Mr. KNUTSON. Heretofore, under the W. P. A. we at least made people come to town and get their grapefruit and other things, because the kids had to have something to play with, you know. I recall a little town up in my district where they sent in a half-carload of grapefruit and the kids were playing ball with the grapefruit. Dr. COULTER. We are doing that same thing in a large way in 10 or 15 countries; aren't we? Mr. KNUTSON. In those days we made people come and get it. It seems now we have embarked on a new policy. We tell them to go and sit down and we will bring it to them. Dr. COULTER. I think we have a policy that we are extending financial aid in some 10 or 15 or 20 countries, all through Latin America. Rubber is one of the things, and various oils-babassu and various other things. I don't know whether they are helping down there to finance cotton growing or not, down in Brazil. Mr. KNUTSON. Prior to the outbreak of the war-of course we can't take the war period as a base or criterion, but prior to the war-it was generally felt in the agricultural sections of the country that such benefits as accrue from these trade agreements and the operation of the trade agreements went to the manufacturer of automobiles, farm machinery, office equipment, and so forth Dr. COULTER. Yes. Mr. KNUTSON. And that the farmers were the goats. He was the one who paid the bill. Dr. COULTER. That is the impression. Mr. KNUTSON. Does that square with your investigations? Dr. COULTER. That is the way the farmers felt, and that is one reason I investigated to find out whether the heavy industry group were getting those benefits which indirectly might help agriculture, but my testimony indicates that I can find no evidence that any substantial gain came to the heavy industries group, and therefore no reflected gain could come to agriculture. Mr. KNUTSON. As you know, the part of the country where I come from produces a lot of rye. If the administration was really sincere in wanting to help agriculture, wouldn't it have been the part of wisdom to put in a synthetic rubber plant up in this rye-producing area, at the time when rye was selling at around 48 or 50 cents, or 52 somewhere in there, rather than to put it in the oil fields, where we are going to have a shortage of oil in 10 or 15 years-so we are told— unless we find some new pools? Dr. COULTER. I think there is a very considerable school of thought there that the butadiene base for the Buna S rubber should have come from commodities like rye and some of these annual crops that will grow in perpetuity so long as man is willing to work, rather than getting into the oil fields, where the same crude, in using it for high-octane purposes, has to be drawn upon and it is competitive. But I think that their processes are being unfolded so that they are making magnificent progress in both fields. They are now making butadiene from the corn and wheat, and that may be the evolution. Mr. KNUTSON. Of course if they would embark upon that kind of policy they would take up the slack that was created by the introduction of automotive power, wouldn't they-much of it? 86405-43-36 Dr. COULTER. Yes. Mr. KNUTSON. Now, Dr. Coulter, can there be any justification for giving preferential tariff treatment to imports of commodity products of which we have an exportable surplus, in normal times, like corn and wheat? Dr. COULTER. I don't see that. I don't see why we should burden our commerce rather than aid it. I think after all enlightened, intelligent business policy is the thing that we want to stand for. There are some years when weather is the controlling factor. Mr. KNUTSON. But in a 5-year period nature strikes a pretty good level. Dr. COULTER. A very excellent average; yes. Mr. KNUTSON. Do you see any justification for giving preferential treatment to the importation of pigs in the time when we were killing pigs by the millions in this country and dumping them in the river? Dr. COULTER. No; I don't recall that we did that. Mr. KNUTSON. Didn't we make some treaties along about in 1934-35? Dr. COULTER. Yes; but I don't recall that pigs were on the list. Mr. KNUTSON. They have certainly been put on the list since, haven't they? Dr. COULTER. Yes. Mr. KNUTSON. You know more about that than I do. We will assume that we hadn't made any reciprocal arrangement regarding the importation of pork. But subsequently we did. Dr. COULTER. Oh, yes; and on other kinds of meat which were competitive. Mr. KNUTSON. Other kinds of meat which were competitive? Mr. KNUTSON. Can there be any justification for a policy of that kind? Dr. COULTER. It makes it terribly tough on the farmers, especially when they get back three or four hundred miles from the coast, because where foreign countries are subsidizing shipping and refrigeration on the pretense that they are paying for the carrying of mail or something, where you can bring under refrigeration or otherwise cured products and feed the coastal cities it just strangles the whole interior of the country, and then presently, when the coast can't get it because of war or disease or weather or things beyond control, then the coast cities commence crying and whimpering and wanting the interior people to come and feed them. But that is one of those long policy programs. Mr. KNUTSON. Do you recall, Dr. Coulter, that in the campaign of 1930, and again in 1932, we heard a great deal about the iniquity of the Tariff Act of 1930, more generally known as the Hawley-Smoot bill? Dr. COULTER. Yes. Mr. KNUTSON. In fact, there were those who went so far as to claim that the depression was caused by the Hawley-Smoot bill. Dr. COULTER. Yes. Mr. KNUTSON. Would you mind telling the committee when the depression set in? Dr. COULTER. Well, the real depression started in during the middle months of 1925. If you make any kind of an economic review of the world conditions, world prices, individual commodities, it was earlier than that. Sugar was at its high point in '23, I think, and was already down some in '25. I have the figures in my portfolio-and on tin and rubber, and so forth. I think rubber may have been at the high point in '25. In all parts of the world, in various countries, a dozen of them, the depression started in, and you could see one commodity after another getting into trouble, and one bank after another, and then whole groups of banks, and in Austria the whole thing collapsed and the state came to the banks' rescue. Britain tried to help and we tried to help, with the Dawes Commission and the Young plan. We were trying to stop that thing all over the world, in a dozen countries. Then By 1929 and '30 that had spread into this country, like the flu or any other disease or any contagious thing where there is an international flow, so that by 1930 the world as a whole was pretty well on into the depression and trade was already being affected very violently. Mr. KNUTSON. The depression for the farmers set in in 1920, did it not, in October? Dr. COULTER. Yes; but there was a slight recovery, you will recall, in 1923-24. Mr. KNUTSON. Very slight. Dr. COULTER. But there was a quick dip in '21 and '22 and a slight recovery in '23-24, and there we hovered for a little while in what they called the post-war boom period, and then by '25, here and there and all over the world, those that were watching prices and international exchange and foreign investments and so forth commenced to say "You had better make sure that your storm celler is pretty well bailed out." Mr. KNUTSON. In order to show that the tariff doesn't play as important a part in creating depressions as some of our friends to my right like to believe, probably for political purposes, it is a fact that we were operating under the Underwood Free Trade Tariff Act when the depression set in for the farmer in 1920. Dr. COULTER. Oh, yes. That is, of course, true. The Emergency Act was in May 1921. Mr. KNUTSON. Could you tell me why a remedy should work one way in 21 and another way in 1930? Dr. COULTER. That is a very interesting question, but I didn't bring it up because I didn't want to be charged with being political. Mr. KNUTSON. I am bringing it up. I want you to explain it to me. Dr. COULTER. From the time of the passage of the Fordney-McCumber Act that was condemned so violently then, yet under that our imports increased from $3,000,000,000 a year to over $4,000,000,000 a year in 7 years; so, in the face of the tariff, our imports continued. Of course, the argument might be made that you didn't make the Fordney-McCumber tariff high enough. You recall one thing at that time. We were the only country of any importance-there are tariff experts from the Commission here who can very easily verify this that imposed our tariff rate on foreign invoice instead of the landed value of the product or proclaimed value, and you recall in the Fordney-McCumber Act the whole tariff was rewritten to put out selves on the same basis as all the other leading countries, the delivered, landed cost. It got through one House that way, I think. But then, finally, Congress let it go back and it followed the old routine. So that when we say we have a tariff rate of 40 percent, actually it is about 25. The argument has been made that since that emergency act and the Fordney-McCumber Act didn't stop the imports from mounting tremendously, it indicated that the party in power didn't do such a good job after all. If they had done a little better job we wouldn't have been in the later mess, perhaps. Mr. KNUTSON. I think you are right. The Fordney-McCumber bill was not high enough, and the Hawley-Smoot bill sought to make it more adequate to our needs. Dr. COULTER. There were some changes and corrections and so forth. Incidentally, I think the Government reports show that the rates under the Fordney-McCumber Act were not as high as the average of the proceding 100 years. Mr. KNUTSON. You heard Democratic campaign orators promise the American people that the first thing they would do when they got in would be to repeal the Hawley-Smoot bill? Dr. COULTER. Well, I thought the President, though, over here at Baltimore, promised the farmers that there were no high farm rates. Mr. KNUTSON. He forgot about that. The President has a very convenient memory. But that is a subject that is under consideration. Dr. COULTER. There were a good many who said the rates were too high. Mr. KNUTSON. That is one of their chief lines of attack. Dr. COULTER. Yes. Mr. KNUTSON. On the Republicans, that Hawley-Smoot bill. Mr. KNUTSON. The New Dealers have now been in 10 years. Dr. COULTER. Yes. Mr. KNUTSON. And they haven't repealed it yet. Why? Dr. COULTER. I don't know. Mr. KNUTSON. I don't either. Dr. COULTER. They have been working quietly at it, cutting it away, nibbling at it in the trade agreements, but it hasn't been brought openly out in front of the people. Mr. KNUTSON. At least they haven't taken hold of it courageously. They have been nibbling at it like mice at a piece of cheese. You are agreed that so long as the war continues it is immaterial whether we have trade agreements or not, because the war acts as an embargo? Dr. COULTER. Substantially. There might be some items here and there. There was a while back when the boats which were carrying supplies and boys over to Britain were coming back pretty well loaded with woolen cloth for suitings and clothing and so forth, and the farmers and the woolen crowd got pretty worried there for 6 months and took it up with the State Department and Lend-Lease and so forth, and finally the British said that maybe they were pouring it in pretty fast and furious. Mr. KNUTSON. And they changed over to Scotch? Dr. COULTER. Yes. Mr. KNUTSON. That is all, Mr. Chairman. The CHAIRMAN. My friend just asked you why it was that the Democrats, having been in power since 33, hadn't repealed the Smoot-Hawley tariff, and you said you didn't know. Is that the best answer you can give to that? Dr. COULTER. Yes. I don't know. The CHAIRMAN. I don't want you to go into a long explanation. Is that the best answer you can give to that? Dr. COULTER. Yes, it is. I really don't know why they haven't deliberately The CHAIRMAN. As the result of the Smoot-Hawley tariff law many other nations raised their tariffs correspondingly. Dr. COULTER. Yes. The CHAIRMAN. Then, could we consistently lower ours, when they had an embargo or high tariff against us? Dr. COULTER. I think for over 150 years, where we had 107 countries that carried through unilateral agreements each country has said, "We respect you and your family and your ways and your ideas. You work yours out to the welfare of yourself and the world, and we will do the same," and I think that in the long run it will be found that that is the best way. You can't maneuver them out of something that is good to you and not good to them. They will only make the concessions they want to make. The CHAIRMAN. We couldn't lower our tariffs when other countries' tariffs were high on account of ours. We couldn't, could we? Dr. COULTER. Maybe they would go ahead and lower theirs. The CHAIRMAN. Maybe they would, but suppose they didn't? Where would we be? Dr. COULTER. President Wilson thought that that was clearly the way in the Underwood case. I spent many hours with him on that very point, and he insisted that was the best way to do it. The CHAIRMAN. From an economic and business standpoint, wouldn't it be foolish for us to reduce our tariff laws and let other nations keep up an embargo on our exports? Dr. COULTER. But that is exactly what President Wilson, Senator Underwood, and the rest of them said was the thing to do. The CHAIRMAN. That is not the reciprocal trade agreements, is it? Dr. COULTER. No. The CHAIRMAN. Isn't it exactly the contrary? Dr. COULTER. But I say that both parties, up through, or until that time, have always said, "Let us run our affairs." The CHAIRMAN. And what did we get into? Commercial war! Dr. COULTER. Not any more than you have had commercial wars for a thousand years. The CHAIRMAN. Monopolies. Dr. COULTER. Not any more than you have had for a thousand years. The CHAIRMAN. When did you say the depression began? Dr. COULTER. The last, big depression, the last recent one? The CHAIRMAN. Yes. Dr. COULTER. Along about 1925. |