beneficially the employees of companies, and I am sure that has had a salutary effect upon other labor conditions in that country.

But in addition, a great deal of the revenue that Venezuela derives from oil comes in the form of royalties and taxation upon the profits and the operations, and goes to the general revenues of the Government.

Now, I believe those revenues are being used very effectively to develop the country of Venezuela in every eay. They are not being funneled off into a few hands. They are going into very many projects that greatly benefit the industries and the culture of Venezuela.

For instance, you see some fine universities there.

Mr. CURTIS. There is another thing that disturbs me, as one who believes in the private-enterprise system. I would much rather see it going into salaries and wages, for example-then it is in the hands of private individuals rather than vast sums of money going into the hands of the Government to be spent like the Lady Bountiful.

If you have a government that is unpopular, for example, and really unpopular with the people, you can keep that government on their backs through that very device.

Mr. SWENSRUD. All I can say is that the revenues that the Venezuelan Government has derived, having to develop, let us say, the conditions which make it possible for private industry to advance; they are building up their educational facilities, their roads, their harbors, and many of the things that are necessary in a country before private industry can fully advance.

For example, in agriculture, there are many areas in Venezuela where there are perhaps some agricultural possibilities, but there were no roads. Well now when the Government gets money for roads they can build roads out in that area, and then those areas develop under private operation.

I do not offhand think of many of the industries of Venezuela that have been taken over by the Government or which are being carried on by the Government. I believe, by and large, that the business of Venezuela outside of the oil business-is being done pretty much by private capital. This money that they get for oil, whether it comes to the Government or to private wage earners, has a great way of seeping down and, in other words, the employee of Gulf Oil in Venezuela or any other oil company, he earns a good wage for sure. He spends that for other things that he wants.

Some of those are made in Venezuela, and some are imported from the United States; or he builds a house. The people that get the money for building the house, they spend it in turn. It very quickly translates itself into an overall improvement in the economy.

Mr. CURTIS. That is why I was interested in the gross figure of the salaries and wages.

Mr. SWENSRUD. I am sure we can get you that. It is a very large figure.

The CHAIRMAN. Are there any further questions?

We thank you for your appearance and the very helpful information given the committee.

The committee will now stand in recess until 2 o'clock.

(Whereupon, at 12:30 p. m., the hearing was recessed, to reconvene at 2 p. m. the same day.)

AFTERNOON SESSION

The CHAIRMAN. The committee will please be in order.

The next witness appearing on the calendar is Mr. M. J. Rathbone, president, Standard Oil Company of New Jersey.

Come forward, please, Mr. Rathbone. We are very glad to have you here. I will ask you, please, to give your name, address, and the capacity in which you appear, for the record.

STATEMENT OF MONROE J. RATHBONE, PRESIDENT, STANDARD OIL COMPANY OF NEW JERSEY

Mr. RATHBONE. M. J. Rathbone, president, Standard Oil Company of New Jersey.

The CHAIRMAN. You are recognized, Mr. Rathbone, and you may present your statement without interruption.

Mr. RATHBONE. Mr. Chairman, I appear here to offer your committee our company's views in support of H. R. 1, to improve commerce between the United States and the rest of the free world.

As an oilman, I should like to begin by noting that more than a third of the $11 billion invested abroad by private American companies since the end of World War II represents the capital of oil firms. Moreover, in value and volume, oil is the leading commodity in total world commerce and represents a major item in America's own export and import trade. Any program to maintain and improve international trade inevitably involves the trade of United States oil companies here and in other parts of the world.

The company with which I am associated has had extensive business experience both in our own country and in many parts of the world. Our company is an American company which has been engaged in international trade and foreign investment for more than 70 years. During this period we have seen, first hand, the effects on international trade of hot and cold wars, of extreme nationalism, of internal economic and political policies of various nations, and of economic imbalance. All of these have, from time to time, resulted in changes in the trade policies of various governments from one extreme to the other and have important effects on the level of international trade. We have also seen, very clearly, the effects of an expansion of international trade on the economic development, the improvement of living standards, the social advance, and the political growth of many foreign lands.

This experience convinces us that the encouragement of international trade along sound lines is one of the surest ways to promote peace and progress in the world. And we are also convinced the United States cannot fail to benefit from social and economic progress by the other nations of the free world and by a spreading of the desire for peace and the opportunities for progress which peace brings.

Obviously many things go to make up the foreign economic policy of any nation. We favor generally the program of the President as outlined in his message of January 10 to the Congress, and we believe that the extension of the President's authority to enter into trade agreements and to reduce tariffs on a moderate basis as provided for in H. R. 1 is a vital part of that general program.

H. R. 1 holds the prospect of making available to American consumers greater quantities and varieties of goods and raw materials, and on the other hand of enlarging markets for the products of American factories and farms, of giving firmer assurance for the maintenance of employment and general prosperity, and in the final analysis of enhancing our national security.

Reciprocal trade, of course, brings benefits to the American people in a number of ways. In the first instance, products of other countries, which we do not have in sufficient quantity, would enter our markets in increasing volume. A second effect would come about because other nations, by selling more here, would be able to buy more of our goods. This would mean greater use of our productive facilities, would tend to increase employment, as well as to lower unit costs with consequent benefits to the domestic consumer.

The stimulating effect of international trade is not confined to bilateral exchanges. In fact, I believe that if it occurs through multilateral channels the overall effect may be even more beneficial. For example, we spend dollars to buy wool, rubber, or tin from sterling area countries like Australia or Malaya. These dollars are often used to buy sugar from Cuba or wheat from Canada. In turn, these latter countries eventually spend the dollars in the United States. Thus a sort of economic chain reaction has taken place owing to the stimulation of that first dollar transaction. Every United States dollar that goes into foreign trade eventually comes home to the United States, but on its travels it often fosters trade in many areas.

The United States could maintain a high level of economic activity domestically without large volumes of foreign trade. But, just as we have raised our living standards by the free exchange of goods internally, so can our prosperity be helped still further by enlarging the area of our trade.

A significant part of America's prosperity is accounted for by foreign trade. Last year the export of United States goods and services to other nations had a value of more than $20 billion. Moreover, improvement in world trade is closely associated with the defense of the free world.

Today we are receiving, in large part from dollars privately invested abroad, supplies of the many raw materials our country needs for military and strategic reasons. Also, as the economies of friendly nations abroad are built up by trade, we increase our safety through having stronger allies.

The importance of H. R. 1 is underlined by the stage to which our economy has grown and by the fact that whether we like it or not our country today is in a position of world leadership. In early days when the United States was making the changeover from a chiefly agricultural to a manufacturing nation, some protection might have been needed by many of our infant industries. Today, however, American industry with perhaps a very few exceptions is well established and strong and this position of leadership greatly magnifies the impact of our actions on the other nations of the world.

For example, imports into the United States either as a whole or on an individual basis, are rather small in proportion to our total economy which is very large. Yet, in proportion to the economies of the nations sending goods to us, they may represent the difference between growth and stagnation in those nations.

We do not believe that the United States should abolish all tariffs, and we understand this legislation supports that view. H. R. 1 calls for the President, in considering the moderate tariff reductions which the bill authorizes, to look at each situation in relation to the national welfare.

Such moderate steps are consistent with a healthy, outward-trading economy. Extreme protectionism, on the other hand, is built on a sort of Maginot-line philosophy. It would wall America around with high tariffs, quotas, and trade restrictions to the ultimate detriment of most of our citizens. The consumer would have less goods available to him and at higher costs. Large and important overseas markets would be lost to farmers. The investor would suffer in a reduced economy at home and through the loss of investment opportunities abroad. Our whole domestic productive machine would begin to slow down.

It is probable that there are relatively few people in this country who really believe in extreme protectionism. But there seem to be far too many who say, in effect, "I would like to see foreign trade developed for our country, but I want to be able to turn it off whenever or wherever I think it might hurt me." Trade cannot be built on that basis, either at home or abroad. Raw material supplies must be developed, factories put up, shipping facilities arranged for, sales organizations established, financing arranged, before trade can occur. Most businessmen are willing to buck the competition of other businessmen under established conditions. However, they cannot afford to face too much uncertainly regarding Government policies and actions.

Uncertainty, both at home and abroad, regarding our national policy on reciprocal trade already exists, and the extension of the Trade Agreement Act for a period of 3 years would help to provide that fundamental element of consistency which would be most helpful. A foreign manufacturer planning to build or enlarge a plant to make goods for the United States market will be more encouraged by the knowledge that United States foreign trade policies will remain consistent for an appreciable period of time, than he will be by the actual level of our tariffs on any particular date. And the same considerations will affect the American businessman who wishes to invest in production in the United States for foreign markets, or who contemplates overseas investments.

We realize fully that the imports side of international trade can and does impinge sometimes on the activities of certain of our domestic businesses and industries. It seems to us, however, that the general welfare and overall economic health of our country must always be the overriding consideration.

It is not easy to judge these complex economic problems. But it does seem that, when we consider the great overall strength of American industry and the vital importance of developing peace and progress in the other nations of the free world through international trade, we should be very slow to put roadblocks in the way of that development, simply to protect certain segments of our domestic economy. It has been argued that Congress may be justified in considering means of assisting industries and employees who have been temporarily injured by the importation of foreign goods. But we believe it should be understood that such a situation is not greatly different.

from the dislocations that result from free competition within the United States which stimulates initiative, research, and new investment. This is an internal problem and any consideration of it by the Congress should not stand in the way of our program of international trade, investment, and interchange of all kinds with other nations. Certainly a factor that is of prime importance in any consideration of foreign trade is national defense, and whether United States security is adversely affected by a particular import. Here, however, very careful analysis is called for to be sure that the defense of the country is truly affected and only when this is proven should specific action be recommended for each particular case.

A

Another and related principle of importance in America's foreign trade policy is that of refraining from taking unilateral action in the face of trade agreement provisions. When it is found that United States interests are really being injured we should negotiate with the other governments involved to work out a solution agreeable to all concerned. The passage of H. R. 1 would reaffirm this principle. final related foreign trade fundamental is our desire as a nation not to be discriminated against by other nations in their trading practices. Conversely we should not discriminate against other nations. Any discriminatory policy that the United States might follow with respect to particular commodities or particular geographic areas might well be detrimental to ourselves and to other countries, both on the broad governmental level and also where private commercial relationships are involved.

The United States has the largest and most productive industrial plant in the world. It has great wealth in natural resources. But it also has by far the biggest demand for raw materials and finished goods of any nation. There are many things in the rest of the world which we need and want in this country. Beyond this is our country's great desire for peace, and strong allies who will help us to achieve it. These facts seem to point clearly to an expansion of our international trade. Extending the Trade Agreements Act provides a mechanism by which this trade can be developed on a mutually satisfactory basis. Such an action, we feel, would surely be in the best interest of the United States.

The CHAIRMAN. Does that complete your statement, Mr. Rathbone? Mr. RATHBONE. Yes, sir.

The CHAIRMAN. We thank you for your appearance and your very helpful statement to the committee.

Are there any questions?

Mr. REED. Mr. Chairman?

The CHAIRMAN. Mr. Reed of New York, will inquire, Mr. Rathbone. Mr. REED. I appreciate your testimony.

I would like at this point to insert into the record the imports of residual oil and crude petroleum, by years.

The CHAIRMAN. Without objection it is so ordered. (The material referred to follows:)