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GOLD AND SHORT-TERM DOLLAR ASSETS

TOTAL EUROPEAN NATO PLUS GERMANY

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Mr. IKARD. One other statement in the same paragraph that interested me is that you stated the production of agriculture and industry is at record levels, and that the standard of living on a per capita basis is the highest in Europe's history.

Mr. STASSEN. That is right.

Mr. IKARD. Is that true, generally, in free Europe or are you again talking of specific countries?

Mr. STASSEN. I am speaking of the total of Western Europe. It will apply in just about every country.

This last year, on the average, their wages went up 7 percent, and it went up 7 percent without new inflation, without new price rises, so they were real increases in wages. We have encouraged that rise in the wages of the workers of Western Europe through the Organization for European Economic Cooperation.

The gross national product of Western Europe will reach about $200 billion when the final figures are in for 1954, and that divided by the population gives you a higher standard of living.

Mr. IKARD. Then it would follow, Governor, if that is true, that this is their highest standard of living and that their gross national product has reached the highest level. At least the NATO countries plus Germany would be in a position to really get into the world market and do some trading if they had the facilities through this legislation to do it?

Mr. STASSEN. That is correct.

Mr. IKARD. That is all, Mr. Chairman.

The CHAIRMAN. Are there any further questions?

Mr. Simpson of Pennsylvania, will inquire.

Mr. SIMPSON. Mr. Stassen, with all of this great prosperity, dollar and gold prosperity, in Europe, why is it they have all the restrictions they have against free trade today?

Mr. STASSEN. The restrictions are beginning to be relaxed. They are the carryover from the postwar situation when they were extremely short of gold and dollar reserves, and in economic difficulty. A number of the countries have begun to make significant relaxations of dollar restrictions, including Denmark, Germany, the United Kingdom, and Sweden. We are working with every one of the rest of them to constantly relax their restrictions. One of the things that they are to some extent looking to is the indication from the United States Congress of our future trade policy in relationship to their relaxation of restrictions. So, H. R. 1 has a direct bearing on these restrictions. Mr. SIMPSON. You have mentioned the several countries of Denmark, the Netherlands, Sweden, and the United Kingdom, where restrictions have been lifted. It is your argument, I assume, that by lifting those restrictions they help trade.

Mr. STASSEN. That is right.

Mr. SIMPSON. My figures disclose that having lifted the restrictions, whatever they were, instead of helping trade our trade has been going backwards with Denmark, the Netherlands, Sweden, the United Kingdom, and France. In 1951, with Denmark, we did $65.7 million; in 1953, $38 million, and in the first 6 months of this year, $8 million. For the Netherlands, $281 million in 1951; $251 million in 1953, and for the first 6 months of 1954 it was $86 million. For Sweden, $133.8 million in 1951; $101.7 million in 1953, and a much lower rate in 1954. What were these restrictions which they lifted in those countries?

Were they inconsequential items and was it done simply to influence you gentlemen that they were cooperating? Or was it done sincerely to help trade?

Mr. STASSEN. Mr. Simpson, in the first instance, most of the figures. you read of the earlier years were not just trade figures but aid figures. In other words, the real flow of goods to most of these countries, with the exception of Sweden, was the aid. They were the big aid flow of commodities to these countries after the war. Furthermore, as I understood you to read, you had the figures of trade for the first 6 months of 1954. That was prior to these liftings of restrictions. The trade is now expanding with these countries. The restrictions were lifted in the last 6 months.

Mr. SIMPSON. Will you tell me what the restrictions were that were lifted?

Mr. STASSEN. Yes. A bar on the use by their businessmen of dollar foreign exchange; the actual prevention of importing many dollar goods by direct quotas; various kinds of currency controls that would prevent their businessmen from buying dollar goods even if they wanted to. They were steps of that kind. It was a whole network of special restrictions on private trade with the dollar area that they have had.

Mr. SIMPSON. And you say they have not been reflected in the tradefigures because there has not been time?

Mr. STASSEN. They are beginning to reflect in the most recent figures.

Mr. SIMPSON. Do you have figures to show their effect?

Mr. STASSEN. The prelminaries; yes.

Mr. SIMPSON. Do you continue to be of the opinion that our operation under the program should be reciprocal?

Mr. STASSEN. Yes.

Mr. SIMPSON. That is to say, for each concession we make we should get a comparable gain?

Mr. STASSEN. Of course it depends on what you mean by "compa-rable.' You have to look at the total effect. If we make a concession that has a most-favored-nation aspect to it, our concession then, to us, has a worldwide implication, and you have to consider that their concession would not be of that same magnitude, and, therefore, we cannot always match them equally on it. We have to carefully safeguard our total trading and internal domestic picture, while we negotiate with them in specific situations.

Mr. SIMPSON. Then you do not mean that item by item there should be reciprocal reward evident when the agreement is reached?

Mr. STASSEN. No. I mean you have to do a careful, selected, detailed, professional analysis of the precise circumstances of each negotiation.

Mr. SIMPSON. I want to get this very clear. From your point of view, am I correct that you look at the overall picture without any regard to the specific item upon which the negotiation is based?

Mr. STASSEN. Quite the contrary. You have to watch the specifics, when you negotiate, on every specific item. Otherwise, you can unintentionally injure a United States business or adversely affect trade, unless you are very careful, very professional in looking at the details and in having in mind the comprehensive effect of that detail when you negotiate it.

Mr. SIMPSON. Then, are you one of those who under no circum- ¿ stances wants to hurt American business, any American business?

Mr. STASSEN. My view is that from the long-term effect, you want to help American business. You want to help American workers and you want to help American farmers.

Mr. SIMPSON. Governor, I did not ask you that question. You do not have to answer it. I asked you whether you do not want to hurt, under any circumstance, any one American business.

Mr. STASSEN. Let me put it this way, in order that you understand ▸ my meaning and I understand yours. If we had taken the view that under no circumstances did we want to put the horseshoers out of business, or any of them, we could have blocked the progress of America in the machine age. So you have to look at the comprehensive effect and whether or not you are building total jobs and total businesses, and business opportunities for the American people.

Mr. SIMPSON. I would like to talk not about the horseshoe business, but about the shoe business in New England and in Missouri, with the human beings. You, under no circumstance, want to hurt the American production of shoes?

Mr. STASSEN. I would put it this way, that I want to see the total United States economy expand so that there is more future shoe business for our own people and for the people of other parts of the world. In other words, if you try to safeguard a particular business in a restrictive way, and in a narrow, short-term way, you hurt that business in the long run.

Mr. SIMPSON. Then, your answer is that you are unwilling to protect an individual business?

Mr. STASSEN. My answer is that the best way to protect an individual business is to assure the overall high level of United States economic activity.

Mr. SIMPSON. Even though that necessitates the shutting down of a particular business or industry or concern?

Mr. STASSEN. That is not what I said, Mr. Simpson, even though that involves a continuous change in the United States business pattern. In other words, the United States business, production, and financial pattern undergoes constant change, for many reasons, domestic and foreign. If you ever try to stop change, then you will put the United States economy into the reverse. So the constant change, domestically and in relationship to the world, is the thing that I feel is a sound policy. It is the policy that President Eisenhower advocates. But it must be a very careful change. You must carefully observe exactly how it takes place and not have it be too sudden in any one respect.

Mr. SIMPSON. Now, may I inquire along another line for a moment. You showed where you have successfully, I believe, countered the fairs. and so on that the Russians have been having to attract business in those areas of Europe and elsewhere, and you tell me, if I understand correctly, that you do not contemplate having money for that same kind of work in the next year or two?

Mr. STASSEN. In Europe, in the Marshall plan countries, we are going out of the aid business. In other words, with these few exceptions that I mentioned of Spain and Berlin, and the matter of the pipeline of military items that are still flowing, it can quite genuinely and broadly be said that we are going out of the aid business.

Mr. SIMPSON. You believe, then, that the substitution of H. R. 1 will equal or counter that influence of the Russians in those areas to such an extent that you do not need more money for those same purposes?

Mr. STASSEN. In Europe, that is right.

Mr. SIMPSON. Would you tell me how it is possible that H. R. 1, with its permission for 5 percent cuts in the next 3 years, could conceivably in those particular areas provide additional business which would counteract that influence from Russia?

Mr. STASSEN. It is one part of the total movement toward more international trade between European countries, between European countries in dollar areas, between other parts of the world, that gives rise to greater economic health, greater strength and more private business we know means more economic success than if you put it under Government hands and keep it as state trading. So the comprehensive effect of the moves like H. R. 1 are the key to future economic health and strength in the free world.

Mr. SIMPSON. Just a moment. Do you mean that H. R. 1 itself is going to substitute for the work you have been doing in those areas where the Russians are putting the heat on with their trade fairs?

Mr. STASSEN. Not itself, no. Their own efforts, their own trade with each other, the whole total picture of an expanding economic system on a free enterprise basis in Western Europe of which H. R. 1 is a keystone.

Mr. SIMPSON. Have you any idea of the amount of additional trade that the provisions of H. R. I might permit in the next year?

Mr. STASSEN. That is very difficult to estimate. In the next year, it will have very little effect. In other words, it takes time for these negotiations. But it has the immediate encouragment effect on private businessmen all over the world, that they can look forward to sound economic conditions, and they would have less reason to fear depression conditions coming up.

Mr. SIMPSON. Governor, my travels do not begin to compare with yours.

Mr. STASSEN. Pardon me?

Mr. SIMPSON. My travels do not begin to compare with yours, nor do my contacts. But they have led me to a definite conclusion that, as far as businessmen abroad are concerned, it is not this additional 5 percent of a possible tariff cut that concerns them, but it is the question of what our trade policy is going to be. That is why we are told they wanted the 3-year extension, at least it is an equal reason, with the request for authority to cut tariffs.

Mr. STASSEN. You understand, when I spoke of H. R. 1, I was not speaking of the 5 percent, but I was taking the 4 corners of H. R. 1, which includes the 3-year program.

Mr. SIMPSON. The particular thing that they talk to me about has to do with the escape clause, that that creates a circumstance of instability. You have surely heard that argument.

Mr. STASSEN. Surely.

Mr. SIMPSON. And yet you ask for the escape clause to be kept in the law?

Mr. STASSEN. That is right.

Mr. SIMPSON. You would not have it removed?

Mr. STASSEN. No, sir.

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