Mr. SWENSRUD. No, sir; that could not be a true statement. There certainly are no known reserves. Known reserves are reserves you know are there. They do not know it at all. Mr. UTT. You would say that they were speculating? Mr. SWENSRUD. It is definitely speculative and definitely optimistic, in my view. Mr. UTT. That is all, thank you. The CHAIRMAN. Mr. Goodwin will inquire. Mr. GOODWIN. I am sorry I did not have the privilege of hearing your entire statement, but I gather from your response to questions from the gentleman from California, Mr. Utt, that you think Venezuela is one of our very best friends? Mr. SWENSRUD. Yes; I should say that Venezuela is a very good friend of ours. I was commenting on their being a good customer. That is the connection in which it came up. We were talking about the importance of free trade in the world or of trade, let us say, not necessarily free trade but increasing trade, and the fact that while we are a large importer of oil from Venezuela, Venezuela is likewise a very good customer of goods made in the United States. I think it illustrates this principle of trade. Mr. GOODWIN. Do you know of any country that you think we ought to be more careful about maintaining friendly relations with than Venezuela? Mr. SWENSRUD. I tried to emphasize this point: That I believe that we have a great interest in American companies having oil reserves in various parts of the world, because at any time when the world security is involved or the security of the free world, we need a lot of oil. W will need a lot of oil in this country to fulfill our future requirements, and certainly in a war we would need oil in many parts of the world, and likewise we ought to try to keep it from falling into the hands of our enemies. Therefore, good relations with those countries of the world that have very large oil resources, such as those in the Middle East, and Venezuela, to my mind is a very important thing. We should maintain good relations with those countries. Mr. GOODWIN. That is all, Mr. Chairman. Thank you. The CHAIRMAN. We thank you, sir, for the statement you have made here to the committee and the information that you have given us. The next witness is Mr. Eugene Holman, president, Standard Oil Co. of New Jersey. Mr. Holman, we are glad to see you here, and if you will just give your name and the capacity in which you appear for the record here, we will be very glad to hear you. STATEMENT OF EUGENE HOLMAN, PRESIDENT OF THE STANDARD OIL CO. OF NEW JERSEY Mr. HOLMAN. Thank you very much, Mr. Chairman. Chairman Reed, I have about a 20-minute statement, and I have 4 or 5 charts I would like to show you afterward, if that is agreeable with you, sir. The CHAIRMAN. How many minutes? Mr. HOLMAN. About 20 minutes for the statement, and about 4 or 5 charts which I think will take 5 or 10 minutes. The CHAIRMAN. All right, go ahead. Mr. HOLMAN. My name is Eugene Holman. I am a director and the president of Standard Oil Co. (New Jersey). Jersey-to use the company's customary nickname-has been engaged in the oil business for about 80 years. While initially organized to engage in domestic oil operations, Jersey began, almost from its founding, to extend American commerce overseas through the export of petroleum products. Then, early in the 1900's, the company started to obtain producing and refining interests abroad to supply its foreign markets and to supplement United States supplies. Today, in the United States, Jersey affiliated companies produce crude oil in 18 States, have refineries in 7 States, and market petroleum products in 27 States and the District of Columbia. Abroad, Jersey affiliates produce crude oil in 14 countries, refine in 20, and market in 125. In the United States, and even more markedly abroad, the large crude oil producing centers are far removed from the large oil consuming centers. As a result, the task of having the right types and quantities of petroleum products in the right places at the right times presents problems in logistics which require the utmost flexibility of supply and transport. I give this brief review because H. R. 4294-the bill now before you-would, if enacted, profoundly affect our country's domestic conomy and foreign trade, and I judge you are interested in knowing the views of Jersey as a company with considerable experience in both domestic and foreign trade. I appreciate the opportunity to appear before your committee and to give you these views. They have been formulated, I sincerely believe, after careful study of the pertinent data and in the light of what we believe will serve the best interests of our Nation as a whole. H. R. 4294 would extend the Reciprocal Trade Agreements Act for 1 year, but with amendments in the nature of restrictions that are not contained in the present legislation. In addition, the bill would limit imports of crude oil and heavy fuel oil through imposition of quotas, and would provide for higher duties on lead and zinc. First, I should like to explain briefly why we oppose the broad restrictions which the bill would place on the present Trade Agreements Act. Then I should like to discuss in somewhat greater detail the provisions of the bill respecting oil. Jersey favors extension of the Trade Agreements Act. While I recognize that there may be some disagreement as to its effects, our experience is that the act has worked well. Certainly, with our country enjoying its greatest prosperity, it is hard to see how the act and the agreements made under it can be regarded as having injured our domestic economy. On the contrary, they have helped expand world markets for American goods and commodities. They have helped other nations to expand the markets for their goods and commodities. And they have contributed importantly to strengthening the free world's economy, and that is a major element of defense against communism. This is not to say that the act has solved all problems. But progress is being made in the right direction, and the Trade Agreements Act alone has, in our opinion, created conditions conductive to solutions. Other nations, of course, must reciprocate by eliminating some of their high tariffs, quota systems and other discriminations before international trade can make the great contribution to peace and general welfare of which it is capable. While I favor continuation of the act, I cannot emphasize too strongly that Jersey does not favor the restrictions proposed by H. R. 4294. The consequence of these restrictions would be to make the Trade Agreements Act do quite the opposite of what it is intended to do. If the Congress were to legislate restrictive quotas on one group of imports, increased duties on another, and the modifications that are proposed in our tariff procedures, the Congress and the Tariff Commission could expect to be deluged with requests to undo the tariff reductions that have been made, and to establish further quotas and other restrictions. I respectfully urge that your committee consider most seriously the injury to our Nation and to others which could result. Both our own prosperity and our security depend in important measure on healthy international trade and on our allies having econ omies which are able to make contributions to mutual defense. Since the war, other countries have not been able to earn enough dollars to buy the products they want and need from American farms, mines, and factories. The difference between what these nations have been able to earn in dollars and what they have had to spend in dollars has been made up through foreign aid-to a total of almost $35 billion. This vast sum has come from the pockets of American taxpayers. However justified our foreign-aid programs have been as emergency measures, they are hardly to be recommended as a permanent way of international economic life. In the long term, by far the best way for people of other nations to get dollars is through investments and expenditures in their countries by American business firms; through tourist expenditures abroad, insurance payments, and other so-called invisible exports; and by selling in the United States goods they have manufactured or raw materials which they have and which our country can use. Certainly, it is far more satisfactory to expand the exchange of goods and to provide opportunities for other countries to earn their way through sales of their goods and services in payment for those they require from us, than it is to continue large foreign-aid programs. H. R. 4294, instead of moving toward a policy consistent with our country's leading position as a producer, exporter, and investor, would move us in the opposite direction. It would alter the so-called peril-point and escape-clause concepts in the Trade Agreements Act so that the mere existence of imports would almost become evidence of injury to a domestic producer, regardless of what other factors might be involved, and even if the industry suffered no absolute decline but simply did not keep its relative place in the market. The bill would give final power to the Tariff Commission to nullify trade agreements with other nations, thus possibly creating international problems of extreme difficulty and complexity. In the name of preventing injury to any domestic group, the bill would give such a group the right to inflict injury on workers and companies in our export industries and on the national economy as a whole. A general policy of discouraging imports would add to the taxpayers' burden by increasing the requirements for foreign aid. It would force higher prices on consumers. It would impair American leadership in building economic and military strength for the free world. It would invite retaliatory legislation by friendly foreign nations. All this could well lead to the type of economic and political nationalism which existed in the 1930's and which practically halted world trade. Surely we do not wish such conditions to recur. I should like now to comment particularly on the provisions of H. R. 4294 to impose quota restrictions on oil imports into the United States. Jersey believes that quotas on oil are not only unwarranted but, if enacted, would result in wide and serious damage. In this connection, I may say that our company recently completed an extensive study of oil imports and published the results just last month in a booklet titled "Facts About Oil Imports." I refer to this study, because it goes into the subject in much greater detail than time will permit here, and I should like, therefore, with the committee's permission, to attach the published booklet and make it a part of my remarks as filed in your records. (The booklet referred is as follows:) FACTS ABOUT OIL IMPORTS (Published by Standard Oil Co. of New Jersey, April 15, 1953) A number of proposals are currently being made to restrict shipments of crude oil and heavy fuel oil into the United States. This would be accomplished by legislation establishing quotas for oil imports. The quotas would be set at specified percentages of domestic consumption in the preceding year.' Companies affiliated with Standard Oil Co. (New Jersey) have both exported and imported crude and heavy fuel oil for many years. In addition, they have for years been important domestic producers, refiners, and marketers of crude oil and products. These companies are, therefore, directly concerned with suggestions for Government control of imports. Suggestions of this kind seem to arise particularly when output in one or another of the Nation's fuel industries shows some dip. For example, there was pressure to restrict oil imports in 1949, following some decline in both coal and oil production. The pressure lost force when domestic coal and oil output rose in the following years--at the same time, incidentally, that imports were also rising. Oil has been exported from and imported into the United States for decades. This trade makes an important contribution to our Nation's economy. Restricting oil imports would have such far-reaching consequences, not just on companies in the fuel industries but on fuel consumers, the whole American public, our country's position in a troubled world, and on friendly foreign nations, that proposals to this end warrant the most thorough study. Any action respecting such proposals should be taken only on the basis of complete information and to serve the best interests of the Nation as a whole. Agreement exists on some broad principles regarding oil imports Although there is disagreement within the oil industry, and between oil importing companies and the coal industry, about the effects of oil imports, there is also a broad area of agreement. In the first place, all these parties are agreed that the overriding consideration is the strength of our Nation and of the free world. Secondly, there is agreement as to the importance of international trade. No one, for example, has suggested prohibiting oil imports entirely. Officials of coal companies, while opposing imports of heavy fuel oil, state a belief that our 1 Crude oil is unprocessed petroleum; it is a raw material from which many products can be made. Heavy fuel oil is one of those products. The distinction between the two must be kept in mind. country must import increasing quantities of crude oil in the years ahead. Domestic oil producers have agreed that imports which supplement the domestic supply are valuable. Thirdly, there is agreement that the Nation should not be flooded with foreign oil. Disagreement exists as to the impact of current oil imports on domestic fuel industries There are aspects of oil imports, however, on which there is not agreement. For example, the proposals now being made to restrict imports are based on: Claims that imports of heavy fuel oil are a major cause of recent decreases in coal production in the United States, thus supposedly weakening an industry important to the Nation's economy, reducing employment of miners, and injurying railroads which haul a good deal of coal as freight; and Claims that imports of crude oil and heavy fuel oil have been the cause of decreases in oil production in the United States, and that imports have significantly lessened incentives to find more oil. Standard Oil Co. (New Jersey) does not believe that facts support these claims. Imports of heavy fuel oil into the United States have had relatively little influence on coal output. Declines in coal production have been due to a large number of causes, many of them developments of technological progress. Nor have imports had any basic adverse effects on the United States oil industry. The search for oil went forward energetically and successfully in 1952, and the industry achieved record-breaking production. Quota restrictions on oil imports would harm the United States and its citizens Jersey believes that legislation forcing a reduction of oil imports would1. Injure United States business, labor, and agriculture by diminishing the ability of other countries to buy American goods and services. 2. Work against our country's efforts to reduce the need of other nations for dollar aid. 3. Be contrary to the professed aim of the United States to build the free world s economic strength through reducing trade barriers and working toward convertibility of currencies. 4. Be disturbing to friendly nations, and thereby impair our country's prestige and leadership. 5. Do harm particularly to oil-producing nations as, for example, Venezuela, a country which is important to the free world's defense, a large customer for American goods, a supporter of private enterprise, and a country which has not requested nor required United States financial aid. 6. Hamper fuel supplies to our military forces. 7. Injure thousands of large and small businesses which now use heavy fuel oil for heat and power, curtailing their right to choose the fuel they prefer and forcing many of them to heavy expenses for altering equipment. 8. Tend to raise the general level of fuel costs to fuel consumers and, therefore, the costs of many goods and services to the general consuming public. The serious nature of such consequences indicates the importance of carefully scrutinizing proposals to limit oil imports. The subject is not one of simple blacks and whites. It is extremely complex, involving the whole international policy of the United States and oil supply relationships around the world. Expanding international trade increases prosperity and security for the United States and the entire free world It is of tremendous benefit to the United States, a great manufacturing and agricultural Nation, to sell part of its abundant production to consumers in other lands. The American worker, stockholder, and farmer benefit when automobiles manufactured in Detroit, wheat grown in the Dakotas, cotton from our Southern States, lubricants made in New Jersey, or coal mined in Pennsylvania, are sold abroad. If foreign markets for our goods and commodities were to dwindle or |