EXTENSION OF RECIPROCAL TRADE AGREEMENTS ACT WEDNESDAY, FEBRUARY 28, 1940 UNITED STATES SENATE, The committee met, pursuant to recess, in the Finance Committee room at 10 a. m., Senator Pat Harrison (chairman) presiding. The CHAIRMAN. The committee will come to order. Senator O'Mahoney requested an opportunity to appear before the committee this morning. You may proceed, Senator. STATEMENT OF HON. JOSEPH C. O'MAHONEY, UNITED STATES SENATOR FROM THE STATE OF WYOMING Senator O'MAHONEY. Mr. Chairman and gentlemen of the committee, I desire first to read into the record an amendment to this bill which I shall offer to the committee. This is intended to add another section to the bill to read as follows: SEC. 2. No foreign-trade agreement hereafter entered into under the authority delegated to the President by such section 350, as amended, no amendatory or supplementary agreement hereafter entered into under such section, and no duties and other import restrictions specified in a proclamation issued by the President to carry out any such foreign-trade agreement or any such amendatory or supplementary agreement, shall take effect until the Congress by law has specifically approved such agreement and the duties and other import restrictions so specified to carry out such agreement. It will be observed that this is simply an amendment to provide that the trade agreements and the duties set forth in any proclamation issued by the Executive shall be specifically approved by act of Congress. I intend to demonstrate, and I think it can be successfully done, that this provision is altogether in harmony with precedent, that is to say, a precedent of the Congress of the United States which has never been upset until this Reciprocal Trade Agreements Act was passed in the first place. The problem which is presented to this committee and to the Congress divides itself readily into two issues. The first has to do with the desirability of reciprocal trade agreements to alter customs duties. That is purely a matter of national policy. It is purely a matter of what is good or bad for the commercial interests of the country. The other issue involves with the method by which these customs duties in the reciprocal trade agreements shall be changed. This is a constitutional question, and it is to that phase of the subject that I desire to address myself this morning. Of course, many diverse opinions can be offered and much testimony given with respect to the merits of trade agreements and the reduction or modification of tariff schedules. Much can be said and much will be said about the effect of the agreements which have already been made upon the trade and commerce of the United States. Other witnesses will take care of that. There are present in the room now the representatives of the American National Livestock Association, the representatives of the National Wool Growers' Association, for example, and I have no doubt of various other farm and ranch organizations which are vitally concerned in the tariff duties. DEFENSE OF DEMOCRACY I confess to the Members of the committee that in my opinion a more important issue will not be presented to this Congress than that which is involved in the constitutional aspects of this measure. In a world in which democracy is practically vanishing from the face of the earth, we must consider whether or not this Republic shall stand forth as an exemplar of popular government. Everywhere else all of the details of government are being turned over to the executive. For a generation the trend has been observable here. Are we going to defend democracy by continuing to surrender legislative duties, legislative responsibilities, legislative powers to the executive? I am convinced that we cannot save democracy in the world by doing that. I believe as deeply as I ever believed anything that to save democracy, we have got to have the courage to be democratic, and that means we must trust the ability of the people and the representatives of the people to govern. The argument has been made in the House and elsewhere that this bill is necessary because we cannot trust the Congress to exercise its constitutional power properly. Now, let other Senators and other Congressmen make that argument. I will not make it. I will not make it for myself and I will not surrender the responsibility that was placed upon me when I took the oath of office as a Member of this Senate to represent the people of my State in the legislative arm of this Government. This bill, the original Trade Agreements Act, and, of course, this provision to extend it, offends against at least four provisions of the Constitution of the United States. The first of them is the very familiar provision which requires that treaties shall be ratified by a two-thirds vote of the Senate. The CHAIRMAN. Are you contending for that? Senator O'MAHONEY. Yes; I contend that, but I am not raising it in my amendment. Senator BROWN. Your amendment would not cure that defect? Senator O'MAHONEY. My amendment would not cure that defect, but when I undertake to outline the manner in which this act has offended against the Constitution, I must include that, because, as I shall undertake to demonstrate, a trade agreement of this character, an international agreement of this character, is a treaty. Senator VANDENBERG. This defect disappears after your amendment is added to the act? Senator O'MAHONEY. In effect, yes, because the trade agreements are primarily agreements which fix customs rates, and if those customs rates are approved by the votes of the two Houses, I shall be satisfied. Senator BROWN. I disagree with my colleague, I think, if I understand your position correctly. Your amendment would not overcome the objection that the trade agreements are not constitutional, because they are not ratified by two-thirds vote of the Senate? Senator O'MAHONEY. Oh, no. I did not understand your colleague to say that. As a practical matter, I undertook to say that so far as the agreements deal solely with rates, this amendment would satisfy the requirements, of the Constitution, because the customs duties which are enacted, let me say, by Presidential proclamation will become, if they are approved by both Houses of Congress, the legislative enactment of Congress and I think they come then within the Constitution. Well, here is No. 1, a violation of that provision of the Constitution respecting treaties. No. 2: It offends against that provision of the Constitution which says that all legislative power shall be vested in a Congress of the United States. It must be significant that the framers of the Constitution used this word "all" in describing the powers of Congress. They did not use it anywhere else. When describing the executive power, they did not say "all" the executive power shall be vested in the President. It was said "The executive power shall be vested in the President." And when they created the judicial power, they did not say "all" judicial power shall be vested in the judiciary and the courts. They said "The judicial power shall be vested." But when they came to describe the legislative power in the Congress of the United States, they said "all." Now, it is upon that word, that simple word, that all-inclusive word, that have been based all of the decisions of the Supreme Court of the United States, decisions which have never been questioned, that Congress cannot delegate its legislative power. It can, of course, for the purposes of administration, in order to deal with difficult and complex problems, it can delegate certain rule making powers, provided it surrounds that delegation with clear and intelligible standards. You will search this bill in vain for a single standard to guide the discretion of the Executive. The third provision of the Constitution which is violated by this law and by the resolution extending it Senator BROWN (interposing). If I may interrupt you for a moment before you leave that second point? Senator O'MAHONEY. I am going to come back to it. Senator BROWN. I just want to give you one thought, because it runs along this same line. It seems to me that your amendment does not cover one feature that an amendment of this kind should cover. I think it is just as vital to retain a good law that has been enacted as it is to enact it in the first place. Senator O'MAHONEY. Provided the circumstances continue. Senator BROWN. The President may by himself, without any action on the part of the Congress, stop the operation of the law; in other words, abrogate the treaty. Now, it seems to me that an amendment of your type, that there should also be a provision requiring that the abrogation of the agreement be subject to congressional approval, I think that the argument that you are making should touch upon that phase of the question as well as touching the original enactment of the law. Senator O'MAHONEY. The point which Senator Brown makes is, of course, one that is worthy of the greatest consideration, and it suggests itself to any person who will study this law in all of its implications. You are quite right in what you say as to the power of the President to terminate, and the logic of the argument goes just as far as you say. Senator BROWN. That is what I wanted to suggest to you. Senator O'MAHONEY. In presenting this amendment, I have been seeking to simplify it and make it clear, because the trouble with this problem has been that it is confused in the minds of the public, and I think confused in the minds of the members of both the legislative and executive branches of the Government. We do not differentiate between the merits of reciprocal trade agreements and the constitutional inhibitions with respect to the manner in which the treaties shall be made and with respect to the manner in which laws, particularly revenue laws, shall be enacted-and now I come to the third provision of the Constitution Senator VANDENBERG (interposing). Isn't Senator Brown right? If the passage of the law is a legislative function, the repeal of the law is a legislative function, by the same token? Senator O'MAHONEY. Yes; I agree with that. The third provision of the Constitution which I think is violated by this law is the one which prescribes that all revenue bills shall originate in the House of Representatives. The fourth is that clause with which we are all familiar in the Constitution, namely, that the Constitution, the laws enacted in pursuance thereof, and treaties made or which shall be made under the power of the United States are the supreme law of the land. Are foreign trade agreements treaties or are they laws? If they are not treaties, as is contended, how, then, can they modify the customs duties fixed in a law constitutionally enacted by Congress? If they are not laws enacted by the Congress, how, then, can they alter or modify the customs duties? Either these trade agreements are treaties and then come in as a part of the supreme law of the land to modify the Tariff Act of 1930, or they are laws, and if they are laws, they are revenue laws, because they deal with the customs duties and so must be enacted as the Constitution provides. Have they originated in the House of Representatives? Mr. Chairman, to say that because the original Reciprocal Trade Agreements Act originated in the House, that this bill extending that act for another 3 years originates in the House, that this provision of the Constitution with respect to the revenue laws is satisfied seems to me not to rise to the dignity of an argument. REVENUE LAWS MUST ORIGINATE IN HOUSE What did these framers of the Constitution have in mind when they said that revenue laws shall originate in the House of Representatives? They had in mind the taxing power, and they were so jealous of that power that although they provided that the Senate might amend these laws, it was clear that they did not want the Senate to originate them. They wanted to keep the taxing power so close to the people that the people would know at all times through their Representatives in Congress, what was being done and how it was being done and how their interests, their commercial interests, their agricultural interests would be affected by all revenue legislation. Who can tell what rates will be changed tomorrow if this bill is passed? What Member of the Senate or what Member of the House can report to his constituents with respect to the effect of reciprocal-trade agreements that are to be made in the future upon the interests of his State? What rate in any trade agreement that has been or will be made in the future under this act has or will originate in the House? My belief is that although the House may have been willing, apparently, was willing to surrender this fundamental and historic power, the Senate should not surrender the power, the responsibility and the duty which is vested in it by the Constitution. I said there were four provisions of the Constitution violated by this act; I should have said five. EQUALITY OF THE STATES IN THE SENATE The fifth is to be found in the terms of the Constitution which provide for equality among the States in the Senate. There was certainly no subject debated in the Constitutional Convention which aroused more interest and concern than this question as to how much representation should be accorded to the States in the Senate. First it was argued that the big States should have more than the little States, and there were little States in those days too, and big States. But the framers of the Constitution and the people who ratified it came to the definite conclusion that in the Senate all the States should be equal. So, little or big, numerous or scattered as to population, every State in the Union has two votes in the Senate. Two votes to protect the interests of the State. Now we are wiping these distinctions out. No Senator can tell what will be contained in a trade agreement affecting the interests of his State and his people, of their industries, and of the projects of whatever kind that they may carry on so far as those activities are affected by customs duties. So I say that we should be very slow indeed to surrender our right to know in advance what is to be done to revenue legislation which more intimately affects our people than almost any other measure that we may pass. Now, let me return for a moment to the discussion of treaties. It has been said, for example, that the trade agreements fall into a separate and different category from treaties; that they are conventions, Executive agreements that do not rise to the dignity of treaties. That, I think, is the phrase that is usually used. But it seems to me that nobody can read the cases dealing with this subject without realizing that there is a clear line of division between treaties and Executive agreements, and there is a clear and definite distinction between the power of the Executive in foreign affairs and in domestic affairs of the United States. It is frequently argued that these trade agreements are not treaties requiring ratification, but are like postal conventions. How that can be argued by anybody who had given 5 minutes thought to what a postal convention is, is beyond my understanding. Mr. William Howard Taft, when he was Solicitor General, was called upon by the Post Office Department or some other department 215171- ·40- --13 |