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Now, California is interested in that. If it is all done quietly, down in a department, we do not know what is going on, and we cannot find out. If we were to get letters from constituents asking us for information, then we would have to say that we have tried but we cannot find out what is going on. There is the difficulty in this secret arrangement idea, putting this power in some spot where the whole thing can be done in secret. There is a feeling, evidently, that all this should be done with great secrecy. Otherwise they might stir up a lot of feeling. Well, if it is fair to Americans, if what is being done is fair to Americans, it ought not to stir up any feeling.

Mr. SAYRE. I do not think it is fair to say that it will be done in secret. In the first place, let me say this

Mr. REED. I beg your pardon. I did not mean to cast any reflection.

Mr. KNUTSON. That is no reflection. That is an observation.

Mr. REED. I do not intend to cast any reflection. But you understand what we are vitally interested in?

Mr. SAYRE. Of course. I think the American producers have a right to feel that their interests should be protected. The fact of the matter is that just the opposite from what you have been suggesting as to secrecy is taking place. American representatives of producers, and so on, are coming today to the State Department, to the Department of Commerce, to other governmental agencies, making their views known. The State Department has again and again sought information from producers. Nothing is being put across secretly to the disadvantage of American producers. We try to give every opportunity to those interested. The State Department exists, in my conception, to promote American interests, not to injure them. As a matter of fact, in none of the European countries, so far as I know, is there any machinery by which producing interests get formal representation in the bargaining that is going on. far as the United States is concerned, the State Department and the Department of Commerce and the other departments, not only offer free access to manufacturers and producers, but in many instances go out and seek their advice, ask them for their views, before any action is taken.

Mir. REED. Mr. Secretary, of course, I must not consume too much of your time, I realize, but I am interested; for instance, suppose

this plan had been in effect in 1914 and they had been trying to decide at this time under just such an arrangement what industries were efficient and which were inefficient and whether it was to our advantage not to endeavor to manufacture certain things here, but rather to buy them over there, and sell something else in its place. Take the chemical industry in 1914. It would have been declared inefficient then, because it only employed something like 528 persons. Yet today that has become a highly efficient industry, merely with a little encouragement in this country. Now, it is one of our very essential industries, if we are going to be at all self .contained.

Many industries that are trying to get a start in this country today, if they are classed as inefficient now, may die, whereas if they are encouraged, 5 or 10 years from now might become major industries. I can mention dozens of those.

Mr. SAYRE. Certainly. I think all those are problems which require the most careful and intensive study. You mentioned the

But so

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chemical industry. There, of course, there enters in military necessity or the need during times of war. That is one vital element, one factor that has to be considered and carefully considered, and it is for those reasons that it is impossible to exercise a snap judgment with respect to any proposed trade or plan and say this is the kind of thing that ought to be done.

Mr. REED. I am not going to take up any more of your time. There are so many things in the discussion of which I could usurp so much of your time. I am through at this time.

I Mr. JENKINS. I would like to ask Mr. Sayre whether he has ever given any consideration to this probability. Do you not think that whenever you commence to make these agreements through the State Department the ultimate result will be that the big nations of the world will join these compacts, and the little nations will be left out of it, and out of that situation will grow up a system of reprisals and enmities that you cannot handle?

Mr. SAYRE. I do not, sir. The making of agreements will depend altogether upon economic considerations of one kind and another, as indicated by intensive studies of the various commodities. It will be the commodities which countries produce, not the size of the countries, which will determine the making of these trade agreements.

Mr. JENKINS. I know. But I have already heard discussions that involve this proposition that I am trying to advance, which is to the effect that you will be called upon to determine the question from the standpoint of policy, for instance, that it would be wise to give Japan this consideration or Russia that consideration?

Mr. SAYRE. Political considerations will not enter in, as I see the picture. It will be commercial and economic considerations.

Mr. JENKINS. That is the question that I was next going to ask you.

Then let me ask you just another question in that respect. Is not this the first time in any tariff legislation or proposed tariff legislation when the State Department has been given the responsibility with reference to tariff negotiations? Mr SAYRE. This legislation, sir, does not give it to the State Depart

It gives it to the President, and the President may turn to the Tariff Cominission, he may turn to the Commerce Department, he may turn to the State Department, he may turn to any governmental agency to assist him in the carrying out of this legislation.

If I may add, sir, section 338 of the present Tariff Act of 1930 gives to the President absolute uncontrolled power in cases of discrimination made against the commerce of the United States to raise rates to any extent which he sees fit within the 50-percent limit, or even to go to the extent of shutting out commodities, as he sees fit, without control by Tariff Commission recommendation. It is the President alone who is given that power by existing legislation.

Mr. JENKINS. I dare say, though, Mr. Sayre, that never before in the consideration of any tariff bill have we had so much apparent interest manifested by the State Department. I do not find fault with that, but I have always been proud of our State Department, and I am afraid now that if this continues the State Department is going to supplant the Department of Commerce or the Commerce Department is going to move over in to the State Department.

Mr. SAYRE. Not for a moment, sir. May I say that there is the closest cooperation between the Department of State and the Department of Commerce, but that their functions are set and fixed by law enacted by Congress; this proposal does not mean for one moment that the State Department will absorb the Department of Commerce or that the Department of Commerce will absorb the State Department. It will mean the closest kind of cooperation, yes; but not any obliteration of the functions with which each one is charged by law.

Mr. JENKINS. Let me ask you another question with reference to the constitutionality of this act. I am not going to go into that

I except in this question. You have made a very comprehensive statement here. I have seen in the record of the hearings before this committee at different times on tariff matters that briefs have been filed by other lawyers, perhaps of equal distinction with yourself. I have read them. I am now going to ask you a question to see if you agree with me-- probably you will not.

Mr. SAYRE. I trust I will, sir.

Mr. JENKINS. Through all these decisions there runs a yardstick, a definite yardstick, to do a definite, specific thing. In this bill, the yardstick is absent. If the yardstick is not absent, here is one thing that is present. This bill provides to do a great many different things, to bring us out of the emergency, to regulate commerce, to increase international amity, and to do a great many different things. Heretofore in the other bills the one certain thing was set out to be done and one specific yardstick was applied.

Now, do you find that difference in this bill?

Mr. SAYRE. I find this, sir. In the present bill the language of the yardstick provides that "the President, whenever he finds that any existing duties or other import restrictions are unduly burdening and restricting the foreign trade of the United States", or that the purpose of the act "will be promoted by the use of the powers” conferred by the act, is authorized to do specified things. I find this yardstick no whit more vague or less descriptive than the yardstick employed, for example, in the Embargo Act of 1794, of which I spoke yesterday, where you will remember the language of the act was that the President of the United States is authorized and empowered to take action "whenever in his opinion the public safety shall so require. That does not sound like a very definite yardstick, by which to lay an embargo, that is, to prevent the export of commodities from American ports under such regulations as the circumstances of the case may require, and to continue or discontinue the embargo whenever he shall think proper. That does not sound like a very definite yardstick.

Mr. JENKINS. In all those cases, Mr. Secretary, there was a war or the imminence of war or we were just coming out of war. But today we are a great, complex, economic, and commercial Nation. I just offer the prediction, and I hope none of us will live to see it, and I hope we all live long enough to see it if it does occur, that the great State Department is going to be drawn down from its pedestal and is going to be intermixed with the Commerce Department; that if we pass this bill we are going to find that our State Department has become involved in all kinds of imbroglios and reprisals and we will be glad for the day when we will repeal the bill.

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Mr. SAYRE. If you object to my quoting from the Embargo Act of 1794, which it seems to me is particularly pertinent on the question of constitutionality, because it was passed at a time when the framers of the Constitution were still on the scene and acting in the scene, then I would refer you, sir, to the legislation of 1930, now existing, section 338. What is your yardstick there? The President, "when he finds that the public interest will be served thereby”, shall be proclamation specify and declare new or additional duties. He has the right to fix duties at any point which he decides is proper within a 50 percent limit whenever he finds as a fact that a country, “discriminates in

“ fact against the commerce of the United States directly or indirectly.' And who can say what discrimination consists of?

Mr. JENKINS. Your own great President, I think, saw this condition plainly when he was a candidate for office, because in his speeches he said in many places that he viewed tariff revision with a great deal of interest, that it was a very complex matter, and that we should have these commissions to make fact-finding excursions, and, as I remember his statement, that it should all be done absolutely free from any Presidential or Executive restriction. I wonder if he has seen the light, or what has happened to him in that respect?

Mr. SAYRE. You mean to inquire whether in this bill there should ve written in the 50-percent restriction or the restriction that goods shall not be transferred from the free to the dutiable list? Is that what you refer to, sir?

Mr. JENKINS. What I had in mind, Mr. Secretary-and this is the last question is that the President in his campaign apparently indicated that he was fearful of any program that would be arbitrary, as this bill seems to be. He thought that any tariff changes should be brought about first through investigations of a fact-finding commission, and I remember particularly this one sentence that he used, that it should all be free from Presidential or Executive interference. Here this bill intends to give him authority to conduct these negotiations, upon the basis of the assumption that the execution can be made by the Executive instantaneously or quickly.

Mr. ŠAYRE. I think there is one point there that I would like to correct, and which I am very glad you brought forward, sir. If this bill is passed, it is not the intention of the administration suddenly to snap into a lot of bargaining agreements. What is needed is the ability to give to foreign nations the assurance that what is agreed to in the bargains can be put into effect with promptness and reasonable certainty. It does not mean that, of you pass this bill, overnight the President will suddenly sign a lot of agreements, or even that he will do so within the next ensuing few weeks.

As the President said in his message very clearly:

I would emphasize that quick results are not to be expected. The successful building up of trade without injury to American producers depends upon a cautious and gradual evolution of plans.

Mr. McCORMACK. Doctor, I assume that some effort will be made to stabilize the dollar, the franc, and the pound as a necessity in order to carry on world trade?

Mr. SAYRE. I do not feel that I am qualified to answer that question, sir. I think we should refer that to the Treasury Department for an answer.

Mr. COCHRAN. Mr. Chairman, I desire to ask a question. I take it that the passage of this bill does not necessarily depend upon its constitutionality. I do not desire to enter into that matter now, but at this point in the hearings I should like to have inserted the opinion of Chief Justice Taft in the case of J. W. Hampton, Jr. & Co. v. United States, which was reported at No. 242 October term, 1927.

Mr. COOPER. Will the gentleman yield? Is not that decision covered in the brief that the witness presented here yesterday?

Mr. COCHRAN. I am referring to the opinion given at No. 242 October term of 1927 of the U.S. Supreme Court. I wanted the entire opinion in and not an excerpt.

The CHAIRMAN. Without objection, the opinion will be inserted, if it has not already been included in the record.

(The opinion follows:)

SUPREME COURT OF THE UNITED STATES-NO. 242, OCTOBER TERM, 1927 J. W. Hampton, Jr. & Co., petitioner v. The United States. On writ of certiorari

to the United States Court of Customs Appeals (April 9, 1928)

Mr. Chief Justice Taft delivered the opinion of the court:

J. W. Hampton, Jr. & Co. made an importation into New York of barium dioxide which the collector of customs assessed at the dutiable rate of 6 cents per pound.

This was

cents per pound more than that fixed by statute. (Par. 12, ch. 356, 42 Stat. 858, 860.) The rate was raised by the collector by virtue of the proclamation of the President (45 Treas. Dec. 669, T.D. 40216), issued under, and by authority of, section 315 of Title III of the tariff act of September 21, 1922 (ch. 356, 42 Stat. 858, 941), which is the so-called “flexible tariff provision.” Protest was made and an appeal was taken under section 514, part 3, Title IV (ch. 356, 42 Stat. 969–70). The case came on for hearing before the United States Customs Court. (49 Treas. Dec. 593.) A majority held the act constitutional Thereafter the case was appealed to the United States Court of Customs Appeals. On the 16th day of October 1926 the Attorney General certified that in his opinion the case was of such importance as to render expedient its review by this court. Thereafter the judgment of the United States Customs Court was affirmed. (14 Ct. Cust. App. 350.) On a petition to this court for certiorari, filed May 10, 1927, the writ was granted June 6, 1927. (274 U.S. 735.) The pertinent parts of section 315 of title III of the tariff act (ch. 356- 42 Stat. 858, 941 U.S.C., Tit. 19, secs. 154, 156) are as follows:

“Sec. 315 (a). That in order to regulate the foreign commerce of the United States and to put into force and effect the policy of the Congress by this act intended, whenever the President, upon investigation of the differences in costs of production of articles wholly or in part the growth or product of the United States and of like or similar articles wholly or in pert the growth or product of competing foreign countries, shall find it thereby shown that the duties fixed in this act do not equalize the said differences in costs of production in the United States and the principal competing country, he shall, by such investigation, ascertain said differences and determine and proclaim the changes in classifications or increases or decreases in any rate of duty provided in this act shown by said ascertained differences in such costs of production necessary to equalize the same. Thirty days after the date of such proclamation or proclamations, such changes in classification shall take effect, and such increased or decreased duties shall be levied, collected, and paid on such articles when imported from any foreign country into the United States or into any of its possessions (except the Philippine Islands, the Virgin Islands, and the isalnds of Guam and Tutuila): Provided, That the total increase or decrease of such rates of duty shall not exceed 50 percent of the rates specified in title I of this act, or in any amendatory act.

(c). That in ascertaining the differences in costs of production, under the provisions of subdivisions (a) and (b) of this section, the President, in so far as he finds it practicable, shall take into consideration (1) the differences in conditions in production, including wages, costs of material, and other items in costs of production of such or similar articles in the United States and in competing foreign countries; (2) the differences in the wholesale selling prices of domestic and foreign articles in the principal markets of the United States;



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