4062 CONGRESSIONAL RECORD-SENATE APRIL. 5 within the boundaries of Yellowstone Park; to the Committee SENATE on the Public Lands. 7304. Also, petition of mill and factory, New York City, FRIDAY, APRIL 5, 1940 concerning the Wagner Act, the Wage and Hour Act, etc.; (Legislative day of Monday, March 4, 1940) to the Committee on Labor. The Senate met at 11 o'clock a. m., on the expiration of 7305. Also, petition of the Consumers League of New York. the recess. concerning the Barden bill Increase ( +) or decrease (-). Value 1935-39 1938-39 Designation 1935 193(J 1937 1938 19391 Miilion (million (million (million (million (million Percent Million Percent dollars) dollar.;) dollars) dollar) dollars) dollars dollars ------Exports, domestic: To 18 agreement countries: 2 All commodities ___ . __------1, 237 1, 363 1, 845 1, 731 1,862 +625 +50. 5 +131 +7.6 Agricultural commodities _____ ------_------______444 450 520 568 441 -3 -7 -127 -22.4 Nonagricultural commodities _____ ------______------__ 793 913 1, 325 1, 163 1, 421 +79.2 +258 +22.2 To nonagreement countries: All commodities ______------1,006 1,056 1, 454 1, 326 1, 262 +256 +25.4 -64 -4. 8 Agricultural commodities ______------______303 259 277 260 215 -88 -29.0 -45 -17.3 Nonagricultural commodities ______703 797 1, 177 1, 066 1, 047 +344 +48.9 -19 -1.8 ======Imports for consumpt-ion: From 18 agreement countries: 2 All commodities ____ ------1, 191 1, 470 1, 747 1,146 1, 374 +183 +15. 4 +228 +19. 9 Agricultural commodities_------600 705 849 528 614 +14 +2. 3 +86 +16. 3 Nonagricultural commodities------591 765 898 6181 760 +169 +28. 6 +142 +23. 0 From nonagreement countries: All commodities ______------848 954 1, 263 804 902 +6.4 +98 +12.2 Agricultura1 commodities ___ ------472 537 730 428 504 +6.8 +76 +17.8 Nonagricultural commodities ____ ------376 417 533 398 +22 +5.9 +5.9 1 Preliminary. 2 Belgium, Brazil. Mr. SHIPSTEAD. Mr. President, I will say that I have of Agriculture. I do not mean to say that it was done in ~een reports from the Department of Agriculture that do not tentionally, but it makes an entirely different picture. agree with the statement I have placed in the RECORD, and The Senator from Wisconsin [Mr. WILEY] inquired as to I will tell the Senate why. That statement is based upon why there was the extra tariff reduction of 1 cent, who the figures for the calendar year, while the Department's wanted it, and for whose benefit it was made. I have some statement is based upon the figures for the fiscal year. Their notes I shall follow in logical sequence and I think I shall statement ends at the end of 1938, and does not include the come to a discussion of that matter. figures for the year 1939, and the figures for that year alone The 7-cents-a-pound tariff of 1935 on cheese was cut first changed the picture from that presented by the Department to 5 cents, and finally in 1939, in the revision of the agree- 1940 CONGRESSIONAL RECORD-SENATE 4067 ment with Canada, to. 4 cents a pound. The reduction in the and Holland and any other country which would make a ' cheese duty from 7 to 5 cents caused cheese imports to jump trade agreement with us, under which, through the most-. 1,400 percent. Then in 1939 came the cut to 4 cents, and favored-nation clause, every other nation would be given cheese imports again rose threefoid. From an average price benefits in connection with dairy products. of 17 cents in prereciprocal-trade years the price dropped to Owning 60-percent stock interest in Australian dairy sub an average of 13 cents, with a corresponding drop in butter sidiaries, the corporation naturally would be interested in the prices, resulting in a reduction of around $200,000,000 in cash pact with Great Britain, which included all colonial posses income to the dairy farmers engaged in cooperative dairying. sions of the United Kingdom. If the proposed pact with Argentina is signed there will On January 1, 1939, the trade agreement with the United be admitted to the American market the products of a coun Kingdom became effective. At the same time the Canadian try in which butter is produced at 12 cents a pound and pact was revised, so that the duty on Cheddar cheese, wbich cheese at 8 cents a pound, which soon would force American had been cut from 7 cents a pound in 1935 to 5 cents a pound dairy cooperatives to give up the idea of cooperative inde in 1936, was cut to 4 cents, and immediately the profits or pendence, and accept Federal subsidies, following the ex dividends of the National Dairy Products Corporation, as re ample of the crop growers who received $800,000,000 last year. ported by Poor and Moody, mounted to the highest level in As a matter of fact, we are subsidizing the dairy farmer now, years. because of the low prices. We might say that we are in In the corporation's report to stockholders, filed with Poor directly subsidizing dairy-product imports. and Moody, their total business in terms of milk rose from In answer to the question of the Senator from Wisconsin 8,275,000,000 gallons in 1934 to 9,698,000,000 in 1938. The as to who were in favor of these reductions, and who were company had the largest profit in its history. The return on heard, I find that the processors, the large processors of dairy the capital investment jumped from 5.83 percent to 9.47 per products have been very prosperous. They undoubtedly have cent. Gross profits rose from $13,000,000 in 1935 to $17,000,- favored the reduction, because whether cheese is 'worth 15 000 in 1936, a 1-year gain of $3,600,000, and the advance cents a pound or 20 cents a pound makes very little difference notice given out by the president of the corporation. promises to the processor who buys the raw product from the farmer. record profits for 1939. The cheaper he can buy the raw product the more volume From the very start of the trade-agreements policy the he will have and the greater profits he will receive. I can balance for dividends began to rise, as shown by the reports see that those who speak for the processors would be in to stockholders. In 1934 dividends of $66.38 a share were favor of having large imports, particularly if they ·have plants paid on the preferred stock; in 1935, $94.60 a share; and in in foreign countries, as so many of our processors have. The 1936, $134.56 a share. For the first 6 months of 1939 oper cooperative farm organizations in tbis country certainly have ating profits were more than $9,000,000; and the report adds: not asked for the lowering of the tariff. With unit sales volume running at the highest level in the cor Let us see who may possibly have been interested in low poration's history. ering the tariffs on these agricultural products. Included The country may well congratulate . the board of directors in that category are the dairy corporations, organized with of the National Dairy Products Corporation and its 75,000 Delaware charters, whose stock is quoted on the stock ex stockholders on the recent growth of their national and changes and bucketshops, and who have been engaged for international enterprise; but at the same time every Ameri years in the fight against the farm cooperatives. can citizen cannot help regretting that the prosperity which I will take one of them as an example. An international has visited the world's greatest dairy-processing corporation dairy-products organization has been very prosperous _even is not also enjoyed by the farm cooperatives, which are the with these low prices; in fact it started to make money and greatest agricultural asset of a score of the principal States increased its profits as the price of dairy products went of the Midwest wbich produce the raw materials for the down. This corporation owns 54 subsidiary corporations processors, who, controlling the market and having the having Delaware charters, 14 having New York charters, privilege of importing their material into tbis country and and 34 subsidiary corporations in Canada, 2 in Holland, 4 selling it on the American market, which ought to belong in the United Kingdom, 3 in Australia, and other subsidiaries to the American farmer, pay dividends as bigh as $135 a in Belgium and Argentina. share. The charge of monopolistic practices against this The organization referred to is engaged in wholesale and concern has been dismissed by the Department- of Justice. retail distribution and exporting and impprting agricultural The National Cooperative Milk Producers' Federation, products. In spite of the fact that the dairy farmers have meeting in Chicago in November 1939, condemned the trade had tremendous losses, I have no doubt that this corporation, agreement program in the following words: which I take as an example, this international dairy products We believe that the present trade-agreement program of the organization which is engaged in processing and handling Federal Government, as administered by the Secretary of State, is dairy products, had the ear of the experts who wrote this detrimental to the welfare of agriculture and particularly to the treaty. producers of dairy, livestock, and poultry products. It is natural to assume that an international corporation Mr. President, I have briefly tried to give an idea of what the dealing with commodities which are being considered by the result has been to the dairy farmers. Of course, the result is experts in making a. trade agreement would be very much not all due to the trade agreements. We find that in the interested if the corporation owns subsidiaries in Canada, iorthern dairy States, where the cost of production is Belgium, Holland, Argentina, and Australia; at least it would greater than in the South, the increase in dairy cattle has be natural to be the first to be consulted, especially when that been only 5 percent; wbile in the South, where hay crops corporation is not only a manufacturer but a wholesaler, and are now grown instead of cotton and tobacco, since we retailer and distributor and an importer. started the A. A. A. farm program, dairy cattle have in If that corporation duplicated its organization in the United creased in number 21 percent. The increase in dairying in States by owning two subsidiaries in Montreal, and a "Na the South and the importations of cheese have affected the tional Dairy Products Corporation of Canada," with general cheese market, which in turn has affected the butter market, offices at Toronto; in control of its Canadian companies, it and as a result we have the conditions which I have described naturally would be deeply interested in the reciprocal-trade in the agricultural sections where the main industry is pact with Canada. Such pact became effective January 1, dairying. Hogs sold yesterday in Kansas City for $3.75 per 1936, and immediately the sales volume, the net profits, the hundredweight. dividend balance of National Dairy Products Corporation, as I feel that I should not be true to the constituency which reported by Poor and Moody began to mount, though the has honored me if I did not rise upon the floor of the Senate farm cooperatives began to lose. and present their case. However, it is not only the condition Owning a · 100-percent voting interest in the dairy subsidi of the dairy industry and the effect of the trade treaties upon aries of Belgium and Holland, that corporation would be pro that industry which make me take a different position than I foundly interested in the recipro.cal-trade pacts with Belgium took in 1934. In 1937, when the law was extended, I was too 4068 CONGRESSIONAL RECORD-SENATE APRIL 5 ill to be present. At that time we had not had much time to Congress has voted again to yield its tariff-making powers to the President and the Secretary of State. Unless it imposes some sort observe what the results had been. As I stated in the begin of restrictive rule, we may expect more trading off of the farmer in ning, I voted for this arrangement in 1934 because we were reciprocity deals to be made later. The Argentine negotiations told that the men in charge of the administration were good have been suspended, but no doubt will be resumed after election. Yankee traders who would use their power to trade agri The only concessions that Argentina wants are on its farm products. The effect of the most-favored-nation agreements is especially cultural surpluses out of the country. They may be Yankee vicious, taken in connection With the trade pacts. These standing traders, but certainly they traded some Yankee farmers to agreements extend to nearly every country Within scope of our trade the detriment of their pocketbooks. the concessions made in deals With individual nations. For in stance, when the pa.ct with Canada cut 4 cents a pound from the Mr: President, we are confronted with a condition which we duty on dressed poultry and 5 cents a dozen from the duty on did not confront in . 1934. ·Then the world was at peace. eggs, these tariff concessions were automatically extended to all the Now we have a condition in which the world is at war. In other countries. my colloquy with the Senator from Wyoming [Mr. O'MA Among the farm products on which tariff duties have been cut by the Roosevelt trade pacts are cattle, pork, milk, cheese, poultry, HONEYJ the other day we agreed that the first casualty in war. eggs, potatoes, barley, oats, rye, strawberries, cabbage, and other is the truth, and that the second is international exchange vegetables. in currencies. We do not know where currencies are going, Speaking at Baltimore on October 25, 1932, Mr. Roosevelt said: except that we know they are going down. We do not know "It is absurd to talk of lowering tariff duties on farm products. I declared that all prosperity in the broader sense springs from the how far down they are going, because we do not know how soil. I promised to endeavor to restore the purchasing power of the long the world war will last. We know how far down they farm dollar by making the tariff effective for agriculture and raising went in some countries as a result of the last World War. the price of farmers' products. I know of no effective excessively high tariff duties on farm products. I do not intend that such We shall have to decide whether to permit our currency to duties shall be lowered. To do so would be inconsistent With my follow those of other countries in order to defend our trade entire farm program, and every farmer knows it and will not be or whether we wish to protect our own American market and deceived." our own currency. On account of the depreciation of cur In the light of the 6-year record under Mr. Roosevelt's trade-pact law, can we blame the farmer for feeling that he has been deceived? rencies tariffs may be reduced as much as 99 percent or wiped Can we blame him for having misgivings about the future use of out for all practical purposes. this unrestricted power? It seems to me it is a dangerous thing now to tie our inter Mr. BRIDGES obtained the floor. national trade in a strait jacket. We cannot anticipate all Mr. O'MAHONEY. Mr. President, will the Senator yield the things which may happen to our trade under such con for a moment? I desire to ask the Senator from Minnesota ditions. I think it is much more dangerous now than it was a question. in 1934 to fix tariffs by agreement .for a period of 3 years Mr. BRIDGES. I yield. until we know what is going to happen to currencies and to Mr. O'MAHONEY. May I ask the Senator from Minne trade. sota whether it was his intention, in the amendment which After all, the medium of exchange-so far as there will be he has presented, to exclude wool as an agricultural product? a medium of exchange aside from pure barter-will be in Mr. SHIPSTEAD. No; that was not my intention. terms of currency. Settlement will be made in terms of cur Mr. O'MAHONEY. Is the Senator aware that his amend rency; and that fact may eradicate all protective barri~rs ment does not cover wool? against many things which may happen in Europe. Mr. SHIPSTEAD. No; I was not aware of that. I think I wish to read an editorial, not as an excuse but as a reason wool ought to be included. My amendment includes schedule why we had good reason to expect that the market for agri 7 in toto. It is not my intention or desire that wool shall not cultural products would be protected in these pacts. I have be included. before me an editorial from the Minneapolis Tribune of Mr. O'MAHONEY. The Senator's amendment refers to April 1, 1940. I read a part of the editorial: all the paragraphs of schedule 7 of the Tariff Act of 1930. Speaking at Baltimore on October 25, 1932, Mr. Roosevelt said: Schedule 7 deals solely with certain agricultural products. "It is absurd to talk of lowering tariff duties on farm products. I declared that all prosperity in the broader sense springs from the Wool and manufactured products of wool are contained in soil. I promised to endeavor to restore the purchasing power of the schedule il. farm dollar by making the tariff effective for agriculture, and rais Mr. SHIPSTEAD. Raw wool? ing the price of farmers' products. I know of no effe?tive exces sively high tariff duties on farm products. I do not mtend that Mr. O'MAHONEY. Yes; raw wool. Would the Senator be such duties shall be lowered. To do so would be inconsistent With willing to modify his amendment so as to include wool? my entire farm program, and every farmer knows it and will not Mr. SHIPSTEAD. Yes; I will do that. be deceived." In the light of the 6-year record under Mr. Roosevelt's trade Mr. O'MAHONEY. Then, later on, the Senator perhaps pact law, can we blame the farmer for feeling that he has been can present that amendment. deceived? Can we blame him for having misgivings about ·the Mr. SHIPSTEAD. If the Senator will draw the amend future use of this unrestricted power? ment, I will be glad to accept it. In spite of that promise, tariffs have been reduced on more Mr. O'MAHONEY. Very well. than 150 farm products. Mr. BRIDGES. Mr. President, the act which we are now Mr. President, I send the editorial to the desk and ask that considering is one which grants terrific power. It grants that it be printed in full in the RECORD at this point in my remarks. terrific power to just one man, the President. For 6 years this There being no objection, the editorial was ordered to be act has given to one man the power of life and death over printed in the RECORD, as follows: not only all our industries but over our workers, our farmers, [From the Minneapolis (Minn.) Tribune of April 1, 1940] and our States. It has given to one man the power of eco THE FARM ANGLE nomic life or death over whole sections of this country, and to Senators from these Northwestern States stood solidly for the control them as he wishes by this power without the right of Pittman amendment Friday and thereby carried out the expressed wishes of the great farm organizations. Renewal of the trade-pact appeal. law without the restrictions favored by farm leaders will be regarded The Bill of Rights was drawn up carefully to preserve our with misgivings in the light of what ha.s been done already. Duties rights. Certainly it is no less necessary under our Constitu on 160 farm products and commodities that are produced in this country have been reduced by means of trade agreements negotiated tion to insure our rights, in this instance, from decisions made under this law in the last 6 years. by the Executive, which may mean the loss of livelihood to The people of the farm States are not in dissent from the pur those whom they affect. pose of stimulating foreign trade, but they fail to see Wisdom in bargains that increase our surplus of farm products by letting down Life or death power without appeal is "too much power for a the bars for competitive imports. bad man to have, and too much for a good man to want." It is of record that in 1939 there were imported into the United Those are the words of Secretary Cordell Hull, himself, who States 754,000 head of cattle, 86,000,000 pounds of potatoes, 59,000,- now is trying to change it with this policy. The secretary of 000 pounds of cheese, and many other products competing with the output of our own farms. Meanwhile our export market ha.s been state was, to my mind, right-it is too much power for any drying up. man. And I make no reservations in that statement, whether 1940 CONGRESSIONAL RECORD-SENATE 4069 that man be a Democratic or a Republican President of the foreign-trade treaties of ours have had little, if anything, to United States. do with shaping or determining whether war or peace shall As the situation stands now, the representatives of foreign prevail abroad. The administration having prophesied countries have more to say about these agreements which through its many agents located in the many strategic posi vitally affect our American standard of living than do the tions throughout the world that the trade treaties would do Senators and Representatives duly elected to represent the much to keep peace, we have been sadly disillusioned. Now, American people. The American representatives are excluded I think that it behooves the Senate at this time to pay little even from their constitutional duty of ratifying treaties. if any attention to the prognostications of Mr. Roosevelt's On March 5, 1934, Franklin D. Roosevelt, when referring to Departq~.ent of State so far as the extension of this act is the trade-agreement program which the administration had concerned. I think our first loyalty is to the American peo placed before Congress at that time, said: ple-to the farmer, the manufacturer, the home owner, and Legislation such as this is an essential step in the program of the industrialist. national economic recovery which the Congress has elaborated Let me indicate briefly what some of these people think of during the past year. It is part of an emergency program necessi the reciprocal trade agreement policy. tated by the economic crisis through which we are passing. I hope for early action. The many immediate situations in the field Mr. L. J. Taber, master of the National Grange, told the of international trade that today await our attention can thus be United States Senate Committee on Finance that he wanted met effectively and with the least possible delay. it first understood that the National Grange was continuing Mr. President, I ask, referring to the extension of the its opposition to the renewal of this act for another period of reciprocal-trade treaties, when will the present administra 3 years. He said: tion stop imposing emergencies on the American people and We .are glad to note that every farm organization is now op posed to the passage of this act without some type of corrective then presume 3 and 6. years later that emergency acts are amendments. permanent acts? In short, is this extension, which we are today considering, an emergency or is it not? If it is not, I do not need to emphasize the fact that the National then should we not cast aside as irrelevant all the arguments Grange, with a representative membership from ali over the and reasons which caused its original passage as emergency country, has always been nonpartisan. legislation? Hon. William R. Castle, former Under Secretary of State, Mr. President, the American people have for the last 6 commented on these agreements for the press a year ago. years been spoon fed and propagandized with the idea that Let me quote you a bit of his article: the New Deal foreign policy, of which the Reciprocal Trade There are certain ways in which the trade agreements are posi tively harmful to the country. One, and perhaps the most im Agreements Act is such an important part, was responsible portant, is that they constitute another blow at our balanced in a large measure for the maintenance of world peace. system of government, placing unwarranted power in the hands That is just not so. Major nations of the world have been of the Executive. engaged in war constantly since 1934-since the institution of He goe.'S on to say- the Hull trade treaties--and yet to show the Senate the hand It is difficult to explain how anyone can praise and support the and-glove work of our foreign Ambassadors and our State reciprocal-trade agreements and at the same time claim to be Department at home, let me quote from an address by equally in accord with the domestic policy of the administration. Hugh R. Wilson, United States Ambassador to Germany, as The two are incompatible. In fact, the domestic policy seems late as April 13, 1938. Note that this was before Munich, almost designed to prevent the agreements from being of any value to the United States. Trade is, as the Secretary of State keeps to be sure. Ambassador Wilson said: pointing out, a two-way proposition. He is right in insisting that There is still dangerous economic instability in many parts of the we must import if we want to export, but he does not so clearly world. We in America are now doing what we can toward remedying realize that we also must sell if we want to buy. this situation and toward undoing the errors of the past. To attain this end we have embarked upon a course of policy designed Hon. George N. Peek, former trade adviser to the Presi to promote the return to normal and profitable commercial rela dent, and also an expert on this subject, comments that it tions between countries. We chose the method of negotiating is his- reciprocal-trade agreements as the principal instrument of this policy. The choice was deliberate and based upon the profound Considered judgment that the administration has gone danger conviction that no more effective and constructive method could ously astray in its adoption of a foreign-trade policy which, for the be found. We are working on these agreements with determination most part, is in conflict with our internal economic problem and and painstaking care. Much progress has been made, and we hope policy, particularly as regards agriculture, and which in some re for more. spects is diametrically opposed to the attainment of domestic economic balance. Mr. President, if it could be said that much progress had Finally, he says that- been made by embarking the United States- This policy, therefore, is not in the interest of the United States. Upon a course of policy designed to promote the return to normal and profitable commercial relations between countries-- There we have the viewpoint of some of our greatest agri""' In April 1938, as has been stated by Ambassador Wilson, cultural and trade experts on this policy in which the admin what normal and profitable relations have we to look forward istration still persists. to today? It probably would not be fair to say that recipro From the angle of industry let me quote you a few com cal-trade agreements negotiated with European nations were ments that are pertinent. _ a cause of the war of nerves which held the whole world in On March 19, 1930, the National Advisory Council of Inde the grip of fear throughout the summer of ·1938. It might pendent Small Business Men wrote me: not be fair to say that the negotiations .of trade treaties If treaties are to be negotiated, smaller-business men-and there are over 4,000,000 in the country-feel that our interests are safer ended in the Munich Pact in November of 1938. Indeed, it in the hands of our Senators than in the hands of any appointees might not be fair to say that the trade treaties gave rise to or so-called experts; and trust, if the reciprocity idea is to be con powerful dictatorships which today exist in Europe and the tinued, that with us you will fight for the right of review and Far East, but which did not exist before 1934. But it is sanction by the Senate of all pacts or treaties that so vitally affect fair, I believe, to say that the American people as a whole our general welfare. do not wish their economy to be meshed with that of Europe The members of the Manufacturers' Association of my own and Asia. Secretary Hull himself says:· State have written me that they as a body are against this We are now in a period when, as a result of the new and Wide policy as it now stands; and I believe, from what they say, spread wars, the need for means of prompt and effective action on that they have seen through the problem. Let me quote just the part of the Government in the promotion and defense of our foreign commerce is even more imperative than it has been hitherto. a sentence from their letter: We are in a period in which our economic policies and action may The haste and urgency employed to have this law extended have a determining infiuence upon the developments, which, after indicate clearly that it is a political whim rather than a beneficial the cessation of hostilities, will shape the future world. expedient which should be allowed to stand or fall on its merit. Mr. President, I think it can truthfully be said, after a Here is another viewpoint. Dan Tobin, American Federa.... . review of the world's-history for the last 6 years, that these tion o(Labor vice president, and president of the Teamsters' 4070 CONGRESSIONAL RECORD-SENATE APRIL 5 International Union, also· spoke about this program. In an States must be based upon wholly different conditions and editorial in the February issue of the Teamsters' Journal changed conceptions than those which exist today, or those he says: which existed on October 9, 1939. Your Congressman and your Senator should know your views The State Department has steadfastly refused or neglected on reciprocal-trade treaties, the continuance of which jeopardizes to clarify its position with respect to the continuance or con your job opportunities and your standard of living. clusion of the pending negotiations for a new trade agree The American Flint Glass Workers' Union wrote the Com ment with Belgium. This continuing uncertainty is harmful mittee on Reciprocity Information as follows: to all business interests, whether importers, manufacturers, or The action of those entrusted with the carrying on or the nego exporters. The businessmen of the United States are entitled tiation of trade treaties in alleging or assuming that they believe, to know the policy of that Department in administering the through our entry into a trade treaty with Belgium, a nation powers delegated by the Congress. Interested at the present time in maintaining its very life, they We should like to know whether or not the State Depart can increase job opportunities for American workers only through securing a reduction in our present tariff duties on imports from ment contemplates dropping all negotiations and all thought Belgium; to our mind well illustrates the hypocrisy which underlies of a new agreement with Belgium until the end of the present our present trade-treaty policy. European conflict. Let me read a little further from the letter of the Flint Now what about the constitutionality of the Reciprocal Glass Workers' Union: Trade Agreements Act? I am not a lawyer, but I can read the English language, and when the Constitution of the United We sincerely trust that your comimttee, in view of the present unsettled world conditions, realizing that the purposes of the legis States plainly says that treaties must be ratified by the Sen lation which authorizes our entry into trade treaties with foreign ate, I do not think that we can make treaties, call them nations cannot now be secured, will have the courage to publicly agreements, and get around the law. If we assume the con recommend the indefinite postponement of our negotiation of any trade treaties. stitutionality of section 350 of the Tariff Act of 1930, as amended, what about the requirements set down in subpara I do not need to quote to you the position of the wage graph (A) as necessary to be complied with prior to the con earner-the little fellow-as to this policy which Mr. Hull is clusion of a trade pact? Before the President can enter into so vigorously pursuing. All I need to do is to remind you of a foreign trade agreement he must find "as a fact that any the millions of our people who are still walking the streets existing duty of the United States or any other foreign coun of this country with empty pockets and no jobs. try are unduly burdening and restricting the foreign trade There is now in effect a trade agreement between the of the United States and that the purpose above declared will United States and Belgium, proclaimed on April 1, 1935. It be promoted by the means specified." embraces reductions in duty on most of the important com Mr. President, the reports upon which these findings are modities exported from Belgium- to the United States. based have never been made public. They may exist, but I On August 16, 1939, the Department of State announced have never seen them. To the extent that they may be de negotiations for a new trade agreement with Belgium. Such fective, the trade negotiations based upon them would appear notice was accompanied by a list of products to be considered to be null and void. Why was it that the framers of our for possible granting of concessions by the United States. Constitution set forth that treaties negotiated with foreign Included therein w'ere all products on which concessions had nations should b€ subject to ratification? It was obviously already been made in the 1935 agreement with Belgium, plus not for purposes of secrecy. It was obviously to give the pub substantially all products -which had been included in the lic a chance to have a hearing. trade agreement with Czechoslovakia terminated as of April . Oh, we are told that a variety of agencies enter into the 22, 1939, following recognition by the United States of de facto negotiation of a trade treaty, but if you are a pottery maker administrative control of Czechoslovakia by Germany. We or a cotton manufacturer, or anything else, for all practical have no commercial agreement with Germany. purposes you are merely told that a new rate is going into · September 27, 1939, was the closing date for filing briefs of effect, and the rest lies with you-to sink or swim-when the interested parties in connection with this new Belgium trade products of your business may be placed in competition with 'agreement; and public hearings were held before the Com cheap imported products of like character. mittee for Reciprocity Information during the week of Octo · The most striking example of this disparity in the method ber 9, 1939. pf accounting is the one I shall now quote: On September 5, 1939, the President proclaimed that a state In 1939 we exported 7,576,391 metal-fila-ment light bulbs at an of war exists between Germany and France, Poland, and the .average value of 12 cents .per bulb. Then we turned around and United Kingdom, and invoked the provisions of the Neutrality imported during the same period 84,296,063 light bulbs on which Act. Thereafter· such proclamation was supplemented by a an import value of only 8 mills per light bulb was placed. further proclamation on November 4, 1939, forbidding all Mr. DAVIS. Mr. President-- vessels of United States registry from entering a prescribed The PRESIDING OFFICER (Mr. CHANDLER in the chair). belligerent area, which included all seaports of Belgium. Does the Senator from New Hampshire yield to the Senator Protests were filed with the Department of State agajnst from Pennsylvania? · continuance of negotiations under the foregoing conditions, Mr. BRIDGES. I yield. which protests to date have been ignored. Mr. DAVIS. Did the Senator ascertain the differential in Meanwhile Belgium from time to time has placed restric wages between those paid the people who made the imported tions upon its foreign trade, including substantially all the light bulbs and those who made the American bulbs? articles exported to or imported from the United States. Mr. BRIDGES. I have not the exact figures here, but I Whether or not Belgium be drawn into the pending Euro looked the matter up at one time, and wages, roughly speak pean war this action has already had a pronounced effect ing, amounted to an average of $5 a day in this country, as upon economic conditions in the United States, and more par contrasted with a wage, where the bulbs are made abroad, of ticularly in Belgium. Conditions are changing almost daily. around 60 cents a day. The difference may vary a little from The future is wholly unpredictable. that, but that is essentially the ratio, about 9 to 1. Certainly no basis today exists upon which to predicate Mr. DAVIS. It is similar to the comparison in the case of any intelligent appraisal of the effects upon the economy of other articles which were brought into this country,, the dif the United States or any section thereof, or upon individual ferential between the wages paid in this country and those manufacturers and ·importers, of any further changes in tariff paid in foreign countries being very great in nearly every duties affecting our importations from Belgium. Existing industry. conditions preclude any added benefits to our export trade. Mr. BRIDGES. That is absolutely correct. The length of the existing European war is unknown. When It is possible to pick out hundreds of similarly competitive ever its termination and whatever its outcome the trade of articles from the report of the Department of Commerce for 'the world in general, and -foreign trade between any Euro November 1939. It is hardly necessary to point out what a pean country; whether or not a belligerent, and the .United difference it makes in our thin~ng to go a little deeper than 1940 CONGRESSIONAL RECORD-SENATE 4071 the dollar value of imports when studying the foreign trade to be the principal source of imports, and some other country, s'ituation. or countries, became the principal source of imports. It is my earnest hope that the reciprocal-trade policy may A good illustration of this is crude sperm oil, dutiable under be debated fully once and for all at this time, and that it may paragraph 52. The duty is reduced from 10 cents a gallon to be debated on its merits, and not amidst a confusion of prop 5 cents a gallon under the flexible provision of the Tariff Act aganda of one sort or another. If we throw out the propa of 1930, and was reduced from 5 cents to 2% cents a gallon ganda, if we say to ourselves that here is a proposal which, if in the Canadian reciprocal-trade agreement. That agree passed, will represent the will of the American people as a ment became effective the 1st of January 1936. Three years piece of permanent legislation, and then proceed to debate later, in 1939, we imported $586,000 worth of crude sperm the issue on the merits, I, for one, will certainly abide by the oil and only $1,000 worth was imported from Canada. final decision. Here is another illustration, and keep in mind the cotton Is it misleading, or is it not, to make such statements as situation in this country. · This time the reciprocal-trade these-and again I quote Mr. Hull: agreement had been concluded with the United Kingdom. The choice before us is whether we shall lead the way toward the The duty on a certain kind of cotton cloth is reduced from slough of despair and ruin for ourselves and others or toward the 10 percent to 5 percent. That agreement went into effect heights of economic progress, sustained prosperity, and enduring peace for our Nation and for the world. the 1st day of January 1939, and in that year-the first year of the agreement-the imports from the United Kingdom Mr. President, is it not obvious to anyone who is not lulled were only $108,000 out of a total of $572,000. In other words, into unconsciousness by platitudes that this is not the issue $464,000 worth of the imports of this cloth came in from other at all? Naturally we all want prosperity and peace, but foreign countries, without the United States having obtained whether or not this country shall have peace or the world from any of them any concessions whatever to compensate shall have peace has nothing whatever to do with the Hull for the benefits which they obtained from us. If the Senate Reciprocal Trade Agreements Act. Regardless of that fact, I will bear with me for one more illustration, I will refer to might vote for the extension of the act if I thought that it the Tariff Commission's report for 100 more like it. had some small bearing on the question of world peace, but In the reciprocal-trade agreements with Switzerland and I am convinced' that it has not in the past, does not in the present, and will not in the future. the United Kingdom, d~ties were reduced on another kind What have been the results of the Reciprocal Trade Agree of cotton cloth containing silk, rayon, and other synthetic ments Act on our domestic economics? During the life of the textiles. In 1939 only $4,000, out of $287,000 worth imported, trade-agreements program duties have been reduced on more came from either Switzerland or the United Kingdom. Al than a thousand commodities--on 42 percent of our dutiable most the entire amount of the imports of that year came from imports. I quote those figures from the House minority report. countries other than those with which the agreements were Those reductions represent an average cut of 39 percent. Yet made. The other countries which sold that cloth in the I have still to hear of one case in which the duty was raised American market · obtained our concession to do it. They on any article. The administration then, I take it, has found obtained it gratis and without granting ·us any concession no instance in which they felt it necessary to raise a duty whatsoever in exchange for it. And yet this is called trading to safeguard any American producer. on a two-way street. . In my own New England, trading has always been charac As I have said, I believe in trading and in real reciprocity. teristic. That section was built up by trading, and there we At the same time, it is one thing to make a treaty with our have respect for a good horse trader. We believe in trading friends in Canada, where the people believe in our democratic and in reciprocity. I believe in reciprocity, and to me that principles and where standards are high. It is another thing ineans give and take. But these agreements have been nearly to take the concessions we have made to our friends in fair all give with no take. American farmers and workers and pro trade and generalize them to the world. It is another thing ducers are generally being sold down the river. to make those concessions apply also, for example, to trouble · Mr. President, there has never been an administration so some Mexico, on the south, where the workers are peons, or prolific as this one ·in turning out slogans to fit every case. to countries like Russia, where the peasants no longer live They have one to fit the case fo·r the trade-agreements. The under the Czars, and cannot tell the difference because the catch phrase is "Trade is a two-way street." Of course trade standards are still so low. is a two-way street, and we are in business at one end of it. , I have traveled around this country of ours, and I have :-Yet, while the proponents talk about trade being a two-way seen enough of the standards under which Americans live to street, they· have made a one-way street of it and traffic is know what they are worth. I have seen the best of the con not going our way. ditions and the worst, and even the worst of conditions in As good traders, we never set our competitors up in business America have worlds of distance to go before they sink to the if we wanted to be able to stay in business ourselves. Yet, level of living in those countries whose coolie-made goods we under this policy, we do set up these competitors in business. are welcoming into the American market. Reciprocity is one The Export-Import Bank has made loans to Bra_zil, to Poland, thing, but my vote is never going to be given to put the work to Nicaragua, to China,- to name but' a few. We make loans ingmen of my State and of my country on the same plane to trade-agreement nations. with the peons of Mexico and South America and the peas Perhaps, however, that .is getting off the two-way street into ants of Europe. a side alley. It is not a criticism of the· trade-agreements The trade-treaty program is said to be part and parcel of program exclusively, However, the operation of these pseudo the New Deal. I am prepared to believe that. It contradicts reciprocal agreements, and that alone, has raised up a crop the New Deal's domestic policies of restricting crops and 'of competitors where none grew before. Probably it is the increasing the cost of industrial production; but I have seen only crop the administration has not tried to control. so many contradictions in this administration's policy that The administration, we are told, has been at great pains they no longer surprise me. to conclude agreements with the country which is our prin I cannot, however, agree to a policy which results in the cipal supplier of the commodity on which a concession is to importing of agricultural products to swell the surpluses we be made. In that way the administration hopes to get a ·already have in this country;-certainly not when at the same measure of reciprocity in spite of the most-favored-nation time frantic efforts are being made to reduce those surpluses, clause. It hopes to get us something, at least, in return for and to deny American farmers the use of American acres our concessions. which might grow the same crops we import. Let me cite just three examples, Mr. President, from among Recently, the distinguished Senator from Mississippi, at the the dozens which can be found in the Tariff Commission's close of his remarks in support of the trade-agreements pro report to the Finance Committee of the Senate. That report gram, had inserted in the RECORD two letters, one from Presi shows any number of cases .in which, after a concession· was dent Taft, and one from President Theodore Roosevelt. In granted, the country which obtained the concession ceased his remarks he had referred to these letters as evidencing LXXXVI--257 4072 CONGRESSIONAL RECORD-_SENATE APRIL 5 support of the sort of reciprocal-trade agreement this admin First. Our producers, farmers, workers, and manufacturers istration advocates. are given notice of commodities to be considered in any pros Both those letters referred to a trade agreement with . pective agreement so that they may plan the basis of their Canada which was concluded by the Taft administration. policy accordingly. Let me quote just one line from each of the letters. Presi I merely want to insure that- dent Taft said.: Second. Our producers, farmers, workers, and manufac to · Possibly labor is slightly lower in some parts of Canada than in turers have the opportunity to have their views heard as the United States, but it is also higher in some parts and the adop how a prospective agreement will affect them. tion of free trade would rapidly increase the cost of labor and those And particularly I want to see that- parts where it is cheaper in Canada, so that the conditions would Third. Our producers, farmers, workers, and manufactur be the same. · ers act as a check to see that any prospective agreement President Theodore Roosevelt said: will not allow the importation of foreign commodities at a As you say, labor cost is substantially th~ same in the two coun price with which, according to our standards, they cannot tries, so that you are amply justified by the platform. compete. Mr. .President, both those distinguished men were in favor And, lastly, I want to insure with an amendment that of maintaining the American standard of living, and, if possi Fourth. The United States, by negotiating a treaty with one ble raising it still higher. At that time the United States country, will not be giving concessions to the whole world w~ about to conclude a trade agreement with a country without receiving value in return. whose standards were high. It was not a proposal to place If these amendments are adopted, or if others are adopted the American workingman or the American farmer in com which provide the safeguards I want to see written into the law, then I will vote for the joint resolution. But if the trade petition with the coolies of China and India and the peons of agreements program remains as it stands, endangering our South America and Mexico. standard of liVing, and presenting an unjustifiable abdication What could be said in favor of that old and truly reciprocal of the constitutional duties of this body to one man, from trade agreement with Canada cannot likewise now be said whose decision there is no appeal, then I will vote against the of the trade-agreements policy of this administration. extension of the act. It is possible to cloak the plain fact that we are placing Mr. President, in closing I may say that I have been in all high standard American labor in competition with low stand sections of this country; I have been in over 40 States; and ard labor in other countries by the simple trick of figuring probably Mr. Roosevelt and Mr. Hull and the New Deal can imports only on dollar value. The dollar value of a product not do the Republican Party any greater service than by. imported from a low standard country may be low, but that jamming through this reciprocal-trade measure, as they have import may displace many times its own volume j,n a similar attempted to do and are attempting to do now, for the peo product which could have otherwise been produced here and ple, as a whole, are against this trade-treaty program. They sold here at our high standards. know what it is doing and can do to the Nation. I read from the ·hearings before the House Committee on Mr. President, I want to make a prediction here on the Ways and Means, when Assistant Secretary of State Grady floor of the Senate that Mr. Roosevelt, or Mr. Hull, or anyone appeared: else who advocates or supports this measure as it is, without Mr. KNUTSON. Dr. Grady, if you knew that _a nation was in default any safeguard, and then goes before the country as the Demo in its war debts to the United States, or in their obligations to cratic nominee for President, is going to be surprised at the nationals of this country in large sums, and that nation, to all intents and purposes, was bankrupt; if you knew that living stand number of States i·n the Union he will lose on this issue ards, working conditions, wages, were far below those enjoyed by alone. I wish to make the same prediction with respect to the average American workingman, would you consider it good the Republicans; that if the Republican Party should nomi business for this country to enter into a share-the-wealth program with such a country by means of trade agreements? nate a candidate who straddled on the reciprocal trade agree Mr. GRADY. Of course, it is not a share-the-wealth program in any ments program, or who upholds or favors the extension of sense at all. You have two questions there. I think one is with the Reciprocal Trade Agreements Act without proper safe regard to whether other countries owe us money. I think one of guards, the Republicans will lose many States they would the best chances we have of getting it back is to have trade With such a country, because then they can build up their dollars here otherwise carry, particularly in the Middle West and the with which to pay their obligations. You will have a far better far West. chance in other words, of their paying and getting out of default Mr. President, this is a vital issue which concerns the With u~ if you have trade floWing than if you don't. I don't see American -standard of living. It concerns the livelihood of how you improve the situation of getting paid by not having trade agreements. men and women in this Nation. It concerns the living standards of the average workingman of America, and what It is brutally true that the policy of the present adminis he can do for his family. It concerns the average farmer tration in regard to the trade-agreements· policy, while it is in the same way. gloriously idealistic, has yet to show really practical ·results We are fighting not merely for theories; we are fighting that benefit this country. It has served only to worry busi to maintain an American standard of living for Americans in ness, big and little; to starve our far~ers; to make our work America, and I, for one, care a great deal more. about that ers lose their jobs; to block initiative; and to stop the expan than I care about aiding the Bolsheviks in Russia and the sion of industry. peons in Mexico on our south and people in other lands that I firmly believe that in pursuing this policy Mr. Hull is Mr. Roosevelt and Mr. Hull and a few more of the idealistic taking the responsibility onto his own shoulders for forcing and impractical leaders of the New Deal seem to care about American workingmen-farmers, manufacturers, and indus iri fostering the reciprocal trade agreements program. trialists-to compete with people of .other lands who work Unless this trade-agreement measure has some very effec for pitifully small wages and live under conditions which we tive safeguards such as contained in the amendments I have in America cannot countenance. submitted, I must vote against the continuance of the act', In conclusion, Mr. President, let me.say that the only kind for the best interests of the Nation as a whole. of a reciprocity program of trade agreements for which I can Mr. President, I ask that three amendments heretofore vote is the old New England kind, which includes both give submitted by me, and intended to be proposed to the pending and take. That does not mean to give away American stand joint resolution, be printed in full in the RECORD at this point ards and to force peasant life on our people. as part of my remarks. · Therefore I want to offer what I believe to be constructive There being no objection, the amendments were ordered tq amendments designed to meet my sincere criticisms, and to be printed in the RECORD, as follows: safeguard the standards and rights of our people, which I At the end of the joint resolution insert the following ~ew firmly believe are endangered by this policy as it now stands. section: "SEc. -. Hereafter, before any foreign trade agreement is nego In addition to the other ·amendments which my distin tiated, amended, renewed, or extended with any foreign govern guished colleagues have offered, I merely want to see tha.t- ment or instrumentality. thereof _under such section 350, publi_c 1940 CONGRESSIONAL RECORD-SENATE hearings shall be held in the District -of Columbia with respect to Therefore I reach a conclusion different from that which each such agreement to be so negotiated, amen.ded, renewed, or my distinguished colleague from West Virginia has reached. extended, and all interested persons shall be given an opportunity at such hearing to present their views. Notice of such hearings to I say we are not drifting toward war. We are marching gether with a detailed statement of all matters to be considered toward a cooler appraisement of the real situation. We are therein shall be published in the Federal Register once a week for recognizing that as a great people set apart we can render 12 consecutive weeks prior to the commencement of such hearings. A record of the proceedings at such public hearings shall be made the greatest service to the compatant nations and to the and such record shall be the basis of the treatment of all articles future of the race by keeping out of that war. No, Mr. to be covered by such agreement, or amendment, renewal, or ex President, we are not marching toward war. We are becom tension thereof. No article shall be covered by any such agree ing more level-headed, and by "we" I do not mean some of ment, or amendment, renewal, or extension thereof, unless such record contains substantial evidence that such article should be the scatterbrains; I mean the general average of the Ameri included therein in the public interest." can people. Becoming more level-headed, we are becoming At the end . of the joint resolution insert the following new more able to distinguish between what is fact and what is section: fiction, between what is good and what is evil propaganda. "SEc. -. No foreign trade agreement shall hereafter be con cluded, amended, renewed, or extended with any foreign govern Mr. President, because we are becoming more judicial in ment or instrumentality thereof under the provisions of such sec our thinking, we necessarily are less prone to become mentally tion 350, unless the tariffs or import duties upon the articles stampeded. We have our feet on the ground; we will not encompassed in such agreement, or amendment, renewal, or ex become the creatures of hysteria nor go off on an emotional tension thereof, shall be maintained at a point which will at least equalize the difference in the cost of production thereof in the jag. country dealt with and the United States, as determined by the As a consequence of a better mental perspective we are United States Tariff Commission as of the date such agreement, or calling upon all our citizens to be American-minded, and amendment, renewal, or extension thereof, becomes effective." we are becoming more realistic in dealing with those citizens At the end of the joint resolution insert the following new section: who are European-minded. "SEc. -. (a) The last two sentences of paragraph (2) of section Let me repeat the last statement. As a consequence of our 350 (a) of such act of June 12, 1934, are amended to read as fol level-headedness-! call it perspective-we are calling upon lows: 'The proclaimed duties and other import restrictions shall be American citizens everywhere to become more American in effect from and after such time as is specified in the proclama tion. The President may at any time terminate any such procla minded, and we are becoming more realistic in dealing with mation in whole or in part.' those citizens who are European-minded. "(b) Hereafter, every foreign trade agreement, or amendment, No, Mr. President; Mr. Cromwell's statement did no harm. renewal, extension, or modification of any foreign trade agreement, It did good, because it exposed a condition that we must entered into under such section 350 shall contain a provision that any advantage of whatsoever kind which either contracting party check. Every one of our representatives to foreign nations, may extend to any other foreign government or instrumentality because of the Cromwell incident, will be, we hope, better thereof shall simultaneously and unconditionally, without request Americans. But if there are representatives of America in and without compensation, be extended to the other contracting Europe who have become so mentally unfit for their jobs party." because of their prejudice against one of the combatant na - ATTITUDE OF UNITED STATES TOWARD EUROPEAN WAR tions, or prejudice for one of the combatant nations, such Mr. WILEY: Mr. President, yesterday the distinguished representative should be recalled. Senator from West Virginia [Mr. HoLT] commented on cer What I am trying to make clear here, Mr. President, is tain incidents that had taken place of late, to wit: The speech that there is an American point of view separate and distinct of our Minister to Canada, Mr. Cromwell, and the speech of from the European point of view, and only men--of course, the attorney general of Ontario; from the remarks of these they can have their sympathies--only men who place America two gentlemen he drew the conclusion that we were drifting first, who are not inoculated with the idea that it is our busi toward war. ness to settle European problems, who are not affected with Apparently the statements of Mr. Cromwell and the minis "the meddler's itch," should represent this country in these ter of Ontario considerably upset my distinguished colleague. perilous times in the chancelries of other nations. My purpose in making these remarks is not to disagree with In the last World War we know what certain of our repre him in relation to the serious situation in the United States sentatives abroad did. We know that they-and history so and abroad, but I feel that the statements of these men can records-were great factors in educating this country to the be compared to a boil which has come to the surface. These notion that Europe's tight was our tight. I am not going to gentlemen have exposed their cards. They have shown their review the story of our Ambassador to the Court of St. James. views. The fact that our Minister to Canada spoke as he I know that he thought he was doing right. But, Mr. Presi did apparently exposed his personal convictions in the mat dent, he exemplifies what I am talking about. He was a great ter. The same can be said about the attorney generai of factor in accomplishing what the attorney general of Ontario Ontario. So what have we as the result of these two expo aske.d his Canadian brethren to accomplish, to wit, to get sures? America into the war. I repeat, that what he said I think was a wholesome thing. First, in relation to Minister Cromwell's speech we have It was good that he spoke out. He spoke out, Mr. President, the Secretary of State calling him down___;..,that is, calling his as you would speak, as t would speak if we were Canadians attention to the fact that as a Minister of this country he or if we were Englishmen. I want everyone who is an Amer has violated the rules of the game. ican to realize that there is a distinction between being an Secondly, if the speech was premeditated and made with · American and being an Englishman or a Canadian. If I the purpose of trying to find out what the sentiment of the were a Canadian or an Englishman I would want to get majority of the people in this country was-well, it was pro America to help in this great war. But, Mr. President, I am ductive of result. The reaction of the vast majority of the an American, and, while I believe that a large percentage of press and the people was that Cromwell had spoken out of the American people sympathize with the cause of the Allies, turn; that he did not express the opinion of a large percentage I say decidedly that I do not want any American to represent of the American people. this country abroad who has the same attitude of mind that Mr. President, when I landed in New York last September the attorney general of Ontario has. I remember picking up an · American newspaper, and one of I do not want this Nation to get into that war. In my the first things that came to my attention was the Gallup poll opinion any American citizen-and I refer not merely to of a few days before. The Gallup poll then showed, as I officials in Congress but to every citizen in every village, remember it, in answer to a question, that 44 percent of the hamlet, and city in the country-who does not· take every American people were then willing, in case it appeared that possible step to keep America out of war is remiss in his England and France were being defeated, virtually to join obligation to the Nation, and to the generations of the Nation the Allies-that is, to send ships and men. which are yet to come. - The most recent Gallup poll on that subject shows that To recapitulate, Mr. President: - instead of 44 percent the percentage has gone down to 24 First. We do not want this country to be represented by percent, indicating that the American people were thinking. ministers or ambassadors who are Cromwell-minded. 4074 CONGRESSIONAL RECORD-SENATE- APRIL 5 Second. Because we know that Canada and the Allies Mr. O'MAHONEY. Mr. President- want us as partners in their enterprise, we shall be especially The PRESIDING OFFICER. The Chair will state that in on our guard not to be influenced to become allies. accordance with the unanimous-consent agreement heretofore Third. Within our own borders we shall protect ourselves entered into, a.fter the hour of 1 o'clock no Senator shall speak against the infiltration of foreign "isms" which may weaken more than once or longer than 15 minutes on any amendment, our .resolve, and we shall expect the foreigner in our midst to amendment thereto, or substitute therefor, to House Joint observe the rules applicable. to a guest, namely, to live and Resolution 407. think in the American way. I repeat that: In these times Mr. O'MAHONEY. Mr. President, this morning while the we expect every foreigner who lives in our midst to live and Senator from Minnesota [Mr. SHIPSTEAD] was discussing his think in the American way. To those Americans who find amendment, I directed several questions to him with respect that living and thinking in the American way is not good to the extent to which his amendment covers agricultural enough for them in these challenging times, but who must products. As drafted, the amendment refers ~olely to the spew forth foreign "isms" and propaganda, we shall simply agricultural products which are mentioned in schedule 7 of say: "Cease your wicked and unholy purpose. We know how the Tariff Act of 1930. There are numerous other agricul to deal with termites." tural products which are not included in section 7 upon which Fourth. We are not drifting toward war, Mr. President. there are tariff duties. Our sails are set. Our bark is pursuing a splendidly safe I have conferred with the Senator from Minnesota, and I course under the direction of our pilot, and that pilot is the understand that he and I are in agreement that his amend American people under the American Constitution. ment should be broad enough to cover all purely agricultural MESSAGE FROM THE HOUSE products. I therefore desire to offer an amendment to the A message· from the House of Representatives, by Mr. amendment of the Senator from Minnesota, which amend Calloway, one of its reading clerks, announced that the House ment I send to the desk. had passed without amendment the bill CS. 2609) to reim Mr. SHIPSTEAD. Mr. President, will the Senator yield? pose the trust on certain lands allotted to Indians of the Crow Mr. O'MAHONEY. I yield to the Senator from Minne Tribe, Montana. sota. The message also announced that the House had passed Mr. SHIPSTEAD. I understand that the Senator's amend the following bills, in which it requested the concurrence ment to the amendment extends the protection to agricultural of the Senate: products only. H. R. 8471. An act granting the consent of Congress to the Mr. O'MAHONEY. That is all. My amendment to the· Commonwealth of Pennsylvania to construct, maintain, and amendment does not include the manufactures of agricultural operate a free highway bridge across the Susquehanna River, products. at or near Wyalusing, between Terry and Wyalusing Town Mr. SHIPSTEAD. Mr. President, my intention in offering ships, in the county of Bradford, and in the Commonwealth the amendment and in accepting the senator's amendment to of Pennsylvania; and my amendment is to stop the attack upon the income of the H. R. 9209. An act making appropriations for the Mili American farmer for the benefit of industry and foreign 'Pro tary Establishment for the fiscal year ending June 30, 1941, ducers at the expense of the American farmer. I accept the and for other purposes. amendment to the amendment. Mr. O'MAHONEY. Mr. President, I think that a curious HOUSE BILLS REFERRED anomaly has developed in the activity under the Tariff Act. The following bills were each read twice by their titles and High tariffs were originally demanded primarily by manufac referred as indicated below: turers for the purpose of raising the prices of manufactured H. R. 8471. An act granting the consent of Congress to the products and excluding the manufactures of foreign countries. Commonweaith of Pennsylvania to construct, ·maintain, and Those high tariffs were attacked in the past upon the ground operate a free highway bridge across the Susquehanna River, that they contributed to the creation of trusts and the ex at or near Wyalusing, between Terry and Wyalusing Town ploitation of the masses of the people. Agricultural products ships, in the county of· Bradford, and in the Commonwealth were not covered by any tariffs at all, but, beginning with the of Pennsylvania; to the Committee on Commerce. Fordney-McCumber Act, a feeling developed among the farm H. R. 9209. An act making appropriations for the Military ers and agriculturists of the country that agriculture should Establishment for the fiscal year ending June 30, 1941, and likewise have protection, since, apparently, it was impossible for other purposes; to the Committee on Appropriations. to cut down the high tariffs which Congress authorized on EXTENSION OF RECIPROCAL TRADE AGREEMENTS ACT manufactured products. The Senate resumed the consideration of the jciint resolu Now, curiously enough, largely by reason of the develop tion (H. J. Res. 407) to extend the authority of the President ment of technology, American manufacturers are able to turn under section 350 of the Tariff Act of 1930, as amended. out their products at a very low cost and they have become, Mr. DAVIS. Mr. President I suggest the absence of a as it were, independent of the tariff, so that in some instances quorum. the very industries which 15 or 20 years ago were demanding The PRESIDING OFFICER. The Clerk will call the roll. high industrial tariffs are now demanding low industrial The legislative clerk called the roll, and the following tariffs, and the farmer has begun to feel that his interests are Senators answered to their names: being bargained off for the purpose of enabling the manufac Adams Donahey King Reynolds turer to gather in a world market. In other words, in the Ashurst Ellender Lee Schwartz Austin Frazier Lodge Schwellenbach beginning, when industrial tariffs were being built up, the Bailey George Lundeen Sheppard farmer was being victimized in order that tariffs might be Bankhead Gerry McCarran Shipstead raised; today the farmer feels that he is being victimized in Barkley Gibson McKellar Smathers Bilbo Gillette McNary Smith order that industrial tariffs may be cut down. The purpose Bone Green Maloney Stewart of the amendment offered by the Senator from Minnesota, Bridges Guffey Mead Taft Brown Gurney Miller Thomas, Idaho modified by the amendment which is now offered, and which, Bulow Hale Minton Thomas, Okla. I understand, he accepts, is merely to protect the producer of Byrd Harrison Murray Tobey agricultural products from the sacrifice of his interests in Byrnes Hatch Neely Townsend Capper Hayden Norris Tydings . order to purchase a world market for the products of industry. Caraway Herring Nye Vandenberg The PRESIDING OFFICER. The Chair understands that Chandler Hill O'Mahoney VanNuys Clark, Idaho Holman Overton Wagner the Senator from Minnesota accepts the amendment to the Clark, Mo. Holt Pepper Walsh amendment, which modifies his amendment? Connally Hughes Pittman Wiley Danaher Johnson, Calif. Radcliffe Mr. SHIPSTEAD. I do. Davis Johnson, Colo. Reed Mr. CLARK of Missouri. Mr. President, may the modifica The PRESIDING OFFICER. Eighty-two Senators have tion be reported to the Senate? answered to their names. A quorum is present. The PRESIDING OFFICER. The clerk will read. 1940 CONGRESSIONAL RECORD-SENATE 4075 The LEGISLATIVE CLERK. In line 6, after the word "State", Senator from California would vote "yea," and that the Sen in the amendment of the Senator from Minnesota it is pro ator from Missouri and the Senator from Georgia would posed to strike out the remainder of line 6, all of line 7, and vote "nay." insert a period and the following: The Senator from Nebraska [Mr. BuRKE] is paired with As used in this section, the term "agricultural products" in the Senator from Virginia [Mr. GLAss]. I am advised that cludes any product or article classified as agricultural in "Schedule if present and voting the Senator from Nebraska would vote A, statistical classification of imports into the United States," effective January 1, 1939, as issued by the Department of Commerce. "yea" and the Senator from Virginia would vote "nay." The result was announced-yeas 38, nays 43, as follows: The PRESIDING OFFICER. The question is on agreeing to the amendment offered by the Senator from Minnesota YEAS-38 Adams Frazier Lodge Shipstead [Mr. SHIPSTEAD], as modified. Ashurst Gibson Lundeen Taft Mr. O'MAHONEY and Mr. DAVIS called for the yeas and Austin Gurney McCarran Thomas, Idaho nays. Bone Hale McNary Thomas, Okla. Bridges Holman Maloney Tobey The yeas and, nays were ordered. Bulow Holt Murray Townsend Mr. SHIPSTEAD. I suggest the absence of a quorum. Capper Johnson, Calif. Nye Vandenberg Clark, Idaho Johnson, Colo. O'Mahoney Wiley The PRESIDING OFFICER. The clerk will call the roll. Danaher King Pittman The legislative clerk called the roll, and the following Sena- Davis Lee Reed tors answered to their names: NAYS--43 Adams Donahey King Schwartz ~alley Donahey Hill Schwartz Ashurst Ellender Lee Schwellenbach Bankhead Ellender Hughes Schwellenbach Austin Frazier Lodge Sheppard Barkley George McKellar Sheppard Bailey George Lundeen Shipstead Bilbo Gerry Mead Smathers Bankhead Gerry McCarran Smathers Brown Glllette Miller Smith Barkley Gibson McKellar Smith Byrd Green Minton Stewart Bilbo Gillette McNary Stewart Byrnes Guffey Neely Tydings Bone Green Maloney Taft Caraway Harrison Norris Van Nuys Bridges Guffey Mead Thomas, Idaho Chandler Hatch Overton Wagner Brown Gurney Miller Thomas, Okla. Clark, Mo. Hayden Pepper Walsh Bulow Hale Minton Tobey Connally E;erring Reynolds Byrd Harrison Murray Townsend NOT VOTING-15 Byrnes Hatch Neely Tydings Capper Hayden Norris Vandenberg Andrews Downey Radcliffe Truman Caraway Herring Nye VanNuys Barbour Glass Russell Wheeler Chandler Hill O'Mahoney Wagner Burke La Follette Slattery White Clark, Idaho Holman Overton Walsh Chavez Lucas Thomas, Utah Clark, Mo. Holt Pepper Wiley Connally Hughes Pittman So Mr. SHIPSTEAD's amendment, as modified, was rejected. Danaher Johnson, Calif. Reed Mr. HOLMAN. Mr. Pres1dent, I have on the desk an Davis Johnson, Colo. Reynolds amendment which I offer, and request that it be read. The PRESIDING OFFICER. Eighty-one Senators have . Th.e PRESIDING OFFICER. The amendment offered by answered to their names. A quorum is present. the Senator from Oregon will be read. The yeas and nays having been ordered, the clerk will The LEGISLATIVE CLERK. At the end of the joint resolution call the roll on the amendment of the Senator from Minne it is proposed to insert the following new section: sota [Mr. SHIPSTEAD], as modified. SEc. -. (a) Notwithstanding the provisions of subsection (b) of The legislative clerk called the roll. section 2 of the act entitled "An act to amend the Tariff Act of Mr. BRIDGES. I have a general pair with the Senator 1930," approved June 12, 1934, as amended and supplemented, each from Utah [Mr. THOMASL I transfer that pair to the Sen foreign-trade agreement entered into after the date of enactment of this joint resolution under the provisions of section 350 of the ator from Maine [Mr. WHITE], who would vote "yea" if per Tariff Act of 1930, as amended, shall contain a provision providing mitted to vote, while the Senator from Utah, if present, would that such agreement shall automatically terminate upon a date not vote "nay." I vote "yea." later than June 12, 1943. Whenever any such agreement terminates Mr. AUSTIN. I announce the following pairs on this as a result of the operation of any such provision, any proclama tion issued by the President under the provisions of such section question: 350 for the purpose of carrying out such agreement shall no longer The Senator from New Jersey [Mr. BARBOUR], who would be effective. vote "yea," with the Senator from Illinois [Mr. SLATTERY], (b) The President is requested to give notice, not later than who would vote "nay." December 12, 1942, to each of the foreign governments or instru mentalities thereof with which the United States at such time has The Senator from Wisconsin [Mr. LA FoLLETTE], who a foreign-trade agreement, concluded under the provisions of such would vote "yea," with the Senator from Illinois [Mr. LucAs], section 350 before the date of enactment of this joint resolution and who would vote "nay." of which notice of intention to terminate has not been theretofore given, that the United tates is desirous of terminating such agree I vote "yea." ment on June 12, 1943. The President shall thereafter take such Mr. JOHNSON of Colorado. On this vote I am authorized further action as may be necessary to terminate any such agree to announce that the senior Senator from Florida [Mr. ment on June 12, 1943. Upon the termination of any such a-gree ANDREWS] is paired with the junior Senator from Maryland ment, any proclamation issued by the President under the provi sions of such section 350 for the purpose of carrying out such agree [Mr. RADCLIFFE]. If the Senator from Florida were present, ment shall no longer be effective. I am informed that he would vote "yea," and the Senator from Maryland [Mr. RADCLIFFE], if present, would vote Mr. HOLMAN. Mr. President, it is not my intention to "nay." engage in a lengthy debate on this amendment. From the Mr. MINTON. I announce that the Senator from Florida reading of the amendment, its object is obvious. Briefly, it [Mr. ANDREWS], the Senator from Nebraska [Mr. BuRKE], is to require that trade agreements made under the authoriza the Senator from New Mexico [Mr. CHAVEZ], the Senator tion of the extension of the present Trade Agreements Act from California [Mr. DowNEY], the Senators from Illinois shall be terminated at the time the authorization itself termi [Mr. LucAs and Mr. SLATTERY], the Senator from Maryland nates. I do not know that any further explanation is [Mr. RADCLIFFE], the Senator from Georgia [Mr. RUSSELL], necessary. the Senator from Utah [Mr. THOMAS], and the Senator from Mr. WALSH. Mr. President, I intend, when in order, to Missouri [Mr. TRUMAN] are detained from the Senate on offer an amendment limiting to 1 year the continuation of important public business. these trade agreements. What I want to say on this subject The Senator from Virginia [Mr. GLASS] and the Senator will require more than 15 minutes, however; and I should like from Montana [Mr. WHEELER] are unavoidably detained. to take the 15 minutes allotted to me in connection with The Senator from New Mexico [Mr. CHAVEZ] is paired the amendment of the Senator from Oregon to express in with the Senator from Missouri [Mr. TRUMAN], and the Sen part my views. ator from California [Mr. DoWNEY] is paired with the Sena I have written what I wish to say, first of all because I de tor from Georgia [Mr. RussELL]. I am advised that if sire to limit myself to 15 minutes; second, because I consider present and voting the Senator from New Mexico and the the subject of special importance. 4076 CONGRESSIONAL RECORD-SENATE APRIL 5 Mr. President, as is well known, I do not very often discuss What can we do constructively? First and foremost, we public questions from a political standpoint; but, in addition can limit to 1 year the further extension of these agreements. to the reasons which 1 shall later give for the amendment I This will be no repudiation by the Congress of the general intend to offer, I want to refer to some political aspects of policy or disapproval of the experiment. It will indicate that this whole question. the Congress will, between now and another year, try to In my opinion, at the present time in the United States remove the complaints to which I have referred, and bring there are two questions that transcend party lines. One is about more liberal action in making use of the "escape" clause the fixed, determined, adamant state of mind of an over in these agreements; and secondly, will remove the other whelming number of the American people against our in objection by providing approval by the Congress, limited in volvement in the European war. When war first broke out character, and of such a nature as to permit advice from the in Europe, the press was replete with articles discussing the Congress to its agency in the executive department about question whether or not it was possible for us to avoid involve policies which the Congress may be convinced are detrimental ment in the war. Several prominent citizens publicly to American workers and American producers. declared that we should enter the war at once and not wait The tariff issue is a very ticklish one. The American people until we had to enter it at a later date. Our people were have a sensitive strain in regard to tariff legislation. Politi jittery, wondering what influences and forces might sweep us cally, tariff making has been injurious to the political party into the European war. Indeed, it was predicted here and sponsoring the legislation. Democrats experienced in the there that we would be in the war within 6 months or a year. congressional elections of 1914 vigorous opposition from the What a changed situation we find today. Not a single country after the enactment of the Underwood tariff bill. public man of any influence in the country dares today repeat The Republicans lost tremendously in the congressional elec what he said at the outset of the war, suggesting that it was tions following adoption of various tariff bills. There are our duty to take sides with the democracies and enter the signs that our party may have the same experience in the European war. Not an editorial can be found in any news forthcoming election-not so much in the election of the paper from one end of the country to the other favoring our President, in my opinion, as in the congressional elections entry into the war. and I cannot explain the united opposition of the Republicans The plain people of America have demonstrated that when and the opposition of many Democrats in this Chamber in any once they are aroused they are a mighty, potent force in con other way. Indeed, I have heard it predicted that the loss of trolling public opinion. The mothers of American sons, Democratic seats in the Congress would be very great as a American youths, and the fathers, mothers, sisters, and result of opposition throughout the country to these trade brothers, working in the factories, out on the farms, behind agreements. the counters, at the desks, in the counting rooms, have in I heard it said we would carry hardly a State west of the stinctively come together and squelched ·whatever sentiment Mississippi River. These communications are from Demo was being expressed in favor of our participation. In the crats. Why are they disturbed? Why are they voting as they coming election the issue will be not so much, "who kept us are? It is because they know the sentiment back home, and out of war" but "who is most certain to keep us out of war." they know what the Republican Party is going to do in the In my opinion, the next President of the United States is next election. most likely to be the candidate who from one end of this Let me give two illustrations of what I mean by political country to the other demonstrates his interest first and fore effect. I have received many letters in opposition to this most in peace for· America, and the preservation of our own program, and they have .all come from people who are pro democracy here in America, and militantly opposes our in ducers. I have received many letters in favor of the legis volvement in the European war. lation, but comparatively few from domestic producers. I This is somewhat aside from what I wanted to say at this have received the following telegram: time, but it is related to the second issue, which I believe BOSTON, MAss., April 3, 1940. transcends party lines, namely, the issue of unemployment. DAVID I. WALSH, It is not unemployment relief-generous, liberal, unstinted Senator jrom ·Massachusetts, Washington, D. C.: . aid and assistance by the Federal Government to· those in We cannot call to your attention too strongly the eoctreme disad need because of inability through no fault of their own to vantages for ourselves, a.s well as for the entire American patent obtain employment. That issue has already been answered by leather industry, resulting from the Canadian trade agreement. As the electorate. More than anything else it gave the Demo a result of the reduction in the United States' duty to 7Y:z percent, the 1939 imports of Canadian patent leather show a tremendous cratic Party an overwhelming victory in 1936. In the public increase, and the Canadian currency depreciation ha.s further ag mind the matter of sufficient appropriation for fundamental gravated an already serious situation. relief is assured. There may be some criticism of the method All plants are shut down, throwing over 1,000 men out of work, and this is the first time in 15 years that we have shut down our of administration, but all parties, all men, and all groups agree plants. Imperative that some immediate action be taken to stop now that this is a permanent and continuous obligation. Canadian imports if we are to continue in business. The issue that remains in connection with the matter of COLONIAL TANNING Co., INC. unemployment is what is being done to lessen unemployment Let me ask my colleagues, how many votes will a Demo and what is being done to increase unemployment, and if a cratic candidate for Congress get in that community, with a case can be made out that the Democratic Party has contrib thousand men unemployed, if the cause is, as ·allegeq, the uted, or is contributing, through.any.of its policies to unem reciprocal-trade agreement? We have been unwilling to ad ployment in this country, it will, in my opinion, be most mit that, though there have been good results, there is a injurious. chance for improvement, but continue to take the position, . The Republicans are aware of this issue. Their united "The law cannot be improved, take it as it is." Extend it for opposition to the reciprocal-trade agreements is based upon another year, is my suggestion, to see if we cannot provide the belief that they can make out a case that it has increased some machinery which will remove this objection? unemployment and threatens more unemployment . in this I have another communication, from a manufacturer of country. A substantial number of Democrats, who dislike to musical instruments. I shall only take the time to read it in differ with their. party leadership and who exert every effort part: to support their regular party program, are fearful of this The Quartermaster Department of Philadelphia has purchased, issue as evidenced by the votes cast here. They are not voting and as far as I know will continue to purchase, musical instruments against a continuation -of the reciprocal-trade agreements made in foreign countries when they are offered at approximately because of personal reasons. They are voting against them 25 percent less than American manufacturers can supply them. A specific instance is quoted. The Philadelphia Quartermaster because they are convinced that back home there is a strong Department purchased, between August and November 1939, cymbals and growing sentiment in opposition to these agreements; made by the K. Zildjian Co., of Istanbul, Turkey, to the approximate that they are not operating for the welfare of their constitu amount of $500. Previously, cymbals made by the Avedis Zildjian ents; and that means they are not a political asset. That is Co., of Norfolk Downs, Quincy, Mass., had been purchased. They were offered to the Quartermaster Department in competition with the attitude of many Democrats on this side of the Chamber, the Turkish cymbals, but on account of the price the Turkish as I interpret it. · cymbals were taken. 1940 CONGRESSIONAL RECORD-SENATE 4077 · In the late reciprocity agreement with Turkey, the duty on cym which concessions were in effect. We gave that and every bals was reduced from 40 percent to 20 percent, thus enabling this low price to be quoted. The .l).vedis Zildjian Co., in which I am other matter careful consideration. personally interested, was established here 10 or 12 years ago by Spokesmen for organizations representing a very large Avedis Zildjian, a member of the Zildjian family of Istanbul; who number of the women of the United States appeared before had made cymbals for hundreds of years. Avedis Zildjian claims us and submitted statements and, with one exception, as I that he paid for labor in Turkey in making the cymbals, in 1913, the equivalent of $2 per week. The present rate for labor is from recall, all endorsed the continuation of the reciprocal trade $3 to $3.50 per week. The Zi~djian Co., at present, in Quincy, Mass., agreements program. pays to it s labor from $35 to $50 per week. Cotton has been brought into the discussion. Every The facts speak for themselves. Radical reductions have been organization I know of that has anything to do with cotton made in wood-wind musical instruments. Our trade has been affected by the reductions in tariff which have been enjoyed prin endorses the plan. They believe it keeps open the markets cipally by countries other than those to which trade concessions · for our cotton and that it will help the cotton industry. were given, particularly Italy. They also know that had it not been for the trade-agree The purpose of this letter, however, is to show you that, as far as our business is concerned-we employ from 200 to 250 people-Mr. ments program the cotton growers, as well as all those engaged Hull's experimental trade agreements are a headache, and if con in the cotton business, would have been injured materially t inued will, I am sure, develop into a serious condition, especially in the last few years. when the war ends. One of the largest farm organizations in the country en Mr. President, for the present I shall not discuss this ques dorsed the program with the suggestion and the recommenda- tion further, but the uncertainty as to· who will administer , tion that the Secretaries of State, Commerce, and Agriculture the law, the uncertainty as to the agency which Congress may approve these agreements before they go into effect. That name to administer the law, I will discuss when I have a proposal was to some extent embodied in the amendment chance to get the floor after the amendment shall have been· offered by the Senator from Wisconsin [Mr. LA FoLLETTE], voted on. However, I say in all sincerity to my Democratic which was debated thoroughly and rejected by the Senate. colleagues, at times a majority of whom have expressed dis- · , ·- The Senator from Massachusetts said there has . been a . approval of these trade agreements to halt. Let us not go change of sentiment in the country since this program was before the country and say, "There are no faults; there have inaugurated and that there is more opposition to it now than been no mistakes; there is nothing to correct; the policy is there has been heretofore. Perhaps there has been some, s·ound; Congress has abandoned its task to the Executive." change of sentiment. I do not contend, nor do.es anyone else Mr. President, I leave the issue to the Senate. that I know of contend, that this program has been perfect, but I sincerely believe the method provides for the most or Mr. HARRISON. Mr. President, like the distinguished derly treatment of the tariff question, and that it has been of ~enior Senator from Massachusetts, I call upon my colleagues material benefit to our country. on this side of the Chamber to consider and examine care Mr. President, the Senator from Massachusetts says the fully the question before us before casting their votes. Some authorization should be limited to 1 year. We have now of us who are members of the committee which considered been engaged for 2 weeks in a fight to continue the trade the pending legislation, who sat through the extensive hear agreements program. We have been through 2 weeks of the ings, heard the scores of witnesses who appeared bef_ore the most intense battling in which I have ever participated. Finance Committee, and many of us read the testimony and Senators· on the Republican side have lined up practically briefs that were presented by witnesses. before the. Ways and solid against this joint resolution and some Senators on the Means Committee of the House. Running through most of Democratic side, conscientiously opposed to the measure, have the testimony there seemed to me to be an overwhelming voted for every amendment which has been offered. a predominant-sentiment expressed by representatives of Of course it is a fight. I will not go further and say what various organizations for the continuation of the present other obstacles we are encountering, but I will say it is a real reciprocal trade agreements program. Indeed, throughout fight. Of course, in common with the Senator from Mas the hearings there was little criticism of the trade agree sachusetts, I want to see Democratic Senators look into the ments, and much praise for the manner and methods em matter carefully, conscientiously, and vote their convictions. ployed by those who have participated in the negotiation of I know that from a political standpoint it may be injuring these trade ~greements. As I have said before, we heard little us more than it is our Republican brethren, because they are about actual injury, but much about fear of what might pretty solid over there, and we are somewhat divided over happen in the future. here. But I do not charge any bad motives on the part of Of course, representatives of the great livestock organiza any Senator on the other side, or on this side, in casting his tions appeared before us, as they have done every time a vote. I take it that Senators vote their conscientious con tariff measure has been under consideration. It was stated viction. That is what every Senator should do. repeatedly before the committee that today cattle is one of the From what the Senator from Massachusetts said, I imagine few agricultural commodities that is selling above parity. that he advocates the adoption · of the pending amendment Mr. PI'ITMAN. How long has that been? because it provides that when the existing trade agreements Mr. HARRISON. I can give the Senator the figures. It are completed we shall serve notice of their termination. is true that livestock is selling today above parity. Mr. WALSH. Mr. President, I did not discuss the amend ment. I expect to vote against the amendment. I took up Mr. PITTMAN. T~e Senator knows that for years live stock has been selling below parity. the time-! had only 15 minutes-on the general subject. Mr. HARRISON. Yes; I understand; and I listened in Mr. HARRISON. Before the reciprocal-trade agreements tently to the Senator because I have the highest respect for were in existence; yes; but-- him. He is one of the best Democrats I know, one of the Mr. PITTMAN. Yes; and after the trade agreements were ablest men, and certainly one of my closest friends, and I in existence. always respect his views. Mr. HARRISON. If it is necessary, I will submit those Mr. WALSH. I thank the Senator. figures before I finish. But the cattlemen today are receiving Mr. HARRISON. But what are we up against? Here we prices above parity for their livestock, as shown by their own have been for 2 weeks trying to pass this legislation. It is witnesses and by the testimony of experts and official Govern now proposed by some to limit the program to 1 year only. I ment figures. Of course, representatives of the wool growers read in the newspapers this morning that such a suggestion of the West appeared before the committee. We have not was being made. I will say nothing further about that, touched raw wool. There is the same tariff on wool today although I am somewhat prompted to do so. Enough! as was written in the last tariff measure in 1930. There was I never tried to bring differences into my own party. But some criticism from some manufacturers of woolen goods in for 2 weeks we have been considering this resolution. Some the East. But it did not strike us that there was any inequal persons say, ·"Let the program be continued for 1 year, and ity in that respect because,. as shown by the reports of the not for 3 years." Mr. President, if we did tnat, we -would be National Association of Woolen Manufacturers, 1939 was a laughed at by the world. Who would enter into an agreement banner year for tha industry, and that was the only year in with us if the program under which the agreement is to be 4078 CONGRESSIONAL RECORD-SENATE APRIL 5 made is simply to last for a year? ·That would be notice to Mr. WALSH. Mr. President, I offer the amendment to the world that we have no faith in our own program. I would which I referred a few moments ago; on page 1, line 7, of ratl:ler see the law killed now, if that is the purpose of some the joint resolution, to strike out the word "three" and Senators, rather than have it extended for only a year. If insert the word "one." such action was taken, it would necessitate having to go over The PRESIDING OFFICER. The amendment offered by the whole question again in the next session of Congress. the Senator from Massachusetts will be stated. · Mr. ADAMS. Mr. President, will the Senator yield? The CHIEF CLERK. On page 1, line 7, it is proposed to Mr. HARRISON. I yield. strike out "three" and insert "one." Mr. ADAMS. If the agreement is merely extended for a Mr. WALSH. Mr. President, I now desire to take 15 min year, 3-year agreements can still be made. In other words, utes to discuss my views on this amendment. I am present it does not limit the agreements. Even then they do not ing this amendment with the utmost sincerity and good expire automatically. faith-not with a view to embarrassing any of the proponents Mr. HARRISON. Yes; for a year we can make agree of the pending resolution, and not as an empty gesture. I ments, but at the same time those with whom we are dealing am offering it in the belief that its justification and advan are rather alert, and they will say, "Why, your {}Wn Congress tage will be at once apparent and that no reasonable objec did not have any faith in the program if the authority is to tion lies to it.- I am offering it as a friend of the temporary last only for a year/' Mr. President, it· sometimes takes a continuation .of the reciprocal trade agreement authority, year or longer to negotiate a trade agreement. Representa rather than as an opponent. tives must possess the diplomatic suavity and instincts and The debate in this Chamber and the various votes with the fine tactics of the Senator from Colorado to be able to respect to this matter have already clearly evidenced that a come to an agreement in respect to these matters. majority is unwilling to deny an extension of the existing Mr. ADAMS. I should be highly gratified if I had 10 per delegation of authority from the Congress to the Executive, cent of the agreeable qualities possessed by the distinguished lest such a denial might be taken as a vote of censure of the Senator, the chairman of the Finance Committee. reciprocal trade agreement program and a rebuke to the Mr. HARRISON. Well, I can return t:Qe compliment to the President and to Secretary Hull. I place myself in that Senator. · group. Mr. ADAMS. May I again interrupt the Senator to add a It has been clearly evidenced also that a majority has been word? favorable to some measure of restriction upon this delegation Mr. HARRISON. Yes; I am glad to yield. of authority, favorable to some reservation to Congress, but Mr. ADAMS. Might not the fact that we have had a fight being unable unitedly to support any particular reservation, for some 2 weeks, and that the vote has been close, perhaps with the result that all the amendments so far offered have indicate that there may be some substantial doubt as to the failed of adoption. soundness of the policy; and if there is this doubt, might it So it is evident as a practical matter that the joint resolu- . not be wise to give the matter further consideration? If the tion to extend the time limit in the delegation of this author vote was all one way, it would indicate there was no genuine ity to the Executive, free of any restriction or reservation or doubt about the matter. power of review by Congress, will be adopted even though Mr. HARRISON. The Senator knows what would happen many on both sides of the aisle are uncertain what the future holds in store with respect to internatioaal trade and if the Republican Party were to come into control after the next election. And I deny what some of my colleagues say; international trade agreements, and above all else, are re luctant, except for the most imperative necessity, to transfer I do not believe that the Republican Party is going to get from Congress to the Executive, even for a limited time, the control of this Government the coming election, and I am not authority, responsibility, and duty which the founding fathers trying to do anything to push it along and encourage the of the Republic explicitly reposed in the Congress as the direct people of this country to believe that the signs point to it. representatives of the people. I did not see the signs pointing to it in Wisconsin the other All this, I assert, is now self-evident, if we are willing to be day. I do not know how those who write articles in news candid and to review the discussion which has taken place, papers or who give out statements can find that the results the views which have been expressed, and the votes which there show that the country is against us. Wisconsin used to have been cast. · go Republican by four or five hundred thousand votes, and The pending joint resolution provides for a 3-year extension the other day the two Democratic candidates received more of the authority from its present expiration date in June of votes than the two Republican candidates did in that state, the present year. I submit that there is no valid or particu with all the existing cross-currents. The President of the lar reason or theory for making the extension 3 years instead United States lacked just a few votes of receiving as many of 2, or 1, or 4, or 5. as all the others put together. I think that looks pretty good. The original delegation of authority was for a 3-year pe-· The Republicans are mighty easy to please, when they get . riod, upon the supposition that an entire and complete series encouragement from the Wisconsin results. [Laughter.] of reciprocal-trade agreements with all the countries of the Senators, if the proposal to extend these agreements for world could be negotiated and completed within such a period a year is acted ·upon favorably, everyone will say, "Why, of time. When such a result was not realized, Congress voted there was nothing to their program, so they were not willing a 3-year extension, taking the 3-year unit without any par to carry it on for 3 years." . ticular reason and without any particular objection. If the Republicans get into control, one of the first things However, a 3-year extension from next June brings in a they will try to do is repeal the Reciprocal Trade Agree new factor and a new contingency which w·e cannot overlook ments Act and leave the old Smoot-Hawley tariff law on the or disregard. This delegation of authority is to the Presi statute books. Some of my friends on this side probably dent. No one can now know who will be the President after will vote for that action, judging from the way they have the expiration of next January of the present term of the been voting. present occupant of the White House. It may be that cir Mr. President, let us continue this matter for 3 years. cumstances and events will dictate Mr. Roosevelt's renomiha Let those who believe in the policy vote to continue it for tion. It may be that in such a contingency he will be re 3 years. Let those who do not believe iri. it vote against it. elected for a third term. It may be that the next President But let us show our belief in the policy and that we believe will be a Democrat pledged to a continuation of the policies it should be continued. of the present administration. It may be that the next Presi That is· all I desire to say. dent will be a Republican, whose views with respect to tariffs The PRESIDING OFFICER. The question is on the may be at wide variance with the doctrines of Secretary Hull. amendment offered by the Senator from Oregon . [Mr. We do not know. We cannot foresee. The point of the HOLMAN). matter is the simple fact that if we leave the 3-year time The amendment was rejected. limit in the joint resolution not only do we transfer to the 1940 CONGRESSIONAL RECORD-SENATE 4079 Executive unrestricted authority of the most vital character going around whispering, "Vote with me; vote for my amend but we are without any knowledge of what man, what set of ment." When I finish my services in this Chamber, I want men, or what political party will execute and administer the to be able to say I have not whispered in the ear of a living authority delegated to the President. · human being a request to support any amendment advocated Why take so risky a step? Why the 3-year plan? What by me. can we Jose by making it 1 year? What is to preveht the Mr: President, during my 20 years in public life I have Congress from granting a further extension next year if it tried to be impersonal. I have little respect for the public then seems the desirable and prudent thing to do? Do we man who votes for or against any measure because of his like not trust ourselves to deal with this question justly and or dislike of a party leader, or the promoter of a bill, or rationally a year hence? political issue, or for one who may be temporarily occupying We are told on every hand that the war in Europe is likely the Executive office. When I am through here, one of tha to be long drawn out. We know as a practical matter that things I wish to have said of me is that I have been imper the negotiation of new trade agreements at the present time sonal. What I love to think and say of our beloved friend the is at a standstill. We are told that such trade agreements late Senator BoRAH, of Idaho, is that he was impersonal. I and the authority to make them may play an important part have never heard him say a · mean or ill-tempered thing in post-war trade adjustments and the economic rehabilita against a colleague. I have heard him attacked, his motives tion of Europe. But certainly we are in no position today to questioned and misjudged, and then have heard him reply legislate for post-war adjustments which are beyond the by returning to the subject matter and paying no attention to horizon. If there should be occasion for it when peace comes, · the personal attack. What a glorious example. No one ever Congress could delegate to the Executive emergency powers heard him Whisper in the ear of any Senator, "You ought to with respect to foreign trade. But let us limit the present vote this way or that way. Help me on this vote." extension to 1 year. The PRESIDING OFFICER. The Chair will have to sug A further anaiysis of the situation here and throughout the gest that the time of the Senator from Massachusetts has country discloses that many who formerly supported the expired. trade agreements are now opposed to them; still others who Mr. W1\LSH. I suggest the absence of a quorum. may finally vote to continue them are passive and somewhat The PRESIDING OFFICER. The clerk will call the roll. indifferent. · The Chief Clerk called the roll, and the folloWing Senators My distinguished and able friend the chairman of the com answered to their names: mittee [Mr. HARRISON] does not agree with me in that state Adams Donahey King Reynolds ment; but when I look back into the RECORD and find that at Ashurst Ellender Lee Schwartz two sessions of the Congress similar measures went through Austin Frazier Lodge Schwellenbach Bailey George Lundeen Sheppard almost unanimously, I am surprised-as is nearly every other Bankhead Gerry McCarran Shipstead Member of the Senate-to find the opposition which has been Barkley Gibson McKellar Smathers Bilbo Gillette McNary Smith manifested during the present debate. Bone Green· Maloney Stewart As I view the situation, this condition appears to be based Bridges Guffey Mead T·aft largely on two objections. I am not now stating my own Brown Gurney Miller Thomas, Idaho Bulow Hale Minton Thomas, Okla. views but what has been said again and again on the floor Byrd Harrison Murray Tobey of the Senate. Byrnes Hatch Neely Townsend Capper Hayden Norris Tydings The first objection is that the proceedings preliminary to Caraway Herring Nye Vandenberg negotiating the agreements are believed to be somewhat Chandler Hill O'Mahoney VanNuys secretive and of a star-chamber character; that there is an Clark, Idaho Holman Overton Wagner Clark, Mo. Holt Pepper Walsh insufficient opportunity for aggrieved producers and their Connally Hughes Pittman Wiley dependent ·employees to be heard before the agreements are Danaher ·Johnson, Calif. Radcliffe consummated, or even to present and have· judicially con Davis Johnson, Colo. Reed sidered their complaints after the agreements become opera The PRESIDING OFFICER. Eighty-two Senators having tive; and that the escape clause is ineffective. answered to their names, a quorum is present. Secondly, there is a growing conviction that Congress Mr. LEE obtained the floor. should have concurrent control, or some limited right of Mr. WALSH. Mr. President, will the Senator yield? approval of the action of the executive agency of the Con Mr. LEE. I yield to the Senator from Massachusetts. gress, to the end that injury may not be done unconsciously Mr. WALSH. I do not think there will be any opposition to any domestic producer. to the request I desire to make, as I must leave the Senate The further extension of the act for 1 year will meet Chamber to go to a committee meeting. I ask that the yeas these objections in large part. It will be notice to the and nays be ordered on my amendment. country that between now and a year from June the Con The PRESIDING OFFICER. The Senator from Massachu gress hopes to work out some plan which will more effec setts requests the yeas and nays on his amendment.. Is the tively protect the rights of aggrieved producers and permit request seconded? Congress to share some responsibility in negotiating and The yeas and nays were ordered. approving the agreements which will not be injurious or Mr. WALSH. I thank the Senator from Oklahoma. destructive to the general objective, namely, the expansion of Mr. LEE. Mr. President, I rise to oppose this amendment, our foreign trade and the creation of a better understanding which is an effort to destroy by degrees what cannot be done between foreign nations and our country through more satis in its entirety at one stroke; an effort to undermine and de factory trade relations. stroy the reciprocal-trade program by cutting it down a little Mr. President, I sincerely believe that we should vote today at a time. to extend for 1' year the authority to make the agreements, In my opinion, the adoption of this amendment would show with the understanding that an effort will be made to remove a lack of confidence in the program and in this adminis the objections which have been developed in our own party tration. and on our side of the Chamber. In my opinion, we can The amendment does not provide for a limitation of remove all objections between now and a year from now. I agreements. Agreements may still be made for a 3-year should regret very much, as would many of my colleagues on period. Then why not have the program extend for the same this side of the Chamber, to see the whole subject of tariff period? making with its logrolling methods brought back to Congress, In our contracts for farm tenants we are doing our best to or the agreements referred to Congress without restriction. get a 3-year term, in order to afford a feeling of stability, in Mr. President, I do not seek to influence the votes of order that the farmer may make his plans accordingly. The Senators. I have never asked a Member of the Senate to vote same thing is true in the school-teaching field. We are trying for any measure which I have introduced. I do not believe in to make longer contracts. because they make for stability, 4080 CONGRESSIONAL RECORD-SENATE APRIL 5 they make for peace of mind, and they make for better plan inference, that he would not. have offered this amendment if ·ning. That is just as ·true in the matter of making trade he were certain that the present Secretary of State were going agreements. to administer the program for the next 3 years. I, myself, Mr. President, I am convinced that our future lies in the feei that way. I am fully satisfied with the present law, and direction of an extension of the trade of the United States. with its extension for 3 years, if Secretary Hull is going to It may be that tariffs were a good thing at the beginning of administer the program. But I believe that the Senator from our country; but at the beginning of this Nation it was Massachusetts; entirely without intending to do so, would . argued, and with some logic, "We are a young nation. We bring about such a situation.that we would be practically_cer must have tariffs to protect our young industries until they tain to have every trade agreement now in existence canceled are able to compete with the industries of the old country." during the first 4 months of the next administration, if the But the stronger the industrial group grew the higher went fear he expressed should be realized, that is, the selection of a the tariffs. The higher the tariffs went the stronger the high-protectionist President. industrial group became; and the agricultural element of The Senator's amendment would extend the trade-agree the country has been paying tribute to that policy for years. ments program for 1 year; that is, until June 12, 1941. The The industrial group, outnumbering the agricultural element Senator from Colorado [Mr. ADAMS] very accurately pointed ln the Congress, has been able, through a policy of logrolling out, in a colloquy with the chairman of the Finance Com in making tariffs over a period of years, to make laws favor mittee [Mr. HARRISON], that if the extension should be made able to the industrial East, and unfavorable to the South and for 1 year, the agreements could continue on for an indefinite West, because they could outvote them. · period, notwithstanding the expiration of the period during Here is a program which does not rest upon the principle which new agreements could be made. But the Senator from of "You scratch my back and I will scratch your back," and Colorado did not point out the essential fact that not a rate "The fellow that gets there the mostest and the firstest is could be changed after the 1-year period had expired; not an the one that gets the most favorable law out of a tariff pro embargo could be made against any particula-r product. The gram." Here is a program which contemplates the general trade-agreements program would become fixed, absolute, cer welfare, one which contemplates the good of the Nation as a tain, and unchangeable in any manner whatever except by whole, and looks to the future. · the entire obliterat~on of the agreements. The only thing the Why should we launch a great program for building a Executive could do after Ju:ne 1, 1941, would be to discontinue merchant marine-which has been only temporarily stopped the entire program. on account of the war-and at the same time be willing only What would be the attitude of an opposition administra... an inch at a time to grant life to a program of reciprocal tion, to which the Senator is mainly directing his amend trade? ment, if it should come into ofilce? It would have merely I believe in trade. At one time in the history of the world the period from January 20, 1941, to June 12, 1941, Within trade was limited to the Mediterranean, and it built the city which to make up its mind whether or not it would proceed of Constantinople and other port cities. Then it gradually with this program. It could not wait a while and try out moved out into the Atlantic, built the city of London and . the situation. Action would be demanded because of the then built the cities of New York, New Orleans, and San fleeting 4 months. What would be the result of that, if Francisco. We saw trade making the great marts of com the opposition should happen to Win the coming election? merce in the world, and it is still true that trade will build I do not think it is going to do so. I agree with the Senator great cities and great nations. from Mississippi [Mr. HARRISON] that the result in Wiscon Before the world caught on fire with war we were estab sin is a clear indication that so far as the Midwest is con... lishing a good trade with the teeming millions of Mother cerned the Democrats are still on top. We polled more votes India. They were just awakening to the desirability of our than the Republicans did by some thirty or forty thousand. manufactured products. They were enjoying the results of Mr. WILEY. Mr. President, will the Senator yield for our manufacturers' efforts in giving the world the most tasty an observation in that respect? foods, and the finest woven fabrics, and the best finished The PRESIDING OFFICER. Does the Senator from leather, and other products of industry; and they were send Michigan yield to the Senator from Wisconsin? ing in their oriental products, which we do not produce, to Mr. BROWN. I yield. exchange for them. I think it is a short-sighted policy to Mr. WILEY. I have just come into the Senate Chamber. say that we in America do not have enough courage and I · am thoroughly satisfied that the Senator thought he was enough confidence in our own program of reciprocal trade stating a fact; but if he will compare the total vote cast in to give more than 1 year's life to this extension. Wisconsin for the Democrats with the total vote cast for It is argued, "Let us extend the act for 1 year, and at the President Roosevelt in 1936, he will find that the President end of the year we will see what we want." Why not turn has lost about 300,000 votes in Wisconsin. the proposal around and extend· the act for 3 years, the There is no question that every political observer in the · same length of time as the agreements that may be made Nation has stated that the size of the Democratic vote was under it? Then, in the meantime, if we want to change the due to the fact that at least from 100,000 to 150,000 Progres act, the same power that gives it life· today may kill it at sive votes went into the Democratic column because the any time it is deemed best, in the wisdom · of Congress and Progressives had no delegates of their own. the Executive of the Nation, to terminate it. Let us give it _Mr. BROWN. The Senator realizes, does he not, that I life; and then, if we find fault in it, we can take action in the am speaking under a 15-minute time limitation? same way. But it is a negative approach to say, "We will Mr. ,WILEY. I yield the Senator 10 minutes of my time. give the act an extension of life just 1 year at a time, and kill The PRESIDING OFFICER. That cannot be done. it gradually." When there is not enough voting power on Mr. BROWN. I do not think we need to go back as far the floor of the Senate to· kill it all at once, it is sought to as 1936 to compare the Democratic vote with the recent do by degrees what cannot be done at one fell stroke. vote in Wisconsin. Mr. President, I hope the amendment will be rejected. Mr. WILEY. Mr. President-- Mr. BROWN. Mr. President, I should like to take 5 or 10 Mr. BROWN. I cannot yield further to the Senator now. minutes to reason with the Senator from Massachusetts [Mr. Mr.·w!LEY. Will not the Senator compare the 1938 vote? WALSH] and the other Members Of the Senate. Naturally, Mr. BROWN. I will go back to 1938, when the distinguished because of the political situation, I address myself mainly to junior Senator from Wisconsin received something over the Democratic Members of the Senate. We are fairly sure 400,000 votes on the Republican ticket. The candidate on the that the Members on the other side are going to vote solidly Progressive ticket came second-- for this amendment. . Mr. WILEY. With 249,209. I know .the Senator from Massachusetts has been a friend Mr. BROWN. And the candidate on the Democratic ticket of the Hull program. I believe he stated, either directly or by was third-- 1940 CONGRESSIONAL RECORD-SENATE 4081 Mr. WILEY. With 231,976; and. I received 446,770. say, "This is perfection; this program should not be amended; Mr. BROWN. That was .in 1938. In 1940 the Democrats there should be no additional right to be heard granted those go from third to first. I do not see how Senators on the other who think they are aggrieved, and Congress should not inter side can get any comfort out of that situation. But I do not fere with the acceptance of the agreements"? In my opinion, wish to be diverted from the thread of my argument. I am the sufferers under this program, if there are sufferers, are saying to the senior Senator from Massachusetts that his the small dealers, the small merchants, the small-business amendment would be as certain to kill the entire reciprocal men. trade program as anything could be, because if the Repub I am asking for the adoption of the amendment in order licans, assuming the situation which the Senator has assumed, that we may try within the next year to work out something and against which his amendment is directed, should be placed· satisfactory. in power they would have but 4 months in which to operate. Mr. BROWN. I do not think the legislation we have What would they do? No matter how complicated may be passed is perfect by any means. I think legislation is al the platforms, they would say, if they should win, that they ways a matter of adjustment. We cannot please everyone. had received a mandate to kill the reciprocal-trade-program. But I believe this program has pleased more of the American They would not have time to negotiate any new program; people than any tariff legislation we have enacted during the therefore they would do just one thing, they would use the past 40 years. power of termination which is granted in the act, and, in my I say in conclusion, Mr. President, that I want a tariff pro judgment, terminate every one of the 20 agreements we have gram which has reasonable stability to it. I would rather at the present time, because they would not have time to do vote for an amendment which would add a year or 2 years, anything else. rather than to subtract or take a year from the period of Mr. WALSH. Mr. President, will the Senator yield? authority which we grant to the President. I want reason Mr. BROWN. I yield. able certainty in the rates that govern our foreign trade. Mr. WALSH. If the issue now before us is an issue in the Mr. President, I hope that those who have stood by this next election, and we are unable to give any satisfactory program-and I, like many others, am not in complete agree answer to the criticisms made, a Republican President would ment with it, but think it is the best thing we can do in the feel that he had a mandate to cancel the agreements. I am present world emergency-! sincerely hope that those who trying to prevent that. I am trying to secure two modifica have stood so solidly during the 2 weeks of the debate will tions: Flrst, to prov.ide that Congress shall have the right to . continue to stand together, and pass the joint resolution. approve or disapprove of reciprocal agreements made by the -Mr. KING. Mr. President, will the Senator yield? Executive, and, secondly, to give greater opportunity to inter Mr. BROWN. I yield. ested parties to be heard before agreements are entered into. Mr. KING. Does not the Senator feel that, in view of the Mr. ADAMS. Mr. President, will the Senator from Mich chaotic condition of the world, the uncertainty of the world igan yield? war, the demands which will be made upon the financial in Mr. BROWN. I desire first to answer the Senator from tegrity of this as well as other countries, it would be rather Massachusetts. When the Republicans were in power in unwise for us to plan a course which would bind us, even for 1930 and 1932 they passed the Smoot-Hawley Act. - They did . 1 year, with respect to our exports and our imports? not leave with us an act which we could change by mere Mr. BROWN. Let me answer the Senator by saying that executive action. Before we could change the Smoot-Hawley if world conditions were normal, I would be one of the first Act we had to have agreement of the House of Representa to demand that this matter be turned back to the Congress, tives, of the Senate, and of the President. All three had to at least for some form of congressional approval in the mak join. Why should we not do the same thing in the present ing of tariff rates. But I have been convinced that the great year, and leave a statute, if we are to go out of power, that necessity is for action on the part of the Secretary of State is a democratic statute? · I do not think we are going out of when a dangerous situation arises, and I do not think that power, I do not like to talk along this line, but I am forced to kind of action can be taken with the promptness necessary do so because of the position of the Senator from Massa unless we extend the powers which are granted in the act. chusetts. Such a proposal would inject serious instability into our We want to keep the reciprocal-trade program on the entire trade policy. For 6 years we have now had a clear-cut books. We do not want to say. we will merely extend the foreign-trade policy. To amend this bill now, to restrict its law until the next election. We want stability in our tariff extension to 1 year, would mean that during this year Amer rates. Stability in tariff rates, in my judgment, as I have ican business, industry, agriculture, and shipping would be stated on·two occasions on this :floor, is more important than completely up in the air as to what was to be the future policy absolute justice. Industry wants to know whether this pro of this Government. gram is to stop or to continue. To me that is the most vital The question of the welfare of agriculture, as connected thing in this fight. It is the one thing which causes me to with foreign markets, is not a 1-year problem. The ability of go along with the administration when, as I have stated, I our industries to maintain their trade relations is not a 1-year have some misgivings in this matter of delegation of con problem. The matter of employment in our port cities, of gressional authority. But I have been firmly convinced that our ships and sailors, is not a 1-year matter. It is absurd to if we change the program now, if we indicate weakness, if we attempt to make the shaping of our economic relations with indicate that we have no confidence irr the Secretary of the rest of the world a 1-year matter. State, in effect we are saying to the business world, saying to The adoption of the amendment would be interpreted at agriculture, "We are not certain about this thing. There home and abroad as the first step toward an abandonment may be a change in November 1940. There may be a new in this country of principles which the trade-agreements pro Secretary of State in 1941, and perhaps a new program." I gram has represented. Millions of people have supported the want a situation of stability and certainty, which I think is extension of the program as a reaffirmation by this country the most vital thing in tariff making. of those basic principles for which we are prepared to stand Mr. WALSH. Mr. President, will the Senator yield? when peace and reconstruction are possible. A 1-year lim Mr. BROWN. I yield. itation now would indicate irresolution on the part of this Mr. WALSH. There is an advantage in these agreements country with respect to its future policy. Such irresolution in the matter of stability. But the small man, in fact, the would impair our efforts to protect our trade during the war correspondent from whom I read, learns that his factory is period itself since other nations would rapidly abandon liberal closed because of low-tariff duties, and he is in bankruptcy. trade policies in order not to be left holding the bag. Like There is stability. He knows where he ends. The man who wise such irresolution on our part would greatly encourage gets unsatisfactory rates by .. an agreement knows the door is those forces which, unless resisted at this time, will result in locked. Is the Senator ready to go before the country and another calamitous peace. 4082 ·CONGRESSIONAL RECORD-SENATE APRIL 5· It is necessary ·to have this program to protect our do is what they would do. It seems to me that is the real mestic prosperity during the war period and the reconstruc danger in the Walsh amendment. tion period. No one knows what may be the duration of Mr. WALSH. Mr. President, will the Senator yield? these periods, but certainly they are not likely to be limited Mr. BARKLEY. I yield. to 1 year. Mr. WALSH. Mr. President, I did refer to the fact that It would not be feasible to carry on the program if it were there might be a Republican President elected, and that limited to a year's duration, since preliminary preparation, there might be a different Secretary of State, and the Sen investigation. and negotiations may require considerably ator knows some Democrat& who might occupy that position, longer time and other nations would not be prepared to enter who have a different ta:rift' philosophy than that under which upon preliminary discussions or negotiations if the authority the program has been carried out by Secretary Hull. of this Government to conclude an agreement was limited to Mr. BARKLEY. Mr. President, if we should limit the a 12-month period. In short, it would make the program operation of this law to 1 year, then no matter who may utterly unworkable during the 12 months' extension. be elected President, within 4 months we- would have another Mr. BARKLEY. Mr. President; I do not wish to delay a tariff fight in the Congress of the United States. If a Re vote, but I have one or two ideas on the pending amendment publican should be elected, he could bring on a tariff fight which I desire to submit to the Senate. anyway, if he wanted to, but if a Democrat should be elected Frankly, I regret that, after we have proceeded for nearly he should not be compelled to bring· one on when we are 2 weeks considering the pending joint resolution, and the here and now undertaking to provide a way by which it can Senate has consistently refused to complicate the situation by be avoided. adopting amendments which have been offered, we find our Mr. President, I have gone through tariff fights. As I said selves at the last moment confronted with an amendment the the othe:r day, I was here when Congress passed the present effect of which, without the Senator from Massachusetts so law, and that law dragged its tortuous course through the intending, I am sure, would be to--I-do not like the word House of Representatives, beginning in 1929, for a period of "scuttle"-but the effect is the same. It is my belief that if 19 months. It wound up by being signed by the President we _should limit the operation of the law to 1 year in all in June 1930. We were 19 months writing that tariff law. probability no more trade agreements would be entered into within that period. Certainly it would be more difficult to It would be more difficult now to write one under the pres e:1ter into them, because frequently it takes nearly a year of ent world conditions than it was then. We who were here negotiation on both sides to arrive at an agreement, and in then can recall that there was so much logrolling and back all probability it would be more difficult, due to the chaotic scratching that you could almost see the blood flow. condition of the world, to come to an · agreement now than [Laughter .J it has been in the past 6 years, since the original enactment I do not believe that in the present world condition we of the law. So I honestly believe that limiting the operation ought to undertake to enter into a long-drawn-out tariff of the law to 1 year would mean that no more agreements · flght on the floor of the Senate and in the House, and I would be entered into. think these 3-year agreements will be a very wholesome lever I do not entertain the fears which have been expressed in the adjustment of the post-war conditions in the trade with respect to the coming election, but let us assume for· the relations of the country. sake of the argument, and only for the sake of the argument, Suppose we say that the law shall not be continued for that a Republican President should be elected; let us assume more than 1 year; suppose that 1 day before the European that he might desire, as has been expressed here, to raise war ends the law expires, and all these treaties and the tariff rates instead of lowering any of them; let us assume authority to make them expire. We know that following that he approached another .nation in order to negotiate a the war millions of men in the trenches will insist that they trade agreement, and that nation should say, "All right, Mr. be provided with emploYment in private industry. Every President of the United States; what have you to offer as an · nation will start out to become self-sufficient, as it did after inducement? What concessions will you make to us in order. the last war. Every nation will begin again to raise even to bring about an adjustment of our trade relations?" If higher the barriers against trade, on the ground that it can the President desired to increase these rates, can Senator& compel its people to consume its own products, as was done imagine him saying, "Well, these are my terms. If you will by Italy after the last war. Then Italy refuSed any longer lower the barriers that keep my goods out of your country, I to buy American tobacco, because the Italian Government will raise the barriers, and we will continue to keep your sought to induce the Italian people to chew and smoke the goods out of my country." That is what it amounts to. tobacco they produced. That same impulse toward extreme How many nations in the world would be so stupid as to nationalism and self-sufficiency will continue when the Euro enter into an agreement of that sort? So I have no fear pean war comes to an end; and, if there is no binding tie that whoever may be elected President of the United States, between our Nation and other nations, the world will again whether he is a Democrat or a Republican, will be able in witness the scramble for the erection of higher and higher trying to negotiate an agreement to induce any other nation barriers against international trade. If the agreements to make all the concessions in our behalf, while we are in which are entered into, extending for a period of 3 years, sisting upon making it more difficult "for them to get their continue 1 or 2. years beyond the end of hostilities, they will goods. into our country. have a binding effect, they Will have a wholesome e.tfect, upon Mr. BROWN. Mr. President, will the Senator yield? international trade, and, in my judgment, will be very potent Mr. BARKLEY. I yield. in making it possible to adjust the existing international Mr. BROWN. In that connection I should like to make the difficulties. point that if the Walsh amendment shoUld ~ adopted, the If the pending amendment is agreed to, we limit the power right to negotiate wou~d expire on June 12, 1941. of the President to 1 year, every nation which has a treaty Mr. BARKLEY. That is correct. with us now, and every natinn that is even considering enter Mr. BROWN. If the unfortunate condition to which the ing into negotiations, will consider our action as a· lack of' Senator refers-the defeat of the Democrats-should take confidence in the Government of the United States, and they place, which the Senator from Kentucky and I are confident, will say, "Why should we enter into any negotiations? Why and I am sure the Senator from Massachuse.tts is confident, should we enter into any arrangements with a government will not take place, then there would not be time for a Sec whose Congress is willing to risk entering into an agreement retary of State to look into the matter of the trade agree for only 12 months?" ments, to stop and consider and determine whether or not I do not think that ought to happen. I think it would changes could be made that would be reasonably satisfac be disastrous. It would be misinterpreted ail over the world. tory to everyone. The only thing they would have time to · For these reasons and others which I do not wish to take do would be to cancel the agreements, and very likely that the time to discuss, 1 hope the amendment will be defeated. 1940 CONGRESSIONAL RECORD-SENATE 4083 Mr. HOLT. Mr. President, will the Senator yield? that is why I am personally opposed to the agreements pro Mr. BARKLEY. I yield. gram being abrogated in toto. Mr. HOLT. Is it not a fact that most countries with which Mr. NORRIS. I thank the Senator for his contribution, we have trade agreements reqUire legislative ratification by but I hope Senators will realize that my time is limited and their own legislatures? · not take up too much of it. There are several things I have Mr. BARKLEY. I _consulted the Secretary of State about to say. that matter because it had been brought up in the debate, That is one of the reasons, Mr. President, which caused and I was told that the entire 22 agreements, with two excep me to believe that the amendment should be defeated. We tions, became effective at once, and that the subsequent rati ought to be prepared to meet conditions which will arise fication was a mere matter of form; and in the case of some when the world war is over. Unless we continue the trade of them such as those with Canada and Great Britain, where, agreements, we may find ourselves unprepared to meet a as we ~ow, the parliamentary system of government prevails, situation such as even our imagination cannot portray to us and the government itself is a part of the parliament, the at the present time. agreements went into effect immediately upon being signed We ought to have some instrumentality. If we limit our by the respective countries. Secretary of State to the exercise of this authority for 1 year, Mr. HOLT. But it is a fact, is it not, that all but two of for practical purposes we shall perhaps make it impossible those agreements had to be ratified by the legislature of the for him to meet the situation, or even to attempt to meet it. participating country? MUch has been said by various Senators about the politics Mr. BARKLEY. Not in-order to take effect; no. They were involved in this matter. It has been said that we may have subsequently ratified, but that was a matter of form. There a Republican President. Perhaps we shall. So far as I am was no delay. All -went into effect immediately upon being concerned, I should like to give him the same instrumentality, signed, except the two I referred to. no matter who he is or to what political party he gives Mr. HOLT. But finally they were all ratified? adherence. Give him an opportunity to do some · good. Mr. BARKLEY. Of course. If they had been rejected, Whether or not he does, it is up to him, not us; but if we they would not have qualified. But they went into effect upon take away the authority, the blame can be put upon our signature, and have been in effect ever since, so that the rati shoulders. fication provided for in those countries was a mere formality, Mr. President, reciprocity is a Republican doctrine. and was brought· about after the treaties went into effect. James G. Blaine, the plumed knight of Maine, was the Mr. President, I sincerely hope that the amendment will be father of reciprocity. When I was a boy too young to defeated. vote, I worshiped at his shrine. I was delighted when he . . Mr. NORRIS. Mr. President, I have not looked up any.par succeeded. I was filled with despair when he met defeat . ticular agreement that has been entered into to see how much Now the Republican Party, so far as the Senate is con- . time elapsed between the time it was first negotiated and the cerned, is apparently turning its back on that policy. We C(ompletion of the agreement. But it is my contention that, may have a Republican President who will be in favor of if we limit to 1 year the power to make the agreement, we reciprocity, as the country would have had if James G. shall for practical purposes have made it impossible to get Blaine had been made President. If he had been given that any agreement unless it is made in a hurried manner, some opportunity no Republican would have blushed at his success thing which has been condemned during 2 weeks of oratory or his ability. Perhaps some Republican will come forward here, particularly on the Republican side of the Chamber. and be elected President who can take the place of James Many amendments have been offered providing that we must G. Blaine, the father of reciprocity, and advocate the same have action by the Senate, action by the House, a two-thirds theories which he so ably advocated. ' vote by the Senate, and favorable action by both Houses. Any Mr. President, I am despondent to see the two Senators such restrictions would result in delay. from Maine both supporting the Republican Party in its After initiating an agreement I have no doubt that on the unanimity in this Chamber against the pending measure. average more than a year will have passed before the agree For weeks, together with certain Senators on the Democratic ment is completed. side who are likewise opposed to the joint resolution, they Mr. CLARK of Missouri. Mr. President, will the Senator have resorted to all kinds of amendments, many of which, yield? if they had been adopted, would have killed reciprocity. Mr. NORRIS. I yield. I do not blame Senators for such tactics, if they are opposed Mr. CLARK of Missouri. I am advised by the Tariff Com to the entire program. They are a legitimate legislative mission that the average time is a year, two months, and method of fighting. However, one after another, the Senate some days. The most important treaty, however, involving has knocked down those amendments. This is one more. more than 500 items, was completed in 9 months. That was Regardless of the patriotic belief of the Senator who offered the one with the United Kingdom, and that was considered it-and I do not question his motives--the effect will be to an exhibition of remarkable expedition. But the average take the teeth out of the law, and to kill it. In effect, it is time is a year and two months and some days. another chiseling of the law. - Mr. NORRIS. I thank the Senator for that contribution. I do not complain of any Senator's vote for the amend It demonstrates what I think every Senator, from his own ment. If he is opposed to any reciprocity that is a legitimate experience arid observation, must realize to be true. Do we and proper thing to do. However, there are prominent, in want to hurry those who are negotiating trade agreements? fluential, powerful, and patriotic Republicans scattered over If we are to have an agreement, do we want to say to our this Nation who believe in reciprocity today, just as Republi Government, "Do your work now, and do it in a hurry. Do cans believed in it in the days of James G. Blaine. not investigate the situation. Do not look into the matter"? So far as the Senate Republicans are concerned, they are Mr. President, that is something which we have denounced about to bury reciprocity. They are about to turn their backs repeatedly. on one of the greatest leaders the Republican Party ever had Mr. WALSH. Mr. President, will the Senator yield? in its history. I have thought, Mr. President, that we ought Mr. NORRIS. I yield. to have some kind of a public ceremony over the death of Mr. WALSH. I think perhaps the Senator would be reciprocity in the Republican Party. I should like to have pleased to know that Secretary Hull stated before the one Senator from Maine preside as chairman at the obsequies, Finance Committee that they were not negotiating any and I should like to have the other Senator from Maine treaties at the present time. That the principal and the deliver the funeral oration. Reciprocity is a Republican doc very important service that they are rendering is to be in trine. In my judgment, Republican Senators, in this instance, a position to enforce the escape clauses in the agreements. are moved by a partisanship which, if carried to extremes, I personally think, if I may add a word further, that that is always injurious to the welfare of our country and our provision is a very vital one and a very important one, and people. 4084 CONGRESSIONAL RECORD-SENATE APRIL 5 Mr. BANKHEAD. Mr. President, will the Senator yield? I would answer that most of the amendmtmts the Senator Mr. NORRIS: I yield. from Nebraska so criticizes have been offered by Senators on Mr. BANKHEAD. The Senator mentioned Mr. Blaine as the other side of the aisle. The Democrats o.f this body .have one of the great Republican advocates of reciprocity. I come over-those who have offered the amendments-to the should like to ask him if a more recent advocate was not the Republican side. By that I mean the Republican side of Sen great President, Mr. Taft, whose son is now a Member of this ator Blaine. We have always stood for maintaining the body? integrity of the Senate with no sell-out to the President. Mr. NORRIS. I think that is true. As we all know, there Mr. NORRIS. Mr. President, will the Senator yield? is a unanimity among Senate Republicans in the votes on the The PRESIDING OFICER. Does the Senator from Wis chiseling amendments which have been introduced in the consin yield to the Senator from Nebraska? past week, entirely to kill reciprocity. Among the Republi Mr: WILEY. I will yield, but not for long. I want my cans there has been a unanimous vqte in favor of doing so. 15 mmutes to reply to the challenging argument the Senator I cannot think they believe in that course. Perhaps they from Nebraska has already made. consider it a good political method of trying to control the Mr. NORRIS. I am wondering if the Democrats have next Presidential election. I do not believe it is even decent, come over tp the Republicans or whether the Republicans good politics. It will not work. The people of the country have not gone over en masse to a few Democrats. will look with sorrow on the spectacle of representatives of a Mr. WILEY. I would answer that by saying, my dear Sen great political party, which, in many respects, has had a noble ator, we have not followed in your footsteps. [Laughter.] history in the past, now chiseling, cutting down, and destroy Mr. President, the reciprocity of Blaine, the reciprocity of ing the keystone which was brought forth by one of the McKinley, the reciprocity of Taft is still the doctrine of the greatest leaders in the history of the Republican Party. Republican Party, and we welcome those distinguishe(l Demo Mr. BARKLEY. Mr. President, will the Senator yield? crats who have seen the light and who have joined with us Mr. NORRIS. ! ·yield. in advocacy of that highly desirable Republican reciprocity. Mr. BARKLEY. I was about to suggest that following the Let it be made plain what that is. That reciprocity means advocacy of this policy by Mr. Blaine, the Senator will recall fair dealings between nations on a fair basis. It means fur that in his last speech, at Buffalo, President McKinley advo ther no surrender by the Senate or the Congress of the United cated the same policy. Later, Theodore Roosevelt and Wil States in negotiating any reciprocity agreement, of any of liam Howard Taft-particularly in respect to the Canadian the constitutional powers which are lodged in the Senate or treaty---advocated the same form of reciprocity. in the Congress. Thus far, I think, we have established, by Mr. NORRIS. Yes. the votes of the Republican Members of this body, that we Mr. BARKLEY. So in the Republican Party there is a are unwilling to surrender our constitutional rights as Sen long line of outstanding advocates of reciprocity, ators. Mr. NORRIS. As I remember, one of the last speeches made by William McKinley was in favor of reciprocity. Soon When the distinguished Senator from Massachussetts [Mr. afterward he was felled by the assassin's bullet and went to WALSH] says, by his amendment, let us delegate to the Presi his last resting place, almost with the words of reciprocity on dent for 1 year, commencing with June of the present year, his lips. the right as the agent of the Congress, or of the Senate, to We now find the Republican Party, at least in the Senate, negotiate reciprocity agreements, some of us say we will unanimous in trying to kill that policy of government by make the President the agent of Congress for 1 year longer. methods which are indirect. Every Republican Senator will Why should it be longer than 1 year? The distinguished vote for this amendment. Why? For the same reason that SenatoJr from Nebraska refers to conditions over there and they all voted for the other amendments, the effect of which what is liable to happen after the close of the war. But he would have been to kill or injure reciprocity. Again they will fails to particularize. Then he argues therefrom that we be unanimous; and I wonder how the Senator from Massa must turn over to the Executive our legislative power to deal chusetts [Mr. WALSH] can obtain much consolation from the for us-the representatives of the people of this country. fact that he is backed principally by Members who are bit But does the Senate need anyone to deal for it? No; the terly opposed to his party and the principles which its rep Senate does not need anyone to deal for it. I have confi resentatives advocate. dence in the Members of this body-their judgment, their Mr. President, I am not influenced by such considerations. patriotism. I should like to extend the power to make agreements because Furthermore, I wish to call attention to a challenging fact it remedies a condition which is indescribable. It does not which seems to have been overlooked. Twenty-two agree entirely cure it. However, every Member of this body knows ments are now in effect; and, as the Senator from Massa the agony and the dissatisfaction which always follow the chusetts says, no further agreements are in · the making. enactment of a tariff bill, no matter what party is in power. Why? The answer is found in the statement of the Senator We all know that a tariff bill becomes a logrolling plan before from Nebraska that, because of conditions over there, because it is passed. I do not find fault with that situation, because of the depreciation of currencies, because of a thousand de it is so from the very necessity of the case. The making of tails that have come into the picture since the President reciprocal-trade agreements is to some extent a remedy for negotiated the last reciprocity treaty for us we cannot enter the terrible and disastrous condition which never yet has led into further agreements. to the enactment of a single satisfactory, efficient, or logical Bear in mind that if by June 20-I think that is the date tariff bill. when the 3-year limit will expire-if by that time no further Mr. WILEY. Mr. President, I have listened with much power is conferred upon the President of the United States interest to the distinguished senior Senator from Nebraska to negotiate, the existing trade treaties will not go into the [Mr. NoRRIS]. Far be it from me to challenge any of his discard; those treaties will continue ad infinitum; they will remarks. However, when he speaks about the Republican continue on unless-what? Unless action is taken by the Party-the party of which he was once such a distinguished appropriate body to cancel them. If the treaties are working member-and about the Republican group in the Senate in well, and are good, they will continue. If they are not work the way that he does, I feel that it is up to me, one of the ing well, then, under the terms of the compacts or agree neophytes in the party, to rise and speak my sentiments not ments, cancelation can be made. And, further, under the only on the amendment now before the Senate but in reply Constitution the President can negotiate treaties but the to his rather derogatory remarks about my brethren. Senate must pass on them. When he referred to the former Senator from Maine, Sen Now, Mr. President, let us revert to our discussion on the ator Blaine, and asked in a rather ironical way why the Mem principles of the Republican Party. I say, and I say it with.. bers representing that great State in this body had gone back out any equivocation, that the Republican Party has not on the doctrines of that distinguished Sen :~tor, I would an gone back on reciprocity, but that the Democratic Party has swer by saying they have not gone back on those doctrines. asked that the Senate of the United States take no further -1940 CONGRESSIONAL RECORD-SEN-ATE · 4085 part in reciprocity; and indeed has asked:the Senate to give ing" of my brethren on the other side who get up and say, , away its rights, shirk its duty. "Well, you know, if a Republican President is elected, or if Senator Blaine felt that the Senate should become a party this condition happens, and · so forth." Well, I am afraid to every reciprocity agreement. So did McKinley and so did that the fear of God is in their systems. They know the job Taft. This kind of reciprocity is the reciprocity of. the that· was promised to -be done as outlined in their 1932 plat Republican Party today. form has not been done. They know the American people Another suggestion made by the distinguished Sen a tor are going to speak without any equivocation, without any from Nebraska was that if we merely give the President doubt, -and that new leadership is coming to America. 1 year in which to operate-! think-he called it a "chiseling" That, however, is not on this point. The point is that a amendment-the effect of that 1-year limitation will be to year from now the President and the Congress will have had "chisel" out of existence the doctrine of reciprocity. Several 1 more year of experience, 1 more year of perspective, seeing days ago I . made. some remarks· on the ftoor of the Senate the whole world as a picture, knowing what should be done. in which, in substance, I said, among other things, that I Yes; a year from now this body will be just as well able to would prophesy that after the present war in Europe was over determine and, in fact, better able to determine what should there would not be any thought or talk of trying to initiate be done than at present. The ~enate in this changing world reciprocity arrangements, agreements, treaties, or compacts. should hesitate to vacate its place for the Executive. Why? As has been demonstrated on the ftoor of the Senate, I feel deeply in accord with the sentiments of the dis in 2 years we will have-practically all the gold in the world .. tinguished Democrats who have said that we Senators owe Then other countries will .not be able to buy from us. .Reci an obligation to maintain and retain the functions of gov procity implies that the other fellow has something to trade ernment which · are conferred upon the Senate by the Con- for something we desire to sell. Secondly, their currencies , stitution; and I personally feel that if we now delegate that will become so depreciated that they will have to resort to power for a period of 3 years we· shall be remiss to our con· the same practices which Germany has initiated in her deal , stitutional obligation· and -our obligati-on as citizens of this ings with South America. Then many who ar.e now in the great Republic. Senate and who for 7 years have, .in the vernacular of the Mr. LEE. Mr. President,. will the Senator. yield? street, "lambasted"· the Smoot-Hawley Tariff Act, will sing The PRESIDING -OFFlCER. Does the Senator from .Wis- praises to high heaven that there is available some kind of. consin yield to the Senator from Oklahoma? · a legislative barrier to .prevent America being -inundated by Mr. WILEY. I yield. a ftood of European goods. Mr. LEE.. Does the Senator favor this amendment? · I also said the other d.aY that then Europe will need Mr. WILEY. Yes. America more than ever,. and she w.i:ll need an America that Mr. LEE. Is the Senator against. the extension of the is self-sustaining-an America that will not be paralyzed by Trade Agreements Act in its entirety? a ftood of cheap peon-labor-made -goods. As the result, she Mr. WILEY. I am against giving unrestricted power to will need, as I said, a great humanitarian like Hoover who the President; yes. will reach out and give of his heart and soul and of the M.r. LEE. · The- Senator is against the extension and· will finances voluntarily contributed by American citizens to take vote "no" on the extension of the act. Is that true? care of poor bleeding citizens of Europe. Mr. WILEY. That depends upon the subsequent amend Mr. LODGE. Mr. PreSident, will the Senator yield? ments to the joint resolution. I do not know how the joint Mr. WILEY. In a moment I will yield. resolution will read at the time of the final vote upon it. I Furthermore, Europe will need the sympathetic heartthrobs have my idea as to how it will read. of the world, but she will need, above everything else, a great Mr. LEE. Would the Senator vote for the joint resolution nation that is standing on her own feet and able to accom if th:s amendment were .added to it? plish things, and will not be able to accomplish much if we . Mr. WILEY. If this amendment and other constructive let "sob stuff" interfere with the rights and property of our amendments and safeguards were added, I should give that 130,000,000 people. The Republican Party has always stood matter serious consideration. for the American doctrine of markets for American products Mr. DANAHER. Mr. President, on the 17th of April 1939, from American farms and American factories. our distinguished majority leader, the Senator from Ken Let the barriers down and instead of 10,000,000 unem tucky [Mr. BARKLEY], introduced into the RECORD a letter ployed, as we have now, we will have 30,000,000 unemployed. from the President of the United States to the Chancelor of Let the barriers down and factories will be closed. Let the the German Reich. On page 1483 of volume 84, part 12 of the barriers down and America will face revolution. Keep the RECORD, we find this sentence-the President had been talking barriers up; make ourselves more and more self-sufficient to about the matter of a discussion. looking toward disarma meet emergencies; then we can reach into Europe and do a ment-he then said: worth-while job. Now I yield to the Senator from Massa~ Simultaneously the Government of the United States would be chusetts. prepared to take part in discussions loolcing toward the most prac Mr. LODGE. May I call-the attention of the Senator from tical manner of opening up avenues of international trade to the end that every nation of the earth may be enabled to buy and sell Wisconsin-and I think it is appropriate to what he was on equal terms in the world market as well as to possess assurance saying-to an excerpt from a speech by William McKinley in of obtaining the materials and products of peaceful economic life. 1897? Mr. WILEY. Do not read the entire speech. Mr. President, that particular sentence and that statement Mr. LODGE. The excerpt is very brief and is as follows: of the objective then in the President's mind underlie this entire program. There can be no doubt about that. ·Anyone The end in view is always to be the opening up of new markets for the products of our country by granting concessions to prod who is opposed to a continuation of the reciprocal trade ucts of other lands that we need and cannot produce ourselves agreements program should vote against the amendment of and which do not involve any loss of labor to our own people, but the Senator from Massachusetts [Mr. WALSH]. Why should tend rather to increase their employment. we continue for 1 more year beyond June 12, 1940, the unre Mr. WILEY. I thank the distinguished Senator from stricted power to make agreements with any other number of Massachusetts. His statement reminded me of Lincoln's nations beyond those with which we have already agreed? story when he spoke of "the end in view," but, of course, that Mr. President, quite the contrary. The situation~ as it story does not necessarily apply to this argument. seems to me, is in this light, and should ·be understood, for Mr. President, I · was speaking in relation to conditions there has been a great deal of loose talk here this afternoon America would face at the conclusion of the world war. about limiting the President's power to 1 year. It has been When that time comes America must · be ready. One year said over and over and·over again by one Senator or another, from today no one knows what the conditions will be~ Mr. in effect, that there is under discussion the power of the Presi President, I find a great deal of humor in. "the wishful wish- · ~ent · to enter into· new agreements which would be good for 4086 _CONGRESSIONAL RECORJ?-SENATE APRIL 5 only 1 year. Not a bit of it. Let us look at the law for a apparent that we have financed every dollar of the export moment. business which has been developed? And that is not all, 1 In section 2, subparagraph (b) , we find a clause the pr0vi Mr. President. We paid an export bounty of 30 cents a sions of which are wrttten into every single outstanding agree bushel on 300,000 bushels of wheat exported to Japan only ment of the 22 now in force: last month; we pay export bounties on cotton; and yet we Every foreign trade agreement concluded pursuant to this act hear talk about a reciprocal trade agreements program de shall be subject to termination, upon due notice to the foreign veloping an export market for the United States. During government concerned, at the end of not more than 3 years from the same period we have reduced the tariffs on more than a the date on which the agreement comes into force, and, if not then terminated, shall be subject to termination thereafter upon not thousand articles which have been produced by Americans in more than 6 months' notice. times past, but are now being displaced by products imported from foreign countries. So, Mr. President, all the agreements now in force will con Now, let us come back to our Uncle Sam, the garage man. tinue in force from June 1940 until at least January 1941, Let us assume, if you will, that along comes a man driving an that being the earliest terminable date within the meaning of automobile which collides with a telegraph pole, and the the law. automobile is wrecked. It is towed into Uncle Sam's garage, Congress will be back here in January. If we really want and he pays his laborers to put new parts into the car. He to keep our hands on the situation by voting down this entire pays the automobile manufacturer for the parts he installs. program and by voting down the amendment of the Senator He pays for a paint job; and then, at the end of the work, the from Massachusetts we shall not for one ·minute terminate owner of the car says, "I am sorry, Uncle Sam, but I cannot outstanding agreements; but we shall at all times between pay you ·right now for the work you have done on my car. now and then have an opportunity to examine into world If you will let me take the car for a while, I will bring yoU! conditions and to ascertain upon what basis, if any, we shall the money." He takes the car, and in a little while he comes be willing to make new trade agreements. back and says, "I cannot pay you in money, but I can pay you Mr. President, if the program is an advantageous one, we in goods. I have managed to get together 300 automobile ought to be for it. If it is not an advantageous one, we ougi:t tires to pay you for that job, and here they are." to be against it. Certainly there is not a Member of this . Uncle Sam takes the tires, and when the tire salesman from body who is willing to vote for a disadvantageous agreement Akron comes around Uncle Sam says to the tire salesman, "I so far as the interests of the United States are concerned. am sorry; I do not need any tires. I have tires." The tire With that thought in mind, how can we say that by allowing salesman tells his wholesaler, and the wholesaler says to the the present act to terminate the United States will lose even manufacturer, "I am sorry, we do not need any tires, because one iota of its position of power and prominence in the world, Uncle Sam is all stocked up with tires." So the factory holding as it does the key to the monetary situation upon closes, the people walk the streets looking for work, and they which all exchange must be predicated, holding as it does the wonder why. Uncle Sam, who has financed the entire pro power of the productivity of our vast factories, our farms, gram from start to finish, has put his money into that auto our resources? If there be any logical answer to that par mobile, has financed all the parts that went into it and all the ticular form of question it lies in the fact that the Depart labor that went into it, and finds himself in identically the ment of State carrying out the program of the President, situation the United States occupies today under this kind of undertakes to 'open up our markets to the countries of the program. We are financing every dollar's worth of this world on equal terms. If that is what the people of the business. United States want, let them understand that it is being Mr. President, the amendment of the Senator from Massa given to them by a majority which is committed to that type chusetts does not by any means reach to the heart of the of program. Let them then ask, as Americans walk the situation. If you want the program, if you wish to give your streets looking for work, "Who did this to us?" President the power unrestrtctedly to negotiate new agree Mr. President, the United States is not greatly unlike a -ments during the next year, which new agreements will have figure in a hypothetical case I shall present. Let us con the force of an initial period of 3 years, and be in force indefi sider if you will, that the United ·States is Uncle Sam, and nitely thereafter, then you can vote for the Walsh amend that 'uncle Sam is a garage man; that he is a repair station ment. If, on the other hand, you are opposed to the prin proprietor. Let us assume, if you will, that he does not like ciple, to the idea, to the basic philosophy, which would turn the presence of broken glass on the road, and he conceives American markets over to the whole world, as the President that it is a service to the public in general if he gathers up said, "Open up the avenues of international trade so that that broken glass. Accordingly, he undertakes· to pay $35 a all the people can have access to our markets," then vote for bushel, if you choose, for all the broken glass that is brought the Walsh amendment, vote to allow the program to continue to him. Every boy in the neighborhood and every boy in 1 more year, and then vote, to be consistent, to continue the town goes out and gets all the broken glass he can. They whole program 3 years. But do not under any circumstances gather it up, and they bring it to the garageman, Uncle Sam, vote for 'the amendment on the theory that you are voting and they put it in his bin; and at the end of a year he has an to hamstring the joint resolution. enormous hoard. If you choose, he has 18,000,000,000 bushels The PRESIDING OFFICER. The question is on agreeing of broken glass in his bin. to the amendment of the Senator from Massachusetts [Mr. Then the boys who got $35 for each bushel of broken glass WALSH]. go over to the candy store and the ice-cream store, and, of Mr. HARRISON. I suggest the absence of a quorum. course, business booms. Of course, you can measure dollar The PRESIDING OFFICER. The clerk will call the roll. for dollar from 1934 down to date, the increase in exports The legislative clerk called the roll, and the following Sena- allegedly due to a reciprocal-trade program over and co tors answered to their names: incident with the period during which we were acquiring Adams Clark, Idaho Harrison McNary 18,000,000,000 ounces of gold to be buried in a hole at Fort Ashurst Clark, Mo. Hatch Maloney Knox, Ky.; not that it is not safe in Kentucky. Even though Austin Connally Hayden Mead Bailey Danaher Herring MUler the distinguished former Governor of Kentucky has joined Bankhead Davis H1ll Minton us, it is still safe at Fort Knox. Barkley Donahey Holman Neely Bilbo Ellender Holt Norris Mr. President, I have the greatest respect for my dear Bone Frazier Hughes Nye friend who occupies the chair at this moment (Mr. CHANDLER Bridges George Johnson, Calif. O'Mahoney in the chair); but I say to him that if Uncle Sam, the cus Brown · Gerry Johnson, Colo, Overton Bulow Gibson King Pepper todian of that glass bin, that gold bin, has taken from the Byrd Gillette Lee Pittman pockets of the American taxpayers $15 for every ounce of . Byrnes Green Lodge Radcliffe Capper Guffey Lundeen Reed gold he has acquired, and has given it to foreigners every time Caraway Gurney McCarran Reynolds he buys an ounce of gold worth only $20.67, is it not perfectly Chandler Hale McKellar Schwartz 1940 CONGRESSIONAL RECORD-SENATE 4087 Schwellenbach Stewart To\vnsend Walsh ment which should have extended study and full discussion Sheppard Taft Tydings Wiley Shipstead Thomas, Idaho Vandenberg and debate before final action is taken. I want to mention Smathers Thomas, Okla. Van Nuys some of these, and then pass on to a more detailed discussion Smith Tobey Wagner of two. or three of the points which most directly affect the The PRESIDING OFFICER. Eighty-one Sena.toTs having welfare of the people of North Dakota, and, of course, indi answered to their names, a quorum is present. rectly affect the welfare of the people of the whole Nation. The question is on agreeing to the amendment offered by First. From the study I have made and from the argu the Senator from Massachusetts [Mr. WALSH]. The yeas and ments for and against the joint resolution, I have come to nays have been ordered, and the clerk will call the roll. the conclusion that reciprocal-trade agreements are no more The legislative clerk proceeded to call the roll. or less than special commercial treaties under another name. Mr. BRIDGES (when his name was called). I have a pair As such, they are treaties, and under the Constitution do not with the Senator from Utah [Mr. THOMAS], which I transfer become legal or binding unless or until they have been sub to the Senator from Maine [Mr. WHITE], and vote "yea." If mitted to the Senate and have received the approval of two the Senator from Maine were present and voting, he would thirds of this body. vote "yea"; and if the Senator from Utah were present and Second. The price changes in connection with commodi voting, he would vote "nay." ties bought and sold in foreign trade should be given the Mr. SHIPSTEAD (when his name was called). I have a same consideration as are the rates of duty. There is no pair with the senior senator from Virginia [Mr. GLASs]. question in my mind that concessions granted by us in the I am informed that if he were present he would vote "nay." form of tariff reductions should automatically be canceled If permitted to vote, I would vote "yea." I withhold my vote. when price changes-due to whatever cause-result in The roll call was concluded. definite injury to American agriculture, industry, and labor. Mr. MINTON. I announce that the Senator from Florida So far as agriculture is concerned, a clear-cut definition of [Mr. ANDREWS], the Senator from Nebraska [Mr. BURKE], the injury would be when the domestic selling price of a com Senator from New Mexico [Mr. CHAVEZ], the Senator from modity is below parity. The Congress has defined parity as California [Mr. DoWNEY], the Senators from lllinois [Mr. the ratio of prices of farm products to prices paid by farm LUCAS and Mr. SLATTERY], the Senator from Georgia [Mr. ers for commodities purchased, using the 5-yea.r pre-war RussELL], the Senator from Utah [Mr. THoMAS], and the period as the base in the setting up of a parity index. Senator from Missouri [Mr. TRUMAN] are detained from the Let me give one illustration: Senate 0n important public business. The price of oats was only 24.4 cents per bushel in Decem The Senator from Virginia [Mr. GLASS] and the Senator ber 1938, and yet the tariff was reduced in the Canadian from Montana [Mr. WHEELER] are unavoidably detained. agreement from 16 cents per bushel to 8 cents per bushel. The Senator from New Mexico [Mr. CHAVEZ] has a pair The lower rate became effective January 1, 1939. In De with the Senator from Missouri [Mr. TRUMAN]. cember 1939 parity for oats was 51.1 cents per bushel. Mr. MINTON. I announce that the Senator from Mon While the price was slightly higher than in December 1938, tana [Mr. MURRAY] is unavoidably detained on public busi because of relatively poor crops during 1939 the price in De ness in one of the departments. cember was only 34.7 cents per bushel. In other words, oats The Senator from California [Mr. DowNEY] is paired on were more than 16 cents per bushel below parity in price, yet this vote with the Senator from Georgia [Mr. RussELL]. If the tariff was reduced 8 cents per bushel, and as a result the Senator from California were present, he would vote over 4,000,000 bushels of oats were imported into the United "yea"; and if the Senator from Georgia were present, he States, thus helping to hold down our market prices. would vote "nay." In the first place, under those conditions, there was no Mr. AUSTIN. I announce the following pairs on this excuse for reducing the duty on oats, and if it was techni question: cally reduced, the lower rate should not have been effective The Senator from New Jersey [Mr. BARBOUR], who would while domestic prices were below parity. vote "yea," with the Senator from Illinois [Mr. SLATTERY], It is argued by some theorists that a crop which is some who would vote "nay." times on an export basis does not need a tariff, or that the The Senator from Wisconsin [Mr. LA FoLLETTE], who would tariff is ineffective. Actual experience shows that such tar vote "yea," with the Senator from Illinois [Mr. LucAs], who iffs are of vital importance because of the effect which they would vote "nay." have upon the price structure. When the crop is short, the farmer should have a correspondingly higher price per The result was announced-yeas 34, nays 46, as follows: bushel, but it is impossible to secure this if the tariff is re YEA&--34 moved and great quantities of imports are permitted at low Adams Gibson Lodge Thomas, Idaho Ashurst Gillette McCarran Tobey rates or without duty. Austin Gurney McNary Townsend Third. Just as price changes in the international market Bridges Hale Maloney Vandenberg are more devastating than changes in rates of duty, so, too, Capper Holman Nye VanNuys Clark, Idaho Holt O'Mahoney Walsh fluctuating values of currency used in international settle Davis Johnson, Calif. Pittman Wiley ments are more devastating than changes in tariffs. During Frazier Johnson, Colo. Reed the last few years currency values have been changed by Gerry King Taft all of the leading countries so much and so often that the NAYB-46 ratio of the dollar to various foreign currencies changes Bailey Connally Hughes Reynolds Bankhead Danaher Lee Schwartz almost from day to- day. It would seem that this country Barkley Donahey Lundeen Schwellenbach should have taken adequate steps to protect the farmers and Bilbo Ellender McKellar Sheppard Bone George Mead Smathers wage earners of the United States against the evil effect of Brown Green Miller Smith these fluctuations in currency values. Bulow Guffey Minton Stewart During · the last 6 months the depreciation in the case of Byrd Harrison Neely Thomas, Okla. Byrnes Hatch Norris Tydings . the British pound, the French franc, the Canadian dollar, Caraway Hayden Overton Wagner and other currencies has been a tremendous disadvantage to Chandler Herring Pepper us, stimulating imports of many farm products while making Clark, Mo. Hill Radcliffe it correspondingly difficult for us to export our products NOT VOTING-16 because of the reduced value of foreign money, Andrews Downey Murray Thomas, Utah Barbour Glass Russell Truman If the Trade Agreements Act is to be extended there should Burke La Follette Shipstead Wheeler be provision calling for automatic cancelation of the agree Chavez Lucas Slattery White ment where foreign currency depreciation is disadvantageous So Mr. WALSH's amendment was rejected. to our people. Mr. FRAZIER. Mr. President, there are a great many According to some of the articles written about the results different phases of the problem of reciprocal-trade agree of these trade agreements, it would seem that many of the LXXXVI---258 •4088 CONGRESSIONAL RECORD-SENATE APRIL 5 foreign countries have outmaneuvered us. It really seems the importation of special foreign commodities. In other that they are better horse traders than we are. words, the whole theme was that the solution of the farm We in this country seem to have entirely lost sight of what problem was to find a way to export burdensome surpluses. is going on abroad, or else .we are too dumb to protect our According to the record, a number of foreign countries have own interests. The extension of ·the reciprocal trade agree made what is called concessions to us. A very careful study ments program merely continues the opportunity for tariff of these seems to indicate that, in fact, they have been no manipulations in the hands of a bureaucracy almost 100 more than gestures. In other words, some of these same percent made up of believers in the theory of free trade and foreign countries have proceeded with agreements to set up who seem to be determined to bring about a complete down all manner of restrictions so that, in fact, there has been little ward tariff revision without any opportunity by Congress to or no increase in volume of our exports as a result of the review their action. concessions we are supposed to have received. In the first trade agreement with Cuba, the principal pur.. It is true, at the same time, that there have been other pose was to restore sugar prices in Cuba in order to restore reasons for failure of the reciprocal-trade agreements to peace in that small neighbor island republic. It is acknowl bring about an increase in our exports. edged by all that chaotic conditions existed. After the World We must recognize the fact that we have passed through War, when European countries returned to,.the production of a series of very trying years, and, as a result, for several sugar to supply their own needs, the world market for Cuban years we did not have large quantities of certain crops to sugar fell out from under them and the Cuban sugar was export. That, however, does not apply to the years 1937, literally dumped into the markets of the United States. 1938, and 1939. · It is my understanding that the price of raw sugar in Cuba In other words, during that period the United States had fell as low as one-half a cent per pound. Undoubtedly there an abundance of products to export, in my opinion largely was need for a modification of the commercial treaty between due to underconsumption here at home; but, at any rate, the United States and Cuba, and all of our people favored we had a surplus. In the meantime, other policies were working out some method of stabilization. But there are adopted in connection with the A. A. A. program, so that many who protest that Cuba was given a decided advantage. instead of exporting more cotton, wheat, tobacco, and other We were told that if the farmers in the United States would items, in most cases we have exported less, except for a short r.ot continue to expand sugar production, we not only would period during which a third policy was adopted-that of sub help to stabilize conditions in Cuba by importing about one sidizing exports of wheat and cotton. third of our sugar requirements from them, but that, in turn, Another illustration is the concessions granted by the by helping to raise sugar prices in Cuba, we would greatly Netherlands with reference to the quota on wheat. But it increase their purchasing power and that would lead to a · seems that while they appeared to increase the quotas of tremendous increase in the volume of our exports to Cuba. wheat from the United States, this was only on condition Much has been said about the amount of our farm products that the amount of wheat desired and the quality desired being bought by Cuba. It seems that the facts do not bear would be available at the time desired and at a competitive out many of the statements that have been made. world-price level. My attention was recently called to a statement prepared In other words, while we appeared to get a better quota, and published by the educaUon committee of the Sugar they reserved the right to buy in other markets if they could Cane League. located in New Orleans. This statement, among buy at better prices. It is true that for a short period re .. other things, shows that about 75 percent of the flour shipped cently we did export larger quantities of wheat to the Nether .. from the United States to Cuba is made from wheat im- · lands, but apparently this was only during the period when ported from Canada for grinding in bond and exported to we paid them to take our wheat. In other words, by pay Cuba. Only during a period of a few months in 1938-39 has ing a subsidy we did succeed in exporting some wheat. wheat grown in the United States been used to produce flour I have gone through much of the evidence submitted before for Cuba in any considerable volume. That was during the the Ways and Means Committee of the House and the Finance period when- the A. A. A. subsidized home-grown wheat to Committee of the Senate, and other reports, and I have yet the extent of 20 or 30 cents a bushel in order to stimulate to find other gains in our agricultural export trade. In other exports of surpluses which were piling up in this country. words, the burdensome surpluses are still with us. You may Previous to that time, and since the subsidies have been call them ever-normal granary or by any other ·name. We withdrawn, we are again supplying CUba with flour made have not yet solved the problem, and conC-essions secured from Canadian wheat. from foreign countries in our reciprocal-trade agreements do It has always been my contention that the wheat shipped not seem to have improved our export situation to any extent. in from Canada and milled in bond and the flour shipped Perhaps some reference should be made to the fact that out was in direct competition with the flour made from wheat with the outbreak of the new European war, the first of last produced here in the United States. September, our position becomes even more critical because The question naturally comes up: Would not the farmer, -European countries have almost completely ceased purchas who produces the so-called surplus crops such as wheat, be ing farm products from the United States because of their much better off if domestic sugar production were allowed desire to reserve all dollar exchange for the purpose of buy to expand and absorb some of the acreage now devoted to ing military materials. Thus, foreign concessions to us are these surplus price-depressing crops? ali temporarily canceled while our concessions to the foreign In my home State and surrounding States, we are told that countries continue in operation. we are producing a surplus of wheat. At the same time we In contrast to the concessions foreign countries have are also producers of sugar. granted to us, a very different situation exists with refer In the Red River Valley of North Dakota and Minnesota, ence to the concessions we have made to foreign countries. we have a soil, a rainfall, and a climate which is ideal for the It was not intended, when the original act was passed, that . production of sugar beets, and it would be quite possible for our tariffs on agricultural products were to be reduced and us to increase production to the extent of thousands of acres that new imports of farm products were to be encouraged. and of thousands of tons of sugar; and we can do that so All of the talk centered around preserving our agricultural efficiently and economically that we could provide the people tariff rates by permitting the importation of other commodi of the United States with this sugar at a reasonable retail ties which could be brought in without injury to American price. agriculture, labor, and industry. The whole argument for this system of reciprocal-trade Almost exactly the opposite situation has developed. The agreements back in 1934, when the original act was passed, State Department--apparently with the approval of the centered around the proposition that the United States had Secretary of Agriculture-has proceeded to lower rates of burdensome agricultural surpluses which, it was said, we duty on practically every manner of agricultural products. could sell in foreign markets if, in turn, we would permit This applies to a long list of grains and seeds, including feed 1940 CONGRESSIONAL RECORD-SENATE 4089 and food products made from grains and seeds. It applies I want to refer a little further to the duty on honey. to all manner of fibers and textiles. It applies to a long list Surely, the United States can produce as fine bees and as of special commodities, including such important ones as fine flowers and blossoms and as fine nectar as can be sugar and tobacco. It applies to cattle and meat and im produced any place in the world. If we wish honey, there is portant dairy products like cheese, together with a long list no reason why we cannot produce literally millions of of other livestock items and livestock products. And it ap pounds so that everyone in the United States can have all plies to fruits and vegetables, and special items like potatoes, of the honey he desires. maple sugar, and sirup and honey. In the United States production of honey averages about I mention some of these items by name because, in the 160,000,000 pounds annually. With 130,000,000 people, this Northwest, we produce tremendous quantities of such special means that we consume something over 1 pound of honey crops as sugar beets, potatoes, and honey in our effort to find per capita during each year. The duty on honey from Cuba profitable crops to take the place of wheat. was 2.4 cents per pound. Even if that duty did help to hold In my part of the country, quite a percentage of the land the price of honey up to a reasonable level, it cannot be is devoted to pasture and forage crops as a basis for livestock claimed by anyone that it resulted in an increase of more industry. Here we produce a surplus of wheat, and are trying than 3 cents on the amount of honey consumed in the desperately to find some way to get rid of burdensome United States by each person during a full year. surpluses. Thus, the possible extreme effect of the tariff might be The livestock industry and the feed crops to support the 3 cents for each consumer; but, on the other hand, it might livestock industry naturally are the subject of great interest. help thousands of farmers to make a living, while bringing We were building up a large business in alfalfa seed, clover to the consumers a very great pleasure of having honey on seed, and so forth, and the State Department comes along and the table. reduces the duty, and all but ruins that new branch of farm But the State Department thought otherwise. They de ing in the Northwest States where the choicest kinds of seeds cided that the duty should be cut 50 percent. I do not know can be grown. whether this saved the consumers a cent on the price of ·we attempt to build up our livestock industry, and along their honey or not, but I do know that it has raised havoc with comes the State Department and reduces the duty on cattle. our farmers who are trying to make a living while, at the It is true that in the first agreement with Canada, rather same time, supplying American consumers. limited quotas were established, although they were far too The result was that the foreign farmers are finding a mar large at that. ket in this country for honey. Then the Canadian agreement was revised, and lower tariffs Mr. President', it is mighty difficult for me to figure out were prescribed at various points, while quotas were either any possible justification for a reduction in rate of duty on eliminated, or larger quotas granted. Step by step, each new farm products, when those products are selling below parity, trade agreement makes some new concessions which leave us unless it is the determined purpose of the State Depart literally dumfounded, and each new effort on our part to ment-and apparently with the approval of the Department improve our own condition is destroyed by some action of the of Agriculture-to lower the rate of tariff protection on all trade-agreements organization. farm products merely because they have failed in their effort Some may think that the potato growers need no pro to solve the farm problem in any other manner. tection, but they do. In other words, merely because they have not been able In the Red River Valley of the North we produce the to find a way to protect the cotton growers in the Southern choicest sort of seed potatoes--certified seed-and had suc States, all other farmers in the United States must be brought ceeded in developing a good market especially in the South down to the level of the cotton sharecroppers or to the level ern States for this certified seed, and also had a good market of the poorly paid fa.rmers of foreign countries. for table potatoes for fall and winter use. But apparently It is a common argument that the amount of imports of the State Department thinks that new seed potatoes should farm products is such a small percentage that it does not be imported each year from foreign countries, and apparently amount to anything. But this argument is one of the most also it feels that new potatoes should be imported from dangerous and one of the most fallacious ever brought into . tropical areas for use during the winter months. an economic picture. In other words, tremendous damage has been done, both to We know that by a very small percentage added to our reg our seed-potato industry, and to our table-potato producers ular rate of interest, it is possible for a farmer, over a period through the trade agreements, especially with Canada and of years, completely to pay for a farm. We know, equally Cuba. well, that if the farmer is receiving only relatively little be What I have said applies equally to the products of the low parity, it will not be long before the farm will be mort dairy farmer and the poultry farmer. There is no reason gaged and he will lose his home. why our people cannot produce as good cheese of different The total quantity of agricultural imports has increased kinds as is produced in other parts of the world. We can through the years that the trade agreements have been in grow the feed; we have the cows to produce the milk and effect, and it must be conceded that imported farm products cream; and we have the labor to produce the cheese; yet in have tended to keep prices down. half a dozen or more agreements the duty on cheese has So the battle goes on, and the State Department drives to been reduced, with the evident effect of keeping the price of bring down the prices by the importation of agricultural milk and cream down below parity; evidently also with the products, so that our farmers are being put out of business, idea that it is better to import our food from other countries while the Department of Agriculture proceeds along abso even though our farmers are driven to bankruptcy. This lutely contrary lines. is ·equally true with reference to poultry products. Surely, The Agriculture Department asks for increased appropria every kind of poultry product can be produced in the United tions for parity payments to offset the loss to our farmers States in sufficient quantities to provide all domestic re through the reciprocal-trade agreements. Our farm exports quirements.. Just why the State Department thinks it have decreased and farm imports have increased. Our losses better to import poultry products is more than I can under on farm exports and imports practically balance the appro stand. priations for parity payments. During the last year, 1939, the average price of poultry It would. not be fair to the people of my State or indeed to and eggs was below the price back in the pre-war days, the farmers of the United States as a whole, if I failed to . 1909-14, yet our poultry farmers were paying 21 percent more make passing reference to the effects of continuing this pro for everything which they purchased. In other words, poul gram. The President and Secretaries Hull and Wallace try farmers were receiving only 77 percent of parity. Many would not be fighting so hard for this trade-agreements pro other illustrations might be cited. gram if they did not intend to continue to use it. 4090 CONGRESSIONAL RECORD-SENATE APRIL 5 Recently, we have recognized Australia in the same way The PRESIDING OFFICER. There is no amendment that previously we had recognized Canada, and now we ex pending. change ministers with that great colony of the British Em Mr. PEPPER. I send to the desk an amendment which I pire. Of course, we all know that the purpose of this is to ask to have stated. begin the preliminary conversations necessary before a trade The PRESIDING OFFICER. The amendment offered by agreement is negotiated with Australia and New Zealand. the Senator from Florida will be stated. Undoubtedly the duty on \ .-ool and mohair will then be The CHIEF CLERK. At the end of the joint resolution it is reduced, as well as the duty on butter and possibly many other proposed to insert the following new section: farm products. We know that temporarily the negotiations SEC.-. No foreign-trade agreement hereafter entered into under with Argentina and Uruguay have been suspended, and why? section 350 of the Tariff Act of 1930, as amended, no modification Evidently pending the passage of this joint resolution. From hereafter made in any such foreign-trade agreement, and, after the expiration of 240 days after the date of enactment of this joint all past experience, it would seem to be the definite purpose resolution, no foreign-trade agreement, and no modification of a to continue the lowering of rates of duty on farm products. foreign-trade agreement, heretofore entered into under such section, What ·possible excuse could otherwise be given for reducing shall provide for, or contain any provision which permits, the im portation into the United States in any one calendar year of any one item after another? foreign agricultural or horticultural commodity which is in sub For example, is the reduced tariff of 15 percent on honey stantial competition with any like or similar domestic commodity, about to bring the consumers of the United· States to a state as determined by the United States Tariff Commission, at a rate of stabilization? of duty lower than that in effect with respect-to such· foreign com modity on June 12, 1934, after the quantity of the foreign com ... Must we call on the farmers of other countries to produce modity previously imported into the United States at such lower honey for our own people? But if the farmer who is produc rate during such calendar year equals 125 percent of the total ing on a commercial scale is driven to bankruptcy, who then is average annual quantity of such foreign commodity imported into the United States during the 5-year period from January.!, 1929, to going to support that farmer? And once the American farmer January 1, 1934. As used in this section, tp.e term "agricultural or is reduced to ·even greater poverty than at the present time horticultural commodity'' includes any article which on the date and supported by the Government, is it not perfectly clear of enactment of this joint resolution is classified as an agricultural that foreign farmers will rapidly advance their prices to such import in the schedule of the Bureau of Foreign and Domestic Commerce, in the Department of Commerce, designated as "Sched an extent · that American consumers will be exploited by ule A, Statistical C!assification of Imports Into ~he United States.'_' foreign producers? The whole thing simply does not make sense. I sincerely Mr. PEPPER. Mr. President, I am .sorry that the teehni- hope that our action will not be based on political' or partisan calities of the amendment require it to -be longer than it reasons. Let us lay aside partisan considerations for a mo- should be to make its intent clearly apparent on its face. All ment and reject this proposal. Incidentally we ·are in the it provides, in substance, is that the executive department, midst of world chaos. which negotiates the treaties, may not allow· an importation There is no emergency which justifies blindly continuing of any agricultural or horticultural commodity in excess of this program-one department .of Government paying the 25 percent more of that commodity than was permitted to farmers to cut down production and another department let- come in on an average annual basis for the 5-year period ting down the bars to foreign farm products to keep down prior to the adoption of the Trade Agreements Act, provided the prices. that that commodity is in competition with any agricultural Mr. President, in plain English that is a crazy system, and or horticultural commodity domestically produced, as found for the life of me I cannot see how anyone can conScientiously by the United States Tariff Commission. and consistently advance a principle of that kind. In other words, the amendment gives to the executive de- Let us suspend operations for a while and give our own partment power to permit a 25-percent increase in the annual farmers at least a little chance to work back to a more quantity of an agricultural or horticultural commodity to be ·prosperous condition. . . imported into this country, even though it-be in competition ·The farmers have been -promi-sed parity prices. But there . with domestic production, but it limits possible competition to is no chance for parity for the farmers as long as the-se trade . an increase of 25 percent. agreements provide for an exchange of a f-ew fav{)red manu- So it seems to me that the amendment lays down a fair factured products for foreign agricultural products at a price principle. It simply provides that if the subject of any nego substantially below parity. tiation is an agricultural or horticultural commodity, our Mr. President, in the 1932 platform· of the Democratic Party Tariff Commission shall determine whether or not that com- ! find this statement in regard to tariff for revenue: modity is in competition with a commodity of like character We advocate a competitive tariff for revenue, with a fact-finding domestically produced. If it is of that character, it is the Tariff Commission free from Executive interference. duty of the negotiator of the trade agreement to limit the quantity of increase ·to 25 percent more than was being an I do not know whether or not all Senators listening to me nually imported, on an average, during the 5-year period got that. Let me read it again. The 1932 platform of the prior to the adoption of the original Trade Agreements Act Democratic Party had this to say about tariff for revenue: in 1934. We advocate a competitive tariff for revenue, with a fact-finding Tariff Commission free from Executive interference. Mr. VANDENBERG. Mr. President, may I ask the Senator a question? Of course, some may say that a platform is only something Mr. PEPPER. I yield. on which to get in and not to be observed or carried out after Mr. VANDENBERG. The 25-percent limitation is applied one is elected. That may be true. However, if my memory in the contract with the country with which the negotiation serves me correctly, the present Chief Executive, who was then is made? a candidate for office, stated that he endorsed that Democratic Mr. PEPPER. That is correct. platform of 1932, 100 percent. Mr. VANDENBERG. What happens under the subsequent Mr. President, we are a long way from having a competi application of the unconditional most-favored-nation policy? tive tariff for revenue, with a fact-finding Tariff Commis 'Suppose the market is flooded 100 percent with imports from sion free from Executive interference. What we have at the other countries than the one with which the negotiation has present time is a tariff-making Chief Executive, without the occurred? interference of the Tariff Commission, without the interfer Mr. PEPPER. I think the question the Senator raises ence of the Senate or the Congress of the United States, and would be a lesser evil than is permissible under the existing without the interference of the Constitution of the United law, because now, in the case of tomatoes, for example, which States. come into this country in competition with tomato produc Mr. President, that is the situation as I see it. tion in my State, the increase has been -56 percent over the Mr. PEPPER. Mr. President, is there any amendment importations in the 5-year period prior to the Trade Agree pending? ments Act in 1934; and my amendment would limit the pos- 1940 CONGRESSIONAL RECORD-SENATE 4091 sible increase from all countries to 25 percent. So whatever tries might obtain under the amendment would be much the incidents might be as affecting our domestic production, larger under the existing law than they would be if the they could not be as great as they could be under existing amendment were adopted. law. Reading further from the report of the Bureau of Agri Mr. VANDENBERG. I concede that the Senator is pro cultural Economics: ceeding in the direction of a limitation; but I am trying to The possibility of increased agricultural imports from trade discover whether or not the limitation finally amounts to agreement countries disrupting domestic farm markets, however, has been carefully guarded against, not only by refusing to reduce anything so long as we proceed under the unconditional United States farm tariffs sufficiently or in such a way as to disturb most-favored-nation policy. domestic markets but also by introducing specific safeguards where Mr. PEPPER. It only limits the .scope of the bargaining reductions were made on the more important so-called "com of our executive department in dealing with foreign coun petitive" agricultural imports. tries on this type of commodity. Under my amendment all Mr. President, if that had been the policy actu~lly consum the incidents of the existing law would apply, but the scope mated, I should not have offered this amendment. But let would be diminished. us look at what has happened, for example, to tomatoes. In Mr. VANDENBERG. However, the objective which the the year 1926-27 Mexico sent into the United States 272 car Senator seeks could be nullified by imports from other coun loads of tomatoes; in 1927-28, 316 carloads; in 1928-29, 335 · tries under the unconditional most-favored-nation policy. carloads; in 1929-30, 592 carloads; in 1930-31, 395 carloads; MJ.·. PEPPER. Mr. President, generally speaking, in the in 1931-32, 158 carloads; in 1932-33, 77 carloads; in 1933-34, cases I have principally in mind, the imports come from a. 13 carloads; in 193-h35, 9 carloads; in 1935-36, 60 carloads; relatively restricted area. For example, tomatoes in com in 1936-37, 137 carloads; in 1937-38, none; and in 1938-39, petition with domestic production come principally from 12 carloads. Cuba. To illustrate the basis of the amendment, I read from Between 1926-27 and 1938-39, Mexico's export of tomatoes an article entitled "Farm Imports Under Trade Agreements," into the New York market diminished from 272 carloads to 12. by R. B. Schwenger, which was published by the Bureau of Mexican tomatoes are subject to a tariff of 3 cents a pound. Agricultural Economics: In the same time, Cuban exports into New York market in Hence, it is natural to expect them to increase not only our farm creased from 610 carloads in 1926-27 to 1,746 carloads in exports (as data presented in the December issue of the Agricultural 1938-39, showing that a constantly increasing quantity of Situation indicate that they have) but to increase our farm imports Cuban tomatoes has been coming into the United States in as well. It is not desirable, however, that they should increase imports of farm products which can be produced effectively in competition with domestic production. this country, and· it is especially undesirable that they should have As I have said, there has been an mcrease of 56 percent a disruptive influence on domestic farm markets. An examina in the quantity of Cuban tomatoes coming into the United tion of available data indicates that the agreements have tended to increase farm imports, but that safeguards included in the texts States in the 5-year period since the trade agreement was of the agreements have prevented any increases which might have adopted as compared to the quantity that came into the disturbed domestic markets. United States in the 5-year period prior to the trade agree That was the intent behind the action of our executive de ment. partment in the negotiation of these agreements. Later- During the same time Florida, in 1926-27, sent into the Mr. WILEY. Mr. President, will the Sen a tor yield for a same market 1,080 cars, and in the year 1938-39, the same question? number, 1,080 cars. We have not had our natural increase. What has been happening? As a report I have here from Mr. PEPPER. Mr. President, I have only 15 minutes, but the Tariff Commission indicates, Cuban exports have been I yield to the Senator. constantly increasing, while Florida exports of this commod Mr. WILEY. Along the line of the questions by the dis ity into that market have stood still or increased relatively tinguished Senator from Michigan [Mr. VANDENBERG], if we little. should enter into the agreement with Cuba of which the I read a moment ago from the Bureau of Agricultural Senator speaks, under the terms of his amendment, imports Economics explanation of the trade agreement, and it said would be limited to 25 percent above a certain mark. that, in the first place, they had not allowed any trade agree Mr. PEPPER. That is correct. ment to be negotiated with respect to an agricultural or horti Mr. WILEY. But under the unconditional most-favored cultural commodity in a case where there is substantial com nation clause, all the other nations of the world entitled to petition in this country, and that where they had allowed it the benefit of the unconditional most-favored-nation clause they had put safeguards around it and made it of no possible could ship in the same quantity. That would inundate the effect. market. I read now from the figures that were given me also by the Mr. PEPPER. Mr. President, I am not expanding the exist Bureau of Agricultural Economics. Tomatoes are given a ing authority. I am contracting it. So, whatever the ills are, tariff reduction, and for the months of December, January, in the cases with respect to which I have had an opportunity and February, instead of there being a tariff of 2.2 cents a to look into the details, they would be diminished to at most pound, it is only 1.8 cents a pound during those 3 months. 25 percent by my amendment. · In the year 1936-37, in the month of December, Florida Mr. ASHURST. Mr. President, will the Senator yield? shipped 233 cars of tomatoes and Cuba shipped 561 cars; in Mr. PEPPER. I yield. January, Florida, 555 cars, and Cuba 615 cars; in February, Mr. ASHURST. It occurs to me that the nations claiming Florida, 1,117 cars, and Cuba, 479 cars. benefits under the unconditional most-favored-nation clause In the year 1937-38, in the month of December, Florida must share the same fate as the other signatory to the treaty. shipments were 214 cars, Cuban shipments, 607 cars; in A favored nation could not obtain any advantage. It would January, Florida shipments, 181 cars, Cuban shipments, 656 share the same fate as the nation with which the treaty was cars; and in February, Florida shipments, 1,079 cars, and negotiated. Cuban shipments, 691 cars. Mr. PEPPER. Of course, the able Senator is correct. It is In 1938-39, in December, Florida shipped 317 cars and unlikely that such an agreement would work out practically Cuba, 462; in January, Florida shipped 763 cars, and Cuba, to our disadvantage. The thought I wish to convey is that 665; in February, Florida, 1,378 cars, and Cuba, 412 cars. under the existing untrammeled authority of the executive Does that look as if they safeguarded the domestic pro department a competition of 56 percent is permitted with duction when we sent out considerably more than Cuba did tomato production in Florida, for example. Under my amend in the same time? In other words, they said, "We are not ment no more than a 25-percent increase from all countries negotiating these agreements .except in cases where there is could be allowed over the average annual importations for no substantial competition." Can it be said that there is no the 5-year period prior to the enactment of the Trade Agree · substantial com:Petition when we sent in considerably more ments Act. Whatever incidental benefits some other coun- than Cuba did? 4092 CONGRESSIONAL RECORD-- SENATE APRIL 5 This was the intent of the law, Senators, as stated by the of the Commission or in otherwise exercising the functions of the Commission. Bureau of Agricultural Economics: (b) It shall be the duty of the Commission to make a full and The possibility of increased agricultural imports from trade complete study and survey of tariff problems, foreign currency, and agreement count ries disrupting domestic farm markets, however, international trade problems in general, with a view to determining has been carefully guarded against, not only by refusing to reduce whether the trade-agreements program of the United States should the tariff but-- be continued, modified, or terminated. The Commission shall re port to the President and to Congress not later than January 3, It proceeds to say- 1941. by imposing adequate safeguards. (c) The Commission shall have power to hold hearings and to sit and act at such places and times, to require by subpena or other Yet they have allowed a competition which has been 55 wise the attendance of such witnesses and the production of such percent greater in the 5-year period since the trade agree books, papers, and documents, to administer such oaths, to take such testimony, to have such printing and binding done, and to ment than in the 5-year period prior to the trade agreement make such expenditures as it deems advisable. Subpenas shall be in respect to tomatoes from Florida. That has had a very issued under the signature of the Chairman of the Commission and injurious effect upon tomato production in the State of shall be served by any person designated by him. The provisions of sections 102 to 104, inclusive, of the Revised Statutes shall apply Florida. Cuba has, as the Bureau of Agricultural Economics in case of any failure of any witness to comply with any subpena, _report further says, a transportation advantage over the or to testify when summoned, under authority of this section. State of Florida. They send in their tomatoes by shipboard, (d) The Commission shall have power to employ and fix the about three or four shiploads at a time. They reach the New compensation of such oftl.cers, experts, and employees as it deems necessary for the performance of its duties, without regard to the York market on Mondays, Wednesdays, and Fridays ordi provisions of other laws applicable to the employment of oftl.cers narily. We quite generally ship by rail~ and, as soon as our and employees of the United States, but the compensation so fixed commodity is fed into that market, it meets the flooded shall not _exceed the compensation fixed under the Classification Act of 1923, as amended, for comparable duties. The Commission situation that has already been caused by the great accumu is authorized to utilize the services, information, facilities, and lation of tomatoes from Cuba. personnel of the departments and agencies in the executive branch I pick out that case because it is illustrative. of the Government. I have been to the State Department about it; I have been (e) The Commission may authorize any one or more persons to conduct any part of such study and investigation on behalf of the to the Bureau of Agriculture about it, but have not secured Commission, and for such purpose any persons so authorized may satisfaction to which I believe the people of Florida are hold such hearings, and· require by subpena or otherwise the at entitled. This amendment is fair to all and I hope wlll be tendance of such witnesses and the production of such books, papers, and documents, administer such oaths, and take such testi adopted. mony, as the Commission may authorize. In any such case sub The PRESIDING OFFICER SEc. 3. Section 22 (a) of the Internal Revenue Code is amended SEc. 208. This title shall not apply with re~t to any officer or by adding at the end thereof a new sentence to read as follows: employee of a State, or any political subdivision thereof, or any "In the case of judges of courts of the United States who took office agency or instrumentality of any one or more of the foregoing, after on or before June 6, 1932, the compensation received as such shall the Secretary of the Treasury has determined and proclaimed that be included in gross income." it is the policy of such State to collect from any individual any tax, SEc. 4. The United St ates hereby consents to the taxation of com interest, additions to tax, or penalties, on account of compensation pensation, received after December 31, 1938, for personal service as received by such individual prior to Ja.nuary 1, 1939, for personal an officer or employee of the United States, any Territory or posses service as an officer or employee of the United States or any agency sion or political subdivision thereof, the District of Columbia, or any or instrumentality thereof. In making such determination the Sec agency or instrumentality of any one or more of the foregoing, by retary of the Treasury shall disregard the taxation of officers and any duly constituted taxing authority having jurisc,iiction to tax employees of any corporate agency or instrumentality which is not such compensation, if such taxation does not discriminate against exempt from Federal income taxation, or which if so exempt is one such officer or employee because of the source of such compensation. (a) a majority of the stock of which is not owned by or on behalf TITLE ll of the United States and (b) the power to appoint or select a majority of the board of directors of which is not exercisable by or SEc. 201. Any amount of income tax (including interest, additions on behalf of the United States. to tax, and additional amounts) for any taxable year beginning SEc. 209. In the case of the Judges of the Supreme Court, and of prior to January 1, 1938, to the extent attributable to compensa the inferior courts of the United States created under article III of tion for personal service as an officer or employee of a State, or any the Constitution, who took office on or before June 6, 1932, the political subdivision thereof, or any agency or instrumentality of compensation received as such shall not be subject to income tax any one or more of the foregoing- under the Revenue Act of 1938 or any prior revenue act. (a) Shall not be assessed, and no proceeding in court for the SEc. 210. For the purposes of this act, the term "officer or em collection thereof shall be begun or prosecuted (unless pursuant to ployee" includes a member of a legislative body and a judge or an assessment made prior to January 1, 1939); officer of a court. · (b) If assessed. after December 31, 1938, the assessment shall be SEc. 211. If either title of this act, or the application thereof to abated, and any amount collected in pursuance of such assessment any person or circumstances, is held invalid, the other title of the shall be credited or refunded in the same manner as in the case act shall not be affected thereby. of an income tax erroneously collected; and Approved, April 12, 1939. (c) Shall, if collected on or before the date of the enactment of this act, be credited or refunded in the same manner as in the case Mr. WILEY. Mr. President, my amendment proposes to of an income tax erroneously collected, in the following cases- insert a new section 205 in the Public Salary Tax Act of ·(1) Where a claim for refund of such amount was filed before January 19, 1939, and was not disallowed on or before the date of 1939. The Industrial Commission of Wisconsin has directed the enactment of this act; my attention to what it believes is a gross injustice now (2) .Where such claim was so filed but has been disallowed and worked on certain State employees by the Public Salary Tax the time for beginning suit with respect thereto has not expired on the date of the enactment of this act; Act of 1939. · (3) Where a suit for the recovery of such amount is pending on Briefly, the present Supreme Court of the United States the date of the enactment of this act; and found no constitutional limitations on the power of the (4) Where a petition to the Board of Tax Appeals has been filed with respect to such amount and the Board's decision has not Federal Government to tax State employees, and vice versa. become final before the date of the enactment of this act. Accordingly, the 1939 Public Salary Tax Act provided that SEc. 202. In the case of any taxable year beginning after Decem the Federal Government would not seek to collect back ber 31, 1937, and before January 1, 1939, compensation for personal taxes from State employees, which it was at liberty to do service as an officer or employee of a State, or any political sub division thereof, or any agency or instrumentality of any one or under the new interpretation. The act made one exception. more of the foregoing, shall not be included in the gross income That exception was the group of State employees whose of any individual under title I of the Revenue Act of 1938 and salaries had been financed in whole or in part out of Fed shall be exempt from taxation under such title, if such individual either- eral grants. This is outlined in section 205 of the Public ( a) Did not include in his return for a taxable year beginning Salary Act. after December 31, 1936, and before January 1, 1938, any amount as This appears to be an unreasonable and arbitrary classi compensation for personal service as an officer or employee of a fication, and may work a serious injustice. This may mean State, or any political subdivision thereof, or any agency or instru mentality of any one or more of the foregoing; or that many State employees will now be called upon to make , (b) Did include any such amount in such return, but is entitled up, in one lump payment, the tax for some years back, and under section 201 of this act to have the tax attributable thereto for a period during which they may have been immune from credited or refunded. taxation under a court interpretation. These State employ · SEc. 203. Any amount of income tax (including interest, addi tions to tax, and additional amounts) collected on, before, or after ees were in the same service classification and the same the date of the enactment of this act for any taxable year beginning salary bracket as other State employees with salary not prior to January 1, 1939, to the extent attributable to compensation financed by Federal grants, and a good m ·any of them were for personal service as an officer or employee of a State, or any political subdivision thereof, or any agency or instrumentality of in service before the Federal grant of funds. any one or more of the foregoing, shall be credited or refunded in Let us briefly consider this matter under two headings: the same manner as in the case of an income tax erroneously First. Number of employees affected. collected, if claim for refund with respect thereto is filed after January 18, 1939, and the Commissioner of Internal Revenue, under Second. Considerations relating to the equities of the situ regulations prescribed by him, with the approval of the Secretary of ation. the Treasury, finds that disallowance of such claim would result in · 1. Number of employees affected: Conservatively, there are the application of the doctrines in the cases of Helvering v. Therrell (303 U. S. 218), Helvering v. Gerhart (304 U. S. 405) , and Graves several hundred State employees in Wisconsin whose interests et al. v. New York ex rel. O'Keefe, decided March 27, 1939, extending are; in all probability, affected by the present Federal legis the classes of officers and employees subject to Federal taxation. lation allowing assessments for past years on their income SEc. 204. Neither section 201 nor section 203 shall apply in any earned in State service. At this time an approximately exact· case where the claim for refund, or the institution of the suit, or the filing of the petition with the Board, was, at the time filed or number cannot be stated. However, an enumeration of the begun, barred by the statute of limitations properly applicable departments affected will show the wide application of the thereto. principle at stake. The employment service and the unem SEc. 205. Compensation shall not be considered as compensation ployment compensation department of the industrial com within the meaning of sections 201, 202, and 203 to the extent that it is paid directly or indirectly by the United States or any agency mission have approximately 600 employees. While, of course, or instrumentality thereof. not all of these fall in salary brackets that would cause them SEc. 206. The -terms used in this act shall have the same meaning to be affected by the present income-tax legislation, never as when used in chapter I of the Internal Revenue Code. SEc. 207. No collection of any tax (including interest, additions theless there is a good proportion of this number who are to tax, and penalties) imposed by any State, Territory, possession, affected. or local taxing authority on the compensation, received before Janu The chairman of the highway commission estimates that ary 1, 1939, for personal service as an officer or employee of the United States or any agency or instrumentality thereof which is there are approximately 200 individuals in the State highway exempt from Fe.deral income taxation and, if a corporate agency or department who may well have to pay back taxes through a instrumentality, is one (a) a majority of the stock of which is owned considerable number of years. Many individuals on the by or on behalf of the United States, or (b) the power to appoint or instructional staff at tne university, in the schools of engi select a majority of the board of directors of which is exercisable by or on behalf of the United States, shall be made after the date o:C neering and of agriculture, are affected. The entire number the enactment of this act. of county agents and their staffs are concerned. The depart- 1940 CONGRESSIONAL RECORD-SENATE 4101 ment of agriculture and markets have some cases involved. employee, nor to the employee engaged in an essential gov The department of public welfare, embodying the relief and ernmental function, as distinguished from one engaged in a assistance agencies, have a very considerable number of nonessential function. The test to be applied is whether the individuals affected. The employees of the department of compensation was paid by the United States. No money vocational education have a stake in the matter. Employees would be paid out of the Treasury as a result of adopting this in the department of public instruction and in the conserva amendment, as it does not authorize any refunds of taxes tion department are affected. already paid. 2. Considerations relating to the equities of the situation: No one can say that this amendment applies only to a In all save a very few cases, such as university instructors Wisconsin baby. We have heard arguments here throughout and county agents, the State employees whose salaries are 2 weeks to the effect that every State .ha.s a child of its own. derived in whole or in part from Federal grants to the State Each Senator is interested in this matter. In my State there have come from the classified civil-service lists. There is are from 500 to 700 public officials who will be penalized. In absolutely no difference in job-qualification standards and States such as New York the number will run up to from 3,000 general nature of work done between employees whose sal to 10,000. If the Government imposes and collects this tax, aries are traceable to Federal grants and employees whose as it threatens to do,· it will reach back 6 years, and take the salaries are not so traceable. State employees, regardless salary that the individual earns this year. of whether or not their income is derived from Federal grants, I have here a letter, which I ask to have printed in the not only are selected with reference to identical job-qualifica RECORD, from a very prominent professor in Wisconsin Uni tions standards and do the same type of work, the civil versity. By his personal efforts, because of his discovery of service classification considered, but there is likewise no dif~ vitamins and their effect, he has given the equivalent of mil ference in the salary brackets; and promotions, pay increases, lions of dollars to the public good. He calls attention to the and so forth, are subject to identical considerations. fact that because the Government has contributed something Illustrative of this point, there are several situations I have toward the salaries of professors in the University, his asso learned of, wherein the employees whose salaries have been ciate professors will have to pay back income taxes to the derived in the past from Federal grants were without knowl Government throughout the years. edge of the fact. It is not at all unusual for employees in I ask that this letter be printed in the RECORD as part of my the State service to be unacquainted with "fiscal arrangements remarks. · existing between the State and the Federal Government. The PRESIDENT pro tempore. Without objection, it is so In a number of instances the State employees affected in ordered. the instant situation were already in State employment and The letter is as follows: performing the functions of their departments before the ad UNIVERSITY OF WISCONSIN, vent of Federal funds into the picture. As an example, the CoLLEGE OF AGRICULTURE, State of Wisconsin had an employment service and an· un Madison, Wis., April 1, 1940. Hon. Senator ALEXANDER WILEY, employment-compensation department before the Wagner United States Senate, Washington, D. C. Peyser funds and funds under title ill of the Social SecuritY DEAR SENATOR WILEY: It has lately been called to my attention Act were made available, respectively, to these two depart that due to a reversal of a previous Supreme Court decision, State ments. The affected employees in these two departments employees like myself will be subject to the payment of a Federal income tax on that part of our salary which for some years has had been selected with reference to personnel classifications been exempt because of its origin from the State treasury. set up before the coming in of Federal funds. Their quali I, of course, can raise no valid objection against the payment of fications and salary classifications in no manner related to taxes upon income because in most instances I am conVinced that income tax is a justifiable tax. But in my own particular case Federal specifications. At the time Federal funds were af and in that of many of my colleagues it so happens that we re forded the State, there was no change in pay or salary clas ceived payment over a long period of years without knowing sification of these individuals. It is quite obvious that if the whether the money for these payments had its origin from State Federal Government now goes back and taxes these em or Federal sources. In some cases the payments were made pri marily from State sources and in other cases primarily from Fed ployees, the fact that the Federal Government came in and eral sources. But of this we W{lre never notified. In consequence furnished money to the State to pay the salaries of these of this if we would now have to make payment of these back taxes employees means that these employees suffered what amounts some of us would be affected very little and others would be af fected to a critical extent. It is this injustice which prompts me to a salary waiver which is now to be made effective by one to write you hoping that you Will do everything you can to secure assessment for all these past years. The employees in those the enactment of a law which will remove the liabiJity for these departments have in very many instances been selected from back taxes. classifications in the civil-service list from which many other Thanking you, I am Cordially yours, State departments draw their personnel, and hence are receiv HARRY STEENBOCK. ing the same rates of pay and are performing the same func tions as are other State employees. Certainly to go back now Mr. WILEY. I also ask to have incorporated in the REc and tax this restricted group of individuals on a retroactive ORD a statement from the Industrial Commission of the State base makes for discrimination and inequality between em of Wisconsin, by its counsel, Stanley Rector. ployees in the State doing the same type of work pursuant to The PRESIDENT pro tempore. Without objection, it is so State civil-service standards. ordered. Therefore, I am offering my amendment to correct this The statement is as follows: situation. Title 2 of the Public Salary Tax Act of 1939 affords INEQUITABLE TREATMENT OF CERTAIN STATE EMPLOYEES IN THE 1939 relief to certain State officers and employees from Federal PUBLIC SALARY TAX ACT The 1939 Public Salary Tax Act abated the liability of State offi income taxes for years prior to 1939. The relief so afforded cers and employees to pay Federal income taxes on their earnings did not include State offcers and employees who were paid for past years, except to the extent that their compensation had directly or indirectly by the United States, because the Treas been paid directly or indirectly by the Federal Government. ury Department argued that they were always subject to the This analysis proposes to show that the failure to extend exemp tion from past liability to the class of State employees indicated tax, and it would have been inequitable to afford them such above is out of accord with what Congress had in mind at the time relief. of the passage of the act, and is premised on an erroneous under Section 205 of the present law prevents relief where the standing of the past history of the problem of Federal taxation of compensation is paid directly or indirectly by the United State employees. It is generally regarded that the Federal Supreme Court in States. My amendment, as modified, repeals the present sec Helvering v. Gerhardt (304 U. S. 405 (1938)) and in Graves v. tion 205 by amending it to read in a different manner. O'Keefe (59 S. Ct. 595 (1939)) has greatly restricted (if it did not, for The effect of my amendment, as modified, is to prevent the all practical purposes, destroy) the constitutional immunities from taxation which had formerly attached to State and Federal em collection of taxes for all taxable years prior to 1939 if the ployees. The Supreme Court in these cases decided that the con compensation was paid directly or indirectly by the United stitutional immunity from taxation that had been previously sup States. It does not apply to the ordinary State officer or posed to exist as to a great number of State and Federal employees 4102 CONGRESSIONAL RECORD-SENATE APRIL 5 had never as a fact existed. As a consequence these employees be ereign. The immunity doctrine was based upon a conception of came apparently liable to pay income taxes on all their past earn sovereignty that permitted no burdens. to be imposed thereon on ings-that is, State employees became liable to pay Federal in~ome the theory that an ·allowance of the power to tax held in it the taxes on all their past earnings and Federal employees became liable power to destroy. · to pay State income taxes on all their past earnings. An obviously In Flint v. Stone Tracy Company (220 U. S. 107, 172 (1911)) intolerable situation would have existed had not . remedial action there was the first limitation on the broad doctrine of Federal and been taken. The Public Salary Tax Act of 1939 proposed to· rectify State employee immunity when certain trustees were held not to the matter by waiving and abating past income-tax liability which be agents of a State government in the sense which exempts them had thus been acquired by State and Federal employees by reason from taxation because of the execution of necessary governmental of the cited Supreme Court decisions. While this remedial legis powers of the State. · lation was being discussed by Congress, representatives of the Treas In South Carolina v. United States (199 U. S. 437 (1905)) the ury Department proposed that past liability be abated as to all State immunity doctrine was restricted by the holding that immunity employees except those who had no legal basis for believing their from taxation related only to governmental functions. The State compensation to be exempt. This was in accord with the Presi in its proprietary capacity had established dispensaries for the dent's message of January 19, 1939, which specified the need of exclusive sale of liquor, and the Court sustained the imposition of protection because of recent Supreme Court decisions for indi a Federal tax on such activity. viduals who "mistakenly and in good faith" had believed their These previous cases occurred prior to the sixteenth amendment compensation to be immune from Federal tax. and could not, of course, have reference to the powers conferred by John P. Wen chel, Chief Counsel, Bureau of Internal Revenue, this amendment to the Federal Constitution. However, Evans v. stated to the House Committee on Ways and Means: Gore (253 U. S. 245 (1920)) held that the purpose of the sixteenth "The President's recomemndations with respect to excusing now amendment was not to broaden the scope of. taxation or bring in from Federal income tax for past years the compensation of those new subject matter for taxes, but was merely to relieve income employees of States and their municipalities who honestly had taxes from the constitutional requirement that direct taxes must good reason to believe their compensation to be immune from tax be apportioned between the States according to their respective can, in my opinion, be adopted satisfactorily without at the same populations. time excusing from tax liability those employees who have had no In Metcalf & Eddy v. Mitchell (269 U. S. 514 (1926)) it was reit legal basis for believing their compensation to l?e exempt. For erated that performance of services in governmental functions was example, even before the Gerhardt decision Stat e employees engaged the test of immunity, and it was held that an independent con in the sale of liquor on behalf of the State knew definitely they tractor performing a contract relating to results was not in such were subject to Federal income tax on their compensation (Ohio v. relation to the State as to have Federal income-tax immunity Helvering (1934), 292 U. S. 360); officers and employees of public conferred upon him. utilities, such as State railways and the like, owned or operated by Ohio v. Helvering (292 U. S. 360 (1934)) applied the doctrine of .a State or municipality, knew their compensation was subject to the South Carolina case to another State monopoly on liquor stores. Federal income tax (Helvering v. -Powers (1934), 293 U. S. 214); In Ne.w York ex rel. Rogers v. Graves (1937) (299 U. S. 401) the and for 13 years it has been known that an independent contractor court, in applying the immunity doctrine, foun-d that New York performing services for, or supplying materials to, a State or a could not constitutionally tax the salaries paid the officers and em political subdivision thereof is subject to Federal income tax (Met ployees of the Pamrm.a Railroad Co. The operation of the Canal calf & Eddy v. Mitchell (1926), 269 U. S. 514) on his compensation was held to be an exercise of the war and commerce powers received therefor." (p. 406}, and without any question as to the distinguishing char No proposed draft was before the congressional committee, and acteristics of an instrumentality of government as compared with only the general content and specifications of proposed legislation employees engaged in the performance of services for such instru were being recommended and considered. The provisions were to mentality, the court immediately concluded that the officers and be later drawn by the Treasury Department. In view of all the employees of the railroad company were exempt from taxation. discussion at the time of hearings on the measure, it can but be In Brush v. Commissioner of Internal Revenue (300 U. S. 352 assumed that Congress intended to exclude from the abating pro (1937)) the court concluded that water was a vital necessity to visions of the law only those State employees who in the past the city of New York and was auxiliary to its public functions, "had no legal basis for believing their compensation to be exempt." with the consequence that officers and employees of the city's It would appear, therefore, that those drafting the legislation water department were immune from Federal income taxation. considered that the class of State employees who could be properly Allen v. Regents of the University System of Georgia (304 U. S. regarded as having had reason to definitely -know that they had 590, 58 S. Ct. 1053) (rehearing denied, 304 U. S. 439, 58 S. Ct. 980} always been subject to Federal income taxes were those State is authority. for the proposition that collecting of admissions for employees whose salaries had been paid directly or indirectly by the football games by State universities is riot an essential Govern Federal Government. ment function and that therefore such activities are not immune In this thought there was fundamental error. It is th~ error from Federal taxation; relating to the class of employees who could be held as always hav Helvering v. Therrell (303 U. S. 218 (1938)) is frequently cited ing known that they were liable for Federal taxes that gives rise as a support for the proposition that. a State employee can claim to the erroneous classification of sectinn 205 .of the 1939 Public no exemption from Federal income taxation if he is not paid by Salary Tax Act which fails to abate the liability of State employees State moneys. However; the court, in holding that a liquidator who have been paid in whole or in part, directly or indirectly, by of State banks was not immune from Federal tax, did so in a the Federal Government. An examination of the state of law then manner that prevents this case from being authority for such a obtaining will make clear that this class!fication made by section · proposition. The ratio decidendi mentions more considerations. 205 is an erroneous one and that it visits liability for past taxes on The taxpayers were not officers of the State in the strict sense. a group of employees who as a class had no good reason whatso The business of liquidating the banks and insurance companies ever to know that they had any legal liability to pay Federal was not a governmental function. The corporations being liqui income taxes. dated were private enterprises and the taxpayers were paid from If the thesis set out immediately preceding can be successfully private assets. It is clear that the first two considerations would maintained, clearly Congress should in all fairness move to correct have in themselves supported the court's decision .. the situation which obviously has and will continue to work gross The above-cited cases allow no contradiction to the assertion that inequities and will affect in an intolerable manner the finances of at the time of the Gerhardt and O'Keefe cases (the implications a very large number of citizens. The following analysis will dis of which formed the subject matter of remedial legislation in the close the essential soundness ·of the thesis. 1939 Public Salary Tax Act) it was State employees engaged in the At the time of the passage of the Public Salary Tax Act there performance of nonessential or proprietary functions of govern .was, as a matter of fact, as pointed out by Mr. Wenchel (see above ment who constituted the class that had reason to know that they quotation from his testimony) a class of State employees who had always had been subject to Federal income tax in the light of full reason to know that they were subject to the Federal income established law existing before the Gerhardt and O'Keefe decisions. tax. The cases cited by Mr. Wenchel are illustrative of the nature It is significant that not a single case considered the derivation and limits of this classification. Nothing could be clearer than of funds out of which compensation of the employees were paid that the group who had reason to know of their liability under as having a controlling significance. As pointed out, the Therrell Federal income-tax legislation was· made up of State employees · case, which is frequently cited in support of the "derivation of whose income had been derived from services in the nonessential funds" theory, found that the services performed were nonessential functions of State government or in the proprfetary or group as to Government, and hence the case is entirely foursquare with the pects of such governmental activity. · "essential versus nonessential governmental functions" basis of A converse analysis will, with equal clearness, show that the classification. · controlling cases and legislation defining the nature and limits of A brief reference to the history of income-tax legislation will the class of employees who had full reason to know of their Federal further disclose the error in denominating State employees who tax liability were in no manner related to the item of the Federal would be paid directly or indirectly from Federal funds as those payment of salaries. A chronology and summary of the decisions "who had no legal basis for believing their compensation to be of the Supreme Court of the United States will clearly demon exempt." · strate the basis of the classification of federally taxable State em The Revenue Act of 1913 imposed the first income tax levied pur ployees and those State employees immune from Federal taxes that suant to the authority of the sixteenth amendment. This act existed prior to the Supreme Court's decisions in the Gerhardt and contained an express exemption relating to all State officers and O'Keefe cases. · employees except those having their compensation paid by the Fed In Dobbtns v. Commissioners of Erie County (16 Peters 435 eral Government . .The Revenue Acts of 1916 and 1917 continued (1842)) and in Collector v. Day (11 Wall. 113 (1870)) the Court these exemptions. However, after considerable debate on consti laid down the principles of the respective immunity of Federal tutional considerations, the 1912 Revenue Act as passed deleted any and State employees from the taxing jurisdiction of the other sov- reference to State employees. No mention was made one way or the 1940 CONGRESSIONAL RECORD-SENATE 4103 other concerning· them-this regardless of how their salaries hap theory of nonimmunity of State salaries because of Federal fund pened to be derived. There was, however, an express inclusion of derivation could in no manner be considered as the accepted criteria Federal officers and employees. Each subsequent revenue act up to for distinguishing State employees who were immune from Federal the time of the 1939 Public Salary Tax Act likewise failed to make taxation from those who were not so immune. any specific mention of State employees as being taxable or non The case of Hanson v. Landy (24 Fed. Supp. 535) apparently is taxable. Presumably, because of the elimination of the specific ex not only the first case but the only case that tests the contention emption language in the 1918 Revenue Act, the Secretary of the of the Treasury Department in its 1934 and 1936 regulations that Treasury requested and received from the Attorney General of the State employees paid with Federal funds are subject to Federal United States an opinion to the effect that even though the act income tax. The employee was a professor in the agricultural did not expressly include or exclude compensation paid State and college of the St1;1te university of Minnesota and was paid from municipal employees, it could not be assumed that there was an Smith-Lever funds. The court held that there was no immunity intent to tax salaries of State employees, because "there cannot be from taxation, since the fact that the State did not pay the salary any doubt but that such wages and salaries are beyond the taxing could allow of no conclusion that a burden was imposed on the powers of Congress" (opinions of Attorney General Palmer, May 6, State government by the Federal tax. It is quite clear that the 1919). ratio decedendi of the case does not make taxability turn upon the To those pointing out that the early Revenue Acts of 1913, 1916, derivation of funds from Federal sources merely, but rather on the and 1917 contained specific exemptions relating to State employees, fact that the salaries were derived from sources other than the it is clear that subsequent Supreme Court decisions above-cited State. The case was decided August 3, 1938 (less than a year recognize that in general the limitation was of a constitutional before the enactment of the Public Salary Tax Act), which would rather than of a statutory nature, since, as was later developed by hardly support the proposition that State employees paid out of the cases abov~-discussed, Congress had no power to tax State em Federal funds had always known that they were subject to Federal ployees except those performing nonessential functions of Govern income tax. ment. Therefore, the effect of the exemption language relating to The district court had before it the decision in the Helvering case State employees in the 1913, 1916, and 1917 acts was to exclude and its interpretation of the significance of this case can be ques from taxation only these "nonessential employees," except those of tioned. The court stated that "according to more recent decisions this group that were paid from Federal funds. Stated another way, immunity may be claimed from taxes by persons employed by the the early statutory language, as was finally made apparent by court State-engaged in the performance of an essential governmental decisions, achieved an exemption of State employees who were in function when it clearly appears that the burden on the State nonessential governmental services and who were not paid from would be actual and substantial and would not be merely conjec Federal funds. When this language was dropped out of the series tural." It is submitted that neither the Helvering case, nor any of Revenue Acts beginning in 1918, the situation was entirely con case prior thereto, concerned itself with whether or not a burden trolled by constitutional considerations. Thus, had the early stat was imposed, after it had determined that the service performed utory exemption language remained, it is an accurate statement, in related to an essential governmental function. It is of importance the light of subsequent Supreme Court decisions, to say that an to note in passing that the district court found that the Treasury employee engaged in the performance of services in an essentially Department had been in error in excluding the Smith-Lever group governmental" function would have been exempt, regardless of the of State employees in their previous regulations. Certainly, if the fact that he might have been deriving his salary from funds fur Treasury Department had been in error all these years, how could it nished the State and Federal Governments. be said that this group of State employees or any other State em A reference to the series of "regulations" issued by the Treasury ployees paid out of Federal funds had had full reason to know which relate to corresponding revenue acts will further evidence their legal responsibility to pay Federal taxes in the past? that there is little, if anything, to charge employees paid directly Whatever might have been the importance of the district court or indirectly by the Federal Government with a sure knowledge of decision in the Hanson case was considerably dissipated by a. their Federal tax liability. Regulations 33 and Revised Regulations decision of the circuit court of the seventh district in Helvering v. 33, relating to the 1913 and the 1916-17 Revenue Acts, respectively, Stilwell (101 Fed. (2d) 588). It was the Government's contention contain articles defining and interpreting the corresponding express that the income of a master in a chancery court in the State of statutory exclusion of State employees. When the express stat Illinois who was compensated by fees paid by litigants was subject utory exemption of State employees was discontinued in 1918, the to tax because, since his compensation was not paid by the State, regulations for that year and subsequent revenue acts down to there could be no burden in imposing the tax. That this ques 1926 point out that all State officers and employees were immune. tion of derivation of funds as a criterion of tax immunity was an Very far from restricting immunity to those not paid by Federal original one was conceded by the Government, and the court point funds, the regulations relating to the Revenue Act of 1916 and each ing out that "the precise question here presented, that is, where the Revenue Act thereafter until 1934 mentioned employees who were taxpayer, though he be an officer of the State government, receives paid out of Smith-Lever funds (that is, Federal funds) as examples his compensation from sources other than the State, or the political of State employees who were not liable to pay Federal income taxes. subdivision of which he is an officer, is immune from Federal taxa The 1926 regulations reflect the significance attached by the Treas tion, ;has not been decided by the Supreme Court is conceded. We ury to the decision in the Metcalf and Eddy case, and articles of the are urged, however, to adopt what is claimed to be the more modern regulations distinguished for the first time State employees engaged theory that immunity fro~ Federal tax is allowable only where in nonessential governmental functions from those engaged in there is a resultant burden upon the State, and where as here essential governmental functions. Specific mention of this "essen compensation of the taxpayer is payable from a source other than tial" and "nonessential" classification exists until 1938, at which the State itself, there can be no such burden upon the State and time the regulations proceed to beg the question by specifying that consequently no immunity." It was this more modern doctrine referred to in the above quota State officers and employees were subject to tax on all compensa tion that was the basis of the Government's endeavor to declare·in tion received by them "except that which was immune from·taxa the 1934 and 1936 regulations that State employees paid directly or tion under the Constitution of the United States." indirectly by Federal funds were taxable and the basis of the Gov In 1934 and 1936, though, as before stated, the regulations base ernment's argument which prevailed in the Hanson case. The tax immunity on the then accepted constitutional principle of court denied the claims of the Government and held that the test essential against nonessential governmental function. Reference is of immunity had been and continued to be that of whether an again made in the regulations--and seemingly without any basis employee is engaged in performing an essential or nonessential in the statutes or court decisions-that compen.sation of a State function of the Government. The easily recognizable significance employee is not immune if derived directly or indirectly from of this case in the present matter is greatly enhanced by the fact Federal money. There is no attempt made to reconcile this seem that the conrt had before it the Gerhardt case. The opinion of this ingly irreconcilable classification with the essential against non court was that the Gerhardt case did not destroy the old doctrine of essential" classification. Certainly State employees could not be immunity or change the basis thereof, but rather restricted its charged with any clear understanding of a definite legal liability application. It is certainly pertinent to this analysis to point on their part by this reference to Federal funds in the 1934 and out that the Supreme Court refused to review the circuit court's 1936 regulations. decision (Helvering v. Stilwell (307 U. S. 644)). It. would seem, After specifying that federally derived State salaries were taxable therefore, that the Treasury Department's theory as to salary in the 1934 and 1936 regulations, as before stated, the regulations derivation being the test of immunity has been discredited by the proceeded to beg the whole question in 1938 by pointing out that highest court to which it has been brought. The decision was all State salaries were subject to tax except those that were consti handed down on March 9, 1939, immediately preceding the approval tutionally immune. Apparently the Treasury Department at this of the Public Salary Tax Act on April 20. In the light of this de point gave up trying to fairly and correctly interpret the existing cision alone and without reference to the other weighty con?idera -state of law and put taxpayers on their own in trying to ascertain tions herein considered, it can be fairly stated that at the time of what the state of law might be. the passage of the act, State employees could not be justly charged It is not necessary for the purpose of this analysis to examine with the knowledge that their income was subject to tax because as to the validity of the Treasury Department's contention set it was derived from sources other than the State and in such a forward in the regulations of 1934 and 1936 to the effect that manner that a Federal tax did not place a burden on the State. State employees were liable to the extent that they were paid Apparently there is reliance on section 1211 of the Revenue Act directly or indirectly by the Federal Government. It suffices to of 1926 as evidence that State employees paid directly or indirectly show here that the state of existing law during this period of time from Federal funds have always been considered subject to Federal certainly would not warrant the conclusion that this class had income taxation. (Senator WILEY, of Wisconsin, for instance, was always been considered liable to pay Federal income tax and conse so informed by representatives of the Internal Revenue Bureau.) quently "had no legal basis for believing their income to be Section 1211 of the 1926 Revenue Act abated all past liability exempt." As the preceding analysis of controlling case law, legis with respect to Federal income taxes imposed "upon any indi lation, and Treasury Department regulations demonstrates, the vidual in respect of amounts received by him as compensation for LXXXVI--259 4104· CONGRESSIONAL RECORD-SENATE APRIL 5 personal services as an officer or an employee of any State • another case the contention was expressly disallowed by the highest (except to the extent that such compensation is paid by the United court which has ever entertained the issue. States Government directly or indirectly)." The proper appreciation of section. 1211 of the 1926 Revenue Act Reference to the legislative history of the section shows that disallows it being considered as evidence that all State employees congressional intent was in no manner predicated on any idea that paid from Federal funds have always been considered as liable to State employees receiving Federal fun ds had been, previous to the pay Federal taxes. The section did not attempt to create liability; enactment of section 1211, any more subject to F-ederal income it was an abating provision intended to relieve liability of an unde taxat ion than any other class. fined class of employees who might have been affected by a court Section 1211 was the congressional answer to the implications decision at that time. As shown by its subsequent regulations, the of the Metcalf and Eddy decision in 1926. Senators Butler and Treasury Department did not itself consider that all State employees Howell pointed out the grossly inequitable situation resulting from paid out of Federal funds were affected by the section. In any event, Treasury Department action with reference to the Supreme Court the Supreme Court decisions, both prior and subsequent to the decision. They asserted that State employees who had had no rea enactment of this section, have pointed out that the matter of tax son for believing that they were subject to Federal income tax ation of State employees is a constitutional question. The enact were presently being apprised of their liability on their past earn ment of section 1211 was not only not premised on congressional ings. (It is to be recalled that the Treasury regulations commenc thought that all State employees paid out of Federal funds were ing with the Revenue Act of 1918, which deleted all reference to subject to Federal tax but Congress could not have, had it desired State employees, specified that all State officers and employees to, proposed such a liability in the light of the constitutional doc were immune-this without reference to any qualifications.) t rine of immunity as then enunciated by the Supreme Court. It is Section 1211 represented amendments by Senators SHIPSTEAD and quite clear that, at the time of the enactment of the 1939 Public Butler to correct the situation. (See CONGRESSIONAL RECORD, VOl. Salary Tax Act, State employees paid directly or indirectly by Federal 67, pt. IV, pp. 3853-3855, incl.) Section 1211 constituted abat funds had no reason whatsoever to know that as a group they had ing legislation and did not, as suggested, declare as to the Federal been for the past period of years subject to the taxing jurisdiction tax liability of any group, but rather relieved through abatement of the Federal Government. · such liability as might obtain with respect to State emp!oyees gen STANLEY REcToR, erally, except a specified number of the group. Th-e failure to re Caunsel tor Industrial Commission. lieve such liability as existed with reference to this group clearly is to be distinguished from imposing liability with respect to the Mr. HARRISON. Mr. President, I hope the Senator from group. Reference to the remarks of the sponsors and active sup Wisconsin will not offer this amendment to this particular porters of the measure will demonstrate that they had no well joint resolution. I assure him that at the first opportunity defined ideas as to what State employees might or might not be subject to Federal taxation by reason of the Metcalf and Eddy de which the Committee on Finance has, when a revenue bill or cision but were seeking only to take preventive action. There is a tariff bill comes over from the House of Representatives no indication as to why possible liability was continued with re and I expect one to come over here pretty soon-this matter spect to State employees paid out of Federal funds. The possible will be considered. I say this so that no one will get the explanation is that section 1211, as was the 1939 Public Salary Tax Act, was drafted by the Treasury Department and premised then wrong impression and think that a major tax bill is coming (as now) upon erroneous conceptions. One would have to fully over. It is expected that a tariff bill of some kind will come understand the conception of the Metcalf and Eddy decision that here before long, and we will then take up and consider the existed in the minds of the drafters of section 1211 and know pre cisely the status, functions, and relations to State and local gov- matter referred to by the Senator. I hope the amendment . ernment of those who at that time derived their pay directly or will not be adopted as a part of this joint resolution, which indirectly from F-ederal funds and who were deemed to have been cfeals with an entirely different subject. affected by the Metcalf and Eddy decision, in order to properly Mr. WILEY. I appreciate the remarks of the distinguished appreciate the situation. It is clear that there was no thought at the time that all governmental workers paid directly or indirectly Senator. I should like to ask him a question. Does he ap out of Federal funds were, by reason of the enactment of section prove the principle of this amendment? 1211, bound to pay the Federal tax. Subsequent to the enactment Mr. HARRISON. We will get a full report regarding it of section 1211 the Treasury continued to treat employees pain out from the Treasury Department and from the experts of the of Smith-Lever funds as a class representative of those immune from Federal income taxation. · · Joint Committee on Internal Revenue Taxation. From the The treatment afforded State employees paid out of Smith-Lever reading of the amendment at the desk there seems to be funds by Treasury regulations not only constitutes proof that the something in it. I do not refer to the first draft the Senator Treasury Department has itself never considered all Federally paid presented, but we will consider the second draft of the amend State employees as subject to Federal income taxation but it is likewise illustrative of the very grave inequities that will be prac ment which the Senator has offered. The experts and the ticed by the failure to abate liability of all State employees and Treasury Department will go over it, and I assure the Senator this without the exception presently made in the 1939 Public that we will give it every consideration. That is all I can Salary Tax Act. promise. The inequities in the position of the Treasury Department are patent. After they had been treated as specific illustrations of an Mr. Wll£Y. I take it that the remarks of the distin immune class for the periad·of years indicated, the recent Treasury guished Senator from Mississippi would apply whether or not Dilpartment release in interpretation of the 1939 salary act en this amendment were defeated. I have promised my con titled "Taxability of Compensation Received by Federal Officers and Employees and Officers and Employees of th-e State (It. mimeo. stituents back home that I would attempt to have the amend col. No. 4916---R. A. No. 978)" expressly states that the employees ment made a rider upon this joint resolution. Therefore I who have received Smith-Lever funds are not entitled to abating cannot agree to withdraw the amendment; but, if it has merit, action of the Public Salary Tax Act but are consequently liable for we at least have had publicity for it, and I ask every Senator all back taxes--this beeause of their Federally derived funds. whose constituents are affected to give it consideration. CONCLUSION The PRESIDENT pro tempore. The question is on agree The Supreme Court decisions in the Gerhardt and O'Keefe cases substantially altered the doctrine of constitutional immunity from ing to the amendment offered by the Senator from Wisconsin. taxation of the salaries of State and Federal employees. In the 1939 Mr. HARRISON. Mr. President, I ask for a division on the Public Salary Tax Act, Congress intended to relieve all State em amendment. ployees of liability to pay Federal income taxes that might accrue by reason of these decisions except in those instances where the Mr. WILEY and Mr. McNARY called for the yea-s and nays. State employees "had no legal reason to believe that their compen The yeas and nays were not ordered. sation had ever been exempt from taxation." The only class of State Mr. McNARY. I ask for a division. employees who, through the previous years,. could have been charged with the knowledge of liability to pay Federal income taxes were On a division the ayes were 19, the noes were 51, so the State employees engaged in what the courts from time to time had amendment was rejected. held to be nonessential governmental functions. State employees The PRESIDENT pro tempore. If there be no further performing essential governmental functions had no reason whatso ever to believe that constitutional immunity did not attach to their amendment, the question is on the third reading of the joint earnings merely because their compensation had been paid directly resolution. or indirectly out of Federal funds. For many years Federal tax regu The joint resolution was ordered to a third reading and lations expressly exempted from Federal income taxes groups of read the third time. State employees who were paid out of Federal funds. Not until 1934 clld the Treasury regulations consider that there was no immunity The PRESIDENT pro tempore. The question now is, Shall from taxation if the funds were paid directly or indirectly by the the joint resolution pass? Federal Government. The contention that the source of salary derivation was of primary importance in considering whether there Mr. ASHURST. I ask for the yeas and nays. was a burden on the State and consequently whethE)r the salary was Mr. McNARY. I suggest the absence of a quorum. taxable was adopt~d by a court for the first time in 1938, and in The PRESIDING OFFICER. The clerk will call the roll. 1940 CONGRESSIONAL RECORD-SENATE 4105 The legislative clerk called the roll, and the following Sena Mr. HILL. On this vote I have a pair with the Senator from tors answered to their names: Florida [Mr. ANDREWS]. If the Senator from Florida were Adams Davis Johnson, Calif. Radcliffe present, he would vote "nay.'' If I were permitted to vote, I Ashurst Donahey Johnson, Colo. Reed should vote "yea." Austin Ellender King Reynolds Bailey Frazier Lee Schwartz Mr. JOHNSON of Colorado. The senior Senator from Mon Bankhead George Lodge Schwellenbach tana [Mr. WHEELER] is unavoidably detained. If he were Barkley Gerry Lundeen Sheppard present, he would vote "nay.'' Bilbo Gibson McCarran Shipstead Bone Gillette McKellar Smith Mr. SHIPSTEAD (after having voted in the negative). I Bridges Green McNary Stewart have a pair with the senior Senator from Virginia [Mr. GLASS]. Brown Guffey Maloney Taft Bulow Gurney Mead Thomas, Idaho I understand that if present he would vote as I have voted, so Byrd Hale Miller Thomas, Okla. I allow my vote to stand. Byrnes Harrison Minton Tobey Mr. CLARK of Missouri. My colleague the junior Senator capper Hatch Murray Townsend Caraway Hayden Neely Tydings from Missouri [Mr. TRUMAN] is unavoidably detained on Chandler Herring Norris Vandenberg official business. If he were present, he would vote "yea." Clark, Idaho Hill O'Mahoney Van Nuys Clark, Mo. Holman Overton Wagner The result was announced-yeas 42, nays 37, as follows: Connally Holt Pepper Walsh YEAS-42 Danaher Hughes Pittman Wiley Bailey Donahey Lee Schwellenbach The PRESIDENT pro tempore. Eighty Senators having Bankhead Ellender McKellar Sheppard Barkley George Mead Smith answered to their names, a quorum is present. The ques Bilbo Gillette Miller Stewart tion is, Shall the joint resolution pass? On that question Brown Green Minton Thomas, Okla. Byrd Guffey Neely Tydings the yeas and nays have been demanded. Byrnes Harrison Norris VanNuys The yeas and nays were ordered. Caraway Hatch Overton Wagner The PRESIDENT pro tempore. The Clerk will call the Chandler Hayden Radcliffe Walsh Clark, Mo. Herring ReynoldS roll. · Connally Hughes Schwartz The Chief Clerk proceeded to call the roll. NAY8-37 · Mr. BRIDGES (when his name was called). I have a gen Adams Frazier Lodge Shipstead eral pair with the Senator from Utah [Mr. THOMAS] which I Ashurst Gerry Lundeen Taft transfer to the Senator from Maine [Mr. WHITE]. If the Austin Gibson McCarran Thomas, Idaho Bone · Gurney McNary Tobey Senator from Maine were present, he would vote "nay.'' If Bridges Hale Maloney Townsend the Senator from Utah were present, he would vote "yea.'' Bulow Holman Murray Vandenberg Capper Holt O'Mahoney Wiley I vote "nay.'' Clark, Idaho Johnson, Calif. Pepper Mr. BYRD
4062 Congressional Record-Senate Senate
