situation, and that was his answer, and if that is the place that we are trending, if that is where we are headed for, it will certainly be very disastrous to American labor. We cannot afford to do it. That certainly cannot be the answer. Without assuming to repeat extensively what I said before the Ways and Means Committee of the House of Representatives, I might suggest that the granting of a tariff concession to Cuba under the provisions of 19 U. S. C. 124, 125, and the treaty of December 11, 1902, which reduced the tariff fixed by any statute by 20 percent, was an unfair advantage to the Cuban grower, and has worked a general destructive hardship on American vegetable growers which they have had to fight against all through the years. This kind of favoritism permitted the imports of Cuban grown tomatoes which I use as an example to reach the figure of 25,559,827 pounds in 1932, and which allowed the Cuban grower to take over quite considerable portion of the American vegetable market. However, under the trade agreement consummated with Cuba about the first of September, 1934, the imports for that year jumped to 37,405,692 pounds, and for 1935 they advanced further to 42,020,873 pounds, and the trend has been steadily upward ever since. So that we have gotten it to a point almost double to what they were before the trade agreement. It would probably be interesting to this committee to know that practically 88 percent of the imports of tomatoes from Cuba now arrive during the months of December, January, and February, when the tariff rate drops from 2.4 as it is during the other nine months, to 1.8 cents per pound. The practical working of this Cuban agreement is this. The Tariff Act of 1930 fixed the duty on tomatoes at 3 cents per pound, a little less than the difference in cost of production. The 20-percent preference allowed under the treaty and statute mentioned above, reduced this to 2.4 cents per pound, which is further reduced to 25 percent to 1.8 cents per pound during December, January, and February. This shows conclusively just what this Cuban reciprocal trade agreement is doing to the American vegetable grower. It is not a sufficient answer to say that the American vegetable grower cannot grow all the vegetables the American people need. That is not true. According to the report of the Department of Agriculture, we can raise fresh vegetables every month of the year in some part of the United States, and all we need is an opportunity to expand ourselves and meet this demand. Give the American vegetable grower a chance rather than requiring him to curtail 10 percent year after year, and see what he can do. But suppose that we are to admit, for the sake of argument, and that only, that the American vegetable grower can raise only some designated portion of what the American people need for vegetable consumption, and we will for the sake of argument fix this at 75 percent. How can we expect the American vegetable grower in Florida, Georgia, Alabama, Mississippi, Louisiana, Texas, California, and other Southern States, and the hothouse vegetable grower, to make a living and have a fair return for their labor, and compete with the Cuban who has a 3-cent advantage practically in "cost of production"? He most certainly cannot do it, as evidenced by the constant increase in imports of tomatoes from Cuba. Certainly during the balance of the year the American vegetable grower should be able to supply the demand for fresh vegetables, if he is given proper support by his own Government. And most certainly the American vegetable grower is entitled to have the American vegetable market maintained at a point which will permit him to make an American standard of living during all the year without subjecting his market to the depressing effect of cheap peon labor conditions prevailing in the Cuban field vegetable growing industry. It just came to my attention today, bearing date of October 7, 1939, with a date line from New York, a clipping, "Promoter Startles Cuba With Offer To Buy Gigantic Tonnage," and this article goes on to describe the possibility of the purchase of 30,000,000 pounds by one buyer. They are importing now 45,000,000 pounds. Do they expect to jump it to 75,000,000? If they can import those during December, January, and February, they can import them at 1.8 when the difference in the cost of production in 1930 was 3.3. That is evidence of the situation that is facing the American vegetable grower. They buy them there for less than they can buy them here. They would buy them here if they could buy them on an equality or on a rate equivalent to ours, or even probably a little more, but where they can get them for so much less, far less in Cuba, and ship them to New York and distribute them throughout the country because of the low rate fixed by this trade agreement, we simply lose the business. If the American vegetable field grower in the Southern States and the hot house vegetable grower are to make a fair living, they must have a proper market during the winter months, and are entitled to it, without having their normal market flooded by cheap "cost of production" Cuban vegetables. If there must be curtailment of fresh vegetable production, it should be allocated between the winter and summer vegetable growers of the United States, so that we will have a balanced vegetable program, as between both the classes of growers, and not by permitting unfair "cheap foreign peon labor cost" competition. Finally, I am interested as the legal representative of a great agricultural industry, and one which should be fostered and protected, and not harassed and curtailed. If I have made a fair analysis of the situation of the American field vegetable grower and the American hot house vegetable grower as to the importation of Cuban grown fresh tomatoes-which situation is illustrative of the entire vegetable situation-then we are entitled to some relief. Certainly we are entitled to some other consideration than being required to curtail our American production 19 percent with probably more to follow. Mr. West said this on the other side of the House, and his remarks appear at page 2890 of the Congressional Record. Mr. Peterson had just introduced the amendment that I am going to propose to you in a very few moments. Mr. West was speaking in opposition to it. This is what he said: Mr. WEST. Mr. Chairman, I rise in opposition to the amendment. Mr. Chairman, of course, in the negotiation of so many trade-agreements inequalities creep in occasionally. That might be true in the case of tomatoes in this particular instance of which the gentleman from Florida has recited. I have talked with the Secretary of State in regard to this and he assures me he will make a careful investigation of these cases; that is, in connection with the trade agreements with Cuba; and, after a careful investigation, if it is found that there is an inequality existing and that prices of these vegetables in the United States are being hurt, he will correct it under the escape clause. Therefore, this amendment is not necessary, and I ask that it be voted down. You know, I am just a little interested to know how he is going to do that. I have the escape clause-in fact I have the whole Cuban agreement here, and I have the escape clause here, and I have read it through. It is article 11 of the Cuban agreement: The customs, preferences, and other benefits provided for in this agreement are granted by the United States of America and the Republic of Cuba to each other subject to the condition that the government of each country will refrain from subjecting payments or the transfer of means of payment or the disposition thereof through any regulation, restriction, charge or exaction over or higher than was in force on April 1, 1934, which results in (1) impairing or circumventing any provision of this agreement; (2) placing an undue burden on the trade between the nationals or residents of the respective countries; (3) preventing or hindering nationals of either country residing, doing business or traveling in the territory of the other country from securing and transferring in or to either country the funds reasonably necessary for or arising from such residence, business or travel. In the event that the government of either country considers that the other country has failed to comply with the conditions expressed in this article, and the latter country shall not have satisfactorily corrected the regulation, restriction, charge or exaction by which such failure arose after formal complaint has been made thereof, the government of the country so complaining may terminate the agreement 30 days after giving notice to the other government. The CHAIRMAN. I think we will have to adjourn now, but I want to be perfectly fair with you, and if you do not feel that you want to put your brief in the record as a part of the record with any amendments that you propose, we will adjourn until 9:45 tomorrow morning and hear you at that time. Mr. CONNAUGHTON. I would rather do that than to put in the data, because there are matters that I want to refer to. The CHAIRMAN. The committee will recess until 9:45 o'clock tomorrow morning. (Whereupon, at 5:40 p. m., a recess was taken until Saturday, March 2, 1940, at 9:45 a. m.). EXTENSION OF RECIPROCAL TRADE AGREEMENTS ACT SATURDAY, MARCH 2, 1940 UNITED STATES SENATE, The committee met, pursuant to recess, in the Finance Committee room at 9:45 a. m., Senator Pat Harrison (chairman) presiding. The CHAIRMAN. The hearing will be in order. You may resume, Mr. Connaughton. STATEMENT OF JOHN H. CONNAUGHTON, WASHINGTON, D. C., REPRESENTING VEGETABLE GROWERS OF AMERICA, WORTHINGTON, OHIO; NATIONAL ASSOCIATION OF HOTHOUSE VEGETABLE GROWERS, TERRE HAUTE, IND.-Resumed Mr. CONNAUGHTON. I do not need to present argument to this intelligent body of statesmen which compose this committee to convince you that an American vegetable grower with a cost of production, based on the American standard of living of 6.3 per pound as to tomatoes, cannot compete with a Cuban grower who can raise these tomatoes and deliver them in New York and Chicago at 3 cents per pound. I do not care if the Cuban only supplies 25 percent of the market now, if this program continues, the Cuban will have the entire 100 percent of the American vegetable market, and will drive the American fresh vegetable grower out of this American field. The only limitation upon this result is the ability of the Cuban vegetable grower to supply the entire demand. He can certainly sell all that he can raise at a profit, and at the same time undersell the American vegetable grower in his own market, and force the American vegetable grower to allow a portion or all of his crop to rot in the field. It might be that for a few years the American fresh vegetable grower would be able to make a bare living under this kind of competition, but as the importation of fresh vegetables from Cuba increases, the competition to the American vegetable grower becomes more critical and the Cuban grower undersells the American vegetable grower in the American vegetable market, and sells all he, the Cuban grower, raises, and makes a profitable living (according to the Cuban peon standard), while the American vegetable grower can only sell a part of his crop at destructive low prices, and gradually pays less Federal income taxes, discharges his American workers, one by one, as the depression tightens on him, which workers become the clients of the Federal, county, State, and city pauper and relief rolls, and the American vegetable grower and his family follow them in a few years, or possibly months, as their savings dwindle away. Can there be any other result? I am not interested in the stand taken by politicians and political parties on this subject, and neither are the many million Americans who are interested in their vegetable diet and the American standard of living. I am interested in solving a problem for a great American agricultural industry, which should be growing instead of curtailing, as the American public should become more "vegetable consumer conscious." I am interested in the welfare of the vegetable growing industry, and the health of the American people, and I resent the idea that this vital prolbem is made the "football" of vacillating politicians, and vacillating political parties. I take the same stand here which I took before the Ways and Means Committee of the House of Representatives, and this is the one I am willing to go to the American people upon. That is this: The present administration of this reciprocal-trade statute which we are now considering extending, being 19 U. S. C. 1351 et seq., as it is now and has been for the last 6 years, is detrimental and destructive to the American fresh vegetable grower. If your committee can show me how an American vegetable grower with his high standard of living, which makes his cost of production of tomatoes approximately 6 cents per pound, can compete with a Cuban vegetable grower, who raises his vegetables with cheap peon labor, at a cost delivered in New York and Chicago of approximately 3 cents per pound, without a tariff differentiation, then I am ready to admit that 2 and 2 sometimes do not make 4. Gentlemen, it cannot be done. We have heard in this hearing, and the one which preceded it before the Ways and Means Committee, masses of figures reputed to show that these "trade agreements" have increased exports, and have not increased imports, on this, that and the other. I do not care what these figures show, and the things that they show do not prove anything at issue in this controversy. There are many factors that enter into the results which are experienced when we get into trade relationships, but there are basic principles that underlie them all which are as unchangeable as the rule that 2 and 2 always make 4. One of those rules is that all of these factors cannct operate on all parties concerned equally unless they have an equal "cost of production." There cannot be an equality in trade relationships when it costs you twice as much to produce an article as it costs me to produce the same article. I have been informed by labor executives that labor wage scales in Great Britain are approximately 60 percent as compared with us; Belgium, 25 percent-it is actually more than that. They pay their iron workers 17 cents an hour and we pay ours 78 cents an hourItaly about 40 percent, and other countries range from these figures down. What are we going to do in a world of such labor relationships? Are we going to crawl down or drag those industries of ours down to this level, where a large part of the cost of production of such industries is the labor cost? One thing for us to determine here and now is whether we desire to maintain our present labor standard or get in the gutter with the rest of the world. If we desire to join them, then our present "trade agreement" policy will work when we get down to that un-American level. Then in the language of Patrick Henry, "I have no lamp by which my feet are guided but the lamp of experience. I know of no way of judging the future but by the past." And in the light of that past as applied to the action of the secret committee, which negotiates |