United Nations Economic and Social Council to establish this Commission.

Samuel C. Waugh, the Assistant Secretary of State, in his appearance before the subcommittee vigorously opposed the revision of the Commodity Commission.

A Committee on Commodity Problems was established at the ninth meeting of the contracting parties of GATT. It completed a draft agreement and suggested it to be approved at the 10th session of those contracting parties.

This action suggests the possibility of reviving chapter VI of the Havana Charter through amendments to GATT which would then be administered by the Organization for Trade Cooperation.

Many countries, in the debate in the United Nations Economic and Social Council last spring on the report of the Ad Hoc Committee on Restricted Business Practices, suggested that that problem also be turned over to GATT for solution. I bring this to the attention of the committee because I think it is important that these developments will largely influence the deliberations by the Congress in reference to United States membership in the Organization for Trade Cooperation. It is essential that these issues be met head-on if this bill is to be passed.

The United States did not participate in the working party and we have not supported commodity agreements in GATT. We should be willing to support amendments, in my estimation, to H. R. 5550 which will preclude any obligation which this Government has to accept charters amending GATT relating to commodity agreements or restrictive business practices.

It seems to me that this amendment ought to be in such form or at least one portion of this amendment ought to be in such form that we will not be under any obligation to accept that amendment unless it is also accepted on behalf of the Congress.

That is my statement in general.

From being present in Geneva on two occasions and watching GATT at work, it does not appear to me that there is any feasible way to make GATT work as a longtime proposition unless and until you have a working organization that can meet from day to day and week to week. It is just about the same, we will say, as 4 or 5 business organizations which are trying to exchange business secrets or business know-how with each other, attempting one to help the other, where you just meet for 30 days a year and in just 1 body. It seems to me that, if you are going to have any continuing success, it is necessary that you have a working organization that has that work from day to day and is constantly acquainted with the problems that arise between countries and those problems being continually exchanged back and forth between the countries themselves. That is the only way it appears to me that GATT can work over a long period of time in any way that is feasible.

That is a personal observation which I make from being present at one time with Mr. Waugh in September 1953 in Geneva. Thank you, Mr. Chairman.

Mr. MILLS. Mr. Springer, we appreciate your appearance before the committee this morning and the information you have given us. I am sure that it will be most helpful as we endeavor to cope with the problems involved in H. R. 5550.

Mr. REED. I ask unanimous consent to insert at this point in the record a short memorandum I have just received from the Bicycle Institute of America, Inc., 122 East 42d Street, New York, N. Y. I believe it will be very valuable to the committce.

Apparently the relatively small bicycle industry has been forced to contribute some $65 million during the past 5 years to the rehabilitation of the economy of foreign countries.

Mr. MILLS. Without objection, the material will appear at this point in the record.

(The information referred to follows:)

In commenting on the testimony on H. R. 5550, you mention the effect of the unfair foreign competition in the bicycle and washing-machine industries. It is doubtful, however, if many appreciate just how serious this situation really is.

The bicycle industry has exhausted every remedy provided by the administrative agencies-CRI and the Tariff Commission- without success.

Prior to 1950, when the effect of the 75-percent reduction in tariff on bicycles became really effective, imports accounted for less than 4 percent of consumption. Both American and foreign manufacturers had for years offered the socalled lightweight, variable-speed models, but these found little popular acceptance. However, by devaluating their currency and with the tariff reduction from 30 percent to 72 percent to the foreign producers whose labor rates are onethird of ours were able to put competitive models on the market in the country at prices often below our actual cost of manufacture. The increase in tariff granted earlier this year, on bicycles, has no appreciable effect on imports as, on the average, it amounts to only 88 cents on models with a declared value of $23.45 and $2.08 on models with an average declared value of $27.69 (Tariff Commission figures).

The following figures from official sources (Bureau of Census and the Tariff Commission) show all to clearly the inevitable results of such reckless slashing of tariffs and the impossibility of any small manufacturer getting effective action to correct this injustice under the existing procedures.

There is very reason to believe that if the duty had been left alone, the domestic industry would have been able to supply bicycles at approximately the same rate of consumption as in former years, for the foreign manufacturers offered nothing in the design or models not available from domestic sources. The one and only reason for the tremendous increase in imports, which still continues, was the ability of the foreign manufacturers, with their lower labor rates, to sell competing items at a profit, with prices substantially lower than the United States manufacturers can possibly meet and remain solvent.

You just cannot beat a labor rate of $0.537 in England (National Industrial Conference Board) when we pay $1.95. Foreign plants are new and well equipped, amply financed, and efficiently operated.

Apparently the relatively small bicycle industry has been forced to contribute some $62 million during the past 5 years to the rehabilitation of the economy of foreign countries.

Under the operation of GATT, the burden of this aid is being transferred, with crushing weight, to the smaller United States industries which are least able to get any effective relief, as long as Congress does not more closely control the operations of the State Department in this field.

Great Britain has reduced its duty 40 percent while the United States duty has been reduced 75 percent. The British reduction, however, is nullified as they require import certificates.

Mr. MILLS. The next witness is Mr. Lamar Fleming of Houston, Tex.

Mr. Fleming, we are glad to have you with us this morning. Will you give your name and address and the purpose of your appearance for the record?

Mr. SIMPSON. Mr. Chairman.

Mr. MILLS. Mr. Simpson.

Mr. SIMPSON. I would like the record to show that I was privileged to serve with Mr. Fleming on the Randall Commission where he made valuable contributions.

Mr. REED. Mr. Chairman.

Mr. MILLS. Mr. Reed.

Mr. REED. I was also a member of that Randall Commission and I had the pleasure of associationg with Mr. Fleming. He is a very valuable man. We are glad to have him here.

Mr. MILLS. Mr. Fleming, you come quite well endorsed.

STATEMENT OF LAMAR FLEMING, JR., CHAIRMAN OF THE BOARD, ANDERSON, CLAYTON & CO., HOUSTON, TEX.

Mr. FLEMING. Mr. Mills, I am quite grateful indeed to Mr. Simpson and Mr. Reed. I must say that I enjoyed my contacts with them on the Commission and with Mr. and Mrs. Simpson in Geneva.

My name is Lamar Fleming, Jr. I live in Houston, Tex. I am chairman of the board of Anderson, Clayton & Co. This company is cotton merchant, ginner, warehouseman, seed-crusher, and refiner of edible oils, shortening, and margarine, and owner of plants used for these purposes. It serves some or all these functions and owns plants in several foreign cotton-producing countries, through subsidiaries.

I served on the Randall Commission, together with Mr. Cooper, Mr. Reed, and Mr. Simpson. I spent the weeks of last winter in Geneva as an adviser to the American delegation to the conference there for revision of the General Agreement on Tariffs and Trade.

I would like to mention my reasons for personal interest in foreign trade policies. One reason is that I have been more or less connected with foreign trade for 45 years. Another is that I believe that the fact that the material lot of the human race has improved so much faster since the days of Napoleon than ever before, was due to wide observance of certain principles, and that we will be wise to seek to identify those principles and conserve them for future advancement of American welfare and general human welfare. In my opinion they can be identified as the liberal economic principles which were developed by such

thinkers as Adam Smith and John Stuart Mill, and they became the basic core of western economic thought.

Due to good fortune and wide observance of these principles, the world enjoyed relative peace between Waterloo and World War I, the leading nations maintained sound currencies, private accumulations of savings created capital for development and trade, international fluidity of capital made it available wherever returns and conditions of safety were attractive, there was rapid discovery and development of natural resources, invention flourished at an ever-quickening pace, transporation and communications were extended and perfected, and the volume of trade surpassed anything previously imaginable. Together with the expansion of trade, there developed a body of tradition on what is fair and unfair in trade, which received widespread acceptance.

In the early part of this era, the American people were engaged in development of our natural resources and transportation at a rate which kept up in debt to foreign countries; but, by the end of the 19th century, the fruits of this development had enabled us to catch up with the service of our debts and start the accumulation of savings that was to bring us to international creditor status. With our rapid increase in population and relatively high average buying power, our domestic market became the greatest mass market ever known, capable of absorbing the output of mass production; and progressive invention and savings enabled us to create industries on a mass production basis, in which a great degree of mechanization and technological improvement accomplished labor savings, which enabled us to pay the highest wages in history without commensurate increases in costin fact with actual decreases in cost in some lines. These developments stimulated the tempo of invention, with the effect of progressive introduction of new objects of enjoyment, creating new demands, new industries, and new jobs.

The two world wars have changed the world picture. They exhausted the savings of the principal nations of Europe, to the point where they could not maintain the integrity of their currencies, and disrupted their agriculture and industry, so that their impaired capacities to produce for export and their increased needs for imports made balanced trade impossible for them, if they were to maintain a tolerable standard of living. Their dilemma became the more difficult when the ingrained hostility of the Communist bloc and the need to be armed for defense against it were recognized. In these difficulties, the European nations had to resort to government restrictions on imports and international payments; and they resorted also to bilateral trade agreements with other nations for two-way exchange of goods, through which exports substantially were subsidized and the markets at both ends tended to become captive markets. Even with these sacrifices of their citizens' freedom in trade and finances, their difficulties were so great that they required the tremendous help in grants and loans which the United States has given them and still is giving them.

Nations of southern Asia and South America and Australia, which had depended heavily before the wars on imports of manufactures from Europe and the United States, had suffered during the wars from interruption or shrinkage of the flow of them and also from par

tial loss of access to the European market for their own produce. A great demand had arisen among their peoples for development of their domestic resources and for industrialization, in order to become less dependent on imported supplies and on foreign markets for their agricultural products. There resulted an acceleration of industrialization, urbanization, and public works in almost all countries of this type, which overtaxed their fiscal and balance-of-trade capabilities. So also these countries resorted to controls on imports and international payments and many of them to bilateral trade agreements.

For whatever reason established-whether because of wartime dissipation of resources, the strains of depression, or excessive development-these controls and bilateral agreements all acted as barriers to the export trade of the United States.

For its own part, the United States emerged from the two wars with a greatly expanded productivity, expanding progressively with accelerated invention, technological improvements, and progressive mechanization—and with a greatly increased share of the world aggregate of savings. Our needs in raw materials had increased and continue to increase with expanding consumption and an ever-quickening crop of inventions, which enlarge the variety of our object of enjoyment and at the same time increase our need of the old materials and add needs of new ones. So we need more of materials that we always have imported, we are nearing the exhaustion of our economical home resources of some materials, and we are becoming progressively more dependent on materials from foreign resources-so much so that many American businesses now are engaged in exploration and development in foreign countries in order to be assured of necessary future supplies.

An all-important change is the expansion of the Russian drive to impose its totalitarianism upon other countries, I believe most of us agree that successful opposition to this effort has to be a team affair, and that it is highly important to us that as many as possible of the peoples of the world be on our team and be strong, healthy, and spontaneous members of it.

Continued outlets for the ever-increasing American productions depending upon exports of part of them, which could not be collected for by import purchases until the foreign productivities were greatly improved, and therefore up to now have been in considerable measure unrequited gifts to foreign governments. Some of our agricultural exports were destined to decline as the importing countries, particularly in Europe, regained peacetime productivity. Our exports in all lines were severely hampered by the restrictions which most of the foreign governments had imposed on imports and foreign payments and by the captive market effect of the bilateral trade arrangements. The enigma was how to maintain and expand our world trade in these circumstances, how to end the exporting of our goods as gifts, and how to create conditions in which other peoples would be able and glad to stand with the free nations against totalitarianism. A basic essential was to untangle this accumulated web of restrictions. The first step, in which we and Canada were the leaders, was an effort to reach some international consensus as to what is fair and unfair in trade and to what extent, and under what conditions, circumstances justified deviation from the perfect pattern of fairness, and then to lay plans for complete return to the standards of fairness as