Mr. TROVATTEN. I could not make an answer on that, because what we are advocating is a flexible tariff and not a high tariff.

Mr. LYNCH. I think I understand your position, Commissioner, but I think our only point of disagreement is this, and perhaps we are not in disagreement: I believe in a flexible tariff because a flexible tariff is exactly what the reciprocal trade agreements are.

Now where you spoke about your fear about these imports, it occurred to me that you probably were overlooking the necessity for

exports.

Of course, I am only a farmer from New York City, with a geranium plant in my district, but it occurs to me that farmers must have some outlet for their surplus products, and I do not see it, and I wonder if you could help me out. How are you going to have an outlet from your surplus products, if you have no export trade, and if you have an export trade, does not that necessarily mean that we must do some importing from those countries?

Mr. TROVATTEN. Of course, I am not worried about our surpluses, Congressman. If we have full employment, if agriculture is paid on the basis of what it costs to produce it, what little surpluses we would have, you could give away and it would not make anything.

Mr. LYNCH. Now, Commissioner, you know more about it than I, but it certainly occurs to me that, since I have been down here in Congress, I have heard about surpluses of wheat, and surpluses of cotton, and surpluses of potatoes on Long Island where I live. And we have had high wages. I think only last year we had a surplus of potatoes on Long Island.

Now, under those circumstances, do you not think that we must have an export trade?

Mr. TROVATTEN. You had surpluses of potatoes because you had up in our State-and that is true in many other States-you had a quota of sugar beets way below what it needs to feed this Nation and it was replaced by the growing of potatoes.

That is part of the New Deal philosophy.

Mr. LYNCH. I think you missed my point completely.

The CHAIRMAN. I think he did pretty well.

Mr. LYNCH. I am glad the people from Minnesota are so unanimous, but I am sorry the distinguished Governor Stassen disagrees with the distinguished chairman of our committee.

My question was, Do you not think, regardless of the cause of the surplus, that when we have a surplus there is only one way under every rule of economics that we can dispose of it, and that is by sale to foreign countries or by export?

Mr. TROVATTEN. What little surplus we would have, would be 2 or 3 percent, and no more than 5 percent; it has never amounted to more than that, and then if you want to be a good neighbor, give it to somebody if you want to do that.

Mr. LYNCH. Are you not opposed to giving those things away? You stated before you were opposed to subsidies, if I remember correctly.

Now let me ask you, just diverting from Governor Stassen for a moment, you stated you are opposed to subsidies.

Does not the Government subsidize the farmer when the price in the market place falls below 90 percent of parity by paying the difference between the market price? Is not that a subsidy?

Mr. TROVATTEN. They do when they get agriculture completely out of joint like they have had it this last 14 years.

Mr. LYNCH. I am not asking you about that, Commissioner. You stated you are opposed to something. Subsidies and parity prices were passed by Congress and have been going on for years.

Now I am asking you, When the price in the market plays below parity, and when the Government pays the difference to the farmer between the market price and the parity price, is that not a subsidy? Mr. TROVATTEN. Certainly it is a subsidy.

Mr. LYNCH. And you are opposed to subsidies,

Mr. TROVATTEN. I see no need for it.

Mr. LYNCH. You are opposed to subsidies?

Mr. TROVATTEN. That is right.

Mr. LYNCH. That is correct?

Mr. TROVATTEN. Yes.

Mr. LYNCH. Then you are opposed to parity prices, is that correct? Mr. TROVATTEN. I am not. I am trying to propose a plan for parity prices, to you here that would be workable.

Mr. LYNCH. Mr. Commissioner, what would be the purpose of a parity price if, when the price of the item fell below the parity price, there was not a Government payment for the difference between the two prices? What would be the purpose of parity unless it provided for a Government payment of the difference between parity and the price below parity?

Mr. TROVATTEN. That difference in that party price and the surplus that you would have to sell abroad could certainly be adjusted, could it not?

Mr. LYNCH. I am asking you just one simple question and I do not think you are answering it. Perhaps you do not get it. Perhaps you do, and you do not want to answer it.

You stated you are opposed to subsidies. I pointed out to you that the Government is paying a subsidy to the farmer when it pays the difference between a below-parity price and the parity price, and I am asking you if that is not a subsidy?

Mr. TROVATTEN. Le us take an illustration here.

Mr. LYNCH. I am asking a simple question.

The CHAIRMAN. Let the witness answer.

Mr. LYNCH. I am asking a particular question, and I will ask you to direct the witness to answer my question.

Mr. REED. This is not a court.

The CHAIRMAN. I am going to see that the witness is permitted to answer the question, Mr. Trovatten, you will answer the question in your own way.

Mr. TROVATTEN. He is trying to drive me to agree to his program, and I am not for it because it is an unworkable program.

Mr. LYNCH. Commissioner, I know you are not for it, but I am asking you these questions, and I want to give you every opportunity to answer. The only thing that I do ask is that you answer the question, because I know very well if you do not, the chairman will not instruct you to, even though I ask him to.

The CHAIRMAN. This is a free country.

Mr. LYNCH. I wonder if you would answer my previous question. Mr. TROVATTEN. If you want my answer, I will illustrate what kind of a plan we are trying to propose to you.

99616-47-pt. 2-62

This last winter we dumped over 2,500 carloads of potatoes in Minnesota. There was a good market for that over in Europe, according to the Herbert Hoover report. You could have gone over there and taken care of thousands of people with that food production that we threw away. That could have been bought at parity price, could it not, just as well, even though the Government would have had to buy it from the farm people and give it to those people. That is not a subsidy.

Mr. LYNCH. Buying from the farm people and giving them the parity price, and giving a product away to foreign people is not a subsidy, is that it?

Mr. TROVATTEN. It is not a subsidy to my way of thinking.

Mr. LYNCH. Well, that is an answer.

Mr. TROVATTEN. They could live on potatoes but they could not live on money if you gave them the money.

Mr. LYNCH. That is an answer.

Is it not a fact that the potato subsidy was as a matter of fact advocated, and secured, by the Senator representing the great State of Maine? Was he not the one who secured the subsidy for these potatoes?

Mr. TROVATTEN. That is probably true.

Mr. LYNCH. Now going back to Governor Stassen again, Commissioner, he says this in his address:

"It is of grave importance that we do not obstruct

and I call attention of the chairman to this statement

"the existing trade program while we share the responsibility of our national administration with Republican majorities in the Senate and the House, and an opposition party President and executive in the executive branch.

Do you agree with Governor Stassen in his statement that the majority should not obstruct the existing trade program?

Mr. TROVATTEN. If you would ask Governor Stassen to answer this question, whether or not he wants the farm people of the United States to sell below parity, I would answer it very readily but until you can secure that answer for me, I am not prepared to answer.

Mr. LYNCH. In other words, you are not prepared to answer whether or not there should be no obstruction to the existing trade program as outlined in the address by Governor Stassen, is that correct? Mr. TROVATTEN. You haven't answered by question yet.

Mr. LYNCH. No, Commissioner.

Mr. TROVATTEN. Because there is nothing in his speech that indicates that he is against full parity for agriculture, because I happen to know that he is for full parity for agriculture.

Mr. LYNCH. Commissioner, let me say this. Although you and I may have divergent opinions, I think that you are a qualified witness and could readily give me the information I ask. But I also think that Governor Stassen is a qualified witness, and I am only basing my questions upon the address that he made in my own city.

I am trying to have it clarified by you, his commissioner of agriculture.

Now he says further and perhaps you want to comment on this: Improvements in the methods of negotiating the agreements should be developed as Senators Vandenberg and Millikin have ably pointed out but the alter

native is either to go forward now with the reciprocal trade agreements or to slide back in economic isolation. I consider it to be of tremendous importance, therefore, that our Republican Party follow through with interim support of the reciprocal trade program. The impending negotiations between 18 agencies at Geneva should be held and extensive agreements should be negotiated.

Do you agree with that statement of the governor's, that we should either go forward now with reciprocal trade agreements, or slide backward in economic isolation? Would you care to comment on that, Commissioner?

Mr. TROVATTEN. Only to the extent I have already stated.
The CHAIRMAN. Has the gentleman concluded?

Mr. LYNCH. When I have, I will advise you, Mr. Chairman.
The CHAIRMAN. Well, we may have to call time.

Mr. LYNCH. If you call for time I will call for a quorum. Commissioner, when Governor Stassen said "A high tariff policy no longer suits this country," do you not think he implied that we had pursued a high tariff policy, or if I may put the question doubly to you, do you not think we have had a high tariff in the past?

Mr. TROVATTEN. We have in instances, yes. That is not true on everything.

I just pointed out tariff on butter, for instance. It would only bring the price of butter up to approximately 49 cents today, if we had foreign competition on the basis of the prices I said existed in the New Zealand agreement.

Mr. LYNCH. Would, in your opinion, anything below 65-cent butter to the farmer be disastrous to the economy of the country?

Mr. TROVATTEN. If labor costs and other incidental costs went down, of course the tariff prices would automatically be reduced. Mr. LYNCH. I did not understand you before, then. Your 65-cent butter that you spoke of

Mr. TROVATTEN. That is our present parity; yes.

Mr. LYNCH. That has only to do with present prices, including the present cost of labor, that is not a fixed price to go on and on? Mr. TROVATTEN. Labor, of course, is not included.

Mr. LYNCH. That is the parity price?

Mr. TROVATTEN. That is supposed to be the parity price; yes.

Mr. LYNCH. Mr. Chairman, at this time I ask you to place in the record an address made by Governor Stassen of Minnesota at the annual Lincoln Day dinner of the National Republican Club of New York, on February 12, 1947.

The CHAIRMAN. If there is no objection, it is so ordered and will be inserted at the end of the witness' testimony.

Mr. LYNCH. Thank you very much.

The CHAIRMAN. Have you concluded?

Mr. LYNCH. Yes.

The CHAIRMAN. Mr. Trovatten, you were not very tactful when you said that we had now balanced the budget. You see, the New Dealers are very proud of having established a new record in Government spending, for 14 long years, and it arouses their ire, as well as their apprehension, to think that that glorious period has come to an end.

Mr. LYNCH. Mr. Chairman, I will have to call time if you are going to make speeches instead of asking questions.

The CHAIRMAN. If you had submitted your manuscript to me, I should have blue-penciled that paragraph, because you should not have stepped on their toes.

Are there any questions?

Mr. REED. Yes; I would like to ask a few and make a few observations.

I just want to say to you, sir, that you have subjected yourself to one of the most searching examinations by one of the greatest lawyers in New York City.

Mr. LYNCH. Thank you very much. I appreciate that.

Mr. REED. That is just a little free advertising.

Also, he qualifies as not only a dairy farmer but a farmer in general. You probably did not know that.

Mr. TROVATTEN. I did not know that.

Mr. REED. He has belonged to a party that has milked the public night and day for 14 years, so he really is a good dairy farmer. Mr. LYNCH. No comment.

Mr. REED. Now you spoke about New Zealand. I happen to know something about New Zealand and about Australia.

New Zealand is very highly organized for the dairy business, as you probably know. They have to spend practically no money at all for their harbors. They have these creameries located, the large ones, comparatively close to the harbor. They are built and subsidized by the government for the purpose of exporting. They have a climate where their cattle can run out doors the year 'round and graze in luxuriant pastures. They do not have to build the expensive barns that you do up in Minnesota.

Not only that, but they have subsidized the transportation rates back to the farms inland, so they get the same rate of transportation for their butter to the creameries at the ports, at the same rate that the farmer does living in close to the city.

Everything is in the interest of export. Their factories are convertible from butter to cheese for export, almost over night, so whenever they see an opportunity in the price of butter or cheese in this country, when it has reached the point where it looks as though it might go up another point or two, the ships heavily loaded come into our ports. Just one shipload, I think you will agree, will break the market and send it down.

The CHAIRMAN. Would you answer the question? The reporter cannot see the nod.

Mr. REED. Do you understand that?

Mr. TROVATTEN. That is true.

Mr. REED. Canada had to take about something like an embargo to save their market up there.

Mr. TROVATTEN. Yes; I recall that.

Mr. REED. It is rather interesting to note the amount of exports of butter that come into this country in different years. In 1935 our market was broken by imports from all countries. There is an importation here of $3,577,000 worth.

If we go back to 1935, we find they pushed in here 22,675,000 pounds. That would break the market, would it not?