little over three billions to spend in this country. They actually spent in that year nearly half of that sum, or nearly one and a half billion dollars for our farm products alone. By 1932 there had been such a drastic shrinkage in our imports that the foreigners spent in this country only three quarters of a billion dollars for our farm commodities, or just about half of what they spent in 1930.

You cannot shut out imports without also shutting in exports.

In 1932 we bought from the outside world just 30 percent as much merchandise as we had bought in 1929. The shrinkage in our outlay for foreign goods of $3,000,000,000

Senator VANDENBERG (interposing). What year was that?
Mr. CLAYTON. In 1932.

Senator VANDENBERG. Everything shrunk in proportion, did it not, all around the world?

Mr. CLAYTON. Everything shrank; yes, sir. Surely the advocates of economic self-sufficiency as the road to prosperity in this country could hardly ask for a closer approach than this to their coveted goal. But the other side of the picture is that in 1932 we sold to the outside world just 30 percent as much merchandise as we exported in 1929, a shrinkage in foreign purchases of our goods of three and a half billion dollars. Indeed, 1932 witnessed the lowest point for many years in our foreign trade. It is no mere coincidence that 1932 also established other records in this country not pleasant to contemplate, such as the lowest prices for all time for our farm products, the highest point for all time in unemployment, and the lowest point for half a century in our economic well-being. Incidentally, 1932 was the year in which farmers were losing their homes and farms at so rapid a rate that economic and social disintegration threatened.

The only sound and permanent solution of the farm problem is the reopening of the channels of international trade. Only in this way can purchasing power be restored to our agricultural surpluses. The reciprocal trade agreement program is a modest step in that direction. It approaches the subject from the point of view of the best interests of all the people instead of the special interests of groups. Since the passage of the reciprocal trade agreements, our annual volume of foreign commerce has increased in value by 21⁄2 to 3 billion dollars, divided about equally between exports and imports. Senator VANDENBERG. What do you base those figures on? Have you the actual figures by years?

Mr. CLAYTON. Yes, sir; I can give them to you.

Senator VANDENBERG. I wish you would.

Mr. CLAYTON. In 1934, the total exports of United States merchandise were $2,100,000,000, and the total imports were $1,636,000,000, making a total of $3,736,000,000. In 1937, the exports were $3,298,000,000, and the imports were $3,000,000,000, making a total of $6,300,000,000. It shows an increase of nearly $3,000,000,000.

Senator VANDENBERG. Yes; but the Trade Agreements Act did not generally became effective until along in 1936, while you compare with 1934 and then give all the credit to the Trade Agreements Act. Mr. CLAYTON. I don't intend, Senator Vandenberg, to give all the credit to the Trade Agreements Act, but if you take even 1936, 2 years after the Trade Agreements Act was passed, the exports and the imports totaled $4,800,000,000.

Senator TOWNSEND. What was each?

Mr. CLAYTON. $2,400,000,000 of exports, and $2,400,000,000 of imports. It just about balanced. That was in 1936. In 1937 they had jumped to $6,300,000,000.

Senator VANDENBERG. What were they in 1938?

Mr. CLAYTON. $5,200,000,000.

Senator VANDENBERG. In 1938 they were $5,000,000,000, and in 1936 they were $4,800,000,000. They are practically the same as they were in 1936 when the trade agreements really became effective. Mr. CLAYTON. The act was passed in 1934. I don't know how soon the agreements became effective. At various times, I presume.

Senator VANDENBERG. There were one or two in 1934 and three or four in 1935. They really were not swinging until 1936.

The CHAIRMAN. Have you 1939?

Mr. CLAYTON. I have the totals for 1939; yes, sir. They are $5,400,000,000 in 1939.

Senator VANDENBERG. How was that divided?

Mr. CLAYTON. $3,123,000,000 for exports and $2,276,000,000 for imports.

Senator VANDENBERG. I make no point of the questions I asked you. I have just come to the conclusion that I can take the available figures on this subject and make a swell speech on any one of four sides.

Mr. CLAYTON. You can usually do that, I believe, with any set of figures.

The CHAIRMAN. You can do that on anything. [Laughter.]

Mr. CLAYTON. Surely this additional trade has been reflected in promoting recovery from the depths to which our economy sank in 1932.

The present war is creating some grave new problems for American agriculture, especially cotton. Practically all of our cotton exports go to Europe and Asia. The nations of these continents are either at war or preparing for war. In these circumstances, they are living off of their capital, especially as regards purchases in the United States. They are sending us their gold and liquidating their securities. What will they do for dollars when these things run out, as they must sooner or later?

Already there are signs that such precious dollars as these nations can command will be husbanded for the purchase of essential war materials which only the United States can furnish. Tobacco, cotton, and other farm products will more and more be bought in those countries willing to accept goods in payment, thus not only effecting an exchange of goods but also providing cargoes for the ships both ways. Today most of the ships coming to our Gulf ports for cotton come in ballast. Ships are worth at charter $1,000 a day and upwards. Is there any wonder that the foreign buyers of American cotton are turning more and more to other growths?

When this war ends, America will find itself in the position of King Midas and finally when we shall have acquired all of the gold in the world, we will be compelled to face the immutable law of international trade, "He who would sell must also buy."

Senator VANDENBERG. Meanwhile, what will we do with the gold? Mr. CLAYTON. I cannot answer that. In the end, we must bow to this law or reconstruct our domestic economy in an effort to find other jobs for some twelve to fourteen million persons normally employed in connection with our export and import trades, and

to find other uses for some seventy-five to one hundred million acres of agricultural land normally employed in producing for export.

For a century prior to the outbreak of the World War, the principle of international division of labor made tremendous strides throughout the world. The last quarter of a century has unfortunately witnessed a reversion in the directions of economic nationalism. This has notably resulted in a world-wide revolt against the free market. Much of the world's economic and political ills are traceable to this development. Responsible opinion appears to be crystallizing on the view that the next peace, if it is to have any hope of permanence, must be based upon the principle of the division of labor on a worldwide basis. The trade-agreement program is a modest effort to keep alive that principle. Its abandonment at this time could only be interpreted as a step backward toward economic self-sufficiency. Believing that such action would constitute a grave national error, I earnestly recommend that the Trade Agreements Act be extended. Senator VANDENBERG. Mr. Clayton, you do not think that we can combat external self-sufficiency solely through these trade agreements, do you? Haven't we got to have a lot of other weapons, too? Mr. CLAYTON. I don't know about the weapons, Senator Vandenberg, and I do not contend that we can combat it solely with the tradeagreement program. I am merely saying that I think that the trade-agreement program helps to keep alive a principle which we should not see die if we can help it.

Senator VANDENBERG. The thing that challenges my fears is that we may keep this principle alive through an agreement which we faithfully execute and the other fellow does not, because the moment he has made an agreement with respect to tariffs with us, then he discovers some devices by which he checkmates every advantage that we were supposed to get. For instance, in one instance I think we made a trade agreement with a major country, and within 6 days afterward they depreciated their currency. We made an agreement with another, and within 2 weeks, I think, they installed blocked exchange which practically nullified every advantage we were supposed to have gotten. I want to be an idealist and keep a lot of fine principles alive, but I do not want to be a sucker about it, and it seems to me that in a world at war and in the post-war period of adjustment, the self-sufficiency is found to reassert itself viciously everywhere, and that you just cannot deal with that condition on the unconditional most-favored-nation theory. When you get through, all you will have left is your ideals, and the rest of the world will have everything else.

Mr. CLAYTON. Senator, I appreciate that, but when this war ends, it will be either a totalitarian world or more or less a democratic world. If it is a totalitarian world, foreign trade will be conducted on that principle, which will be a barter principle, such as Germany employed prior to the beginning of this war. If it is a democratic world, I think it means going back to a fairly free exchange of world goods such as we had prior to the beginning of the last war.

Senator VANDENBERG. Already we have found it advantageous to barter a little rubber for cotton as we did, did we not, with England? Mr. CLAYTON. I question the advantage of it. We have done it. Senator VANDENBERG. I think you are consistent in that statement. Have the trade agreements helped cotton?

Mr. CLAYTON. Yes, sir.

Senator VANDENBERG. How?

Mr. CLAYTON. By increasing world trade or trade between the United States and the rest of the world, and anything that permits the rest of the world to increase their shipment of goods to this country is bound to help cotton, because some of the money, some of the dollars thus created, will be used to buy our cotton and have been so used.

Senator VANDENBERG. Don't you think the major portion of our export trade is due to a recuperation in the world buying and consuming power?

Mr. CLAYTON. I do not think it would have been possible for us to make use of that recuperation if we had not reduced somewhat our tariffs on foreign goods so that those goods could come into this country.

The CHAIRMAN. Are there any other questions?

(No response.)

The CHAIRMAN. Thank you very much, Mr. Clayton.

The next witness is Mr. Oscar Johnston of Mississippi, president of the National Cotton Council of America.

STATEMENT OF OSCAR JOHNSTON, SCOTT, MISS., PRESIDENT, NATIONAL COTTON COUNCIL OF AMERICA, MEMPHIS, TENN.

The CHAIRMAN. Mr. Johnston is from Mississippi, a very good State. He is president of the National Cotton Council of America and he is very familiar with the cotton industry. We will be glad to hear you, Mr. Johnston.

Mr. JOHNSTON. Thank you, Mr. Chairman. My name, as the Senator stated, is Oscar Johnston. My address is Scott, Miss. I appear representing the raw-cotton industry, which is organized as a general welfare corporation under the name of the National Cotton Council of America. The council, for the benefit of the committee, is composed of cotton growers, the ginners, the warehousemen by whom it is stored and compressed, the cotton merchants or dealers, and the first processors of cottonseed, the oil mills. The council embraces the entire Cotton Belt.

There are 19 of our 48 States that produce cotton; 10 of them in which it is produced as a major crop, 3 of them in which it is a vitally important crop, and the others in which it is not so important but still is a fairly heavy crop. In those States, each of the five interests I have named and to which I shall refer hereafter as the raw-cotton interests, have organizations, as, for example, the Farm Bureau or Grange, the Ginners Association, the Warehousemen. Each of these organizations in each of the cotton-producing groups selects a designated equal number, three each, of representatives who serve on the council. So that the council is composed-its voting power is lodged in 215 delegate members selected by the organized groups within each interest, and in that way it is representative of the 21⁄2 million farm families representing 10% to 11 million farm people who actually work in the fields and produce cotton, of some 12,500 operators of cotton gins, some 5,000 operators of cotton warehouses, some 4,500 cotton merchants or shippers, and some 550 cottonseed crushers.

The shippers have their major organization in the American Cotton Shippers Association which was represented a moment ago by Mr. W. L. Clayton, who appeared. I am appearing on behalf of the industry as a whole.

At an annual meeting of the delegate members of our council's convention held on the 14th of February in New Orleans, a resolution was adopted. Omitting the preamble, the resolution is:

Whereas the tariff policy

et cetera

Now, therefore, be it resolved, That the National Cotton Council of America urge the Congress to approve House Joint Resolution 407 providing for authority for the Executive branch of the Government to conclude without further legislative action reciprocal trade agreements with foreign governments; and be it further Resolved, That the officers of the National Cotton Council of America be instructed to transmit copy of this resolution to the Senators and Congressmen from the cotton-growing States.

Following the authorization given in that resolution, further action was taken by the officers, and in this connection let me point to this fact. The organization, as I have stated, is composed of five groups, but may not take a position with respect to any matter of general policy except upon the affirmative vote of two-thirds of the delegate members representing each of the five interests, the interests voting separately; so that when a resolution such as this was proposed as a matter of fact, this resolution was unanimously adopted--but when any resolution is adopted by the council, it must be representative of the expressed views of two-thirds of the total representation of each of the five interests.

Following that action, the officers of the council sent out to the county committees and to representatives of the council in the various counties producing cotton, requests that they poll and get the sentiment expressed by petitions of the leaders of the cotton industry in their respective counties. There are approximately 900 counties in the 19 States producing cotton. No effort has been made to organize in the States of Kansas, Illinois, Kentucky, and Florida, because in the 4 combined, only about thirty or forty thousand bales of cotton are produced, but omitting those States, there are some 800 counties producing cotton. The council has organized committees in each of those counties made up of the leaders within the cotton industry in those respective counties.

We also communicated with various civic bodies, chambers of commerce, Kiwanis Clubs, Rotarians, and others, and we present here for the record resolutions from the States of Texas, Louisiana, Arkansas, Tennessee, Mississippi, Alabama, Missouri, and quite a number of resolutions from various communities and towns, which I propose to put in the record. The resolutions are all endorsing the House Joint Resolution 407 and urging the Congress to enact that measure as it came from the House.

The CHAIRMAN. They will be inserted in the record. (The same are as follows:)

SUMMARY OF RESOLUTIONS PASSED BY CHAMBERS OF COMMERCE AND CIVIC ORGANIZATIONS AND FILED WITH THE NATIONAL COTTON COUNCIL HEADQUARTERS IN MEMPHIS, TENN.

Name of organization and location.-Bonham Rotary Club, Bonham, Tex.; Rayville Kiwanis Club, Rayville, La.; Chamber of Commerce, Jonesboro, Ark.; Hope Chamber of Commerce, Hope, Ark.; Hope Kiwanis Club, Hope, Ark.; Dover Stewart County Chamber of Commerce, Dover, Tenn.; Chamber of Commerce, Vicksburg, Miss.; Farm Bureau Association, Athens, Ala.; Hayti Lions Club.; Hayti, Mo.; Caruthersville Rotary Club, Caruthersville, Mo.; Steele Rotary Club, Steele, Mo.; New Orleans Board of Trade, Ltd., New Orleans, La.; Shelby Chamber of Commerce, Shelby, Miss.