earnest hope that in the ECA program we could assist these countries in a long-term program to help correct that.

Senator BREWSTER. Your safeguarding theory is on the vasis that production costs in some instances abroad are lower than production costs here.

Mr. OGG. That would be, of course, a factor, necessarily. Senator BREWSTER. So that is one of the basic things in which you have to proceed.

Mr. OGG. Yes.

Senator BREWSTER. Now, you recognize the quota principle as the most effective and perhaps one might almost say the only effective means of control under the present inflationary situation.

Mr. OGG. Well, no, I wouldn't think it would be the only means. Of course, you have exchange controls, and you have quotas. You have licensing.

Senator BREWSTER. Let us say it is the most effective.

Mr. OGG. I don't mean in this country; I mean in other countries. Senator BREWSTER. It is the most effective means of control.

Mr. OGG. Yes; it has been so effective that it has shut out a great many of our exports.

Senator BREWSTER. I notice that you stress the escape clause as against the peril-point procedure.

Mr. OGG. Well, I wouldn't want to single out, Senator, or be construed as singling out the escape clause. We feel there are a number of safeguarding features that are quite important, not only the escape clause, but section 22.

Senator BREWSTER. What relief do you secure under that?

Mr. OGG. Well, if imports come in in such volume as to interfere with the effectuation of various agricultural programs, price support programs, or acreage adjustment programs, or marketing agreement programs, the President, after investigation by the Tariff Commission, may invoke quotas, or additional fees to offset the damage.

The CHAIRMAN. Has that been done, Mr. Ogg?

Mr. OGG. Yes, sir. In the case of wheat it has been invoked twice, I believe; and I think once or twice in the case of cotton.

The CHAIRMAN. Cotton; yes.

Mr. OGG. Cotton goods, in one case, and in the other case, I think, a certain type of raw cotton.

Senator BREWSTER. And those provisions both contemplate the investigation by the Tariff Commission and then action by the President.

Mr. OGG. Yes, sir. It is rather similar to the procedure under the escape clause, as I understand it, sir.

Senator BREWSTER. The period of crops is more or less an annual period; that is, the question of the effect upon our economy has to go more or less on an annual basis.

Mr. OGG. Yes, in most cases. That would not be true of dairying, of course.

Senator BREWSTER. I was interested that you stressed that 120 days was not sufficient for the Tariff Commission to make an adequate investigation to determine peril points. If that is true, how much more serious it is, if more time is required to determine upon the application of the escape clause in section 22?

Mr. OGG. If I said that, I didn't mean that in the way you took it. Senator BREWSTER. Well, I will quote it: "120 days is too short a time for the Tariff Commission to function, in this determination." Those were your precise words.

Mr. OGG. May I explain what I had in mind?
Senator BREWSTER. Yes, certainly.

Mr. OGG. I had in mind there the type of information that the Department of Agriculture is assembling all the time, both here and abroad. And I had in mind that unless they send out their own independent investigators into the field, or into foreign countries, and get that first hand, they necessarily must rely, to a considerable extent at least on the information already available in the Department of Agriculture. That is all I had in mind.

Senator BREWSTER. Well, do you have any reason to think that the Tariff Commission does not seek from the Agriculture Department information in a matter of this kind?

Mr. OGG. No, I am sure they do.

Senator BREWSTER. So that that is all instantly available to this scientific group.

Mr. OGG. Certainly.

Senator BREWSTER. And you stress the importance of the scientific approach in the matter of determining protection.

Mr. OGG. Then it becomes a question of which is a better one to evaluate, I think; the Tariff Commission, or the Department of Agriculture.

Senator BREWSTER. Well, as I think the Senator from Colorado has pointed out, the President has the final determination in any event, with all sources available to him.

Mr. OGG. That is true.

Senator BREWSTER. The Tariff Commission is simply charged by the Congress with the responsibility of determining what in their judgment is a peril point.

Mr. OGG. Yes, I think that is a correct statement.

Senator BREWSTER. Beyond that, full latitude still prevails.
Mr. OGG. That is correct.

Senator BREWSTER. Now, in how many instances have we quotas? Do you know?

Mr. OGG. Import quotas?

Senator BREWSTER. Yes.

Mr. OGG. Well, I mentioned wheat and flour.

Senator BREWSTER. Is that now in effect?

Mr. OGG. Yes.

Senator BREWSTER. What is that limit?

Mr. OGG. Well, I think it is 4,000,000 pounds of flour, and I believeI am only depending on memory-possibly 10 or 15 million bushels of wheat, though I might be wrong about that.

I can obtain the figures for you, Senator, and put them in the record. Senator BREWSTER. Will you do that?

(The information is as follows:)

The import quota for flour is 4,000,000 pounds annually. The import quota for wheat is 800,000 bushels annually.

86697-49-pt. 1-17

Mr. OGG. Also, I believe, quotas have been imposed on cotton textiles. I am not sure whether those are quotas or fees. And I believe a quota has also been imposed on a certain type of raw cotton. Senator BREWSTER. What is the limitation on cotton?

Mr. OGG. I don't recall. I could get it for the record.
Senator BREWSTER. Is it not quite restrictive?

Mr. OGG. Well, it only applies to one type of cotton, which is relatively small in importance.

Senator BREWSTER. You mean as to most types of cotton there is no restriction?

Mr. OGG. That is correct. There were some restrictions on cotton textiles. I am not sure what the present status is.

Senator BREWSTER. Would you get that for us?

Mr. OGG. I would be glad to.

Senator BREWSTER. And if you could give us a summary, if we have not already had it, I think that would be a good thing to obtain. Have you had put in the record the information on quotas?

Mr. OGG. The Tariff Commission could get it for you. I would have to get that from either the Tariff Commission or the Department of Agriculture.

Senator MILLIKIN. I would suggest, Mr. Chairman, that the Tariff Commission representatives, who are here, might get that for us.

Senator BREWSTER. I would like to have a statement of what quota limitations are in effect.

The CHAIRMAN. In effect at this time?

Senator BREWSTER. Yes; and how long they have been in effect and what they have been in the last 3 years, say, since the war.

The CHAIRMAN. Will you please prepare that, for us, gentlemen? Mr. MARTIN. I will be glad to do it, sir.

The CHAIRMAN. Will you prepare it, and put in an accurate form as to all quotas, how long they have been in effect, and what quotas have been invoked, or imposed during the whole 3 years?

Senator BREWSTER. I thought we should have it since the war.
The CHAIRMAN. Since the war ended, anyway.

Senator MILLIKIN. Senator, I think you will find some interesting facts going beyond the war. Why limit it to 3 years?

Senator BREWSTER. You mean to take the prewar period?

Senator MILLIKIN. Yes, take whatever they have on the history of quotas.

Senator BREWSTER. I think the history of quotas is very interesting, from the standpoint of one who does believe in the protective principle.

(The information is as follows:)

USE OF IMPORT QUOTAS BY THE UNITED STATES

This memorandum is concerned with absolute quotas on imports, that is to say, quotas which are quantitative limitations on the amount of imports permitted to enter the country' for consumption. It does not deal with so-called tariff quotas under which a specified quantity of merchandise may be permitted entry at a reduced rate of duty, imports in excess of the quantity not being prohibited but being subject to a higher rate of duty.

The United States has employed quantitative limitations as a measure of foreign trade control principally as a part of, or as a necessary supplement to, governmental programs for regulating internal operations. Quotas have been used in this country to but a small extent in comparison with most other countries.

Some of the commodities affected by this type of control, however, have bulked large in our foreign trade accounts and our various quotas have had important effects. Import quotas have been adopted both by direct congressional enactment and by executive action in pursuance of congressional authorization. In certain instances agreements to which the United States Government was not a party have also operated to impose quotas on imports.

Quotas under the industrial recovery program

The National Industrial Recovery Act of June 16, 1933, was designed to cope with the then existing emergency by promoting the organization of the various branches of industry. It authorized the adoption of codes of fair competition which included provisions for price stabilization, increases in wages, decreases in working hours, and the prohibition of various practices labeled as unfair competition. Section 3 (e) of the act authorized the imposition of fees or quotas on imports when found necessary by the President, after investigation by the Tariff Commission, to prevent such imports from rendering the codes ineffective or seriously endangering their maintenance.

In some instances the codes themselves provided for import quotas. The petroleum code was adopted on August 19, 1933, and on September 2 the Administrator (the Secretary of the Interior) ordered, in accordance with the code, that imports be limited to the level prevailing in the last 6 months of 1932. This level was much lower than that prevailing in earlier years as the worst part of the depression was then existing, and the United States had in June 1932 imposed an import-excise tax of 21 cents per barrel upon petroleum. The result of the import-control provisions of the petroleum code was to prevent imports from increasing above the depressed level existing in the latter half of 1932. Under the lumber and timber products code, imports of Philippine mahogany were restricted by quotas, and under the alcoholic beverage importing code imports were subject to quotas for a few months.

Many complaints and requests for restrictive action under section 3 (e) were filed with the National Recovery Administration. Fourteen of these presented prima facie cases with sufficient cogency to warrant formal investigation by the Tariff Commission. Seven of the investigations ordered were completed, and in four of them restrictive action was recommended to prevent imports from endangering the codes.

In the case of red cedar shingles it was recommended that imports be limited to a quota of 25 percent of domestic requirements. The Canadians restricted exports to this figure which obviated the need for action by the President under section 3 (e). The 25 percent approximated the share of the market supplied by the Canadians during earlier years, but during the years immediately preceding the quota imports had increased materially relative to domestic consumption. For lead pencils and cotton rugs (imported principally from Japan) restrictive action was recommended either by way of increased tariff duties or by way of additional import fees and quantitative limitations. After the recommendations but before action by the President the Japanese restricted exports to the United States to specified quantities, with the result that no restrictive import action was taken by this country except that import fees were imposed on some types. In the case of matches, import fees were recommended but as a result of an increase in excise taxes on the types of matches which were the subject of the recommendation no import-control action was taken.

The legal authority to regulate imports under the codes of fair competition ceased to exist in the summer of 1935, as a result of judicial decisions holding unconstitutional the pertinent sections of the NIRA. Although no quantitative limitations were officially ordained by the United States under section 3 (e) of the act, the actions that were taken to restrict exports to the United States had results very similar to those which would have pertained had import restrictions been adopted. Further, the technique of controlling imports into the United States by limitations imposed at the source persisted after the National Recovery Administration had ceased to regulate commerce. In several instances the export controls were maintained by foreign countries for a considerable period and new controls based on a similar technique were adopted, as referred to hereinafter.

Quotas under the agricultural program

The Jones-Costigan Sugar Act of 1934 was designed primarily to increase the incomes of domestic sugar producers by providing for a system of benefit payments based on processing taxes and by increasing and stabilizing prices at

higher levels through the device of marketing and import quotas. The act provided for regular estimates of domestic market requirements and the allocation of the amount so determined by prescribed rules to the domestic beet and cane areas, Hawaii, the Philippine Islands, Puerto Rico, and Cuba, with minor quantities allocated to other sources. The quotas were imposed concurrently with the reduction of one-fourth in the rate of import duty on sugar so that the increase in domestic prices, coupled with a reduction in duty, inured to the benefit of both domestic and foreign suppliers in the form of increased returns. The share of the domestic producing areas was increased materially as compared with the previous decade. The share allotted to the Cubans was materially lower than the 10-year average (1.9 million short tons compared with 3.12 million short tons in 1924-33). It was, however, higher than the Cuban shipments in 1933 (1.55 million short tons). The share allotted the Philippine Islands was materially higher than the 10-year average (1.015 million short tons compared with 0.708 million short tons). It was, however, lower than the shipments from the Philippines in 1933 (1.93 million short tons).

The sugar quotas were continued after the processing taxes were terminated as unconstitutional, and the sugar program was reenacted in the Sugar Act of 1937 which provided for a manufacturing tax and benefit payments to farmers as well as marketing and import quotas. The quotas were continually in force from 1934 until April 1942 except for the period September 12 to December 31, 1939, inclusive. In April 1942 the effectiveness of the quotas was suspended because of the war emergency, but the enabling legislation has been continued in force. The quotas were reimposed under the Sugar Act of 1948, effective January 1, 1948.

The trade agreement between the United States and Cuba, which became effective September 3, 1934, provided for reduced duties on wrapper and filler tobacco, scrap tobacco, and cigars and cigarettes (all of Cuban origin) and also provided that the total quantity of dutiable tobacco and tobacco products from Cuba that could enter the United States for consumption in a calendar year should not exceed 18 percent of the total quantity (unstemmed equivalent) of tobacco used in making cigars in registered factories in the United States during the preceding year. The percentage allotted the Cubans was substantially the same as the ratio of imports of tobacco and tobacco products from Cuba to domestic consumption of cigar tobacco during the previous 10 years. The ratio of imports to consumption in the years immediately before the agreement had declined, and the agreement actually permitted an expansion of the trade. The continuance of the tariff concessions in the agreement was dependent on the continuance of the domestic cigar-tobacco adjustment program, and shortly after that program was terminated in 1936 the duty concessions and the import quotas on Cuban tobacco under the trade agreement were also terminated. Duty concessions have been made to Cuba under later agreements but were not limited by quotas.

In 1935 section 22 was added to the Agricultural Adjustment Act of 1933 to authorize the President to impose quantitative limits on imports of products when such action was found necessary, after investigation by the Tariff Commission, to prevent such imports from rendering ineffective or materially interfering with various agricultural programs under the Agricultural Adjustment Act. Later the law was extended to protect programs under the Soil Conservation and Domestic Allotment Act, and still later to protect programs under section 32 of the act of August 24, 1935, which set aside 30 percent of the gross customs receipts each year for certain agricultural promotion and subsidy programs. Originally section 22 specified that no quota should be less than half the average annual imports of the article in the period July 1, 1928, to June 30, 1933, inclusive. The base period was later modified to be January 1, 1929, to December 31, 1933, inclusive. In the Agriculturel Act of 1948, section 22 was amended to afford protection to all programs or operations of the Department of Agriculture. The base period previously specified for determining minimum quotas was eliminated and the President was given discretion to select a representative base period. A new provision was added to prevent restrictions under section 22 from being enforced in contravention "of any treaty or other international agreement to which the United States is or hereafter becomes a party." Two investigations had been ordered by the President under this law, and both have resulted in quotas on imports.