Mr. REED. What is the greatest contribution that an industry makes to the locality, as a whole, where it is located?

Miss NORTHROP. It puts people to work and creates wages which are spent; and in a wide sense, as far as the United States is concerned, the more wages and the more consuming power, the greater contribution as far as areas are concerned. The higher the wage scale and the greater spending power in the community, the more labor and the rest. That assumes the industry sells its commodities at a price which makes it possible to maintain labor and wages.

Mr. REED. It is quite true, is it not, that as you travel throughout the country, the wealth of those communities and the living conditions and the standards of living and home ownership and all of those things come largely from the wages of some industry in that town? Miss NORTHROP. All of us get our living through wages wherever we happen to be.

Mr. REED. If we can maintain in this country and can produce things that are needed and useful even though it has to exist as a result of a tariff rather than be destroyed by foreign competition, you would believe in a tariff for it, would you not?

M'ss NORTHROP. As a general proposition, sir, we would put people to work, create wages, high consumer spending power and we would produce and sell to our maximum capacity.

That assumes a market area which makes it possible for our producers to sell their goods. That does not necessarily stop at a national boundary.

Mr. REED. That does not quite answer my question. If such an industry could succeed in the community to keep that community prosperous but could not succeed and would be put out of business by reason of foreign competition, would you believe in a tariff to protect it?

Miss NORTHROP. I believe that we will have to use the tariff in a way which makes it possible for us to maintain employment and standards of living on the widest possible basis.

Through time displacements here, displacements there and in the, light of the general interest, we will have to take those displacements area by area, wherever they come, in the light of the total increase in total wage scales and total standard of living.

My answer, therefore, would be to you that at some time we might adopt a policy which would in some little area in this country or in some area of this country create problems of displacement.

I do not believe we can overcome that.

We ought to adopt every policy not just as a tariff policy in the light of the total standard of living in this country and the ability to maintain the highest level of our foreign market. That requires a marketing area larger than one city, one state or one nation.

Mr. REED. If through a reasonable tariff you can provide a marketing area in this country for a host of industries with a tariff, do you believe in a tariff then?

Miss NORTHROP. You are asking me a hypothetical question where I do not believe in your original assumptions. I think I would have to say "no" to that.

Mr. REED. That is all.

The CHAIRMAN. Mr. Cooper?

Mr. COOPER. I have just a question or two, if I may. It is your belief, then Miss Northrop, and the organizations for whom you speak

here, that the reciprocal trade agreement program is definitely in the interest of this country?

Miss NORTHROP. Oh, yes, sir. I do not believe we should take any action except with that as a basis, and it is in the interest of this country.

Mr. COOPER. And while it is desirable to raise the standard of living in other countries of the world, the primary purpose of the trade. agreement program is to help this country.

Miss NORTHROP. Yes, sir.

We cannot take any action which will destroy our own standards of living and help anybody.

Mr. COOPER. And being familiar with the program as it has operated up to now, you think the results clearly indicate that a continuation of the program is necessary for the best interests of the country.

Miss NORTHROP. Yes, sir; I do. The results of the trade-agreement program from 1934 to 1939, I think, showed that our total trade with trade-agreements countries increased more than our total trade with non-trade-agreement countries.

You must remember that that was a program that began at a time when the whole world was trying to get out of a depression, and was really meeting more and more restrictions.

So I do not believe really even that history and that record is fully capable of judging what we might expect from it in the future, particularly if we all sit around a conference table and not use special kinds of trade weapons.

Our interest is an enlargement of our total trade, and so is everybody else's.

I would like to make a split in the reciprocal trade agreement program in the decade of the 1930's and what it might have been made. to be in the postwar world, because if we can integrate it by developing international rules of the game and we go on record as saying, "We are willing to cooperate fully and to sit down around a conference table in this method and work out a solution in our interests and your interests," then I think the possibilities of the Reciprocal Trade Agreements Act are very much greater even than they were in the decade of the 1930's, because in the decade of the 1930's, as you well know, we could not get enough international action, agreed international action, to really solve or form the basis of solving any of these very deep-rooted international problems.

I think it has a greater hope in the future than it has had in the past, and I think it sort of proved it was helpful in the past.

Mr. COOPER. And I take it that it would be your view and it would naturally follow that you think it would be even more important to continue the program in the future than in the past.

Miss NORTHROP. Yes, sir; I do, in two ways. One is the method. of dealing with other countries which is embraced in it. That method of dealing is so important, and I think it ought to be firmly fixed as an element of foreign policy that other countries can count on us for.

As far as the terms, the tariff terms or the barrier terms were embraced in the Tariff Agreements Act.

What will happen in the future is careful of being ascertained at any stage of the future. We have gone so far now as to say, "Up to these limits, this is our bargaining weapon in trying to reach a solution."

So it is something which should be a permanent element in our foreign policy, subject to policy review as the situations change in the world through time.

Mr. COOPER. And with conditions as they are today now throughout the world and with the many dislocations that we know exist, you think it is even more important than ever that some program of this kind be provided to meet those conditions.

Miss NORTHROP. I do, sir.

Mr. COOPER. I thank you.
The CHAIRMAN. Mr. Jenkins?

Mr. JENKINS. I have no questions.

The CHAIRMAN. Mr. Gearhart?

Mr. GEARHART. Miss Northrop, I was just wondering about your general views. Do you advocate freer trade?

Miss NORTHROP. Yes, sir; meaning nondiscriminatory.

Mr. GEARHART. Do you also advocate the freer movement of people from country to country?

Miss NORTHROP. Do you mean as travelers or laborers?
Mr. GEARHART. As people seeking new homes, immigrants?

Miss NORTHROP. Yes; our immigration policy is important since labor is one of the vital elements in making goods. I certainly think our immigration policy has not been geared in with our total economic policy. I do not believe that it is necessary for men to move if goods do.

Mr. GEARHART. Are you for the freer movement of people in and out of countries as immigrants?

Miss NORTHROP. I am, myself. However, I am not speaking for myself. I would be in favor of the review of the total immigration policy of the United States in light of, say, the displaced-person problem. How far you should go, I have not any idea.

If you mean the United States immigration policy, I certainly would like to go on record as saying I think we could help to solve the displaced-person problem by some policy in line with our current economic policy.

I do not believe it is necessary for the United States to open up the floodgates to immigration, such as we had in 1890 or the early part of the twentieth century.

I think it is not necessary if goods move among nations.

Mr. GEARHART. Then you do not advocate the opening up of the floodgates to the flow of goods of the United States, do you, that we had, say, in 1920, 1921, which resulted in the emergency tariff law?

Miss NORTHROP. I do believe that goods must flow among nations. I do believe world markets must be opened up not only for our goods, but for the goods of all persons.

I believe really an exchange of goods is fundamentally important to the production of income all over the world.

If you mean that without any tariff at all this country would be flooded tomorrow with cheaply produced foreign goods, I do not believe I would go so far as to agree with you. I think the United States is the only productive mechanism in the world at the moment which is really capable of meeting its own civilian demands, and that not completely.

No other nation has gotten back to production yet.

We have not got after this war the same kind of problem which we were faced with after the last war.

Mr. GEARHART. I am going to carry your views a little further into the political field. Are you what they call a one worlder, a person that believes we should amalgamate all countries into a federation?

Miss NORTHROP. I believe that the nations of the world, if they solve the problems of their international conflict, have got to work out working rules. I believe that those rules have to be worked out under the structure of the United Nations and the international organizations that are coming into being. I also believe, sir, that those rules have to be worked out slowly, patiently, and we have got to work on the problem for a long time to come.

What the end result will be, I hope, will not be war.

Mr. GEARHART. The thing that you hope for ultimately, then, is a one world organized without political lines and without restrictions to the flow of trade and utterly free for the movement of people to one place from another. Is that your ultimate ideal to which you are looking?

Miss NORTHROP. I did not say that. In the first place, that was not what I said. If you try to take the implications of what I said into the ultimate benefits, which may be a millennium removed from the current actions of men being capable of perhaps thinking about as the end; yes. Why not?

But we do not know enough now.

Mr. GEARHART. It is because of your philosophy on the general picture as has been outlined that has influenced you to support the reciprocal trade agreement program as one of the means to that end? Miss NORTHROP. No, sir; I sometimes think that when you talk of peace, you sit just as starry-eyed and hopeful. That is not so. I think that all that I have said is the most hard-boiled, personal politics a person can say.

I said what I said because of my training as an economist.

There is no better training to accept the facts of the world as we see them now than to go through that discipline which shows the ultimate relationship of a nation against a nation in international economic affairs.

So I began not from any wishes for a hopeful future, but I began by saying, "We have got to learn to sit around a conference table and. bargain and bargain in our own interests, to develop practical working rules of the game."

I consider that pretty hard-boiled politics, sir.

Mr. GEARHART. What is your idea as to the opportunities of Americans to dispose of their goods in foreign fields?

Miss NORTHROP. I should like to make it possible for Americans to sell abroad, which they cannot do-and here is a hard-boiled factunless we buy abroad.

Mr. GEARHART. Why is it necessary to buy abroad in order to sell abroad? I know that phrase has been bandied around for years and years and accepted as true by people because they have heard it so many times, but I ask you now the very definite question: Why is it necessary to buy abroad in order to sell abroad?

Miss NORTHROP. Because other people have to earn an income to pay for the things they buy from us. The only way they can earn dollars is the way in which we put dollars out in the world. The only things we can do is to pay for something we have bought from other people or to lend them money.

Lending is no good unless you have a coordinated trade security.

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The fact is you have got to earn an income in order to buy. A foreign nation earns a dollar income by what we like to give them dollars for.

Mr. GEARHART. Then as an economist you would say the only way we can balance the sale and purchase of goods in the international field is by the exchange of goods.

Miss NORTHROP. Goods and services.

Mr. GEARHART. Exchange of goods and services only.

Miss NORTHROP. Exchange of goods and services only, except we could lend, but of course ultimately we would want to be repaid for that lending. Goods and services only, exchange of goods and services.

Mr. GEARHART. But, after all, is it not the flow of wealth in and out of the country that is important, not the flow of goods or the value of goods that flow in and out of countries?

Miss NORTHROP. No, sir. What you really need is the flow of income. Income is money, and money is nothing but the goods and services it will buy.

Mr. GEARHART. I am talking about the flow of wealth, however it is used. Is that not the controlling thing rather than the balancing of the sale and purchase of goods?

Miss NORTHROP. No, sir. I do not really know what you mean by the flow of wealth. Wealth is something that does not move. It is only the money value of it that moves.

Mr. GEARHART. All right, the money value that moves in and out of this country and in and out of every country; that is the thing which establishes the credit of a nation, is it not?

Miss NORTHROP. I do not know what you mean by money value moving in and out. If you mean dollars move in and dollars move out, they only deal on the basis of trade or services. If I travel abroad, I take dollars with me.

Mr. GEARHART. And when you travel abroad, you take dollars with you. You as the tourist for 1946 will drop almost a billion dollars in the foreign markets all over the world, according to the estimates of certain people.

Miss NORTHROP. Many people solve international problems by hoping Americans will travel abroad.

Mr. GEARHART. In the old days when there was no particular reason for tourists going into world travel as much as they are now after 5 or 6 years of restraint, the average amount of money dropped in the foreign markets by these travelers was over $500,000,000 a year.

Then there are other ways by which money leaves the United States and goes to the foreign fields. For instance, the newly arrived immigrant usually sends money home.

Miss NORTHROP. Yes, sir.

Mr. GEARHART. We know by actual records that before we were in this World War which we have just completed triumphantly, that the newly arrived immigrants used to send home another $500,000,000

a year.

We also know that due to the stress of their relatives now that will be increased to very close to $1,000,000,000 for the next 5 or 10 years. There are many ways by which American money moves abroad, in addition to goods and services.