These estimates average 4,424,000 for 1946 after estimating exports at 282,000 barrels daily compared with 531,000 for 1938. Current production is running approximately 5,000,000 barrels daily. While this is 600,000 barrels above the estimated demand for 1946, according to those who are well informed, the country is now producing conservatively 200,000 barrels per day beyond the maximum efficient rate in order to meet war and civilian requirements. Nature will also play its part in a natural decline which may make the adjustment less severe than is anticipated at this time. The State regulatory bodies in those States having conservation laws, and the oil industry in others must act courageously and fearlessly to bring production in line with demand and prevent waste through holding production to the point where unneeded oil will not be placed in aboveground storage. The drop in demand should be of comparatively short duration. These estimates show increasing demand until by 1949 the total averages 4,870,000 barrels daily, including 148,000 barrels daily exports. Three estimates were made for 1950 which average 5,054,000 barrels daily, including 129,000 barrels daily of exports. I am more concerned about the attitude of our Government toward the importation of cheap foreign oil than I am about our inability to adjust promptly our internal production to market demand. EXHIBIT 2.-Actual and estimated oil production from South America1 1 Oil Weekly, Dec. 11, 1944, Trends of Crude Oil Production by Countries. 1 Oil Weekly, Dec. 11, 1944, Trends of Crude Oil Production by Countries. EXHIBIT 4.-Competitive cost of Middle East and East Texas oil f. o. b. New York (Middle East oil via Suez Canal) Middle East: Production cost. Royalty average. Tanker from the Persian Gulf to New York via Suez Canal. Présent day, modern tanker, foreign officers and crew.. Loading cost‒‒‒‒ Present tax on imported oil from countries having "friendly nations contracts" Per barrel $0.10 .21 .61 .02 .102 .13 Toll charge through Suez Canal.. Total out-of-pocket cost Difference in refinery realization against Arabian oil--- Total out-of-pocket competitive cost f. o. b. New York‒‒‒‒‒‒ East Texas: Market price-- 1.172 .20 1.372 1.25. EXHIBIT 5.-Competitive value of middle east and California oil f. o. b. Los Tanker from the Persian Gulf to Los Angeles refineries. Modern tanker, foreign officers, and crew- .61 Loading cost___. .02 Present tax on imported oil from countries having "friendly nations contracts" EXHIBIT 6.-United States exports of crude petroleum and products during 1938 1 North America includes exports to Alaska, Canada, Cuba, Mexico, Panama Canal Zone, Puerto Rico, and a small amount of "others." NOTE. Total exports are reported figures from Bureau of Mines. Countries by destination are reported figures from U. S. Department of Commerce. "Unknown" includes adjustment covering discrepancies between figures from above 2 sources. EXHIBIT 7.-Imports of crude petroleum and products into the United States NOTE.-Total United States imports of crude and products were obtained from available data published by the U. S. Geological Survey and Bureau of Mines. The figures by sources of origin, with the exception of crude oil, are partly estimated. Mr. REED. We will close the proceedings now because of the lateness of the hour. We will stand adjourned until tomorrow morning at 10 o'clock. (Thereupon, at 5:30 p. m., the committee adjourned, to reconvene at 10 a. m., Friday, April 25, 1947.) RECIPROCAL TRADE AGREEMENT PROGRAM FRIDAY, APRIL 25, 1947 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met at 10 a. m., pursuant to adjournment in the hearing room of the Committee on Ways and Means, New House Office Building, Hon. Harold Knutson (chairman) presiding. The CHAIRMAN. The committee will come to order. Is Mr. Molitor here? STATEMENT OF C. B. J. MOLITOR, REPRESENTING THE AMERICAN LACE MANUFACTURERS ASSOCIATION AND THE AMALGAMATED LACE OPERATIVES OF AMERICA, LEVERS SECTION, NEW YORK,. N. Y. The CHAIRMAN. I am going to ask you to be as brief as possible because we have a schedule that is quite heavy and there is a meeting of the House at 11 o'clock this morning. Mr. MOLITOR. All right, sir. The CHAIRMAN. If you will give your name to the reporter and also tell us who you represent. Mr. MOLITOR. My name is Charles B. J. Molitor and I am associated with the North American Lace Co., lace manufacturers in Rhode Island and Pennsylvania. I am representing the Amalgamated Lace Operatives of America, Levers Section, a labor union of Philadelphia, and the American Lace Manufacturers' Association of Providence, R. I. The CHAIRMAN. Do you have copies of your statement for us? Mr. MOLITOR. I sent them to the committee, sir. The CHAIRMAN. All right, you may proceed. Mr. MOLITOR. Our little industry employing approximately 7,000 skilled workers, has appeared before this committee in opposition to the extensions of the Trade Agreements Act in 1940 and again in 1945. On both occasions we have pleaded for just such an investigation as you have very wisely instituted. We have opposed and now oppose continuation of this program which has resulted in "one-way reciprocity." It is time that we calmly take a look at the record to judge just how this wide delegation of congressional power has been used. Due to the intervention of war, but relatively few American industries have been injured seriously up to the present as a result of tariff reductions, effected under trade agreements. You can be certain however, that with the return of normalcy many more industries will be very seriously injured and most particularly those employing greater numbers of American workers in their production-textiles being a most notable example. Again and again, and again have we been told that trade agreements reduce trade barriers and increase American employment. Let us see how much substance there is to that contention. Our industry was beyond question very seriously injured and was being snuffed out of existence in 1938, 1939, and 1940, as a direct result of the trade agreement with France in 1936. The fall of France, in June 1940, saved us. I hesitate cluttering the record with the details of our difficulties and their causes. Believe me the evidence is preponderantly conclusive and it was made a part of the record of this committee then considering the extension of this act in 1945 at the request of Congressman Jenkins. But, despite the imperiling of the industry through tariff reductions in the previous French and British agreements, the ax is about to fall again. Laces are listed in both the contemplated agreements with France and the United Kingdom, for still further reductions in rates. These further reductions are being considered notwithstanding the fact that a substantive provision of the Trade Agreements Act provides that the President may reduce United States tariffs whenever he finds as a fact, that they are unduly burdening or hindering the foreign trade of the United States. Though neither time nor complete data have been available to me, I have discovered some very irregular procedure in negotiating these trade agreements as well as after their negotiation. Let us once more survey the circumstances preceding the trade agreement with France which has caused our industry so many difficulties. While we were carrying on preliminary negotiations with the French Government, preparatory to working out specific details of the agreement, the French raised their tariffs on American products avowedly for bargaining purposes. Mr. Cordell Hull acknowledged that fact publicly. He then stated that we may not bargain on tariffs in the light of such circumstances. Time passed and bargain we did. We reduced our tariffs while France reduced her tariffs to the extent of but part of the increases which had been effected for bargaining purposes. But, that is only the beginning. The French franc was valued at 610 cents on the effective date of the agreement, namely, June 15, 1936. In 4 months to the day, the franc was devalued to 410 cents, and, by the end of 1939, to 2 cents. It is now eighty-four one hundredths of a cent. Article XI of the French agreement states: In the event that a wide variation occurs in the rate of exchange between the currencies of the United States of America and France, the Government of either country, if it considers the variation so substantial as to prejudice the industries or commerce of the country, shall be free to propose negotiations for a modification or to terminate this agreement in its entirety on 30 days' written notice. As a result of this very violent currency devaluation, French laces landed in the United States-duty paid far below prices in France in 1936-without duty. In effect, we had even less than free trade— we were in effect subsidizing French products entering our ports. |