Mr. PETERSEN. Certainly the effects of our policy would depend to a great extent on the response we obtain from other nations. It has frequently been not very good. Mr. SIMPSON. I think we have been outtraded, but I do think our Republican administrations have been better traders than the others. Mr. PETERSEN. No comment, sir. Mr. SIMPSON. That is all. The CHAIRMAN. Any further questions? The CHAIRMAN. Mr. Mills, of Arkansas. Mr. MILLS. Mr. Petersen, you have attached to your statement a list of names under the Committee for Economic Development, Research, and Policy Subcommittee on International Economic Policy, and then a list of the Committee for Economic Development, Research, and Policy Committee. I think that should be included with your remarks. Mr. PETERSEN. All right, sir. Mr. MILLS. If there is no objection, I ask unanimous consent that it be inserted into the record with his remarks. The CHAIRMAN. Without objection, it is so ordered. (The information referred to above is as follows:) COMMITTEE FOR ECONOMIC DEVELOPMENT RESEARCH AND POLICY COMMITTEE, AS OF NOVEMBER 23, 19541 Frazer B. Wilde, chairman, president, Connecticut General Life Insurance Co., Hartford, Conn. J. Cameron Thomson, vice chairman, president, Northwest Bancorporation, Minneapolis, Minn. Elliott V. Bell, chairman of the executive committee, McGraw-Hill Publishing Co., Inc., New York, N. Y. John D. Biggers, chairman of the board, Libbey-Owens-Ford Glass Co., Toledo, Ohio James F. Brownlee, partner, J. H. Whitney & Co., New York, N. Y. S. Bayard Colgate, honorary chairman of the board, Colgate-Palmolive Co., New York, N. Y. S. Sloan Colt, president, Bankers Trust Co., New York, N. Y. Gardner Cowles, president, Des Moines Register & Tribune and Cowles Magazines, Inc., New York, N. Y. Jay E. Crane, vice president, Standard Oil Co. (New Jersey) New York, N. Y. Harlow H. Curtice, president, General Motors Corp. William C. Foster, Manufacturing Chemists' Association, Inc., Washington, D. C. Clarence Francis, chairman of the board, General Foods Corp., New York, N. Y. Philip L. Graham, president and publisher, the Washington Post, Washington, D. C. Robert Heller, Robert Heller & Associates, Inc., Cleveland, Ohio. Amory Houghton, chairman of the board, Corning Glass Works, Corning, N. Y. Meyer Kestnbaum, president, Hart Schaffner & Marx, Chicago, Ill. Fred Lazarus, Jr., president, Federated Department Stores, Inc., Cincinnati, Ohio. Thomas B. McCabe, president, Scott Paper Co., Chester, Pa. Fowler McCormick, Scottsdale, Ariz. Don G. Mitchell, chairman of the board, Sylvania Electric Products, Inc., New York, N. Y. 1 Date of issuance of policy statement, United States Tariff Policy. Messrs. Biggers and Kanzler dissented from the general conclusions of the statement. Mr. Curtice was out of the country and took no position on the statement. George L. Morrison, chairman of the board and president, General Baking Co., New York, N. Y. Howard C. Petersen, president, Fidelity Philadelphia Trust Co., Philadelphia, Pa. Philip D. Reed, chairman of the board, General Electric Co., New York, N. Y. Beardsley Ruml, New York, N. Y. Harry Scherman, chairman of the board, Book-of-the-Month Club, Inc., New S. Abbot Smith, president, Thomas Strahan Co., Chelsea, Mass. Alan H. Temple, executive vice president, the National City Bank of New York. Frank Altschul, New York, N. Y. Henry P. Bristol, chairman of the board, Bristol-Myers Co., New York, N. Y. S. Sloan Colt, president, Bankers Trust Co., New York N. Y. Gardner Cowles, president, Des Moines Register & Tribune and Cowles Magazines, Inc., New York, N. Y. Jay E. Crane, vice president, Standard Oil Co. (New Jersey), New York, N. Y. John S. Dickey, president, Dartmouth College, Hanover, N. H. William C. Foster, president, Manufacturing Chemists' Association, Inc., Washington, D. C. H. J. Heinz II, president, H. J. Heinz Co., Pittsburgh, Pa. Philip D. Reed, chairman of the board, General Electric Co., New York, N. Y. Beardsley Ruml, New York, N. Y. Harry Scherman, chairman of the board, Book-of-the-Month Club, Inc., New York, N. Y. H. Christian Sonne, chairman of the board, Amsinck Sonne & Co., New York, N. Y. Wayne C. Taylor, Heathsville, Va. J. D. Zellerbach, president, Crown Zellerbach Corp., San Francisco, Calif. Mr. MILLS. That list of the Research and Policy Committee is the one you referred to at the bottom of page 1 of your statement of the 38 persons authorized to vote on the statement; is it? Mr. PETERSEN. Yes, sir. Mr. MILLS. Fine. Mr. PETERSEN. This is the product of that committee's work. Mr. MILLS. These 38 members with the exception of the one who was absent from the country saw the statement, did they, and concurred in the statement? Mr. PETERSEN. Two dissented. Mr. MILLS. That is, except for the two who dissented? Mr. PETERSEN. That is correct. They wrote a written dissent which is in this other statement. Mr. MILLS. The main point I want to bring out is that those that you list saw the statement, with the exception of the one out of the country, and did concur in the statement? Mr. PETERSEN. That is right. Mr. MASON. Mr. Chairman? The CHAIRMAN. Mr. Mason of Illinois will inquire. Mr. MASON. Mr. Petersen, your statement, like most of the statements that have been presented the last couple of days, is based upon a false premise, and, therefore, it is misleading. Date of issuance of policy statement, United States Tariff Policy. The false premise is that our tariff walls now, and our tariff obstacles, are pretty high, when, in fact, they are the lowest in the world of all of our competing nations with the exception of Japan. To illustrate that, I want to read from the bottom of page 2 of ment: your state * a liberalized American tariff could make a real contribution to our allies' economic health and military strength. I think that should read: A liberal American tariff has made a real contribution to our allies' economic health and military strength. That is my view of it. And because that is my view, I think your whole premise is wrong when you base your arguments upon the false premise that we now have high tariff walls, when, in fact, we have the lowest tariff walls. Mr. PETERSEN. This is a great, free trade market, as you say, but there are still tariffs and some of them are substantial. Mr. MASON. Yes, but compared to all of those with whom we deal and have these reciprocal trade agreements, ours is the lowest of the whole group today. That is not according to my figures, but that is according to the State Department figures. We rank eighth from the bottom of all the nations on earth today, and the only competitor we have is Japan, who has lower tariffs than ours. That is all, Mr. Chairman. The CHAIRMAN. Mr. Eberharter, of Pennsylvania, will inquire. Mr. EBERHARTER. Mr. Petersen, in reference to tariff reductions and tariff increases, which factor do you think should be paramount, the national interest or the interest of a particular industry? Mr. PETERSEN. The national interest, obviously, to me. But the national interest, of course, is composed of a composite of all the special and group interests. It is a question of balance. I think paramount would be the national interest, being mindful, however, of injury to the group interest. Mr. EBERHARTER. Thank you very much. The CHAIRMAN. Mr. Reed, of New York, will inquire, Mr. Petersen. Mr. REED. Mr. Petersen, this matter of dissenting opinions to your statement has been brought up. Is the opinion of the dissenters in that pamphlet you have? Mr. PETERSEN. Yes, sir. Mr. REED. Who wrote that? Mr. PETERSEN. It was written by Mr. Biggers, president of LibbyOwens-Ford, and was joined in by Mr. Kanzler. Mr. REED. But do their views appear in the document? Mr. PETERSEN. Yes, sir. Mr. REED. I ask unanimous consent that that document be made a part of the record, as long as it contains the dissenters' opinions. The CHAIRMAN. Without objection, it is so ordered. Mr. REED. Thank you very much. (Extracts from the publication referred to above are as follows. The dissent appears as a footnote on p. 829.) UNITED STATES TARIFF POLICY Committee for Economic Development, New York 22, N. Y. Finding a tariff policy which is in our national interest has never been more difficult or more important that it is today. The scope of tariff policy considerations has broadened tremendously in recent years. What was once a narrow, domestic issue-even a local issue-now involves questions of national and international security as well as the health and welfare of United States industry. Tariffs were imposed in this country at first largely as a means of raising revenue for the Federal Government. In the years before 1860 the American economy was still predominantly agricultural and tariffs were generally low. Between 1860 and World War I the tariff became a major protective device for the host of new industries which were being born in community after community in the United States. These industrial communities grew up in the face of powerful competition from well-established industries in Europe. It was in the national interest to give them substantial tariff protection for their formative years. Often they retained it long after their formative years. World War I added a new dimension to American tariff policy. The war found the United States cut off from traditional supplies of many important materials-notably essential chemicals and pharmaceuticals from Germany. Partly to eliminate this dependence on foreign supplies Congress increased tariffs further in the 1920's. The Tariff Act of 1930-the Smoot-Hawley Tariff-raised tariffs to the highest point in our history. But in 1934 a retreat from protection began with the enactment of the Trade Agreements Act. For the first time since before the Civil War those who believed that freer trade policies would strengthen rather than weaken American industry saw their views reflected in tariff legislation. This act introduced many new principles, notably the principle of reciprocity whereby the United States bargains concessions in its own tariff for tariff concessions abroad. Again, however, a domestic issue- the aim of increasing domestic employment by getting other countries to lower their tariffs on our exports-probably decided Congress in favor of lower tariffs. World War II for the first time broadened the scope of tariff policy considerations beyond the domestic economy. The size and competitive strength of the American economy in the wake of World War II made the country inevitably, a major factor in international trade. At the same time there was a growing awareness of the interdependence of America's security with that of the rest of the free world. Today, what the United States does with its tariffs has a bearing on the economic and military security both of this country and of its friends abroad. It has a bearing on the foreign policy of this country and of other free world countries. Since the tariff has become a foreign policy as well as a domestic issue, the trend toward lower tariffs which started in 1934 has continued. Postwar tariff agreements, negotiated at Geneva, Annecy, and elsewhere, have resulted in rates well below the 1930 levels in many cases. Today's debate is concerned with whether or not we should continue this trend or stop and perhaps even reverse it. The President has recommended that the United States continue a policy of general tariff reduction. There are many who support this position. Others believe that we should maintain or increase our tariffs. In this policy statement we present the principal facts and considerations relevant to American tariff policy and make recommendations for its future course. AREAS OF AGREEMENT Public debate often accents the differences of opinion about our tariff policy and tends to ignore the many aspects of that policy on which most people agree. The following propositions, we believe, will command a wide measure of agreement: The tariff and United States foreign trade (1) United States foreign trade, like our internal trade, permits a more economical use of our resources by promoting specialization of production. Taking the economy as a whole, we enjoy higher real wage levels and living standards with foreign trade than would be possible if we relied solely on supplies and markets within our own borders. The economic advantage of foreign trade is very clear when we buy abroad things which we don't produce at all at home-coffee, bananas, and tin, for example. To provide substitutes for these imports within our own borders would entail a most uneconomical use of our resources. At the same time we would lose the advantage of obtaining these imports by exporting in exchange the things which we produce with relatively greater efficiency than anybody else-automobiles and almost all consumer hard-goods, for example. There is a less obvious, but nonetheless real, economic advantage in our foreign trade when we buy abroad things which we do produce in some quantity at home things like pottery, fine woolens, and hats. We could if we wanted meet all our requirements for these imports from home production. The cost would be nowhere near so great as would be the cost of trying to grow coffee or bananas in the United States. But there would be a cost which would be reflected in higher prices (and less demand) and lower wages-i. e., a less economic use of our resources. And again we would lose the advantage of selling, to pay for these imported items, goods which we produce at home with greater comparative efficiency. In general, when an import competes successfully on its own merits in our domestic market, foreign trade offers us an economic advantage by promoting a more efficient use of our resources. All trading nations benefit in this way from an expanding world trade. (2) Sometimes the economical use of our resources is less important than other considerations. The health of key defense industries is likely to be the foremost example of a situation where overall economic efficiency becomes of secondary importance. The welfare of a particular domestic group might also on occasion be of overriding importance. Then there are limitations to the general rule that expanded international trade serves the economic advantage of trading nations. For example, if the prices of imports are made artificially low for a time by foreign subsidies or dumping, the rule does not hold. In some cases temporary protection for domestic "infant" industries from foreign competition may result in greater efficiency in the long run. (3) Tariffs inhibit the growth of American exports. Because our typical industrial and agricultural exports are the products of some of the most efficient producers in the world, other countries are anxious to buy more from us. But they are limited by their dollar earnings. Increasing the effective demand for United States exports depends upon increasing the supply of dollars abroad. The main way of doing this is by increasing United States imports.1 Trade is a two-way proposition. While some dollars spent abroad may at times go into other countries' reserves, the vast demand for American products abroad assures that most dollars spent in other countries will come back here in one way or another in the form of increased orders for United States exports. (4) Many sectors of American manufacturing and agriculture sell a large part of their output abroad. Between a quarter and a half of our entire production of cotton, tobacco, corn, and wheat is exported. In all, farm products representing about 30 percent of the value of farm marketings are highly dependent on export markets. We also export a large part of our output of some manufactured goods. In 1952, for example, we exported 30 percent of our earthgrading machinery, 23 percent of our tractor production, 22 percent of our textile machinery, 22 percent of our sewing machines, 19 percent of our typewriters, 17 percent of our printing machinery, 16 percent of our trucks and buses, 13 percent of our refrigerators, 13 percent of our diesel engines, and 12 percent of our agricultural machinery. We exported chemicals and pharmaceuticals in large volume-38 percent of our DDT, 26 percent of our penicillin, and 11 percent of our dyes, colors, and stains, for example. We exported 9 percent of our cotton textile print cloth. And a large volume of iron and steel products. (5) Only a part of our imports are subject to tariffs or other import restrictions. Of our total annual imports of approximately $10.8 billion in 1951, some $6 billion consisted of products which enter free of duty or quota restrictions. 1 Increasing imports is not the only way to enable foreigners to buy more of our products and services. To some extent, and for a time, exports can be increased by expanding the flow of American investment abroad. Increasing expenditures abroad by American tourists also helps expand our exports. Foreign aid, too, is a method of maintaining or increasing our exports, although it is not one on which we or other countries wish to rely indefinitely. 1951 is the latest year for which this kind of breakdown of United States import figures is available. |