the ability of American producers to hold their domestic markets against foreign competition.

In his message to Congress the President states that due heed must be paid to the requirements of the various branches of the recovery program, such as the National Industrial Recovery Act.

This would appear to be a situation where careful investigation by an expert government body and the presentation of testimony by interested parties would be highly important.

At this point, may I incorporate in my statement the following resolution adopted on March 3 by the board of directors of the Chamber of Commerce of the United States, after consideration had been given to changes called for in the bill which is before you?

The board of directors of the Chamber of Commerce of the United States again emphasizes the importance of retaining in American tariff legislation the principle of flexibility; that is, adjustment of tariff rates by administrative authorities within limits prescribed by Congress for the purpose of maintaining a consistent tariff policy. The chamber, by referendum, has favored the creation of a tariff adjustment board to administer such adjustable rates. In connection with such modifications and with respect. generally to tariff making, the chamber favors close adherence to a policy of providing reasonable protection for American industries and agriculture subject to destructive competition from abroad and of benefit to any considerable section of the country. In the interest of promoting our overseas commerce reciprocal tariffs are commendable but they should be regarded as tariff instrumentalities that are secondary in importance, supplementing rather than replacing the more fundamental principles of protection and flexibility. The chamber from its early years has favored the maintenance of a permanent Tariff Commission. Such a commission provides opportunity for affected American industries and agriculture to make their views known on proposed tariff changes in advance of the effective date of such changes-a principle which we believe should at all times be embodied in our tariff legislation.

RECOMMENDATIONS

In closing, may I reiterate the three recommendations we have to make:

First, that in granting authority to make tariff changes in the interest of reciprocal tariff negotiations, the Congress write into the law the definite limitation that no rate be lowered to a point where American industry and agriculture shall be subjected to destructive foreign competition.

Second, that the flexible provisions of the tariff act be maintained, embodying a basic controlling formula laid down by the Congress, according to which shall be determined the adequate protective level at which individual tariff rates shall be set.

Third, that through a tariff-adjustment board or other instrumentality, and in advance of such board making its recommendations to the President, there be full opportunity for American businesses likely to be affected by contemplated reciprocal tariff or other tariff changes to present testimony as to the incidence upon their respective enterprises of such changes.

Finally, may I say that the above-expressed attitude on this bill is not one of antagonism; rather, it is one of a desire to put forward some suggestions which, in our opinion, would make the proposal more in keeping with reasonable coordination of our national and our international interests.

Mr. HILL. You are favorable to the proposition of reciprocal tariff agreements?

Mr. FARRELL. Yes, sir.

Mr. HILL. As I understand you, you think the power to negotiate those reciprocal agreements should be lodged in a tariff-adjustment board rather than in the President of the United States?

Mr. FARRELL. So that the matter can be carefully considered, as in the recommendations made to the President.

The CHAIRMAN. As I understood you, this advisory tariff-adjustment board would do no more than furnish the President certain facts. It seems to me the power would still be left to the President. Mr. FARRELL. Exactly.

Mr. HILL. Of course, the Tariff Commission is fully authorized and fit to do that very thing now?

Mr. FARRELL. Yes.

Mr. HILL. It has been brought out here that it requires a great length of time frequently for the Tariff Commission to get the information which is required of it. What reason have we to expect that a tariff adjustment board could get those facts more promptly than the present agency, the Tariff Commission?

Mr. FARRELL. They would have to come to an early conclusion after listening to the statements of people who were interested. In other words, they would have to put their judgment at times against the judgment of other people pro bono publico-for the benefit of the public.

Mr. HILL. But they might have to consult other sources of information and accept the testimony of people peculiarly interested in the particular industry?

Mr. FARRELL. Yes; to get both sides of the question.

Mr. HILL. I do not know, but I assume probably the Tariff Commission avails itself of all of those sources of information.

Mr. FARRELL. I suppose that Mr. O'Brien could explain that situation better than I. I am not in any way antagonistic to the Tariff Commission. It might be that you could rehabilitate or rejuvenate the Tariff Commission into a quick-acting body. I think that Mr. O'Brien will agree with me that it does take an inordinate length of time to arrive at the facts.

Mr. O'BRIEN. Is this not due to the law, the cost of production theory, which takes that time?

Mr. FARRELL. I know.

Mr. O'BRIEN. You cannot send a troop of men to the coast of Siberia to find out how much it costs to raise tuna fish, and do that quickly.

Mr. FARRELL. I know that.

Mr. HILL. I understand you have a rather comprehensive plan in your mind as to tariff reformation or revision of the tariff policy. It is not limited simply to the purposes of this particular bill. În other words, you talk about the flexible provision and the administration of the policy of the tariff as expressed in that particular provision, also, in addition to the reciprocal trade agreements feature.

Mr. FARRELL. My mind covers a wide range on that question, Mr. Hill. Take, for instance, the question of our relations with Canada. Our business with Canada since Canada entered the Ottawa pact-I mean the business of the country-has fallen off tremendously. We bring into the United States $45,000,000 to $50,000,000

45571-34-10

worth of newsprint every year, and it comes in on the free list. Of course, you have to be pretty delicate, you know, when you talk about the possibility of any duty on newsprint. It is one of these glorified things that is kept in a hermetically sealed container. It must not be touched.

Mr. TREADWAY. Did not Mr. Cannon have a little experience in connection with that matter, sir?

Mr. FARRELL. Anyway, perhaps the word "threat" is a hard word to use, but I think that if the Canadian Government got the impression in a diplomatic sort of way that we would like to put a duty on newsprint, some of these countervaling duties would come off.

For instance, take the steel products. The average duties on steel, you know, are infinitesimal. Rails are $2.24 a ton, and all that sort of thing, while in Canada they are $11.20. There is any quantity of stuff they do not make in Canada for lack of material or one thing and another. Yet they collect this enormous duty against the United States, and then the British material comes in free of duty. That is one of the results of the Ottawa agreement.

Then again, I should think that a little persuasion might result in Japan taking a little more cotton, instead of cutting down her imports of cotton from us to 50 percent, as against 65 percent or 70 percent, if we would say something about the 90 percent of their exports of raw silk to this country. We might perhaps use a little ingenuity there.

And you can travel around the whole world and find in every place an opportunity to do something that will increase the trade of this country.

Mr. HILL. But now let us get down to the formulas that must be conformed to in order to bring about these reciprocal agreements. You say that the flexible provisions of the tarif act should be maintained, embodying a basis for a controlling formula laid down by the Congress, in accordance with which shall be determined the adequate protective level at which individual tariff rates shall be set. Now, I would just like to have you tell me what you mean by such a formula.

Mr. FARRELL. Well, at the present time we have a formula that is more or less a method for ascertaining the cost of production abroad and the cost of production here, and all that sort of thing, but I do not believe we can go on with that kind of a formula. We have got to take the situation as it confronts us from day to day, and take care of the business of the country.

Mr. HILL. Of course, I take it that this formula, if it is being laid down by Congress must be a more or less permanent proposition; that is, Congress would not legislate at very frequent intervals in establishing these formulas?

Mr. FARRELL. Well, I should think perhaps it might be carried on for 2 years, or possibly 3. I think that the way the world is moving at the present time it would be better to make it every year. Mr. HILL. Let Congress establish each year a formula?

Mr. FARRELL. Yes.

Mr. HILL. Below which we will say rates cannot be lowered in negotiating these reciprocal agreements?

Mr. FARRELL. Yes.

Mr. HILL. Would not that be quite a handicap to the ministerial officer or officers negotiating and carrying out the power to negotiate these reciprocal agreements?

Mr. FARRELL. I think that the ministers, as you might call them, are under instructions from Congress as to what to do. They would probably have to deal with it in a fair sort of way. We had a great panacea not long ago that was going to revive the business of the world, and I admire the gentleman who proposed it so much that I do not like to mention his name, but we were going to have a horizontal reduction in tariffs all over the world, and that was going to restore the equilibrium of the world. What did that mean on 300 percent duty on lard, for example, in Germany?

Mr. HILL. You would practically have to establish a minimum rate, I take it, for each commodity that is dutiable?

Mr. FARRELL. Yes, sir.

Mr. HILL. That is about what your formula would require?

Mr. FARRELL. Yes. And, of course, it would not be a very difficult job, because 63 percent of the stuff in the tariff is on the free list.

Mr. HILL. Of course, in this reciprocal provision we have and also in this bill before the committee, there is a range of 50 percent up or down.

Mr. FARRELL. Yes.

Mr. HILL. Which, in a measure, conforms to perhaps your suggestion of formula?

Mr. FARRELL. Practically.

Mr. HILL. In other words, you say you cannot go below 50 percent, below the present dutiable rate, and you cannot go more than 50 percent above that rate?

Mr. FARRELL. I think that is one of the most effective things in the tariff.

Mr. HILL. Now, you have got flexibility there. There is where flexibility is. If you establish a formula of a minimum rate, for instance, on each commodity

Mr. FARRELL (interposing). You could do it by percentages, or you could do it specifically.

Mr. HILL. The flexibility would be all in one direction.

Mr. FARRELL. It could easily be done specifically or done by percentages.

Mr. HILL. It rather occurs to me, in following your statement, that this matter of establishing formulas is more or less an impractical proposition from a legislative standpoint.

Mr. FARRELL. It seems a little involved.

Mr. HILL. I think I understood you that in this flexibility, in this present flexible provision of the tariff act, you would confer additional authority to transfer from the free to the dutiable and from the dutiable to the free list?

Mr. FARRELL. Yes.

Mr. HILL. And from the dutiable to the free list?

Mr. FARRELL. Yes, sir.

Mr. HILL. Would you do that also as to the reciprocal agreements, the powers conferred to negotiate reciprocal agreements?

Mr. FARRELL. No; that could not be done. If you enter into an agreement with a country you cannot change it overnight.

Mr. HILL. Yes; I understand that, after the agreement is once made; but in making the agreement?

Mr. FARRELL. Well, you would have to get your navigation, so to speak.

Mr. HILL. I appreciate the fact that you could hardly induce a foreign country to consent to going on a dutiable list when it is on a free list, when that country is exercising its free will as to whether or not it enters into an agreement. There has been some suggestion here that in this bill before the committee there ought to be an additional provision permitting the President to transfer commodities from the dutiable to the free list and vice versa.

Mr. FARRELL. I think also that it ought to include putting a duty on articles that are on the free list. You probably would not do much there. All that you would have to do would be to talk about it.

Mr. HILL. As a practical matter you could transfer from the dutiable list to the free list, but probably you could not do it the other way, from the free list to the dutiable?

Mr. FARRELL. No.

Mr. HILL. These three suggestions you summarize in the last phase of your statement here, all are interrelated; they bear one upon the other very intimately.

Mr. FARRELL. Yes.

Mr. HILL. Your recommendation no. 1 is that in granting authority to make tariff changes in the reciprocal tariff negotiations, Congress should write into the law itself with respect to limitations, that no rate shall be lowered to a point where American industry and agriculture shall be subjected to destructive foreign competition. Mr. FARRELL. That means dumping.

Mr. HILL. That language is general. That is probably about the language used in the act. Now, somebody has got to construe that and interpret it; say whether it does go below that or not.

Mr. FARRELL. Of course, that means dumping, Mr. Hill.

Mr. LEWIS. Would you substitute that principle for the 50 percent limitation?

Mr. FARRELL. Which principle?

Mr. LEWIS. The principle that the reduction of duty should not exceed the point where it leaves American industry in safety and stability?

Mr. FARRELL. No; I would not do that.

Mr. LEWIS. You would not use the 50 percent limitation?

Mr. FARRELL. I would use them both.

Mr. LEWIS. Just another question, Mr. Hill. I find from a glance here at the law that the duty on razor blades is 308 percent, while the razor-blade industry of the United States exports more razor blades than are probably made outside of the United States.

Mr. FARRELL. You say the duty is 300 percent.

Mr. LEWIS. That is what I find in this report here.

Mr. FARRELL. On razor blades?

Mr. LEWIS. The combination of the specific and ad valorem duty. I may not be able to get to it quickly, but I was told that it is reported at 308 percent. And there are many duties as high as that.