Keeping out of the domestic market almost every trace of imports of woolen goods, as part of a general tariff policy which destroyed a large part of our foreign trade and contributed greatly to the general economic maladjustment both in this country and abroad, did not prove to be a paying proposition for your industry or the workers in your industry. That imports of wool fabrics amounted on the average to only about 1 percent of our domestic consumption--as they did after 1930-was surely poor consolation for the 46,000 employees who were out of work and for the decline of more than half in the pay roll of your industry. As a matter of fact a study of the trends of national income and of domestic exports and imports over the past 15 years shows that all three tend to fluctuate in unison. For example, in 1929, when national income reached 81 billion dollars, our exports amounted to 5.2 billions and our imports to 4.3 billions. By 1932 national income had fallen to 40 billions, exports to 1.6 billions, and imports to 1.3 billions. Are not these figures sufficient evidence to any reasonable person that there is something radically wrong with the idea, which seems to be the underlying assumption of your statements, that a slight change in the small share of the domestic market supplied by imports is what makes the difference between good and bad times for the American industry? It is idle to say that other factors besides the Hawley-Smoot Act contributed to the depression. That there were other important factors, no informed person would deny. But neither would he deny that the rapid rise of trade barriers throughout the world-a development in which our own tariff policy after the World War, reaching its ultimate extreme in the Hawley-Smoot Act, played a sinister part- -was an important factor in contributing to and greatly aggravating the general depression. The third point which I set forth at the beginning of this letter was that the trade-agreements program tends to promote economic activity and employment generally in this country. What I have just said concerning our experience under the Hawley-Smoot Act shows clearly enough what happens when the opposite policy, the policy of embargo protectionism, is followed. I desire, however, to comment further with reference to the attempt in your statements to induce workers in your industry and the public generally to believe that the trade agreements program is merely an altruistic policy which aims to engender good will abroad at the expense of American industry and the American standard of living. The fact is that the trade-agreements program has been remarkably successful in restoring foreign-market opportunities for many products of our farms and factories. In the agreement with the United Kingdom alone-the main object of your unfair attacks—we obtained specific concessions on American products exports of which to the United Kingdom, Newfoundland, and British colonies in 1936 amounted to $326,000,000. It is obviously too early to judge the value of these particular concessions in terms of actual trade increases. However, it is significant that exports to agreement countries in the 2-year period 1937-38 were greater in value by 61.2 percent than the average for the preagreement period 1934-35, while exports to all other countries increased by only 37.9 percent. Agreements are now in operation with countries which in 1938 accounted for nearly 60 percent of our total foreign trade. These are some of the facts you fail to mention which are vitally significant to the vast number of American producers of farm and factory products who must export, or shut down or operate at a loss. When these American producers lose export markets as a result of embargo tariffs here and abroad or for any other reason, then the wool manufacturing industry and other "protected" industries lose part of their domestic market, and we have what we had in 1930, 1931, and 1932. Neither do you mention that the powers vested in the President by the Trade Agreements Act have been exercised with the utmost scrupulousness. The President has had the assistance of all the facilities of information and expert judgment available to the Government of the United States from official and private sources, and every detail of the agreements has been scrutinized by expert advisers with a degree of thoroughness such as has never before characterized the determination of tariff rates in this country. In view of all the facts and circumstances, it seems to me that the misleading claims and inferences which are set forth in your advertised assertions cannot possibly serve any useful purpose either from the standpoint of the public generally or from that of the workers in the wool manufacturing industry. Without questioning the honesty of your motives and convictions in connection with these matters, I am convinced that you have not taken all of the facts into account. It is to be regretted that no opportunity was sought, before your statements were published, to discuss the whole subject with us. We would have been very happy to discuss it with you, and we are still ready to do so at any time. Sincerely yours, (Signed) CORdell Hull. (The table submitted by Mr. Brown entitled "Value of International Merchandise Transactions," etc., is as follows:) Value of international merchandise transactions wholesale price index, 40 international basic commodities reduced to uniform gold basis-The World (109 countries) The CHAIRMAN. We will recess until 10 o'clock tomorrow morning. (Whereupon, at 1:05 p. m., a recess was taken until Tuesday, March 5, 1940, at 10 a. m.) 215171-40-40 EXTENSION OF RECIPROCAL TRADE AGREEMENTS TUESDAY, MARCH 5, 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. The first witness is Mr. Russell B. Brown, of Washington, D. C., representing Independent Petroleum Association of America. STATEMENT OF RUSSELL B. BROWN, WASHINGTON, D. C., REPRESENTING INDEPENDENT PETROLEUM ASSOCIATION of AMERICA Mr. BROWN. I am appearing here in behalf of the Independent Petroleum Association of America, a national organization of independent units in the petroleum industry. I present a resolution from that association for the record. (The resolution is as follows:) RESOLUTION ADOPTED AT ANNUAL MEETING OF THE INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA, FORT WORTH, TEX., OCTOBER 20, 1939 The conservation programs of the oil-producing States are related to a policy of balancing supply with demand in order to avoid waste. One feature of supply, imports, is not within the power of the States. Because the amount of these imports which may enter our markets at any time is unpredictable, the careful planning of State conservation bodies may be, and has often been, defeated by unexpectedly large quantities of these imports, which have demoralized our markets and adversely affected the economics of the industry. Since the domestic producers of petroleum are making their contributions to the public revenues through the taxes they pay and are accepting production limitation as a necessary part of a sound conservation program, we believe that importers of cheaply produced foreign oil should be willing to pay a proper excisc tax and to accept an equivalent limitation on the amount of foreign oil they bring into our markets: Therefore be it Resolved by the Independent Petroleum Association of America at its annual meeting held at Fort Worth, Tex., this 20th day of October 1939, That Congress is hereby petitioned to impose an adequate tariff on imports of petroleum and its products. and that until such time as this tariff may be adopted the present excise taxes on imports of crude oil and fuel and gas oil be increased from one-half cent to 1 cent per gallon, and that new excise taxes of $2 per ton be levied upon imports of asphalt, natural or otherwise; be it further Resolved, That Congress is hereby petitioned to adopt legislation restricting the imports of crude petroleum and its products to an amount not in excess of 4.5 percent of the consumptive demand in this country as estimated by the United States Bureau of Mines; be it further Resolved, That Congress is hereby petitioned to repeal that section of the Revenue Act of 1932 which exempts from exicse taxes importations of crude petroleum and its products used for the supplies of vessels. I am also authorized to represent the following petroleum organizations: Central Pennsylvania Oil Producers Association, Oil and Gas Association of Michigan, West Central Texas Oil and Gas Association, Ohio Pennsylvania Grade Oil Producers Association, Panhandle Producers and Royalty Owners Association, Independent Oil Producers Association of Illinois, Western Pennsylvania Oil Men's Association, Rocky Mountain Oil and Gas Association, Lima Crude Oil Improvement Association, San Joaquin Valley Oil Producers Association, Illinois-Indiana Petroleum Association, Southern Oklahoma Oil and Gas Association, Oklahoma Stripper Well Association, North Texas Oil and Gas Association, Oil Producers Agency of California, New Mexico Oil and Gas Association, California Oil and Gas Association, National Stripper Well Association, Creek County Stripper. Well Association, and Kansas Independent Oil and Gas Association. I have also received resolutions from the following associations in opposition to use of the excise taxes, adopted in 1932, in trade-agreement bargaining: Oil and Gas Association of Michigan, Rocky Mountain Oil and Gas Association, San Joaquin Valley Oil Producers Association, Oklahoma Stripper Well Association, North Texas Oil and Gas Association, Oil Producers Agency of California, and Kansas Independent Oil and Gas Association. The original authorizations and resolutions from these organizations, as well as other phases of the argument which we will not repeat here, are filed with the House Committee on Ways and Means and appear in the report of the recent hearing held by that committee on this bill. The associations named request that your committee consider some amendment to House Joint Resolution 407, which would insert in the present act a section so clarifying the law that the excise tax on oil, adopted in 1932, may not be included in any trade agreement. They join in a protest against the inclusion of the petroleum excise taxes in the Venezuelan trade agreement as unauthorized by the Trade Agreement Act, as against the expressed intent of Congress, as not in accord with the purposes of the act, as damaging to a national petroleum conservation program, and as granting rebates in taxes to a few great corporations instead of concessions made to Venezuela. The Venezuelan agreement assumes that these excise taxes, which are a part of the internal-revenue law, are a part of the tariff law. They are not tariffs. When the Smoot-Hawley tariff bill was before the Senate, the domestic petroleum industry sought a tariff on petroleum imports. A tariff was denied them. The domestic petroleum industry is not listed as one of those industries receiving favorable treatment under the tariff laws of the United States. This is not because we did not want it. It is not because we did not seek such favorable legislation. We not only desired such legislation but used all reasonable methods of impressing that desire on Congress. Congress refused our request. That refusal was understandable at the time of the passage of the tariff bill. There was a great deal of opposition to placing a tariff on the importation of oil. That opposition came from a powerful source. A group well versed in legislative matters wanted to keep the channels for importation open. Through their efforts much confusion of the real issues resulted. They had already convinced many in Government that our domestic supply was in danger of immediate exhaustion, that the tariff would be passed on to the consumer, that the imported oil |