raise farm prices as a result of the Hawley-Smoot tariff. As a matter of fact, the Hawley-Smoot law contributed so greatly to the tying up of world affairs that the farmer found himself in most serious trouble.

Senator BROWN. Well, I might say, Mr. Chairman, that those figures are taken from pages 1683, and 1684 of volume 2 of the House hearings, and are based upon figures of the Bureau of Agricultural Economics reported in November 1939, in both cases.

Senator JOHNSON. For what period do they apply?

Senator BROWN. 1938 and 1939.

Senator JOHNSON. Is that for the calendar year?

Senator BROWN. I suppose it is the crop year.

Senator JOHNSON. And the figures are given for all the years? Senator BROWN. 1938 and 1939 on the same page, but I did not read them.

The CHAIRMAN. Is there anything else, Mr. Secretary?
Secretary WALLACE. NO.

The CHAIRMAN. We thank you very much for coming down.

I desire to announce that we will meet at 2 o'clock in this room this afternoon. Dr. Grady, the Assistant Secretary of State, will be here, and I want to request that those people who have filed with the clerk of the committee a desire to appear before the committee, and who live here and are here, ought to be in the room tomorrow. They might be called before we anticipated getting to them, because we want to expedite these hearings as speedily as possible.

The committee will adjourn until 2 o'clock.

(Whereupon, at 12:05 p. m., a recess was taken until 2 p. m., of the same day.)

AFTERNOON SESSION

(The hearing was resumed at 2 p. m., pursuant to the noon recess.) The CHAIRMAN. The committee will come to order.

Mr. Grady, I wish you would give us your position in the State Department, and your position in connection with the trade-agreements program.

STATEMENT OF HON. Henry F. graDY, ASSISTANT SECRETARY OF STATE

Mr. GRADY. Mr. Chairman, I am the Assistant Secretary of State in general charge of economic and financial natters, which includes the trade-agreements program.

The CHAIRMAN. You succeeded Dr. Sayre in the work with these trade agreements?

Mr. GRADY. Yes; I succeeded him last August when he went to the Philippines as High Commissioner.

The CHAIRMAN. Do you prefer to go through your statement and then answer questions?

Mr. GRADY. Yes.

The CHAIRMAN. We will proceed in that way, then.

Mr. GRADY. Mr. Chairman and members of the committee: I shall endeavor to show my appreciation of the privilege of appearing before you by making my remarks brief and to the point. Your committee, in view of its previous hearings in 1934 and 1937, is well acquainted with the essentials of the trade-agreements program which the bill now under consideration proposes to continue. The Secretary of

State has set forth the significance of this program to our present situation and the important reasons calling for its continuance.

It seems to me, therefore, that I can best contribute to your purpose by answering such questions as you may have regarding any aspect of the subject. My statement will therefore be devoted mainly to a few remarks on certain aspects which I consider warrant some special mention.

Together with the widespread growth of support in all directions for this program, there has occurred a notable change in the character of the general opposition which continues from some quarters. It now seems almost universally recognized that we must have a positive foreign-trade program of this sort. Objection of a general nature is now confined largely to the results and methods of this particular program which has been in operation for nearly 6 years. This objection is based principally on two contentions: First, that this program has accomplished no beneficial results for our export trade, but, on the other hand, has caused harm to domestic industries; secondly, that it is not the proper procedure. I propose to deal briefly with each of these contentions.

Those who claim that the 22 trade agreements negotiated with foreign countries have brought no benefits to our export trade are generally to be found among those who also claim that these agreements have injured certain domestic producers by unduly stimulating our imports. This places them in a somewhat unenviable position from the point of view of logic and consistency, since it means that they are contending, at one and the same time, that on the one hand concessions obtained from foreign countries in the form of tariff reductions or enlargements of quotas for American products do not result in stimulating sales of these products in those countries, but that on the other hand comparable concessions which we have granted do result in stimulating excessive imports into our markets.

Without dwelling further on this curious contradiction, I would like to comment upon the general character of the statistical methods by which these contentions are supported. Our trade with the world is subject to such a great variety of factors as to make the accurate measurement of any single influence, such as the trade agreements we have negotiated, an intricate and difficult task.

There is, however, a clear and simple distinction to be drawn between two methods of statistical analysis. One method is an endeavor to ascertain objectively from the facts, in what measure the indications of common sense are supported. On the other hand it is also possible, by sleight-of-hand statistics, to make it appear that common sense is wrong.

The facts amply support the common-sense belief that where excessive barriers to trade are reduced, a healthy stimulus to trade may be expected. This conclusion has been checked and rechecked by using various appropriate statistical approaches and by bringing our calculations up to date whenever new data have become available.

I wish to present to the committee for inclusion in the record, several detailed exhibits and will confine my remarks to a brief enumeration of the main conclusions shown by these exhibits. These are as follows:

Exhibit I shows that our exports to the countries with which we have made trade agreements have, in the aggregate, increased about twice as fast as our exports to other countries; comparing our exports for the 2-year period 1938-39 with the 2-year period 1934-35, the

increase to trade-agreement countries was $475,000,000, or 62.8 percent, and to other countries, $314,000,000, or 31.7 percent.

EXHIBIT I

[Reprint from Commerce Reports of February 17, 1940, issued by the Bureau of Foreign and Domestic Commerce, U. S. Department of Commerce]

RESULTS UNDER THE RECIPROCAL TRADE AGREEMENTS PROGRAM DURING 1939 [Prepared by the Trade Agreements Unit, Bureau of Foreign and Domestic Commerce] There are given below tables showing the trade of the United States with trade-agreement countries and nontrade-agreement countries in 1939 compared with 1938, as well as the average for the post agreement years 1938 and 1939 compared to the average for the preagreement years 1924 and 1935. In addition to a summary table showing total trade with the two groups of countries, detailed statistics are given covering trade with the agreement countries and the principal nonagreement countries individually.

During December 1939 total United States exports reached the highest monthly figure recorded since March 1930. The increase was particularly marked in exports to the agreement countries, and as a result the statistics for the full year 1939 show an increase of 8.1 percent for this group compared with 1938, whereas for 11 months the increase was only 4.9 percent. In the case of the nonagreement countries, a decrease in exports of only 4.5 percent is shown for the full year, compared to the decrease of 7.9 percent shown for 11 months.

On the side of imports, both groups of countries also improved their position during December. Imports from trade-agreement countries for the full year 1939 show an increase of 20.1 percent over 1938, compared to the increase of 17.5 percent shown for 11 months, and imports from nonagreement countries for the full year show an increase of 15.6 percent, compared to the increase of 13.2 percent shown for 11 months.

In the analysis of trade with the agreement and nonagreement countries during the first 11 months of 1939, which was published in Commerce Reports of January 20, 1940, appropriate comments were made on the important changes that had taken place in the composition and direction of the foreign trade of the United States during that period. With few exceptions, these comments are equally applicable to the 12-month period, most of the tendencies previously shown having continued throughout December.

TABLE 1.-United States trade with trade-agreement countries and with all other countries, 1939 compared with 1938, and 1938-39 compared with 1934-35

Including the 18 countries (and colonies) with which agreements were in operation during the greater part of the last 12 months. Only 1 of the agreements was in operation throughout 1935, 6 throughout 1936, 14 by the end of 1936, 16 by the end of 1937, 17 by the end of 1938, and 18 by the end of 1939, including the agreement with the United Kingdom (covering also Newfoundland and the non-self-governing British Colonies). The agreement concluded with Turkey became provisionally effective only on May 5, 1939, and the agreement with Venezuela only on Dec. 16, 1939. Statistics for these countries are therefore not included in the above calculations.

These figures do not include Ecuador, the United Kingdom, Newfoundland, and non-self-governing British Colonies, Turkey, and Venezuela with which agreements have been concluded but where the period during which the agreement has been in effect is too short to justify inclusion for purposes of comparison. 3 The apparent discrepancy shown by these figures in comparison with the other totals is due to the noninclusion of trade with Ecuador and the United Kingdom and its Crown colonies.

GENERAL NOTE.-Percentage changes have been calculated upon fuller figures in thousands of dollars. Source: Latest records of Division of Foreign Trade Statistics, Bureau of Foreign and Domestic Com

merce.

General imports

TABLE 2.-United States trade with individual trade-agreement countries—1934-39

Percent

age
change

average
value

average

value

age
change

Percent
+20.1

53

79

+49.8

76

82

+7.0

92

105

+14.9

105

105

-.7

May 1, 1935

54

71

+30.7

77

65

-16.1

33

52

+59. 1

42

63

+51.8

Haiti.

June 3, 1935

3

4

+31.3

4

5

+41. 1

1

3

+151.6

3

3

Sweden.

+2.2

5, 1935

+125.7

+50.5

+16. 1

Oct. 23, 1938

+78.2

United Kingdom.

Jan. 1. 1939

521

585

-3.0

1,851

2, 139

+15.6

1,960

2,318

+18.3

1 These figures include Surinam (Dutch Guiana), the trade with which is too small to warrant individual listing. United States statistics show only a small portion of the actual exports to Switzerland, most of which are transshipped through third countries and are shown as exports to those countries. Therefore, too much significance should not be attached to the statistics of exports to Switzerland.

TABLE 3.-United States trade with individual nonagreement countries-1934-39 [Values in millions of dollars, except those inclosed in parentheses, which are in thousands of dollars]

1 For statistical purposes, trade with Austria beginning May 6, 1938, and trade with the Sudetan area beginning Nov. 10, 1938, as far as ascertainable, has been included with Germany, while trade with the other Czechoslovak Provinces occupied by Germany, Hungary, and Poland has been included with these countries since Mar. 18 or 19, 1939.

2 Reciprocal trade agreements with Turkey and Venezuela, became effective on May 5 and Dec. 16, 1939, respectively.

Since Aug. 6, 1939, a commercial agreement has been in effect between the United States and the Soviet Union under which the latter country expressed its intention to purchase annually American goods to the value of at least $40,000,000 and, on its part, the United States undertook to accord to the commerce of the Soviet Union unconditional most-favored-nation treatment.

GENERAL NOTE.-Percentage changes have been calculated upon fuller figures in thousands of dollars. Source: Latest records of Division of Foreign Trade Statistics, Bureau of Foreign and Domestic Com

merce.