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RECIPROCAL TRADE AGREEMENTS

WEDNESDAY, MARCH 14, 1934

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,

Washington, D.C. The committee met at 10 a.m., Hon. Samuel B. Hill presiding. Mr. Hill. The committee will come to order.

Mr. TREADWAY. Mr. Chairman, before the witness proceeds, ! would like permission to insert one or two letters in the record, and a little further information I have of how the industrial people in New England regard this bill. I have a letter from the Prophylactic Brush Co. in Massachusetts and one or two others I would like permission to insert in the record.

Mr. CULLEN. In that connection I have some at my office I would like to insert. I did not call by my office this morning, or I would have them now.

Mr. COOPER. Mr. Chairman, I assume all of these are directly on this particular bill.

Mr. TREADWAY. Oh, yes, indeed. I only have three in my hand just now.

Mr. Hill. Mr. Cullen also has a few letters of the same import he has asked to be inserted in the record, but as acting chairman I would like to request that we do not put in too many letters and telegrams. I have a lot of letters and telegrams myself.

Mr. TREADWAY. As I say, I have only 3 now, and I will limit it to 5.

Mr. Hill. Without objection those letters may be inserted in the record, Mr. Treadway. (The letters referred to are as follows:)

FLORENCE, Mass., March 12, 1934. Hon. ALLEN T. TREADWAY,

Representative, Washington, D.C. DEAR REPRESENTATIVE TREADWAY: It is perhaps in order at this time for me, in behalf of the Pro-phy-lac-tic Brush Co., to bring to your attention how the toothbrush industry of the United States is being affected by foreign imports, mostly from Japan.

We estimate that in 1933 approximately 50,000,000 toothbrushes were sold in this country. Of this amount, approximately 13,000,000, or one quarter of the total consumption, were imported brushes, 95 percent of which were from Japan. Three fourths of the balance were made in two Massachusetts plants, namely our own and the plant of the DuPont Viscoloid Co. at Leominster, Mass.

You can, therefore, see how important it is for the welfare of Massachusetts employees that these imports be prevented. I might also add that these imported toothbrushes were landed in this country at the low cost of 142 cents per brush.

Perhaps the above few simple facts will aid you in determining what your position should be relative to tariff matters now pending. Yours very truly,

PRO-PHY-LAC-TIC BRUSH Co.,
WILLIAM C. BIRD,

Executive Vice President. 45571--34

445

-29

STEVENS LINEN WORKS, Webster, Mass., March 7, 1934.'

Hon. FRANK H. Foss,
House of Representatives,

Washington, D.C.

DEAR MR. Foss: At the moment, we are quite apprehensive in regard to the passage of the proposed present tariff bill which if executed might mean the elimination of our industry, as you know the largest in the town of Dudley. We are operating 100 percent under the N.R.A., which of course has greatly increased our cost. Any tariff reduction at this time would be almost disastrous.

At the present time, competition from Russia is almost more than we can stand, and I do not believe that our N.R.A. label would offset this murderous competition. We also find it very difficult to compete with other countries in towels, and what business we are now getting is entirely due to a reputation built up for years by quality.

I should appreciate any information you might give me in regard to the outlook, etc., and as I said above, I am especially interested at the present time in this tariff bill.

With kind regards, believe me, sincerely yours,

H. WADSWORTH CRAWFord.

BOSTON, MASS., March 13, 1934.

Hon. FRANK H. Foss,

House of Representatives:

We manufacture linen crash towels and toweling made from flax; employ 1,200. H. W. CRAWFORD.

Mr. HILL. The letters asked by Mr. Cullen, also, without objection may be inserted in the record.

(The letters follow:)

Hon. THOMAS H. CULLEN,

NEW YORK, March 12, 1934.

It is our

Member of House of Representatives, Washington, D.C. DEAR SIR: As you are aware, our international commerce has suffered severely during the past few years because of tariff and exchange restrictions. opinion that the reciprocal tariff powers to be given to the President under bill H.R. 8430 will help restore our foreign trade, and incidentally, give employment to a large number of our unfortunate citizens. Under the circumstances, we respectfully ask your favorable consideration of this measure.

Very truly yours,

MEYER, LYRA & CO., INC.,
HENRY MEYER, President.

A. M. CAPEN'S SONS, INC.,
New York, March 12, 1934.

Hon. THOMAS H. CULLEN,

Congressional Building, Washington, D.C.

DEAR MR. CULLEN: Confident that our foreign trade is necessary to improvement of domestic conditions, allow us to urge your favorable consideration of bill (H.R. 8430) which will permit negotiations by the President of reciprocal trade treaties with other nations.

Respectfully yours,

A. M. CAPEN'S SONS, INC.,
J. F. CAPEN, President.

Mr. HILL. The committee is honored this morning with the presence of Dr. Samuel Crowther, of Sunapee, N.H.

Mr. SAMUEL CROWTHER. Mr. Chairman, I thank you, but there is no "doctor." I have no degrees that would entitle me to that designation.

Mr. HILL. I will state this, Mr. Crowther, that the rule of the committee is that if a witness desires to proceed without interruption

to complete his statement, he has that privilege, and if you desire to claim that privilege it will be enforced.

Mr. SAMUEL CROWTHER. If you please, sir; I would very much like to have that privilege. I think we will get through faster and reach our objective much more directly if I may make my statement without interruption.

Mr. HILL. I will state in this connection some member of the committee may inadvertently ask a question, and if you yield of course you have waived your privilege, but you do not have to yield and nobody will take offense if you do not yield.

Mr. SAMUEL CROWTHER. If it is regarded as not being offensive by not yielding, I would frankly prefer not to yield.

Mr. COOPER. In order not to ask the gentleman to yield, I request now you speak out clearly so that we will all hear you.

Mr. SAMUEL CROWTHER. I have a very bad voice, and you will discover quickly that I am not a public speaker; and if you do not hear, will you say so.

Mr. HILL. That would not be a question in the sense we are speaking of.

Mr. SAMUEL CROWTHER. That would be a favor to me because there is no point in saying this over to myself.

Mr. MCCLINTIC. Just there, will you put into the record in what capacity you appear here?

Mr. HILL. Will you just give your name and address, and in what capacity you appear?

Mr. SAMUEL CROWTHER. I appear simply as an American citizen. Mr. MCCLINTIC. Do you represent any particular company having a retainer?

Mr. SAMUEL CROWTHER. I have no retainer from anybody. I represent no one and never had a retainer.

Mr. COOPER. I think it would be helpful to us if you would make a statement as to your qualification and experience, and your reason for appearing on this subject.

Mr. TREADWAY. Just do not be modest about it.

Mr. SAMUEL CROWTHER. That is rather difficult to do. I may say for the last 35 years I have been studying the economic and business structure of the United States and perhaps two thirds of the world, have been studying trade, and in the course of that time have acquired I think, some background and knowledge of this subject. Is that enough, sir?

Mr. TREADWAY. Have you not been a profuse writer on economic subjects?

Mr. SAMUEL CROWTHER. I have written a great many articles and books, yes.

Mr. TREADWAY. You need not do it now, but Mr. Chairman, I would like, in view of the questioning by Mr. Cooper, to have the witness insert in the record later a list of the books and articles he has written.

Mr. SAMUEL CROWTHER. I will say that mostly they are contained in Who's Who, except this last one, America Self-Contained, but I could not remember them off-hand, and I could not possibly remember the articles, but for the last six or eight years they have been in the Saturday Evening Post mostly.

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Mr. McCLINTIC. Are you an attorney?
Mr. SAMUEL CROWTHER. No, a writer.

Mr. Hill. Are there any further questions in a preliminary way; if not you may proceed, Mr. Crowther.

STATEMENT OF SAMUEL CROWTHER, OF SUNAPEE, N.H. Mr. SAMUEL CROWTHER. The bill before you to attempt to make a gain in our national economy by permitting the President to execute reciprocal trade agreements with foreign nations on his own initiative and responsibility raise large questions.

The first is whether any man should have unrestricted power over the life or death of any section of American industry and agriculture. The mere existence of that power would place all industry and agriculture under the direct control of the President.

The second question is, assuming that you granted all the powers asked and assuming that they were all exercised with supreme wisdom, would the results in trade, since America is self-contained, help or hurt the prosperity of the country? In other words, are we about to organize to chase a rainbow?

The third question is whether without first ascertaining the actual state of our international accounts, including international debts, it is possible to enter into any trade agreements without any danger of destroying the balance in our economy.

Let us take the second of these questions first. For then the first question may answer itself.

I have not had the advantage of reading the stenographic notes of the testimony that has been given to you, notably by the Secretaries of State, Agriculture, and Commerce, but in the newspaper accounts I have nowhere seen any reference to the need for bringing into this inquiry a most elementary piece of knowledge which we do not now have and without which is it footless to talk about foreign trade policy.

You have been told that international trade gets down to barter and that all credit instruments are only postponements of payment in goods, but you have not been told that these credit instruments and sundry payments must be taken into consideration if you are to. know what any balance in goods means. The international trade in goods is only part of the picture.

You are aware of the fact that the Government of the United States loaned very large sums for war purposes, and you are also aware of the fact that citizens of the United States loaned privately very large sums abroad. But you may not be aware that foreign citizens have bought immense amounts of American securities, even while their nations claimed that they could not pay their public or their private debts to us. And in addition to the ordinary trade in goods, on which we have excellent statistics, there are innumerable insurance, carriage, and other charges and remittances of such character and amount that, until we know the full total of our international transactions in money, we cannot know our trade position with any country and hence we cannot know the meaning of any reciprocity treaty that we might negotiate.

We do not know the amount of foreign holdings in the United States. They may run to upwards of $3,000,000,000. We do know that in

1929 foreign owners had more than 3 billions on demand deposit in this country and that the recalling of their funds was a serious feature in the tightening of credit and the falling of prices. Before we can intelligently discuss any trade with any nation, we simply must know the full state of our accounts. Hence, I suggest to you, and I shall come back to this, that you consider as a part of any bill that you pass the taking of an inventory of foreign holdings in the United States and of American holdings abroad.

Then, and not until then, shall we know whether we are a debtor or creditor nation. It may be that we are now a debtor nation. And unless we set up international books in order to keep our accounts current, we cannot know what we should export or import, or the amounts in which we should export or import. If we are a debtor nation, we shall have to export as we did before the Great War. The very realistic position that Germany and France have taken in their international financial affairs is due to the fact that they know the state of their international accounts. We know only our trade balances in goods, and they may or may not be important.

Let us consider what if any relation exports have to our prosperity. Secretary Hull has given to you the excellent Adam Smith doctrine that nations prosper by the exchange of wealth. That is true to a degree. It was once thought by all the classical economists—and the position is still held by many who have not followed the times—that the nations of the earth were divided into manufacturing nations and raw-material nations—that one half of the world should make and the other half grow. That division no longer holds.

It has been discovered that manufacturing is not a secret but that machinery may be bought and a factory be set up almost anywhere. For instance, American shoe machinery is all over the earth, and it is only a matter of weeks before the latest American style is being made in Mexico or Czechoslovakia. While the raw-material nations of the world have been going into manufacturing, the manufacturing nations have been going into the raising of their own foods, so by a very natural process of evolution-exactly the evolution which brought the country from a raw-material nation to a manufacturing one--the reason for the old international trade has largely vanished.

The change is permanent. The export trade of the world is going the way of the whaling trade, and there is just as much chan restoring it as there is of restoring the whaling trade by cutting out electricity and decreeing the world-wide use of sperm oil. The British coal trade with Italy can be reestablished only by destroying Mussolini's new water-power stations. The British cotton trade with India can be brought back only by destroying the Indian cotton fields and mills, which is as reasonable as attempting to close our own southern cotton mills in order to revive the cotton trade of New England. Chile can regain the trade in nitrates only if artificial fixation of nitrogen be prohibited. Germany can regain its chemical trade only if the trades in England, the United States, and Japan are shut down. And so on.

This change is hitting the nations which have depended upon exports, for they have not adjusted their economies to developing their home markets. The dependence of these nations upon foreign trade during the period 1927–29 is truly extraordinary. We find that during this period the average annual exports of Great Britain,

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