Germany, and Japan amounted to 20 percent of their estimated national income. The percentage for France is 22; for Belgium, 55; for Italy, 15; and for Czechoslovakia, 33. For the Latin-American countries, which mostly export raw materials, the percentages are: Argentina, 34; Brazil, 25; Chile, 35; Cuba, 65; and Mexico, 35. In vivid contrast to these percentages is the United States, in which our very large exports during the same period amounted to only 6 percent of our national income, and, if inter-company relationships were eliminated, the figure would probably not amount to much more than 3 percent.

We import special tobaccos, although we are the largest exporters of tobacco. We import paper and newsprint and paper stocks, largely from the forests of Canada. We could, if it were necessary, supply all our paper requirements and likewise all the wool, hides, and skins we import. We have been importing large quantities of nitrates from Chile and potash from Europe, but so rapid has been the progress in the fixation of nitrogen and the development of ammonium sulphate as a byproduct of steel manufacturing that no longer are we in the least dependent on any outside source for our nitrates, either for fertilizer or for explosives. Our potash development has been equally rapid. We are as independent in dyestuffs as we care to be. It can be stated generally that through the whole chemical field today we are as independent as circumstances warrant, and that the American chemist will produce anything that he is ordered to produce.

Although we are the largest producers of vegetable oils on account of our cottonseed, we import rather a large amount of coconut oil for soap-making. This, however, is a necessity rather than a luxury for certain types of soap. We import tung oil from China for varnishes and linoleum, but now it has been found that the plants can be raised as well in Florida and in several other States as in China.

There is a group of metals of which we import only a little, but that little is very important. These are antimony, chromium, manganese, platinum, quicksilver, nickel, cobalt, vanadium, and tungsten. In some of these we have a slight production, as in manganese, tungsten, and quicksilver, but in none is it now possible to meet our normal domestic consumption. But metallurgists say that for any of these metals they can find satisfactory substitutes.

It is not necessary to consider our imports of diamonds, pearls, works of art, or purely luxury goods, for the total of these is not very large, and they are purely reflections of taste. However, the preferring of foreign to domestic artists is something to be looked into.

Our really large imports are of such raw materials as we do not produce. The chief of these are rubber, coffee, and silk, with tin running far behind. These in 1930 made up 22 percent of our imports, and for the period 1922-26 made up 25 percent. We import our silk from Japan and China and use about twice as much as the rest of the world put together. But except for certain war purposes, we do not absolutely have to have silk, now that we have rayon. Opinions will differ as to whether or not coffee is a necessity. We are the largest coffee drinkers in the world. For tin we have no substitute, but others of our domestic metals are making rapid inroads on tin, not as substitutes but as alternatives.

This reduces for peace-time purposes our apparently essential bulk import to rubber. But we are now making an excellent synthetic

rubber, so our position on rubber is about the same as on silk. Indeed, it may be that the artificial rubber will be preferred to the natural.

Except for rubber, the only other present essentials among our imports are quinine, which is a Dutch monopoly, and opium, which we import from the Near East and Persia. There are other imports which it would be very inconvenient to do without although many of them we could produce if the price were high enough to challenge our chemists. Our imports, with the exceptions that have been noted, consist almost wholly of articles which we could ourselves make at a higher price or which we do not use in sufficient volume to make the founding of an industry worth while.

That is an astounding record. In a year when our imports were running around 4 billion dollars, we could at any time, excluding the imports of petroleum, copper, and sugar from American sources, cut our imports down to a total of around a billion dollars without in the least curtailing any of our necessary imports, such as silk, coffee, rubber, and tin.

None of these imports, it will be noted, come from Europe. As far as Europe is concerned, we are self-contained.

The annual value of our exports for the period 1926-28 was slightly under 5 billion dollars or about $41 a head. In 1929 the exports ran over 5 billion dollars, but in 1930 dropped to under four billions. These totals are large and on the face of things they seem important. But Great Britain imports about three times as much per head as we do and exports about twice as much. We are exporting seven or eight times as much per capita as we did in the seventies, but a very great change has taken place in the character of our exports.

During the first half of the last century, the single item of cotton made up more than half of our exports. Fifty years ago, after the opening of our Middle West, four fifths of our exports were of farm products. But for the period of 1926-30 nonagricultural products made up 63.9 percent of our total. Raw materials are bought on exchanges at world prices, but manufactured goods need salesmen behind them. We have sent out our salesmen, and we have been able to do considerably more than hold our own in the world markets. We have learned enough to know that we can gain and keep the largest share of the worlds markets-if we care to pay the price.

The export trade which we have built up with a good deal of hurrah and flag-waving does not depend on any one article or group of articles. For the period 1926-30 crude materials made up 24.4 percent; crude foodstuffs 6.4 percent; manufactured foodstuffs 9.7 percent; semimanufactures such as copper, lumber, and petroleum, made up 14.1 percent; and finished manufactures made up 45.3 percent. The big export items, taking the 1930 totals, were: Machinery, 13.8 percent; raw cotton, 13.1 percent; petroleum, 13.1 percent; refined oils, 11.6 percent; and automobiles, parts and trucks, 11.6 percent. It is interesting to note that wheat and packing-house products were each only 4 percent items and did not greatly lead raw tobacco.

These exports, it is said, are of primary importance to us. They have not in recent years amounted to more than 5 or 6 percent of the total production of the United States if we include in the total such highly important but nonexportable items as distribution, transportation, and construction.

We have never squarely faced the fact that, if we sell abroad more than we buy, we must finance the sales through loans. And also we have never faced the fact, and neither has any other nation, that, if the loans made abroad are used for productive capital purposes, they will result in building up industries abroad which will make the very articles the country has been importing. If the loans are used for unproductive purposes, they will never be repaid. If we take large imports of manufactured goods in return for large exports, we shall have to decide what part of our people will give up their jobs and what part can be shifted to the making of articles for the export trade. That would seem to be a momentous decision. It would be if it had to be made. But the very rapid changes which have been taking place in the world have made the decision for us. We are not going to have a large export trade. The reasons for this have already been set out. Our only concern is with the size of the import trade which we will permit; that is, how much of our home market we will choose to turn over to foreign workmen. The question gets down to exactly that.

We might leave the answering of that question to nature, if finding the right answer would settle anything. But a far greater question is involved. We have within our borders the wealthiest and most complete economic machine the world has ever seen. To the extent that we import and export, we expose that machine to outside control; a war in which we have no concern may throw millions of our people out of work, if their jobs depend either on foreign demand or supply. Instead of a war with arms, we may run into an economic war waged with cartels and prices that will equally damage our progress. For a while we imagined that foreign commerce was always sweet. Now we know it can be very bitter. We cannot take the sweet without the bitter. But we can choose to have little or nothing of either.

The great majority of the industrialists of the country are already agreed that their possible foreign business is of slight consequence as compared with the future of the home market. They, keeping abreast of science, are realists, and so, reluctantly but positively, they have come to realize that many of the changes which have come about in the world's commerce are basic and that yesterday has gone forever. Even many of the concerns that have a third or a half of the capital abroad and have considered their affairs as international are at the point where they are willing to scrap their foreign investments if they can save their home markets. The really important farm interests, such as the dairy, the cattle, the egg, the fruit, and the vegetable people, depend entirely upon the home market. The wheat farmers and the cotton planters who have now become of less importance in the national picture, would like a large export trade as well as a large domestic trade. That, however is not in nature.

If at the height of our exporting when we were giving our goods away to foreigners, the amount that we exported made only a trivial proportion of our trade, how can it be that suddenly the foreign trade has taken all-important position in our economy? And since in the United States we do about one half the business of the whole world, would it not be more to the point to concentrate on the home market?

That creating a new foreign trade could bring to the country any great amount of business is not apparent from the figures. What are we going to sell and to whom are we going to sell it? And what are we going to take in exchange? Are we going to call the roll of business and decide which parts shall be executed? And unless that be done on a major scale, the amount of imports will be trivial. And if it is done on a major scale shall we be helping prosperity or only creating one more problem?

I suggest that, on the contrary we regulate our trade by our balance sheet. Let us raise the tariff on all goods that we make or grow. Let us import only such raw material and foodstuffs as we do not or cannot produce, or for the time being cannot produce in sufficient quantities. Then our imports would get down to raw silk, coffee, tea, tropical fruits we do not grow, art objects of authentic antiquity, jewels, tin, and a number of the lesser metals. For the time being, sugar and rubber would be on the list. With prices all askew, one cannot say what these imports would amount to in dollars, but if we take the 1922-26 averages, our restricted imports would amount to about a billion and a half dollars, as against average imports under the then tariffs of nearly $4,000,000,000 during the same period. The actual amount, however, would have to be regulated by what the books disclose on our international balance.

Let me now take up the relation of the debts. Under the debtfunding agreements, we are due to receive annual payments amounting to $233,500,000 for the first 10 years and rising to $414,000,000 during the final 12 years of the agreements. The annual debt service on the loans we have made abroad is variously estimated and may be as high as $650,000,000. But we can know nothing about this figure until we know how many of these loans are permanently in default and how many of the bonds have been bought back by the foreigners at a discount. The Germans have been very heavily investing in their own securities. We really have not in hand the knowledge with which to estimate the probable amount of our imports in dollars, because this will depend on the condition of our international books once we start keeping them, on the price level, and on the willingness of our debtors to send to us through triangular trade the goods we choose in payment of the debts owing. Undoubtedly the goods that we choose will not be the goods that they will want to send us.

Because we do not know the state of the accounts, it is likewise impossible to estimate the volume of our export trade under a policy of balanced economy. Since we do not really need to buy anything from abroad, our purchases would be incidental to collecting our debts. Similarly our exports would have to be put into the purely incidental class as far as the national welfare is concerned, and the amount would be determined by the international balance sheet. In exporting let us use first our agricultural surplus and second our manufactured goods.

I agree that our machinery for meeting the problems of foreign trade ought to be speedier than it is now. For a long time we suffered from the imports from countries with depreciated currencies, and those from Japan badly hit the Pacific coast.

But I believe that it would be possible to make a permanent gain in our national economy if you made international bookkeeping a part of any proposed bill, if you enunciated a policy founded on the results

of the books, if you accepted the truth of self-containment and, if you took the debts into consideration. Under such a policy you could safely grant powers of emergency revision to the Executive, but with a review board of some kind so that there might be an appeal from any Executive order.

Mr. HILL. Have you finished your statement now, Mr. Crowther? Mr. SAMUEL CROWTHER. Yes, sir; Mr. Chairman.

Mr. HILL. I think if you desire to do so, you may sit while the members of the committee propound questions.

Mr. HILL. Mr. Cooper.

Mr. COOPER. Mr. Chairman, I have before me, Mr. Crowther, a copy of the book entitled "America Self-Contained", by Samuel Crowther. You are the author of that book, I assume?

Mr. SAMUEL CROWTHER. Yes, sir.

Mr. COOPER. I simply wish to invite your attention to a few statements I have noticed here in this book. I invite your attention to page 152, where I find this statement:

Germany, France, Belgium, Great Britain, and Italy, the countries most concerned in the reparations settlements, in 1929 took 34 percent of our total merchandise exports. This trade, it is alleged, is vital to our prosperity. What otherwise can we do with our surplus goods? We should keep these customers happy at any cost-fix the war debts to suit them, lend money as needed, and also revise our tariff downward in order that they may send us goods to pay us what they owe us. A committee of the League of Nations has reported in effect that few of the financial questions of the world can be answered while the high American tariff wall stands. Some of our bankers have said essentially the same thing.

That reflects your views on that subject?

Mr. SAMUEL CROWTHER. I beg your pardon, sir; if you will carefully look at that it will appear as ironical; that is trying to put down the nonsense we are standing on, if you will read the text.

next paragraph is the same way.

And the

Mr. COOPER. Then on page 158 I invite your attention to this statement:

It is asserted that we can make about twice as many automobiles as we have ever sold, and so on through a long line of industries. Therefore, it is conceded we must either scrap this excess plant capacity or go out desperately into the world seeking markets.

Does that reflect your views on that subject?

Mr. SAMUEL CROWTHER. My irony in there seems to be unfortunate irony taken away from its context. If you will read on you will see I am setting up a straw man, then demolishing it. That is the feature of the straw man.

Mr. COOPER. Then, again, I invite your attention to page 162, about the middle of the page, in which I note this expression:

We can increase our exports only if also we increase our imports or lend or spend money. If we want to make a big drive for exports, we must be prepared for a big push from imports. If we increase exports, we must prepare to lose some of the weaker portions of our home industry, and also our investors will have to convince themselves that foreign investing is good business.

Does that expression reflect your views on the subject?

Mr. SAMUEL CROWTHER. That is not an expression of views, that is a statement of fact.

Mr. COOPER. Now, I assume from your statement here this morning that you are opposed to the method of treatment proposed by the pending bill. That is correct, is it?