actual one and would substitute as actual value that is defined in article 3 (b):

"Actual value" should be the price at which, at a time and place determined by the legislation of the country of importation, and in the ordinary course of trade, such or like merchandise is sold or offered for sale under fully competitive conditions

* *

But this is no agreement at all for different countries may designate different times and places. The words "at a time and place determined by the legislation of the country of importation" are susceptible of more than one meaning, although each in complete good faith. One country can designate the time and place as the time and port of export. This, in essence, is what we call foreign value. Another nation can designate time and place of import, thus arriving at some form of domestic value. This is not agreement. It is not a reliable definition, for it can and will be interpreted in opposite ways. We should not be unmindful of the serious disagreements to come. There is a wide area of decision and interpretation inevitably to be made by the organization. Some are decisions specifically delegated, including releases from or waivers of obligations. The far greater number will be necessitated by ambiguity in language of the charter. It has been said in effect that much of this was intentional, that the charter is only a framework within which the substance will be developed through establishment of precedents and the growth of a body of cases. If this is the case, who will develop this substance? Obviously, it would be the ITO, in which the United States has one vote. It is fantastic to expect the United States to sign such a blank check.

Much has been said by proponents of the charter to the effect that "one country one vote" holds no danger for the United States because it is most unlikely that other nations will gang up against their great and good friend, the United States. This is idealism which is contradicted by the facts.

At Habana we did not dare vote. To avoid votes it was agreed that only a sort of general impression would be obtained. To have voted meant certain and open public defeat. For instance the United States delegation tried to get proper provisions covering foreign investment written into the charter. Despite the fact that the United States is the greatest supplier of such capital the other nations did gang up against us and so prevented our draft from being adopted. Again the United States tried to get a provision limiting the United States contribution to the budget of ITO to one-third of the total. The opposition of other nations killed this proposal also.

It is the most dangerous sort of self-delusion to think that the United States will not be consistently out voted.

If ITO, through its decisions, will create a body of new international law, it will in effect have legislative powers. That very definitely is an invasion of sovereignty. Moreover, it would mean acceptance of administrative law in the international sphere. More government of men-less government under law.

The obligations of the charter are terribly one-sided now because of the exceptions and escapes for other countries. And if new matters of substance could be introduced through the procedure of interpretation, the charter should be rejected forthwith. Unfortunately, just such procedure was followed at a recent meeting of the Interim

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Commission in Geneva. By means of interpretation, the concept of monetary compensation was introduced. That can be found in the document ICITO/EC. 2/SR. 11. The charter provides that where the interests of a member are prejudiced, only retaliatory measures for their redress should be resorted to, such as withdrawal of concessions. While the Austrailian delegate pointed out that the charter was being amended substantively through interpretation, the United States delegate agreed with the interpretation. You can guess the probable target for monetary damages.

A fundamental disagreement running through the whole charter cannot be stated too often. It is the conflict between the doctrines of state socialism and the professed objective of freer trade and exchange among nations. Greater government controls are the very essence of state socialism just as they are the antithesis of freedom and private enterprise.

In the Habana Charter the doctrines of state socialism are paramount.

The charter concerns itself greatly with production and employment. For example, article 3 states that "Each member shall take action designed to achieve and maintain full and productive employment." Thus "full employment" would become an end in itself. This pledge would undoubtedly be accomplished by unbalancing the budget, inflating the currency, and imposing exchange controls. But each of these in turn would lead to contraction rather than expansion of international trade which is the supposed purpose of the charter.

Under this charter the United States would be required not only to take action to achieve and maintain full employment within its own territory, but also to cooperate with other nations through the Economic and Social Council of the United Nations, on such international measures as might be determined desirable to produce the same full employment in all member countries. In view of the widely divergent opinions expressed by Members of the Congress at the time it was considering the Murray full-employment bill of 1945 and the Employment Act of 1946, and the unwillingness of Congress to legislate "full employment" within the United States, we certainly should not now accept any charter which would commit the United States to international "full employment."

If a member's ability to achieve full employment without resort to trade restrictions is handicapped by a persistent maladjustment in balance of payments involving other members, such members respectively shall make "full contribution" and "take appropriate action" to correct the situation. That is in article 4-1. These vague terms must be interpreted by ITO. In a balance-of-payments situation like that between the United Kingdom and the United States, what is "appropriate action" by one and "full contribution" by the other? Even if clearly defined, it presupposes planned international economy coextensive with the commitments.

The provisions of the Chapter on Economic Development are duplications of what was promised as the function of the International Bank for Reconstruction and Economic Development. The more recent Point 4 attempts to deal with the same thing.

Of course, the bank has tried to make sound loans. The authors of the charter provisions are more open-handed.

The facilities for economic development and reconstruction are listed as capital funds, materials, modern equipment, technology and technical and managerial skills. Then this obligation, quoted from article 11-1 (a):

Members shall cooperate in providing or arranging for the provision of such facilities within the limits of their power. **

There are hardly trivial obligations. What is the limit of the power of government? The facilities described are in the United States privately owned and operated, the very essence of private enterprise. While the Habana Charter is submitted for approval as an executive agreement, I predict that it will be regarded both abroad and in the United States for what it is-namely, a treaty. And as a treaty, it will be the supreme law in the United States and yet no individual has any legal recourse against the decree laws of this international bureaucracy. This is contrary to the rights guaranteed American citizens under the Constitution.

Some proponents advocate ratification, bad as it is, and then improve it by amendment. We say that it is wholly unrealistic to expect to alter a contract in your favor after you have signed it.

It is also suggested that the United States can later withdraw if it is not satisfied. That is not only a poor but also a very dangerous suggestion. Political considerations might make such a step impossible.

Proponents of the Habana Charter are still talking in the attractive generalities of the prospectus. But the charter is the contract which either does or does not implement those high hopes. And I say that a careful study of the document shows that it does not do so.

We ask that the Habana Charter be rejected as the first necessary step toward a good charter.

Our real choice is between an effort to obtain a charter of limited scope on which there woud be genuine agreement and the Habana Charter which embodies ideas and practices of state socialism which we in the United States do not want and are under no compulsion to accept.

It is our opinion that if we negotiated a new charter returning to the concept of an organization initially having only consultative and advisory functions, the very exercise of these functions could in time lead to genuine agreement on principles and on the rules stemming from them. But the agreed rules should then be submitted for approval to the legislative bodies of the members. Laws would then be made in orthodox fashion and unless so ratified by legislatures would not become law.

I realize that this is too slow for the world planners, but on the other hand, a mighty oak is not created in a few months or years. Most of the greatest successes any of us know grew from very modest beginnings.

Mr. CARNAHAN (presiding). Dr. Eaton

Mr. EATON. I want to thank the gentleman for a very lucid state

ment.

What would you consider to be the fundamentals of a good charter? Mr. KILLHEFFER. Doctor, I think many of those fundamentals are embodied in the present charter except they are immediately nullified by all kinds of exceptions; the rules against quotas, the rules

against many things are good rules, well stated. But when they are so nullified that only the United States, seemingly, or perhaps one or two other nations will abide by the rules, it seems to me that they then are no longer rules. They are still then more or less abstract objectives, which is another way of saying that inasmuch as we have not achieved agreement here, that we were probably premature and we were in my opinion most premature in trying to go to the extent of really writing rules that would only be applicable to us and nobody else. I mean I am not quarreling with the fact they cannot comply with them, but if they cannot comply with them then I don't think they are rules.

Mr. EATON. Under the present proposed charter, the ITO organization becomes a lawmaking body in itself, which is authorized to make laws for the United States of America along with other people.

Mr. KILLHEFFER. It is not directly authorized, but that I am quite sure is what happens when they will begin to make even the interpretations and decisions that are specifically delegated to them by the charter. In making those decisions, in making those interpretations, they establish more rules. Those rules, if we are a member of this organization, are binding on us as they are on other nations.

Mr. EATON. Is it your view that such a charter of some sort is necessary in the present state of the world economy?

Mr. KILLHEFFER. Frankly, I have very serious doubts about it although I still am of the opinion as I always have been that an organization that provides your place of meeting and your forum where you can talk out these things would be an excellent thing for presumably the more you talk over your differences the more apt you are to come to a solution that will be found to be mutually satisfactory.

I realize that the proponents of the charter and Mr. Hoffman in New York yesterday, or night before last, said that he was for the charter for the very reason that it would provide a forum for the continuation of such discussions. Perhaps it will provide a forum, but that forum will be in the nature of a consultation on what to do about locking the barn after the horse is gone because the rules are already written and they were written when there could not be, in my opinion, universal agreement to them.

Mr. EATON. Speaking in the language of agriculture with which I am somewhat familiar by experience, your idea is that this charter makes the United States the milk cow, economically, of the world, and furnishes all comers with a bucket?

Mr. KILLIEFFER. As to the first part, I think we have that position, now. I think we have a very firm grip on it. Perhaps it does furnish a couple extra pails. I, being a farmer, appreciate your thought. Mr. EATON. Thank you. That is all.

Mr. CARNAHAN (presiding). Mr. Burleson

Mr. BURLESON. I have no questions. May I say, however, I am greatly impressed by your statement, Mr. Killheffer.

Mr. CARNAHAN (presiding). Mr. Smith

Mr. SMITH. Mr. Killheffer, will you give us for the record a brief statement of your personal background.

Mr. EATON. You need not go into any incriminating details.

Mr. KILLHEFFER. That is what I was wondering about. In other words, you want no vital statistics. You want my experience since I have been out in the cold, cold world; is that right?

Mr. SMITH. That is right.

Mr. KILLHEFFER. After my education was finished, I got a job with one of the so-called German I. G. chemical companies and was with them until the outbreak of the First World War at which time I disassociated myself from them and formed a company in the United States and went out to China and gathered up a lot of dyes that I knew were stored up out there and which I knew we were short of in the United States.

Returning from that venture, I started a dyestuff manufacturing plant in the United States. A little later, another much larger company wanted to start the same business and they needed some advice and they were kind enough to think that I was the right person to give it to them so I sold out to them.

part

I later became president of that company, which was the Newport Chemical Works and then a little later on, the du Pont Co. purchased part of the assets of the Newport Chemical Works and at that time. I was moved over into the du Pont Co., from which company I retired nearly a year and a half ago. Now I am a retired farmer, living up in the southeast corner of Pennsylvania, hoping that I can sell that farm and go to live in Florida and have a lot of fun. That brings you down to date.

Mr. SMITH. I understand that you were at the Habana conference. Mr. KILLHEFFER. Yes, sir.

Mr. SMITH. Whom were you designated by to attend the conference?

Mr. KILLHEFFER. I was one of the advisers to the delegation, which the United States delegation I believe carried for the first time at the Habana conference. They asked the larger organizations in the United States each to designate one man, and I was designated by the United States Chamber of Commerce.

Mr. SMITH. How long were you there?

Mr. KILLHEFFER. I was there from November 21 to February 8. Mr. SMITH. And during all that time you were participating in the daily sessions that were held?

Mr. KILLHEFFER. Much to my own discomfort; yes, sir.

Mr. SMITH. So I take it from your experience in Habana that you got a feel of the situation through these meetings and in your contacts with those who were in attendance.

Would you mind telling us just how you felt on this question, or what reaction you got from this question of the possibility of agreement between the parties. I think that is so important.

Mr. KILLHEFFER. I think there will be no disagreement with the statement I make that all of us-not just me-on the United States delegation-were very pessimistic in the early days of the Conference, or maybe a little later than the early days and it did look for a while as though the Conference might collapse because of the violence of some of the disagreement.

Personally, as you can see from my statement, I never came to the view that any real agreement was reached because I would sit in the committees where supposed settlements were made and it is my feeling that many of those settlements will again lead to further differences of opinion.

Mind you, we had at the Habana Conference, 57 nations which were invited-they did not all show up-but well over half of those had never participated in one of those conferences before. Many of them had