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that.

Therefore, your argument is not a valid one, with all due respect.

Now, let me take this further comment: Italy did not gain mostfavored-nation treatment from us if she discriminated against our trade any way whatever. The most-favored nation clause is extended only to those countries that do not discriminate against our trade.

Mr. GEARHART. Wait a minute there.
Mr. Clayton. May I just finish?
Mr. GEARHART. I want to know more about that.
Mr. CLAYTON. Please, may I finish, and then you may come back to

During the period to which you refer, Italy was getting ready for was under Mussolini and was making bilateral trade agreements with other countries and channeling ber trade to those countries that she thought would be useful to her in case of war, just as Germany was doing.

Mr. GEARHART. Yes.

Mr. CLAYTON. Do not forget in that period we had all kinds of currents and developments and trends to contend with in our international trade.

We knew what was happening in Germany. We knew what was happening in Japan. We knew what was happening in Italy. They were all three countries that in normal times we had a very large trade with; but during the period that you are discussing, they were all three getting ready for war and were trying, first of all, to make themselves self-sufficient as far as they could and, in the next place, were trying to direct their trade with countries they thought would be most useful to them.

Mr. GEARHART. You have listed a lot of arguments why the Italian result as shown by these figures can be explained.

Mr. CLAYTON. That is right. Mr. GEARHART. All right. I can take you to another country to which none of those arguments can be applied, and still you get the same result, a loss of the markets

Mr. CLAYTON. All right.

Mr. GEARHART. During the period of the reciprocal trade-agreements program.

Now, you say something about withholding the benefits of the mostfavored-nation principle from Italy. As a matter of fact, Italy was never deprived of the benefit of the unconditional most-favorednation principle as applied to commerce.

Mr. CLAYTON. I did not say she was.
Mr. GEARHART. You implied it very strongly.

Mr. CLAYTON. I did not mean to. I meant to say in regard to Italy or any other country with which we do not have a trade agreement, the most-favored-nation principle applies only if, and so long as, they do not discriminate against our trade.

Mr. GEARHART. Yes; but, as a matter of fact, and in the face of the record, no nation on the face of this earth was deprived of the benefit of the unconditional-most-favored-nation principle, except that for awl ile Australia was, and all of the time Germany was, is that not correct?

Mr. CLAYTON. I cannot answer that "yes" or "no," Mr. Gearhart. I do not know.

Mr. GEARHART. Well, I think the young man with you will verify that.

Mr. CLAYTON. I am informed that it is correct.

Mr. GEARHART. That is correct. And now we go down to the case of France.

France is one of your early reciprocal trade agreement countries, and we find that in the protective tariff years we had 12.2 percent of all of the out-of-country purchases.

During the depression years we fell down in France to 10 percent.

And then, in the trade-agreement years, we went on down to 9.8 percent, our share in her total out-of-country purchases.

How about your explanations that you gave with respect to Italy? Will you apply them to France?

Mr. CLAYTON. No, sir.

Mr. GEARHART. Take Canada Canada is one of the early tradeagreement countries, one of our best customers.

We find that in the protective tariff years, as I have defined them, Canada bought 67.4 percent of all of her out-of-country purchases from the United States.

In the depression years, Canada's purchases from us fell down to 60.3 percent of her total out-of-country purchases.

And under the trade-agreement years, the percentage goes on down to 59.4 percent.

Now, how do you account for the fact that our percentage share in the Canadian market fell off during the beneficent influences of the Trade Agreements Act?

Mr. CLAYTON. It is practically the same. Nine-tenths of 1 percent different.

Mr. GEARHART. That is right, but it is all going in the wrong direction.

Mr. CLAYTON. That is right; in the wrong direction; but the preference system accounted for that.

Mr. GEARHART. Now, we have the Netherlands, another tradeagreement country. In the tariff days, when we treated all countries alike and made them pay for their entry into the American market, we enjoyed 10.1 percent of the market of the Netherlands.

In the depression years we went down to 7.1 percent.
In the trade-agreement years we came up 1 percent to 8.3 percent.

There is the only country that I find on my list where it turned
upward.
Mr. Clayton. I am glad we found one.
Mr. GEARHART. Yes, sir.

In Belgium, in the protective tariff years we enjoyed 10.3 percent of the Belgium market.

In the depression years it went up to 10.7 percent, but in the tradeagreement years our share dropped down to 8.5 percent.

Well, now, I could go on and read into the record the figures in respect to all of these markets, but they all tell the same story.

The trade-agreement countries and the non-trade-agreement countries, they all tell the same story. But, at that, I think the non-trade-agreement countries and the trade-agreement countries should tell the same story, because all of the benefits that go to an agreement country also go to a nonagreement country, and, if anything, the nonagreement country is the one that should be more

appreciative. It gets its entry into the American market under more favorable conditions without the necessity of giving anything to us in return.

That is correct, is it not?

Mr. CLAYTON. During the period that you mention, Mr. Gearhart, our export trade in the whole foreign trade increased materially, and it increased much faster with trade agreement countries than with the other countries.

Mr. GEARHART. I am getting to that, too, and I do not think, really, when we analyze it, that you will be able to stick to that statement. Not wholeheartedly, though you might cling to it tenaciously. You have got a job to do.

But that brings us down to the discussion with a country with which we never had a trade agreement, one which excused itself whenever the subject was broached. That is Japan. They stood on the side lines and got the benefit of every agreement that was made without giving us anything in return.

Japan merely jumped on the "gravy train" and did not pay a nickel for the ride. So we find that in the protective tariff years, as I have defined them, we enjoyed 29.3 percent of all of the total out-of-country purchases of Japan. And in the depression years, our share went on up to 31.7 percent of all of the total out-of-country purchases of Japan; and in the trade agreement years, our share still went on up-to 32.7 percent.

Now, do the trade agreement proponents claim they are entitled to the credit, if any, for the improvement of our trade with Japan?

Mr. CLAYTON. No. That was due to the acquisition in this country of certain essential materials that she could not get anywhere else.

Mr. GEARHART. Then, Mr. Chairman, I ask the unanimous consent to include this tabulation in the record at this point.

Mr. REED (presiding). Without objection, it is so ordered.

(The tables are as follows:) Value of total imports for specified foreign countries and the proportion coming from

the United States
(Value of figures in thousand dollars-old gold, 1926 to 1932, inclusive; currency, 1933-38]

[blocks in formation]

Value of total imports for specified foreign countries and the proportion coming from

ihe United States Continued

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Value of total imports for specified foreign countries and the proportion coming from

the United States Continued

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