and Mr. Carlisle Thorpe, who was mentioned by the previous witness as general manager of the California Walnut Growers Association.

We organized that horticultural industry advisory committee. because we thought it was a good thing to do in line with what Canada has had for many, many years in its horticultural council. And the representatives of the Horticultural Council of Canada are not only in Geneva, but they are a part of the delegation from the Canadian Government and are members of the negotiating team.

But what do they do with Thorpe and Herbert when they go over to Geneva, American businessmen, American citizens? In the first place, they have them about 40 miles away from Geneva, and when they do get in there they refuse to talk with them; refuse to give them any information; refuse to listen to them, and there is not a single man in the American delegation that knows anything about the products of agriculture, on which those two men are experts.

I want to read you a cable that we received from Messrs. Thorpe and Herbert last night:

Members American Negotiating Committee instructed by State Department Division Commercial Policy withhold all information from American industry representatives here and progress kept so secret impossible learn when any schedule being considered or probable outcome. Our industry representatives treated like imposters and have been informed their contribution here would be limited to answering any factual questions regarding our industries if information desired was not obtainable in record. Herbert wrote Clayton April 25 requesting appointment which only granted today. Clayton confirmed policy previously announced by Winthrop Brown to Herbert that no information whatever would be given industry representatives relative proposed tariff schedules or related matters and declined differentiate between horticultural council and any other business enterprise. Also that regardless whether Canadian industry representatives were allowed participate in advisory capacity would make no difference American policy.

I will close with that, Mr. Chairman, and with the further remark that I join in the appeal made to you by Charley Holman of the Milk Federation when he said on May 7, day before yesterday, in concluding:

We respectfully represent, in some way, somehow, this Congress should block, if possible, the consummation in Geneva of the proposed trade agreements with 17 nations.

The CHAIRMAN. What do you recommend, shooting them?
Mr. Loos. Well, that or poison.

(The following matter was submitted for the record by the witness:)

ESCAPE CLAUSE (SENATE FINANCE COMMITTEE HEARINGS ON ITO) After Senator Hawkes had expressed concern about the danger in connection with the escape clause, Mr. Clayton said:

"Well, Senator Hawkes, we are very hopeful because of the very thorough investigation made in these matters, we are very hopeful that on the occasions on which the escape clause will have to be used, that they will be very few. We do think that there are chances for error and there are chances for mistakes in almost anything we do in this world, and we do think the escape clause is a useful thing to have in the provisions in case subsequent developments should show that we made a mistake, and that will give to the producers the means by which they may have it corrected.

"Senator HAWKES. I say, Mr. Secretary, that I think it is vitally necessry to have the escape clause, but I hope that we will not rely on the escape clause and let it lead us into a lot of traps.'

Page 71-76:

"The CHAIRMAN. Abstaining myself from argument on the point, many businessmen say: 'Of course, you are dealing among Government people, but you are also dealing with subject matters that mean our life and death,' and their point is that this should not be in the hands of theoreticians but at least there should be some stiffening of the personnel by men who both know the technique of the negotiations and techniques of tariffs and who have the happy contact of business experience.

"Let me ask you this. This charge is also made, that you will put undue weight on the possibility of getting out of trouble. Senator Hawkes has touched on that, that you will put undue weight on the operation of the escape clauses, and that, therefore, you will feel at liberty to take greater chances in the negotiation of the agreement than you would otherwise take if you did not have the escape-clause mechanism.

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"The point that is made here is that because of the existence of the escapeclause procedure, without the existence of that preagreement protection that we may be inclined to take chances in making the agreements that we otherwise would not make. Those who make that criticism also point out that the escape clause does not give complete protection because an industry might be ruined by the time you might go through its operation and get a corrective declaration by the President.

"Will you give us your comments on that?

"Mr. CLAYTON. Mr. Chairman, the escape clause is kind of a supreme court, and I do not suppose any judge other than perhaps the Supreme Court would be able to say to what extent his decision in the case would be colored by the feeling that his decision was not the final decision and that it would be or could be reviewed by a higher court.

"I would not say that the fact that there is an escape clause would not, to some extent, affect the judgment of some of us. I certainly would not say that it would not.

"However, I think that it would be very easy to exaggerate the feeling to the extent to which it might affect it, because obviously we all want to be right. We do not want to be shown up later that we have been wrong. That will be our compelling motive to make right decisions, always knowing that if we make a wrong decision, we will be shown up as having made a wrong decision.

"The CHAIRMAN. Can you assure us here, Mr. Secretary, that doubts will be resolved in favor of our domestic interests?

"Mr. CLAYTON. Mr. Millikin, I just do not know. When you say 'domestic interests,' we have them on both sides.

"The CHAIRMAN. I mean our domestic producing interests.

"Mr. CLAYTON. Are you speaking about the ones who want protection? "The CHAIRMAN. Yes.

"Mr. CLAYTON. We have also interests that have to be protected. These farmers which I have pointed out before.

"The CHAIRMAN. I am trying to get what your standard will be and what your rule of action will be. I would be a little more comfortable if you gave me the answer that there would be a decision in favor of our domestic producers.

"Mr. CLAYTON. I can only tell you that we have made a very careful and painstaking investigation of all of these commodities that are the subject of negotiation.

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(Went on for about a page describing the hearings before the CRI.)

"The CHAIRMAN: My question was a simple one. Will you resolve the doubts in favor of our productive industries at home?

"Mr. CLAYTON. I am sorry. I want to answer you absolutely truthfully, but I just cannot say that we would in every case, because there are doubts that

arise.

There is a group that has to make this decision and it is a trade agreement committee, and it is composed of seven.

"They get together and they take all of the evidence and testimony, and recommendations of the Committee on Reciprocity Information, and they have to make the recommendation to the President, and the President is the final authority in saying as to what extent we may go in making a tariff concession. "The CHAIRMAN. I did not get in my own mind an answer to the question I asked a moment ago. My question was whether you will take increased chances by virtue of the escape clause procedure.

"Well, I do not think we will, but as I said to you at the time, I do not think anybody can just say absolutely to what extent his mind may be influenced by some knowledge of that kind, no judge, if the judge has to pass sentence on a man for guilt of murder or something of that kind, I do not know exactly to what extent his decision will be influenced under the facts and knowledge that it can be appealed to another court.

"The CHAIRMAN. He may have difficulty relating the facts and he may have difficulty applying the exact principle, but theoretically he operates under standards which the law has laid down.

"Mr. CLAYTON. That is right, Senator.

"Mr. CHAIRMAN: Have you contemplated your answer?

"Mr. CLAYTON: I was just going to say that there are in those cases as you know very well, being a lawyer, a great deal of doubt, because you have in a great many cases, split decisions.

"The CHAIRMAN: Of course. The Senators will bear me out that in cases of doubt of that kind, you resolve in favor of one or the other of the parties.

Mr.

"Mr. Edminster who is Vice Chairman of the Tariff Commission and who was chairman of the Committee for Reciprocity Information seemed to have a stronger view on the matter. At hearings on the International Trade Organization Charter on February 25, 1947, at which he was presiding, a witness testified that he was opposed to the escape clause because it would permit attempts to bring about the partial or complete elimination of duty reductions that had been secured. Edminister took issue with the witness asking him if he did not think that after all there might be some reason for having the escape clauses in agreements in that in the absence of such a clause there might be danger "that the reductions made in the international negotiations might be inadequate merely because of the uncertainties in the world situation. His question indicated that he at least thought there would be a great advantage in the escape clause because it would tend to make the negotiators much more liberal in that they would not avoid making reductions because of possible uncertainties or because of the fear that a reduction might be too great and cause serious injury to the industry affected.”

TESTIMONY BEFORE HOUSE AGRICULTURAL COMMITTEE

March 11, 1947: Clarence W. Nichols, Assistant Chief of the International Resources Division, Department of State.

After referring to a letter from the President to Chairman O'Mahoney of the Special Senate Committee to Investigate Wool, letter dated March 11 1946, Mr. Nichols said:

"The choice of lower selling prices for wool under the administration program can result in an expanded woolen industry, greater real gains to consumers, no injury to producers, greater national security, and better international relations. The United States is seeking, through its participation in the United Nations, to work out a system of world cooperation as the basis of securities; this system of security extends also to world trade. The establishment of further trade barriers at this time, especially on a commodity as important in world trade as wool, would seriously threaten international economic cooperation and the objectives of the United Nations" (pp. 202–203).

Present duty on wool 34 cents but that is insufficient to protect American wool grower (p. 211).

Page 214: "Mr. NICHOLS. We are recommending Government purchases and sale at a loss, or direct income payments, in preference to import quotas or import fees.

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Page 231: "Mr. NICHOLS. We feel import quotas are much more restrictive of international commerce, as a general proposition, than other methods of interfering with trade and restraining competition. By and large, we feel more critical toward the use of quotas than other forms of control.

"Mr. PACE. And you feel more critical about that than you do about production limitation?

"Mr. NICHOLS. I am sorry, I haven't given that enough thought. But on the quotas, I do want to make clear that the Department has recognized certain situations in which the use of quotas would appear to be not only justified, but in which quotas would seem to be as useful and acceptable as any other available method.

Page 238: "Mr. ANDRESEN. Is it the attitude of the Department that if farm products, or manufactured products, can be produced cheaper in some other country of the world, that we should discourage production in the United States? "Mr. NICHOLS. No, not as a generalization. But looking at each case in particular, there are undoubtedly cases in which the United States should not specifically encourage domestic production, but should rather rely upon production which is more fortunately situated abroad, so that our consumers will get the benefit of a better production opportunity.

"Mr. ANDRESEN. Would you, then, favor the United States producers going out of production in those particular items letting the other part of the world produce them for us?

"Mr. NICHOLS. The situation is different, I feel, where the United States is already in production on some scale than it is in the case where it is not. If the United States has a high-cost industry in existence now, then even though a fresh look at the thing might suggest that our country would be better off to obtain its supplies from abroad, it would not be fair, simply on a stroke, to assume as though we were starting fresh and to undermine the basis of an existing industry. There might be a question of gradual movement in that direction. But in the case where domestic production is a small proportion, or does not exist at all, and where the question comes: Should an import restriction be established for the purpose of creating a new industry here rather than rely upon foreign sources, then in many cases, at least in cases of no strategic importance, we would favor very careful consideration of the benefit to our consumers of getting-low-cost production wherever produced.

"Mr. ANDRESEN. And, as I understand it, where only a few thousand people might be involved in an industry like the pottery and glass industry, if the pottery and glassware could be produced cheaper in other countries, the fact the American consumers could get it cheaper from foreign sources would not deter the Department from putting in a policy that would put a few thousand people out of business? "Mr. NICHOLS. Of course, the situation of a few thousand, or even less than that, is as important to them as it would be in the case of a larger situation, and I am not able to speak particularly about the pottery industry. But I feel that there are industries which are in a trend of expansion or contraction and that Government policy should not definitely seek to freeze the existing pattern of production. We would like to see an increasingly effective use of American resources and a higher standard of living abroad. If there are alternative opportunities for employment and for enterprise here, if gradually, over a period of time, our own country will be better off if we produce, say, less and less of our requirements for those things and import them in increasing proportion, that would seem to us to be moving in a desirable direction.

"I do not mean to say we favor abrupt strokes.

"Mr. ANDRESEN. You believe in a sort of gradual liquidation rather than an abrupt liquidation?

"Mr. COOLEY. How else will it be possible for us to revive world trade, except by application of the theory that you have been presenting here this morning? "Mr. NICHOLS. We would not be in a position to say. Our people have worked pretty hard on this, and the suggestions we make do represent our best efforts. The CHAIRMAN. The next witness will be Mr. P. W. Parker, chairman of the board, Standard-Vacuum Oil Co.

STATEMENT OF P. W. PARKER, CHAIRMAN OF THE BOARD, STANDARD-VACUUM OIL CO., NEW YORK CITY

Mr. PARKER. I have a statement that I would like to read to the committee.

My name is P. W. Parker. I am chairman of the board of StandardVacuum Oil Co., an American company which, with its subsidiaries, is engaged almost exclusively in trade in and between foreign countries. Our only operations in this country consist of the purchase of supplies and equipment, and certain products which we buy here for sale abroad.

Standard-Vacuum is the outgrowth of efforts by early American oilmen to find foreign markets for a commodity produced in this

country. It was largely surplus kerosene which caused these oilmen of two and three generations ago to embark on international trade in the countries of the Far East-the countries in which today Standard-Vacuum conducts much of its business.

In 1933, the oil-marketing organization which had been built up by Socony-Vacuum Oil Co. in that part of the world, joined with the producing and refining organization which Standard Oil Co. (New Jersey) had developed in the same area, to form Standard-Vacuum.

Each of these companies has a 50-percent interest in StandardVacuum, and the 141,000 shareholders of Socony-Vacuum and the 164,000 shareholders of Jersey Standard are thus the owners of this enterprise.

This map I show you indicates the part of the world where StandardVacuum conducts its operations-exploration, production, refining, and distribution. This market includes some 18 countries and more than 1,200,000,000 of people over half the population of the world— speaking several hundred different languages and dialects. Both in the economic and the political spheres, it seems to me that these countries, and the attitudes of the people in these countries, is of great importance to us today-perhaps of greater potential importance even than Europe or other areas.

In addition to the countries usually described as the Far East, the area includes South and East Africa, India, Australia, New Zealand, and some of the South Pacific islands. You will note that StandardVacuum is not represented in Europe, Russia, North Africa or the Middle East.

By foreign trade Americans generally think of export from and import into the United States. Standard-Vacuum represents a different kind of foreign trade-a kind in which American capital and know-how are exported to establish trade not with foreign countries, but in and between foreign countries, and in which a return on this investment of capital and skill comes back to the United States.

Because of the disruption following the war, I cannot give you at this moment an accurate picture of our producing and refining properties, since most of them are in areas which we have not yet been able to visit. However, we expect soon to be able to resume operations in the Netherlands East Indies. Our program for rehabilitation and modernization of oil fields and refineries over the next 5 years calls for the expenditure of something over $200,000,000 of new capital. A very large part of this amount will go for materials and equipment purchased in this country-capital investments which are directly linked to American jobs and pay envelopes.

Since the end of the war, Standard-Vacuum's bill for supplies of various kinds purchased here in the United States has totaled more than $30,000,000. We have spent an even larger amount in American shipyards since 1941.

And even though Standard-Vacuum conducts operations only in foreign markets, a substantial part of the products we sell comes from the United States. Essentially all our lubricating oils for these markets-which account for about one quarter of our gross sales in dollar value-are purchased in this country. In the decade ending with 1946 we bought in the United States lubricating oils with a market value of about $260,000,000, all for consumption in the marketing area I have indicated on the map..