came before us in opposition to the program, that has not been in opposition from the start, and we haven't had a single witness to come before us who was in favor of the general principles involved, and supported it in 1934, that came before us and said, “We want to stop it now because it doesn't operate like we expected it to operate." On the contrary, we have had witnesses, and will have some more, come before us who were not for it at the start, but after observing its operation and observing the development of international affairs, now tell us we should not drop this program; that we should hold it and use it as an instrumentality for freer international trade when the war is over.

Now, I have examined very closely these statistics that have been offered here and those that have been sent out in propaganda form from time to time, and I feel that a lot of fine, upright, honest businessmen like yourself have been misled by some of these statistics. Take, for instance, this statement that you made on the second page about the agreement with England, under which Japan benefited. I know you would cut your right arm off before you would misrepresent the facts about that, and yet the facts are that we had no agreement with Great Britain in 1937, when you say all these hat bodies came in from Japan. I don't know how many hat bodies came in. I am not sure that I could tell from the summary just how many hat bodies came in from Japan, but here are the facts: We did not have any agreement with Great Britain in 1937. It was not negotiated until 1939, and when we did negotiate it, there was nothing in it about hat bodies, so somebody has led you out on a limb. We find a good many witnesses here that are suffering from that same misfortune. They come in here in perfect good faith, having absorbed some propaganda deliverately put out by somebody that had an ulterior purpose to serve, and they use those figures as the reason for opposing the program.

Now, I think that if you will take the printed hearings that we had in 1940, take the printed hearings that we will have this year, and sit down on some of these cool, quiet, New England evenings and just read through them with the purpose: “I want to know what the facts are. Is this a good program or is it a bad program? I want to know what our national policy should be.” Then when we take up in 1947 the question of renewing these acts again, you may come back here with a different viewpoint. Thank you very much.

Mr. Gaunt. Mr. Robertson, would you mind my commenting just a moment?

Mr. ROBERTSON. Not at all.

Mr. Gaunt. Doesn't it seem apropos of what you are saying, that we should periodically reexamine these treaties and the distresses that have occurred, dislocations of business?

Mr. ROBERTSON. I fully agree with you, and when we had the hearings in 1940, and apparent hardship cases were brought to our attention in the zinc industry and the lace industry, we had positive assurance of the State Department representatives and of the Tariff Commission that they would go into those problems. Well, they spent over a year studying the lace industry and made some minor adjustments. Then the war came on and that changed the situation. I don't know how much time they spent on the zinc problem, but my friend from Oklahoma, who says his district produces most of the domestic zinc, says they didn't give enough attention to that. But that is an administrative matter separate and apart from the fundamenal principles and fundamenal policy. If they are not administered right, it is very proper for those who feel that they can enlighten us, to come here and point out inequities; then we can relay that information and seek relief. But I was interested in hearing Dr. John D. Coulter state yesterday—and he is as well informed a man on this whole program as there is in the country—that he does not know of any major repercussion-he said there were some minor things, like somebody shipping a carload of cattle to St. Paul on the day that the quota for Canadian cattle had been opened, and two or three carloads came in from Canada on that day and were bought by the packers, who received more than a normal supply, bid the price down and hurt the American farmers. There were instances, no doubt, of that kind, it is true, but Dr. John D. Coulter said the over-all picture of it was that up to this point nobody was seriously hurt, and that what he was interested in was this remaining 25 or 30 percent of the rates that had not been affected; that the administration might monkey with those too much after the war

was over. Mr. Gaunt. With all due respect to Dr. Coulter, the textile industry, as I understand it, is the second in volume in the United States, and it certainly was tremendously hurt by these reciprocity treaties as written. And it was on the way out, Mr. Robertson. You go up to our city of Lawrence and you will see mill after mill standing idle, machinery scrapped. The industry is on its way out.

Mr. ROBERTSON. Dr. Coulter appeared in behalf of the woolen companies principally, I think.

Mr. GAUNT. That's right.

Mr. ROBERTSON. And Mr. Besse, representing the American Association of Woolen Goods Manufacturers, or some such organization, testified at great length before us in 1940, that they had been injured, but I have examined the statistics of the Department of Commerce and the Tariff Commission, and I could not see where they have been injured, and if my memory serves me right, Mr. Besse finally wound up by saying: "Well, there have been other factors that have kept us from being hurt so far, but we are afraid we are going to get hurt in the future.” That is my recollection of the way he wound up his case of injury. I am glad to see him in the audience, and I think he will testify later on, and maybe he can give us more light, but he certainly cannot say that his industry is suffering from lack of the more abundant life just at present.

I know some of the textile mills moved South, thinking that they were going to get lower wages in the South. In that they were disappointed under what is called the Fair Labor Standards Act, and the wages in the South now are on a par with those in New England. Some came South because of lower taxes, better law enforcement, and workers of native origin. Reciprocal trade agreements did not move those textile plants to the South.

Mr. Gaunt. Do you think there is a large and important element here under modern tendencies, Mr. Robertson, with the growth and development of monopolies over the past 2 years, and the deterioration of small business—do you think there is a new element that ought to be considered in rewriting or renewing this act, that has never been brought into the sphere of the act before, but it is tremendously important to our American way of life?

Mr. ROBERTSON. In the campaign of 1936, the candidate for Vice President on the Republican ticket, I think, was Colonel Knox. Colonel Knox was concerned over the problem of concentrated wealth and monopoly, and his running mate was not, and toward the end of that campaign, when Mr. Knox saw the handwriting on the wall, the newspapers quoted him as saying, in the words of Teddy Roosevelt, “I am saddled to another McKinley."'

I agree with you that the question of monopoly is one that certainly should be tackled, and I am inclined to believe that Mr. Truman Arnold has tackled it more vigorously than some wanted him to. It looked to them like he was interfering with the war effort. He was fundamentally right, but his timing might not have been good.

Mr. DEWEY. Mr. Gaunt, just following that monopoly question a little further, isn't it reasonable to assume that large business can benefit greatly through a low tariff by having factories in foreign countries, making the same commodity and importing it, which can be done on meat, has been done on glass, can be done on any commodity, and that is something that I think this committee should look into, as far as the protection of our small businessman and our domestic economy is concerned.

Mr. GAUNT. You are absolutely right, sir. That, of course, already exists. The small man is powerless against it. He should get some protection under the Reciprocity Act against that tendency.

Mr. ROBERTSON. I want to say I am very happy you appeared, because we do have a large group of small industry, and after all, it is the Government's business to protect it.

STATEMENT OF R. H. PATCHIN, REPRESENTING W. R. GRACE & CO.,

NEW YORK CITY

Mr. PATCHIN. Mr. Chairman, I have a statement here which I think will take me about 15 minutes to present.

Mr. ROBERTSON. Would you like to proceed without interruption? Mr. PATCHIN. I would, if it is convenient to the committee.

My name is Robert H. Patchin. I am vice president of W. R. Grace & Co., of New York City. The calendar is in error in saying "Washington, D. C.”. I live in New York City. My company's head office is there. W. R. Grace & Co. has been engaged for three-quarters of a century in international trade, chiefly with Latin America, as an exporter and importer, and is the owner of the Grace Line, which operates to the Caribbean and the west coast of South America. W.R. Grace & Co., not the Grace Line, has an interest in Pan American Grace Airways, which networks all the countries of the west coast of South America and goes across the mountains to Brazil and Argentina. We have certain other enterprises locally operating in South America.

My statement is as follows: To carry the war debt and provide reasonably full employment, after the war, this country must attain an annual national income far exceeding $100.000,000,000, possibly $150,000,000,000. To achieve this we must have a far greater foreign trade. We now know that we cannot produce all the raw materials and other things we need, and we cannot consume at home the full production of farms, mines, and factories. Opportunity to establish a stable post-war prosperity for the people of the United States lies in part, in the need for rebuilding a large part of the world. I would like to interject there that I don't mean rebuilding it at the expense of the United States either. The American effort for a fair share of greater world trade should be encouraged on the one hand and guarded against discrimination on the other. Nobody is going to put our portion in the oven, waiting our orders.

The Reciprocal Trade Agreements Act and policy is the best and, indeed, the only means today provided by our laws for the adjustment of tariffs by negotiation so that our foreign trade may be both encouraged and protected from discrimination.

Necessarily based on future contingencies, most post-war plans, however wise, are dependent upon an unprecedented degree of international accord remaining to be implemented. The network of trade agreements, however, is actual and realistic. The trade-agreements policy has already been implemented. It is an available instrument. While it is no cure-all nor yet the only key to American success in foreign trade, it is, nevertheless, a cornerstone well and truly laid. The question before the Congress is whether this cornerstone is to remain as the outstanding symbol of liberal economic spirit in the world today.

Sixteen of the thirty existing trade agreements are between the United States and Latin-American countries. In peace they were mutually beneficial; in war they have drawn us closer together. Gradually and carefully made since 1934, the agreements have changed the Latin-American view that the fiscal policy of the United States was hostile. This view had been fostered by the previous long record of mounting prohibitive tariff duties and excise taxes imposed on

Latin-American products, or on products from any other place. It was this conviction which made many of the republics doubly conscious of their dependence on Europe.

The trade-agreements policy, while justifying itself economically, has also been a bulwark of peace among the Americas. A byproduct of its operation has been a strong sense of mutual interest spreading throughout the hemisphere. Without the reciprocal trade agreements policy the far-reaching political and defense accords signed at the İnter-American Conferences at Buenos Aires in 1936, at Lima in 1938, at Panama in 1939, and at Rio de Janeiro in 1942, would not have been possible.

At these conferences all the republics convenanted that an attack on any nation of the American family would be considered an attack on all and that all should join in the defense of the hemisphere. Principles of consultation and common action were agreed upon and have been followed.

reciprocal trade agreements were and are economic only, but they inspired mutual confidence and a sense of common interest which had and has great political value. By virtue of the agreements the United States has a vastly improved commercial foothold in the Latin-American market, an area which is susceptible of great development.

Before the war, Latin America was one of the chief targets of Nazi penetration. Berlin hoped to create both economic and political enmity on our flank. American enterprise in Latin America, always accustomed to competition, found itself opposed not only by diligent German traders but by the German Government as a directing force maintaining several different kinds of marks, often buying what it did not need to create exchange for strategic objectives and seeking to weaken the influence of countries practicing honest nonpolitical trade. The reciprocal trade agreements wherever concluded tended to check the German advance and to thwart the discrimination which the Reich sought to force friendly governments to practice at the expense of the American foreign trade effort.

All Latin America is watching to see whether the United States continues the Trade Agreements Act. Congressional failure to extend this act would be received by Latin America as a blazing signal of isolation. During 150 years our policy toward Latin America has been so variable that there is a certain skepticism about it. Should the Trade Agreements Act now be scrapped, our Latin American friends would say, "There you are: the Yankees are changing horses again.”

I do not mean to suggest that we should pursue any policy just for the sake of pleasing other peoples, but when we have a commercial policy that is mutually beneficial, and does make the other fellow more friendly, why abandon it?

Should Congress refuse to extend the act or make the agreements subject to congressional approval or nullification, what would remain in the least degree effective for reciprocal adjustment of our tariff relations to changing foreign conditions? Certainly Congress itself cannot negotiate such agreements. That, presumably, is the reason Congress delegated its authority, subject to strict limitations, to the President, just as it has delegated its authority in other matters to many other Government oflicials, departments, and agencies.

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