The dollar returns to the United States from all of the above sources were estimated at $343 million in 1951, and $370 million in 1952.7 Hence, total exports of goods and services from the United States to Venezuela are currently above $850 million yearly. A breakdown of dollar transfers arising from the above stated exports of services is shown in the following table. TABLE 8.-Transfers of dollars from Venezuela to the United States in payment for exports of services 1 The U. S. Department of Commerce reports that income receipts (amounts remitted to the United States in the form of common and preferred dividends, interest, and branch profits) from direct United States investments in Venezuela from 1950 to 1952 were as follows: 1952, $256 million; 1951, $278 million; 1950, $236 million. (Survey of Current Business, December 1953). Source: Data from Banco Central de Venezuela, quoted in statement of Joseph W. Foss, representing the American Chamber of Commerce of Venezuela, Caracas, Venezuela, before the House Committee on Ways and Means, June 1953. Mr. REED. Mr. Chairman? The CHAIRMAN. Mr. Reed. Mr. REED. I have in my hand a telegram which I ask unanimous consent to have inserted in the record following the testimony of Irving C. Reynolds. I will read the telegram. (Mr. Reed then read the telegram, which was inserted following the testimony of Mr. Reynolds, and appears on p. 370.) Mr. REED. I just want to call attention to that and ask that it go into the record following his testimony. It is of the utmost importance that people who come in and testify that their association is for or against a bill should not be misleading. That should not be tolerated by this committee. I know it will not be under Mr. Cooper. The CHAIRMAN. Without objection the request will be granted. If Mr. Reynolds desires to offer any explanatory statement, he may have that permission, without objection. The next witness is Mr. J. W. Foley, vice president and director, the Texas Co. Come forward, please, Mr. Foley. We are very gld to have you, Mr. Foley. Will you please give your name, address, and the capacity in which you appear, for the record? You may then proceed with your prepared statement without interruption. 7 Quoted in statement of Joseph W. Foss, representing the American Chamber of Commerce of Venezuela, Caracas, Venezuela, before the House Committee on Ways and Means, June 1953. No estimate is as yet available for 1953. STATEMENT OF JAMES W. FOLEY, VICE PRESIDENT AND A DIRECTOR OF THE TEXAS CO. Mr. FOLEY. I am James W. Foley, of the Texas Co., in New York. I am vice president and a director of the Texas Co., an American oil company engaged in the production, refining, transportation, and sale of oil both in the United States and abroad. The Members of Congress have a tremendously important assignment in deciding on this measure to extend the reciprocal trade agreement for a 3-year period, and I hope the experience and thoughts of a company engaged in foreign commerce for more than 50 years, across 6 continents and in virtually all the countries of the free world, can be of some help in your consideration. The Texas Co. has its largest stake in domestic operations here in the United States. It ranks second among the producers of crude oil from American oilfields. Also, the company has modern refineries in several parts of the United States, and is the only company marketing petroleum products in all 48 States. In the early days of the company, our main international activity was the exportation of petroleum products from the United States to European, South American, African, and far eastern markets. Since then, we have developed marketing organizations throughout the world, and have obtained foreign concessions where we now produce substantial quantities of crude oil. We are still a substantial net exporter of petroleum products. And we import crude oil. But our main foreign operations now, including those of our affiliates and subsidiaries, are the refining and marketing abroad of petroleum originating in American-owned foreign concession areas. Our experience in international operations has made us keenly aware of the key position the United States holds in respect to the international economic relations of the free world. United States foreign trade is larger than that of any other single country. And United States influence on the general character of the free world's international economic policies is immense. We believe that the action of the Congress this year in respect to H. R. 1 will go far to determine whether the free world will move forward toward an expanded volume of international trade, or the reverse. The basic problem relating to H. R. 1 is clear cut; does the United States want more foreign trade or does it not? A growing volume of international trade is a necessary element in the continued economic expansion of the United States, which we all desire. And it will contribue to further economic strength in the rest of the free world, of importance to our own security as a Nation. In its essential aspects, we believe this bill meets three important criteria for any such legislation. First, it recognizes the two-way, mutual character of trade. Second, it proposes only gradual change. And, third, it will encourage other nations to go further than they have in reducing the barriers to international trade. In regard to the first criterion, it is clear that the United States cannot hope for enlargement of its own foreign trade unless, we, as a Nation, help to create conditions in which other countries are able, in turn, to enlarge their own trade. H. R. 1 recognizes this fundamental fact. Also, as a corollary, the legislation is realistic in that it employs the tested approach of reciprocal negotiations of tariff concessions. Under the reciprocal trade agreements program, which this bill would continue, tariff concessions are granted by this country only in return for concessions by other countries. Second, the gradual and moderate approach inherent in H. R. 1 would permit private business to plan ahead. The provision of a 3-year term of negotiating authority for the President should assist in creating stability. Likewise, the provision for only gradual tariff reductions should insure that business will be protected from any sudden or erratic change in the trading environment. Third, we believe enactment of this legislation would have favorable effects in stimulating improvement in the international economic policies of other nations. In the last few years there has been a definite revival of economic strength in most countries of the free world. There is hope that these countries can now move forward toward reducing obstacles in the way of free trade, toward creating an environment permitting a freer international flow of capital, and toward convertibility of currencies. Passage of H. R. I would be tangible evidence of the United States determination to hasten the achievement of these more favorable trading conditions. On the other hand, we would be very concerned as to the consequences if the Congress failed to act favorably on H. R. 1 this year. It is the Texas Co.'s opinion, therefore, that this legislation deserves the support of the Congress as a realistic and middle-of-the-road approach to the problem of creating more favorable conditions for continued growth in international trade. I appreciate very much the opportunity to express the views of the Texas Co. on this important question. The CHAIRMAN. Does that complete your statement? Mr. FOLEY. It does, sir. The CHAIRMAN. We thank you very much for your appearance and the very helpful information you have given the committee. Are there any questions? If not, we again thank you for your appearance and the information given the committee. Mr. FOLEY. Thank you, sir. (The Texas Co. later submitted the following supplemental statement:) Hon. JERE COOPER, THE TEXAS Co., Chairman, Ways and Means Committee, DEAR MR. COOPER: Mr. J. W. Foley presented to your committee on January 20, 1955, the statement of the Texas Co. in support of H. R. 1. He did not at that time discuss the position of the Texas Co. relative to crude oil imports as the pending bill did not include provisions directly relating to such imports. In view of the number of statements now presented at these hearings relative tc limitations cf crude-oil imports, we desire to supplement the statement of Mr. Foley by filing with the ommittee a copy of our statement submitted last October to the Cabinet Committee on Energy Supplies and Rescurces Policy entitled "United States Need for Foreign Oil.' I shall greatly appreciate this statement being filed in the record of the current hearings on H. R. 1 and have attached 50 copies in compliance with the rules of your committee. Sincerely, AUGUSTUS C. LONG. SUPPLEMENTAL STATEMENT OF THE TEXAS CO. Mr. J. W. Foley, vice president and director of the Texas Co., presented a statement on January 20, 1955, before your committee in support of H. R. 1. This bill does not include provisions for quantitative limitations on imports of crude oil into the United States and Mr. Foley accordingly did not discuss the position of the Texas Co. on this subject. A number of statements have now been presented at the hearings on H. R. 1 relating to limitations on such imports and the Texas Co. desires to supplement the statement of Mr. Foley by filing with the committee a copy of its statement entitled "United States' Need for Foreign Oil." This statement was submitted last October to the Cabinet Committee on Energy Supplies and Resources Policy, and is based on a careful study by the company of the question of crude-oil imports. In respect to two of the main points made in such statement, more recent statistical data have now become available. These data underline and reinforce the conclusions stated in the October analysis. The first point relates to the immense crude-oil reserves existing abroad. Estimates of foreign reserves as of the end of 1954 are now available. These estimates show that the United States, which accounts for some 60 percent of total free world consumption of petroleum, now has only around 20 percent of total free world crude-oil reserves. The Middle East is now estimated to have above 65 percent of total free-world reserves. Combined reserves of the free foreign areas as a whole are roughly 50 times 1954 production in those areas, whereas United States crude reserves are only about 13 times 1954 United States production. This indicates that we are drawing on our own supplies much faster than is the case in the rest of the world. Although data on reserves cannot be taken as precise, these estimates correctly portray the general magnitudes, and emphasize the fact that, despite the intensive exploration and development of American petroleum resources, foreign crudes must be counted as an increasingly important component of our Nation's overall fuels availability. The second point on which significant new data are now at hand concerns the trends in production and drilling activity in the domestic petroleum industry. In our statement to the Cabinet committee, we said that the slowdown in domestic production around the third quarter of last year was due to purely temporary factors, and that a strong uptrend would soon be experienced. The facts now available have borne out this appraisal. Production in December and the first weeks of January has recovered to high levels, substantially above the levels of a year previous. Domestic crude-oil production in 1954 as a whole averaged but 2 percent below 1953, a very strong showing in view of the fact that the output of all American industry in 1954 averaged nearly 7 percent below 1953. Another key indicator of the domestic industry's vitality is the number of new wells being completed. Preliminary data indicates that 4,920 new wells were completed last December, one of the highest figures on record. And in 1954 as a whole there were an estimated 52,918 wells completed, about 10 percent more than in 1953. In respect to total rotary drilling rigs in operation the showing has also been favorable, with more rigs in operation in the last month of 1954 than in December of either of the previous 2 years, despite the increasing technical efficiency of these modern rigs. These facts demonstrate the vitality and strength of the domestic producing industry. It is our considered judgment that domestic crude production in 1955 will set a new all-time record. A copy of our Cabinet committee statement follows: UNITED STATES NEED FOR FOREIGN OIL (A policy statement of the Texas Co., filed October 19, 1954, with the cabinet committee on energy supplies and resources policy by the Texas Co.) The cabinet committee charged with reviewing national fuels policy has before it a very important task. Availability of ample fuel supplies is crucial to our Nation's economic and military strength. To assure the future in this regard is a vital necessity. The Texas Co. is one of the oldest companies of the American oil industry, and we are engaged in both domestic and foreign operations. In presenting our views to the committee we wish to concentrate particularly on one aspect of the fuels problem, namely, maintaining American access to foreign supplies of crude oil. Proposals have been made for legislation which would limit or jeopardize this access. In our judgment, the Nation would be short-sighted indeed to adopt any such policy. Proponents of restrictive legislation claim that imports of crude oil are undermining the vitality of the domestic crude oil-producing industry. The Texas Co., as the second largest domestic crude producer, is convinced that this assertion is not borne out by the facts. In the American business system, every industry experiences some upward and downward fluctuations from time to time. In recent months there have been moderate cutbacks in domestic crude production. But these cutbacks are not due to imports, which are at approximately the same level as last year. The cutbacks are due, instead, to domestic factors of a purely temporary character. All available evidence indicates that the level of domestic crude production will increase substantially within the next few months. In the judgment of this company, the temporary production cutbacks recently experienced by most domestic producers (including ourselves) provide no basis for reversing the long-standing national policy of maintaining access to foreign crudes. Any such reversal would inevitably have unfavorable effects on both the Nation and the industry. A thorough appraisal of the problem reveals at least six main considerations which would make new legislative restrictions on imports of crude oil an unwise national policy. These considerations are as follows: 1. The policy of relying on foreign crude oils as a supplement to domestic production has stood the test of time. Foreign crudes have proved invaluable to this Nation in both World War II and the Korean conflict, and also in periods of serious peacetime shortages of domestic crudes. 2. In the future, American petroleum requirements will undoubtedly increase, rather than decrease. Unless the consumer is to bear the brunt of petroleum shortage, higher prices, or both, full access to foreign crude supplies must be maintained. 3. Legislative curtailment of crude oil imports would be directly inconsistent with the administration's stated objectives of promoting world trade and encouraging American investment abroad. It would seriously impair the ability of foreign nations to buy American exports. In particular, any step which would entail legislative discrimination among friendly nations with whom America trades would be highly undesirable. 4. A proposal has been made that would sharply restrict crude oil imports from the Eastern Hemisphere under what is erroneously described as a "reciprocal trade" policy. This proposal is directly contrary to our Nation's long-standing reciprocal trade agreements program. It is clearly unthinkable as a basis for American commercial dealings with friendly nations. 5. Crude oil import restrictions which would discriminate against Eastern Hemisphere supplies would be especially dangerous. An estimated 63 percent of total world oil reserves outside the Communist area are in the Middle East alone. Any policy which would increase the risk of losing these oil supplies to the Communists would be gravely prejudicial to America's economic and defense potential. 6. In fact, the domestic producing industry is a prosperous and healthy industry with an exceptionally strong growth trend. Well completions during the first 9 months of the year were at an all-time peak. And while production of American industry as a whole has averaged more than 8 percent below 1953, so far this year, output of the domestic crude producing industry has made the impressive showing of averaging but 2.6 percent lower. The following sections discuss these six points more fully: 1. POLICY OF EXPANDING FOREIGN OIL SOURCES The need for foreign oil sources to help meet America's expanding petroleum needs has been recognized since World War I. The lessons of that war, and of the threatened petroleum shortage that followed it, gave rise to a high Government policy to encourage and even urge American oil firms to develop foreign sources of supply. The State Department became active in helping American firms gain parity with British interests in the Middle East, leading to American acquisition of large concessions in that oil-rich area. Important additional sources were opened up through American investments in Latin America and elsewhere. World War II proved the wisdom of these policies. These foreign sources supplemented the greatly expanded American production, thus making it possible, |