promptly; that at the time this situation began to develop, we might have accomplished some very desirable results at that time? Mr. REED. As the gentleman suggested to me, that is water over the dam. Mr. COOPER. The fact we were not able to accomplish anything along that line at that time is no reason why we should not make an effort now. Mr. REED. Here is what happened; England learned her lesson during the war; England is never again going to be caught in the same position as she was then; where she can become and remain more or less self-sustaining, she is not gojing to enter into any trade agreement that is going to impinge on her program. Mr. COOPER. Can it hurt anything for us to try? Mr. REED. I do not know whether it can hurt or not; I will tell you frankly, from past experiences which we have had in international conferences, I think we came out at the little end of the horn. Mr. DICKINSON. Do you imply that Americans are not good traders? Mr. REED. They have been very poor international traders in the past. Mr. TREADWAY. How can we negotiate these treaties, in view of the fact that we are bound hand and foot as a result of the trade agreements we already have? Mr. DICKINSON. I was not familiar with the fact that we had any of these trade agreements. Mr. TREADWAY. I am talking about the most favored nation treaties. Mr. DICKINSON. That subject, sir, can probably be developed a good deal more effectively by Mr. Sayre when he appears before you. The barrier which the most favored nation clause places in the way of these agreements is, by no means, so severe as it might seem at first sight to be. Mr. REED. Another point I have in mind all the time is that, naturally, with a tremendous surplus of cotton which we will seek to dispose of in foreign markets, we will have to do a vast amount of importing of something that is on the dutiable list in order to derive any benefit from the arrangement. Mr. DICKINSON. The problem about disposing of the cotton is not nearly as severe as it is in connection with disposing of some of these other things. The demand for the cotton has held up, in some respects quite well, but due to the lack of purchasing power of these nations that have not been able to pay for the cotton in anything like the figure that is necessary to give proper remuneration to our cotton producers, those producers have not realized on their product. I would also like to say that Mr. Sayre called my attention to the fact that the Ottawa Agreement does not cover cotton; that the cotton program of Great Britain is apart from the provisions of the Ottawa Agreement. The CHAIRMAN. The witness mentioned a lack of purchasing power of foreign countries in trebling our exports of raw cotton; is not that also true of the manufacturers of cotton? Mr. DICKINSON. Yes. The CHAIRMAN. If they had larger purchasing power, they could purchase raw cotton as well as manufactured cotton. Mr. DICKINSON. They could purchase more automobiles and buy road-building machinery, and that gives me an opportunity to empha size what I might call indirect benefits that would result from reestablishing the currents of international trade, that it would react in increased purchasing power and prosperity of these countries, insofar as they could sell their products, which would enable them to take more of our products. Mr. REED. I would be interested to have you develop this idea, because I have never gotten away from the thought that, when it was possible to produce articles in our own country and sell them, we should do so. I have always had this idea, that when it is possible for us to produce articles in our own country and sell them to people in our own country or to exchange them for things manufactured in this country we should do so; that the pay roll, after all, was the spendable income of the nation, and that whenever you go into the foreign countries to buy things and transfer the pay roll over there, and that, in order to have it worth as much to this Nation in spending power, it is necessary to develop two markets over there in the place of the one here; the thing that pays the merchant, landlord, doctor, and lawyer and that which supports the church and school, after all, is the pay roll of this country. Mr. COOPER. Will the gentleman yield in that connection? Mr. REED. I want to be courteous, but I want to get the reaction of the Secretary. Mr. DICKINSON. Might I answer that question? You do not leave the pay rolls in the other country, because if an American wants to buy leather in Austria, the Austrian has to buy American cotton or American automobiles, or American shoes, or road-building machinery, in order to get that leather back, and the American money goes into the pay roll of the American industry or the American business that makes the American goods with which we pay for the foreign products. Mr. REED. I am talking about things that we can, with reasonable protection, produce here; even if they are produced inefficiently here, then you have the benefit of both pay rolls. Mr. DICKINSON. Not necessarily, if the article is inefficiently produced. Mr. REED. I mean inefficient as described by the witnesses, that can not exist without protection. Mr. DICKINSON. It is sometimes difficult to know where to draw the line. The major thing is to so spend your money so that it will put the largest number of American to work. If the way to do that is to spend money on articles abroad, that will call for the larger production in this country of goods that we are in a particularly advantageous position to produce, then we are contributing more to the national welfare by buying goods, and sending those goods we produce abroad. Mr. REED. Would it be asking too much of your great Department to furnish a list for the record of such a situation as you describe? Mr. DICKINSON. The situation is one that represents analyses as applied to information; I will see what can be done. Mr. REED. I will appreciate it very much. Mr. DICKINSON. I would like to make one further statement in response to your suggestion; in the long run, the greatest wealth accrues from raising and buying what we can at home. Of course, if we apply that principle to the family we see what happens. Mr. REED. I agree with you. 45571-34- -15 Mr. DICKINSON. You would not be so well off spending your time raising string beans; the same principle would apply. Mr. REED. No, I do not think so. Mr. COOPER. I want to call attention, in that connection, to some information contained on page 25 of the Economical Analysis of Foreign Trade in the United States, in relation to the tariff, especially on the point of establishing factories abroad, which I understood the Secretary to state that in his opinion that practice was very largely brought about by the erection of foreign-trade barriers, as revealed by the letter which he received yesterday. Mr. DICKINSON. Yes. Mr. COOPER. The report states: "According to preliminary figures, compiled by the Department of Commerce in connection with the preparation of the report on foreign branch factories, in response to Senate Resolution 138, American branch factories in foreign countries represent an investment of American capital in the amount of about $1,220,000,000 and foreign employment of about 330,000 persons and employment of Americans abroad of about 1,200. These figures are subject to the following reservation. They do not include enterprises with investments of less than $50,000, the minimum prescribed by Senate Resolution 138; they do not include enterprises not coming within the definition of branch factories, like paper mills in Canada, packing plants in Latin America, mining enterprises in various parts of the world, sugar mills, etc." Then this vast amount of American capital and the corresponding number of people employed, and the purchasing power that follows that employment, have been transferred from this country to other countries of the world, and in your opinion it is more largely due to the erection of trade barriers by other countries which have, in a sense, made it necessary for these Americans to pursue that course? Mr. DICKINSON. That is my opinion, sir. Mr. SHALLENBERGER. Could you give a statement showing the growth of this business? Mr. DICKINSON. I will see once more if it is possible to present that material. Mr. SHALLENGERGER. And whether it has come about in recent years, if you can give that. Mr. DICKINSON. There have been various developments; the War had something to do with it; the War caused the building of some of the plants. Mr. SHALLENBERGER. Can you cover the last 10 years? is. would you mind run Mr. DICKINSON. I do not know how full the information we have Mr. REED. As far as the records go, 1910 or 1912, before the war. Mr. DICKINSON. We will be glad to see what can be done. Mr. MCCLINTIC. As I view this entire situation, this country is confronted with an emergency, and it is necessary, in order that we may find a market for that which we produce to provide some kind of quick action, or some legislation which will enable us to have quick action. Mr. DICKINSON. Yes, sir. Mr. MCCLINTIC. There are many phases of the tariff that I do not understand, but the thought comes to me that if America and the other nations of the world can produce cotton, and they reach the point where they produce more than they can consume, they will probably put an importation duty against certain products that we now export that are on the free list. If that is true, I would like to have your opinion as to the advantages or disadvantages that might be incurred if this legislation was widened to the extent that somebody would have the power to place a tax or duty on goods imported that are now on the free list. Mr. DICKINSON. Do you mean in addition to the powers which now exist under sections 336 and 338? Mr. MCCLINTIC. If I understand correctly, at the present time sections 336 and 338 do not apply to articles that are on the free list. Mr. DICKINSON. There is section 3 (e) of the National Recovery Act, which gives to the President the power to impose any import restrictions, in the form of excises or otherwise that may be necessary in order to permit the carrying out of the policies of the Recovery Act. Mr. COOPER. It has been my contention all along with reference to this bill that it is contemplated and intended that articles on the free list may enter into the negotiations? Mr. DICKINSON. Oh, yes. Mr. COOPER. That the President may say to a Nation: "You have certain articles now on the free list". Mr. DICKINSON (interposing). Yes. Mr. COOPER (continuing). "In order for them to be continued on the free list, we want to make some trade with you about some articles being exported from our country to yours." That has been my understanding all along of the purpose of the bill. Mr. DICKINSON. My understanding of this bill is that it permits the doing of that. Mr. COOPER. I understood the statement to be made that Dr. Sayre would suggest some qualifying amendment. Mr. MCCLINTIC. What I had in mind was to find out whether or not we retained sufficient power to bargain on articles now on the free list, either in this legislation or in some other existing law. Mr. DICKINSON. We are not giving any power away by this bill; it is a question of how much power we are creating. I agree with the gentleman from Tennessee that we have the power here to bind the free list; that is to say, we will not take an article off the free list; we will keep it there, "provided you give us some concession.” Mr. McCORMACK. You have not that power in this bill. Mr. DICKINSON. No, sir. Mr. McCORMACK. Of course, under the provisions, there are two limitations; one with respect to increasing the existing rate or decreasing it by more than 50 percent, and second, you cannot transfer from dutiable to free or vice versa. Mr. DICKINSON. No, sir. Mr. McCORMACK. The only way you can do it is under the second aspect of the bill, under the powers granted in subparagraph (b), on page 3, starting at line 9, referring to import limitations, prohibitions, charges, and exactions other than duties. All you can say to another country is, "We will limit you by quota unless you agree to certain things." Do you advocate that? When you do that, the State Department and the Federal Government are going to be accused of not acting in good faith. Mr. DICKINSON. I do not understand that point. Mr. MCCORMACK. The only way you can really get any benefits in the main I say, in the main-in my opinion, out of the commodities on the free list is by imposing import limitations, prohibitions, charges, and exactions other than duties. Mr. DICKINSON. Would you regard it as desirable that the bill should contain a provision authorizing an agreement to retain an article on the free list? Mr. McCORMACK. That is what I wanted you to answer; I am merely listening to the evidence so that I will be able to form an opinion. Mr. MCCLINTIC. The thought comes to me that we have to go into the open market and bargain for trade; we ought not to be restricted in any way; in a business institution, the more articles it has to offer to the public, or to those who deal with it, the better it can trade. Mr. DICKINSON. As was suggested a moment or two ago, Mr. Sayre will, I believe, present an amendment covering the point in question; if it is thought that the present bill is not broad enough to cover it, that is to say, authorizing the President to agree with a foreign country to keep an article on the free list that is there at the present time. Mr. MCCLINTIC. The time may arrive in the next year whereby these other nations will put an importation duty against cotton, which now comes in free. Mr. DICKINSON. Yes, sir. Mr. MCCLINTIC. In view of that situation, the thought comes to me that we ought to have sufficient authority to bargain along the same lines. Mr. DICKINSON. No doubt we should have all of the bargaining power that seems necessary in order to accomplish what we have in mind. Mr. MCCLINTIC. If it becomes necessary to raise the duty, in order to bring about the desired results, we ought to have that covered. There are many nations at the present time shipping various commodities into this country which come in free, and at the same time they are buying other kinds of merchandise from other countries that ought to be bought from us. Mr. SHALLENBERGER. Do you mean that the President ought to have the power if an article is on the free list to include it on the dutiable list? Mr. DICKINSON. I would not restrict the President at all. Mr. MCCLINTIC. That is the point; in this bill he could not do that. Mr. DICKINSON. He could not shift from the free list to the dutiable. Mr. McCORMACK. The act refers to the proclamation increasing or decreasing the existing rate; who is going to prescribe the rate? Mr. DICKINSON. If he were given the power to transfer from free to dutiable, this does not give any such powers. Any amendment to accomplish that result would go beyond the amendment Mr. Sayre has in mind. Mr. McCORMACK. You do not understand what I have in mind. There are various aspects which you have to consider, from the emergency angle and from its constitutional aspects. I may |