Mr. JUDD. To come back to these three words, do you mean by them that under this charter you think we would have less trade than we are having now, or at least less profitable trade?

Mr. LOREE. I think that we can have less trade, perhaps not only because of this charter, but certainly unless we close this dollar gap we are going to have less trade, but I think this is not in the way of improving. We are not going to have more because of it. We can put it around that way.

Mr. JUDD. Therefore, if ITO does not bring more trade then there are no other values which justify, in your opinion, the restrictions that would come with it?

Mr. LOREE. That is correct.

Mr. JUDD. Thank you very much.

Mr. GORDON. Was your organization represented at the conference in Cuba?

Mr. LOREE. Yes; we had two members of our organization there. They did not act as representatives but as advisers.

Mr. GORDON. Did they propose the investment article?

Mr. LOREE. No; I do not think they proposed it. I think they tried to get it worked around into a more acceptable form, and I think the investment provision as it came out of Habana, while still far from acceptable, was an improvement over what came out of Geneva.

Mr. GORDON. Thank you.

Mr. JUDD. May I ask one more question?

Mr. GORDON (presiding). Yes.

Mr. JUDD. Did your organization approve of the Marshall plan in its general objectives?

Mr. LOREE. Yes; it did.

Mr. JUDD. You realize that under that, of course, what looks like trade is not really trade. We give them money with which they buy our goods and then we tell ourselves we sold them something.

Mr. LOREE. I do not believe we approved the Marshall plan on the basis of trade. I believe we approved it on a humanitarian ground, that this country, as a result of the war and the fact that we did not suffer the same kind of destruction as Europe did, that we owed to the rest of the world some help. I do not think we looked upon this as trade. I think it is a mistake to look upon it in this way. I think that is a reflection on the American people to look on it that way. Mr. GORDON (presiding). Mr. Ribicoff

Mr. RIBICOFF. Assuming that your approval of the Marshall plan was not a question of trade, and your organization is interested in international trade, what do you think would have happened to the international business of the United States if we did not have the Marshall plan?

Mr. LOREE. I think our exports would have been very much less. Mr. RIBICOFF. I think they would disintegrate to the extent we did not give Marshall plan assistance.

Mr. LOREE. I suppose that is correct.

Mr. RIBICOFF. It is your idea that we should have a program for negotiation of bilateral treaties involving trade?

Mr. LOREE. I think through bilateral agreement you can get multilateral trade. We always did.

Mr. RIBICOFF. You always did, but we are living in a changed world now, are we not, Mr. Loree? Is the world the same today is it was 25 years ago?

Mr. LOREE. I do not think the general principles have changed in the world. Conditions may have.

If you will allow, I think Mr. Carroll would like to say something to that.

STATEMENT OF CHARLES R. CARROLL, CHAIRMAN, LAW COMMITTEE, NATIONAL FOREIGN TRADE COUNCIL

Mr. CARROLL. What we are advocating is a mechanism of negotiation. Bilateral negotiations are what we are advocating and not bilateral trade. Bilateral trade is what we have in so many cases today, and we will have bilateral trade under this multilateral agreement. What we are advocating is simply a bilateral process of negotiation, where we have been much more successful on the whole than we have in these multilateral negotiations.

Mr. RIBICOFF. But it is a different world, I mean. The world has changed. The United States is practically the only creditor nation in the world. You are advocating policies consistent with the United States' being a debtor nation. I think we must be realistic and recognize that we could do business under the old principles before the First World War, it would be mighty pleasant, but you know we are not going back to 1890. We cannot whether we want to or not. Mr. VORYS. Would the gentleman yield?

These gentlemen are advocating the Hull treaties which are not the pre-First World War. The Hull system is not yet 21 years old, and formed an entirely new system of negotiation for our country.

Mr. RIBICOFF, In all due respect to Cordell Hull, I think the world has changed considerably since 21 years ago, too.

Mr. CARROLL. So has the reciprocal trade program. If you take the Habana charter as a reflection of the reciprocal trade program because it has been defeated and frustrated by these very practices that show up as exceptions in the charter, and there are so many and such a variety of them that it is unprofitable to discuss them in detail. Mr. RIBICOFF. I am inclined to agree with you. I think the exceptions do weaken what we seek to accomplish. However, I am not arguing the pros and cons of the charter itself. I am arguing the point of view that bilateral treaties can solve the economic problems of the world today. That is what bothers me. I think it is a very unrealistic approach, and that is why I would like to interject that point of view.

Mr. LOREE. I think the council has not objected to the ITO charter concept. What it objects to is the charter as it came out of Habana. Our claim is that you must not say that if we do not have this charter that came out of Habana, we are going back into the Dark Ages and the world is coming to an end as far as we are concerned.

Mr. RIBICOFF. I am glad to get that expression. Now, I want to apologize for not having been here at the beginning of your statement, but what disturbed me was the question of your advocating the bilateral treaties as a solution. I mean as businessmen, and knowing what the international world is today, having apparently been

very active in international trade, you, certainly, more than any other group of businessmen, must realize the changes that have taken place in the world.

Mr. LOREE. If we could get the proper kind of charter, we would be in favor of it.

Mr. RIBICOFF. In other words, you do not think the charter is good enough?

Mr. LOREE. We just think it is not good.

Mr. VORYS. Would the gentleman yield? I want to get this clear in my own mind. As I understand it, under the unconditional, mostfavored-nation principle a bilateral trade agreement may have multilateral effects on all other nations that wish to comply with the terms of the concessions granted in the bilateral agreement. Am I right in that?

Mr. LOREE. I would say it does have.

Mr. CARROLL. That is a precisely correct statement, sir. That is a bilateral negotiation resulting in a bilateral commitment, given multilateral effect.

Mr. VORYS. Yes. So when you talk here about bilateral negotiations, you are talking about something that has multilateral effect, and that was and is the idea behind the reciprocal trade agreements. Whether it has been successful or not, that is the principle involved.

Mr. CARROLL. Might I add there is no copyright on the most-favored-nation clause operating in a bilateral treaty of commerce and amity, just as it does in the Hull convention or agreement. If we agree with Uruguay on a solid basis, and they agree with us on the investment area, let us say, Portugal gets the benefit of our commitments in that type of engagement.

Mr. RIBICOFF. I think whether it is ITO or bilateral, you are not going to solve any of these problems unless you do something about the dollar gap, basically. I do not think ITO does it either. Now, what do you propose as a means of closing the dollar gap?

Mr. LOREE. That is a big question, and I do not know whether you want to debate that here today.

Mr. RIBICOFF. I just want to get your point of view.

Mr. LOREE. Certainly, we believe that as the reciprocal trade agreements as originally conceived was to reduce our trade barriers, that is one of the ways to close the dollar gap.

I am not speaking now for the council; but, in my own opinion, I believe we must do away with exchange controls, and we must have free convertibility of exchange, and until we do have free convertibility of exchange, you will never close the dollar gap.

Mr. RIBICOFF. It is a part of the same dilemma; the convertibility of exchange depends upon whether there is dollars with which they can exchange.

Mr. LOREE. I think you are putting the egg before the hen when you say that. I think it is necessary to have the convertibility first. It is all right to say that that is the reason for the nonconvertibility, but until you do have convertibility you will never satisfactorily balance trade. Take England, for example. England at times has balanced its trade, if it could convert its trade with soft-currency countries. And, if it did not have this debt that overhangs it, with its own possessions, or the Empire, and did not have a lot of unrequited ex

ports, it could have had no dollar gap if it could have converted its soft currencies.

Mr. RIBICOFF. Do you think there would be any help if there was substantial American investments on a more or less semipermanent basis throughout the rest of the world?

Mr. LORREE. Yes, I think unquestionably if those investments were sound investments which would increase production in other parts of the world, it would have a good effect.

Mr. RIBICOFF. Do you think American business would have been willing to make those investments without guaranty against extraordinary political risks?

Mr. LOREE. They certainly have in the past, and I think they are doing it today. I think there are a great many places where the political atmosphere is not conducive to our business going in and investing its money, but I am sure they would be delighted to do it, given the right kind of political soil.

Mr. RIBICOFF. How are we going to get it?

Mr. LOREE. I think we have to negotiate it, and I think we have to make these countries understand that until it is there we are not going to do it.

Mr. RIBICOFF. Suppose you have country X who is in good faith, willing to negotiate such a treaty, but country X's government might not be there a year from now. There may be another kind of government that would expropriate all wealth, not only the investments of Americans, but the investments of their own nationals.

Mr. LOREE. Business has always had to face that possibility and has been willing to do it on the belief that our own government will stand behind us and give us such protection as it can. In the past, I must say, it has given us that.

Mr. KIBICOFF. You do not think we are ever going back to "battleship" diplomacy, do you?

Mr. LOREE. We never did. This country never went into "battleship" diplomacy. Business never asked it to.

Mr. GORDON (presiding). Thank you very much for your opinion

and statement.

Our next witness is Mr. Ruttenberg.

STATEMENT OF STANLEY H. RUTTENBERG, DIRECTOR OF THE DEPARTMENT OF EDUCATION AND RESEARCH, CIO

Mr. RUTTENBERG. My name is Stanley H. Ruttenberg, and I am director of the Department of education and research, Congress of the Industrial Organizations, and also chief economist for that organization.

I would also like, before I read the statement, to make one or two references to Mr. Strackbein's testimony of yesterday, purely in the sense that the organizations for which he spoke-that is, the Wage Earners' Protective League and the National Conference of Labor and Management for Foreign Trade-do not include in their membership any organizations affiliated with the Congress of Industrial Organi

zations.

I should like now to proceed with the statement.

The Congress of Industrial Organizations supports the adherence of the United States Government to the charter for an International

Trade Organization. The CIO believes that the charter is a necessary step in the establishment of adequate intergovernmental standards and machinery for effectuating the purposes of the United Nations in the economic sphere and establishing a sound foundation for peace and increasing world prosperity.

It is virtually axiomatic, of course, that our foreign economic policy must continue to emphasize those measures which can lead to the improvement of levels of consumption in all countries of the world, including our own. Poverty, underemployment of manpower, low consumption and living levels must yield to higher and higher standards if the ideals of the United Nations are to be realized, if democratic institutions are to spread and flourish, and if the American people are to live in a world in which the fruits of our increased production, employment, and productivity can be increasingly devoted to the improvement of our own living standards instead of to the building of military defenses. Starting with the United Nations Charter, and the Bretton Woods agreements, the United States has piece by piece been constructing the necessary machinery for a free world. This machinery, and United States foreign economic policy, would not be complete without an organization that dealt with the problems of trade, which are basic to problems of world economics. The United States now has UN specialized agencies in the fields of international finance, agriculture, health, aviation, education, science, culture, and labor, but none in the basic field of world trade.

The CIO and its international unions are actively fostering the principles and practices of democracy, free trade-unionism, and rising living standards through their contacts with trade-unions from other countries of the world, and frequently through the expenditure of trade-union funds. This committee is no doubt familiar with the recent joint action of the CIO and the American Federation of Labor in the formation of a new international labor body. This organization, whose constitutional assembly was held in London last month, was formed by unions which represent workers in 53 countries and whose membership is estimated to total roughly 50,000,000. I would like to quote to you from the constitution of this new organization, because I think that this committee would like to know what is in the minds of the representatives of the organized workers of the world on the basic economic problems that call for such approaches as that embodied in the charter for the ITO:

Point 9 of the aims of the International Confederation of Free Trade Unions (ICFTU) states that it is their aim

to advocate, with a view to raising the general level of prosperity, increased and properly planned economic cooperation among the nations in such a way as will encourage the development of wider economic units and freer exchange of commodities and to seek full participation of workers' representatives on official bodies dealing with these questions.

Again, point 5 of the Declaration of Economic and Social Demands adopted in London states:

We reject the narrow nationalism which leads to the protection of national markets by high tariff walls and other trade restrictions. The resulting limitation of the international exchange of goods and services, and the consequent inaccessibility of raw material sources, have made it impossible to realize a rational sharing out of work among nations. The solution lies in creating everbroadening areas of international economic cooperation.

I would also like to report to this committee the fact that the free trade-unionists of the world are increasingly looking to the United