mutually advantageous economic relations between them and the betterment of world-wide economic relations. To that end, they shall include provision for agreed action by the United States of America and the United Kingdom, open to participation by all other countries of like mind, directed to the expansion, by appropriate international and domestic measures, of production, employment, and the exchange and consumption of goods, which are the material foundations of the liberty and welfare of all peoples; to the elimination of all forms of discriminatory treatment in international commerce, and to the reduction of tariffs and other trade barriers; and, in general, to the attainment of all the economic objectives set forth in the joint declaration made on August 12, 1941, by the President of the United States of America and the Prime Minister of the United Kingdom.

I wonder to what extent that relates to your program.

Secretary HULL. If you are talking about lend-lease supplies, I am not familiar with the details. I think you will find that those in charge are moving gradually in developing their policy about leaselend supplies, and the way they shall be dealt with by each country receiving them, and also plans to keep them, in the end, from being thrown on markets or otherwise dealt with in a way that would interfere with the normal flow of trade and commerce in other respects. That is all I have heard on the subject up to this time.

Mr. REED. Then, Mr. Secretary, I assume that you were not consulted with reference to this arrangement, so far as it might relate itself to your trade-agreement policy?

Secretary HULL. I still think, Congressman, that you will find that those who are administering lease-lend are gradually feeling their way forward and seeking to commit other countries not to handle any left-over supplies in a way that would interfere with trade or be unsatisfactory to us.

Mr. REED. Under it, if they were to cooperate, they would have to consult, under this arrangement, with those nations that have made these agreements, would they not?

Secretary HULL. I believe I may have misunderstood your question. There is, of course, a similarity between the objectives set forth in article VII of the master lend-lease agreements and the trade-agreements program. As I said earlier, article VII sets forth objectives and policies looking toward reciprocal trade based on liberal considerations. This act would enable us to move in that direction.

Mr. REED. Perhaps some of those gentlemen who will follow you from the State Department

Secretary HULL. I will have them look into that and give whatever information we have on it that we can get.

(The Secretary subsequently supplied the following memorandum:)

CONNECTION BETWEEN THE LEND-LEASE AGREEMENTS AND THE TRADE-AGREEMENTS

PROGRAM

Section 3 (b) of the Lend-Lease Act provides:

"The terms and conditions upon which any such foreign government receives any aid authorized under subsection (a) shall be those which the President deems satisfactory, and the benefit to the United States may be payment or repayment in kind or property, or any other direct or indirect benefit which the President deems satisfactory."

The Executive order creating the Lend-Lease Administration, October 28, 1941, provides: ** * That the master agreement with each nation receiving lend-lease aid, setting forth the general terms and conditions under which such nation is to

receive such aid, shall be negotiated by the Sate Department, with the advice of the Economic Defense Board and the office of Lend-Lease Administration."

The agreements have accordingly been negotiated by the Department of State, with the advice of the two agencies named, and frequently of other agencies, and subject always to the control and direction of the President.

Under the authority conferred by section 3 (b) several alternatives were open to the President. He could, for instance, have asked for current cash payment for lend-lease goods, and that was in fact the original arrangement with the Dutch Government, which in the summer of 1941 had available adequate and liquid dollar resources. (Third Report to Congress on Lend-Lease Operations, p. 34). If generally applied, such terms would have defeated the purpose of the act, and after Pearl Harbor and the fall of the Indies they became inappropriate even to the situation of the Netherlands.

Another alternative would have been to ask for money payment in installments after the war. The first arrangement with the Soviet Union, also before Pearl Harbor, was in fact on that basis. (Third Report to Congress on Lend-Lease Operations, p. 33). But for reasons about to be stated that plan was abandoned in the Soviet agreement of June 11, 1942.

After Pearl Harbor it became increasingly evident that this was a global war, and that the battles being fought by the British, the Russians, the Chinese, the Australians, and our other allies, were our battles. It became morally indefensible to charge them money for weapons with which to save American lives. Lend-lease became a part of our total war effort, indistinguishable for this purpose from the contribution of our expeditionary forces. Also it became increasingly clear that the amounts involved, if expressed in money obligations, would be so great as to cast a very serious burden both on post-war commerce and on post-war friendships, and that they would fall most heavily upon those very countries whose prolonged and effective resistance to the common enemy had most completely drained their resources. As the President said in his Fifth Report to Congress on Lend-Lease Operations, p. 22:

"The real costs of the war cannot be measured, nor compared, nor paid for in money. They must and are being met in blood and toil. But the financial costs of the war can and should be met in a way which will serve both the needs of lasting peace and mutual economic well being."

The effort was to find and state that way.

Once this point in the reasoning had been arrived at, other alternatives became available. The President might have said simply that the expected benefit from lend-lease aid was its contribution to the victory, and that no other payment would be asked for. Or he might have postponed the whole question until the end of the war. He did neither of those things, but instead, and very wisely, without attempting to settle everything in detail, made agreements on the principles of settlement which are very beneficial to this country.

The principal agreements, in the order of their signature, are with the United Kingdom (Feb. 23, 1942), China (June 2, 1942), the Soviet Union (June 11, 1942), Belgium (June 16, 1942), Poland (July 1, 1942), the Netherlands (July 8, 1942), Greece (July 10, 1942), Czechoslovakia (July 11, 1942), Norway (July 11, 1942), and Yugoslavia (July 24, 1942). Australia and New Zealand, separately, accepted the principles expressed in the British agreement as applicable to their lend-lease relations with this country (Sept. 3, 1942). All these agreements were published when they were made, and duly reported to Congress in the President's reports on lend-lease operations. (Fourth report, p. 31, 50; fifth report, p. 21, 30; sixth report, p. 14, 22; seventh report, p. 31, 33; special report of January 25, 1943, p. 10, 70; eighth quarterly report, p. 49-56.) The other group of master agreements, those with the American Republics, have not been published, and their terms are confidential, for reasons stated by Mr. Acheson in his recent testimony before the Foreign Affairs Committee of the House. (Hearings on H. R. 1501, p. 83.)

The benefits to the United States resulting from lend-lease under these agreements are as follows:

The first and greatest benefit is the support which lend-lease gives to the common effort to win the common war. This is what lend-lease is for.

The second benefit is the promise of the other governments "to contribute to the defense of the United States" by providing for our use the "articles, services, facilities, or information" which they are in position to supply (art. II). Those · promises are being fully honored, as the testimony in the recent lend-lease hearings has disclosed in great detail.

The third benefit is the promise of the other governments (art. V) to return to the United States, when the emergency is over, whatever lend-lease articles remain which the President finds useful and requests.

The fourth benefit is the commitment, contained in article VII of all the published agreements, to work out together the necessary basis of an expanding business life throughout the world.

Article VII is not a commitment to detailed and specific measures. No one was wise enough to write the necessary measures at one stroke, nor influential enough to get them accepted by the public and legislative bodies in all the countries concerned. The commitment is to negotiate on stated general principles and to stated general objectives. The objectives are important, and their agreed statement enlarges the common ground of our alliance. The agreement to seek, by common action, agreed methods of attaining them is also of importance. But it is not a commitment to any detailed measure. And it does not purport to bind the Congress or the people of this country to accept the detailed measures when presented.

The international discussions contemplated by the article are starting. The Secretary of the Treasury has informally consulted the appropriate committees of both houses in connection with his suggestions for stabilizing currencies. A somewhat different plan for the same purpose has been published in London. A conference of agricultural experts has been announced. Other meetings are suggested. Public discussion is under way in many countries. From all these discussions, projects in many fields will undoubtedly emerge. They will necessarily take many forms; some treaties, some proposals for legislative action, some perhaps executive agreements. As they emerge, and can be put in form for action, they will be submitted for decision to the appropriate authorities, in this and other countries, according to our various constitutional arrangements. Obviously article VII could not, and very clearly it does not purport to, change the regular constitutional divisions of governmental power, in the United States or in any other country. The article is a promise and a hope of better things to come; whether it becomes reality depends on the wisdom and the steadfastness of the people of all the countries concerned, and of their servants.

With specific reference to the question for consideration in these hearings, article VII lists as two of the objectives "the elimination of all forms of discriminatory treatment in international commerce" and "the reduction of tariffs and trade barriers." When the article was written these had been for 8 years the announced objectives of the applicable public law of the United States, that is, the Trade Agreements Act of 1934. The present proposal to extend the authority which that act grants the president, is the American referendum on those objectives. The result will settle whether they are still a part of our national purpose, and whether we shall continue to work toward them, through an effective and tried instrument. The decision rests with Congress.

Mr. REED. Mr. Robertson gave out some astounding figures here with regard to the depletion of our copper and oil and iron. I was rather surprised, in view of the attitude that I supposed existed with regard to Germany because of her unfair methods, to find that from 1936 to 1939, inclusive, there was shipped from this country to Germany 342,000 tons of iron scrap, valued at $5,016,145. And I was also surprised to find that there was shipped to Germany from this country in 1936 to 1939, inclusive, refined copper to the amount of 331,582,831 pounds, or 115,791 tons, valued at $35,295,661.

I had to leave for a long distance call just at the time Mr. Robertson spoke to you or asked you to explain this blocked currency system of Germany. Now, in a transaction of this kind, occurring between 1936 and 1939, during the trade-agreement period, how would they handle that through blocked currency? Or wouldn't they handle it that way? How would they handle the transaction?

Secretary HULL. I may say I have a manuscript 3 or 4 inches thick that gives all of the history of the manipulations by Germany from 1933 on. They had borrowed $1,200,000,000 from this country. They tore up, they just forgot about that debt, and proceeded to put it into

armaments and related needs. They proceeded to deal with every other country in the same fashion. Then they got out numerous, very numerous, kinds of currency of their own, and they palmed them off on many countries, especially South American countries.

The formula for the manipulation that they carried out in whipsawing that whole situation so as to make it look acceptable to South American traders, and the governments of South American countries, is a little bit difficult to describe, but at any rate the way it worked out, the South Americans would take these different kinds of currencies and consider them of some value, and give value received in full for them, and soon they would discover some new regulation that would again whipsaw the whole monetary situation and block any further efforts or attempts really to get back what they had sent to Germany in the way of commodities and supplies. That is quite a long story. Sometime I will be glad, if you care to go through with it

Mr. REED. I will be very glad to get it, because it seems that with the situation abroad as it was, it is rather unusual, because I notice here that we shipped from the United States to Germany during the years 1936 to 1939, inclusive, scrap

Secretary HULL. Well, at that point, Mr. Reed, I would like to get this idea over, to show our difficulties and the fuller sides of the pic

ture

Mr. REED. Pardon me just a second-72,000,000 pounds of scrap copper, or something like 36,146 tons, valued at $9,500,000, was exported from the United States to Germany during 1935 to 1939, inclusive.

Secretary HULL. That is what I was coming to. In 1936, 1937, and 1938, and during those years, I had groups of Senators and Congressmen either over at my apartment or the office, or I would go to their offices. I was fairly shouting to them about the dangers that were coming on, and giving them every detailed fact that I knew. I pointed out how rapidly, from late in 1936 on, Hitler got a million men under arms, heavily trained. Everything he was saying and doing drove us to the conclusion that he would be on the rampage at no distant time.

Well, I might just as well have been talking against Niagara as pleading with our folks to take notice of these things before it was too late, and to let us arm, let us have legislation that would authorize us to deal vigorously and resolutely with some of these countries who had money already over here to pay for scrap, pay for copper. Instead of that, we had no authority to act. That is why I said this morning that we were too late in waking up to what was coming, as I think you will agree if you will look back to everything we said and did during those years.

But we had too many people who, well meaning as all of them were, were entirely complacent about this situation. Take Germany. Back in the early days she would come into Geneva and drag herself in at the rear and sit down on the back seat. That went on for some time. Finally, when she got sufficiently armed and dashed down into the Rhineland and then went back to Geneva, why everybody got up and said, "Come forward and have a front seat."

Well, it is the same way with diplomacy. It is no stronger than the potential military strength of a country that is prepared to back it up. So there we sat, telling everybody about the dangers who would listen. I am not trying to blame anybody, but the only time those

governments would listen to us was when we had the public behind us, a statute that would enable us to apply embargoes, and a growing military establishment.

Now, those things did not take place. We were all talking about something else at home. Of course, Hitler spent billions of other people's money that he robbed them of during those years to build up his armies and aircraft, and Japan was doing the best she could in the same way. But we could not in this country, and in many countries, arouse public opinion. We were all floating along on the idea of isolation, aloofness, and so on and so forth.

Mr. REED. I notice about that time that Mr. Robertson referred to the depletion of our petroleum and oil. I notice that we sent petroleum to Germany in 1936 to 1939, inclusive, to the value of about $76,984,367.

Secretary HULL. Yes.

Mr. REED. And I notice we were also sending cotton from the United States to Germany during the same years; 2,376,883 bales, valued at $138,621,360. That was almost up to the edge of the war.

Secretary HULL. And the only way that could have been prevented would have been through an embargo, singling out one country and saying "You cannot have our goods.' That comes pretty close to an act of war. And as I often said, when we were asked to put an ironclad embargo on Japan, "I am ready on my part, but you must send the Navy along, because we will probably be in a fight within 48 hours, or within a reasonable time at least."

Mr. REED. Would that be true if we asserted we wanted it for our own use?

Secretary HULL. Nobody was even remotely thinking about that. As I say, if the necessary statutes had been enacted, we could have approached that situation, but that problem wasn't seriously on anybody's mind during that period. If we said anything much in any way, we were called warmongers.

Mr. REED. I noticed a good deal of protest, some of which was made to you at the time, I believe, about these shipments to Japan. They are rather startling in the light of Mr. Robertson's statement as to how near we are to the exhaustion of some of our great and necessary mines.

We sent steel scrap to Japan during the years I have mentioned, during the life of the trade agreements, 1936 to 1940, inclusive, to the extent of 7,246,721 tons, valued at $120,814,100, and then we sent copper, refined copper, to Japan during that time amounting to 916,594,803 pounds, or 4,582,472 tons, valued at $99,291,052. These ought to have excited the interest of people other than yourself.

Secretary HULL. You would have thought they would have, but did they? The fact is that it was not until August before Pearl Harbor that we got enacted here a law, the Army Service Extension Act, that would enable us to get out and fight.

Mr. REED. Well, according to the information that has come along from time to time, we foresaw some of this on the horizon; by the time we foresaw it, some of these shipments had gone out.

Then tin plate, of course, and we don't produce any tin here. How many pounds of tin plate we shipped to Japan is rather interesting during those years. Right up to the edge of the war we made those