Secretary HULL. I think that if our country, with our immense portion of natural resources and world commerce, should turn back to the old practices and methods based on the narrowest considerations of nationalism, other nations would inevitably turn away in utter despair of having serious and important cooperation with us in any way following the war.

Mr. COOPER. As indicated by your statement here, you think it is important for us to assume a proper degree of leadership among the nations of the world in trying to point out what will be a safe course to pursue with respect to international trade and relations?

Secretary HULL. I think it is of the greatest importance and the greatest urgency.

Mr. COOPER. In your opinion, the enactment of this pending resolution extending the trade-agreements program would make an outstanding contribution to the future peace of the world?

Secretary HULL. Unquestionably.

Mr. COOPER. That is all.

The CHAIRMAN. Mr. Secretary, may I state my personal appreciation of your appearance and the fine statement that you have made with respect to this House joint resolution?

In my opinion, there is no man in America, and I doubt if there is any in the world, who has made the profound study and has such a complete grasp of international conditions, international situations, and the steps necessary to promote peace and economic welfare of the world as yourself.

Now, as I understand you, it is your view, your definite view, that it is much better to take preventive measures with respect to dislocations of economic world affairs and economic distress before it arrives rather than corrective measures after economic distress appears, or does arrive.

Secretary HULL. That is what happened before, except that it was too late for us to take those measures, those preventive measures. The nations were all preoccupied more or less with domestic affairs. We were all then going along discussing mainly those problems— and when I say "we" I do not mean myself individually, because it was my function to conduct foreign affairs so far as the State Department's portion of that work was concerned-until it was too late to awaken and educate and arouse the public to the dangers involved in sufficient time to prepare against them. That is what inevitably happens if each nation assumes a course of aloofness toward all others as we did, all of us, during the past 20 years.

The CHAIRMAN. You have dwelt upon and emphasized quite extensively the conditions that would obtain, in your judgment, after the close of the present world war.

In your opinion, would the failure to adopt this, or some similar measure, have any serious effect on the prosecution of the war at this time if it were known to the world that we had just backed down and were going to take no further steps to maintain international peace and stability and commercial relations with other nations? Do you feel with any degree of alarm the effect that it might have on the prosecution of the war?

Secretary HULL. The psychological effects very naturally would be bad just as they are bad here at home when somebody puts out

a report that we have about won the war. Nearly everybody unconsciously begins to let down, and when word goes out to the other nations struggling with us to defeat the Axis powers that we probably will not have any serious plan or purpose for increased international cooperation after the war, or even if word goes out that it is doubtful whether we will be disposed to function with them in any way after the war, I think that all of us could judge as to the depressing effect that would have upon the peoples of all the United Nations at this stage of the war. Especially is that true when the chief fighting is still ahead.

Mr. WOODRUFF. Mr. Secretary, as you well know, I have been greatly interested in this program. I have looked upon it with no little apprehension from time to time. You and other members of your Department have appeared before the committee on several occasions. One of the questions I pursued with some tenacity the last time we had hearings on the proposal to extend the Trade Agreements Act was how the provision which you mentioned in your formal statementand I refer to the suspension of benefits provided under the act-how they had worked out, and to what extent they had prevented discrimination against our commerce.

There is this provision in the act, as you know, and which you have referred to, and I will read briefly from your statement:

That while the proclaimed duties would be applicable to imports from all countries, their application could be suspended in the case of countries which discriminate against American goods.

At the last hearing it appeared that only the countries that had been affected by the suspension provided for were Germany and Australia. I then tried to learn from the representatives of your Department how many nations there were in the world that received benefits under all of the trade agreements entered into that were at that time not discriminating against imports of our goods. I was very much surprised and somewhat alarmed when it seemed exceedingly difficult for any one of the witnesses to give me that information. As a matter of fact they named no such nation.

Since that time, I assume, Mr. Secretary, there has been a greater determination on the part of the administration to force, whenever it was necessary, the abandonment of the policy of discriminating against the imports of our goods. I wish you would tell the committee what has been done along that line.

Secretary HULL. I have Dr. Sayre and others who are in intimate touch with these details who would be glad to go into all the details with you.

Mr. WOODRUFF. Mr. Secretary, would you permit an interruption? I do it to save your voice, which is giving you some difficulty. Would you prefer that I take that matter up with the other representatives of your Department?

Secretary HULL. I may make one general remark, and then if you desire to go into detail they will have available any and all data that we have.

I may say that there was no other course of dealing with trade between nations, unless we were going to pursue the old, narrow, utterly disastrous method of bilateral trading, under which any nation would give us a favor with respect to an item of a certain percent,

and tomorrow it would give another nation about twice that much, and the next day it would give some other nation a still different percent of favor, if you want to call it that; in other words, have nothing but chaos. That was a principal contribution to the economic chaos that existed in all international affairs and found terrific reaction back in the domestic affairs of most countries, including our own.

We took this as the only alternative. As you know, the unconditional policy was adopted by Mr. Hughes, a predecessor of mine in the State Department, and on his recommendation, approved by the then President Harding. That was in 1923. There have been a great number of agreements and other arrangements between governments to which that has applied. We have found, according to the best estimate and best approximation, that in the operation of the favorednation policy by us we have received benefits ranging perhaps from seven to eight times as much as we have generalized in turn to other countries. I think that you will find all the authorities who go into this elaborately will say that in general that has been approximately the result.

Now, I would like these gentlemen to give you all the figures and all the data, if you do not mind.

'Mr. WOODRUFF. I suggested a moment ago that I would be glad to take those matters up with the representatives of your Department. There are two or three other things that I would like to discuss with you.

In the first paragraph on page 3 you stated:

The trade-agreements program is not only a thoroughly tested instrument, but also a flexible one. Plainly, after the war, all manner of conditions will need to be taken into account, arising out of new forms of trade, changed values of currency, and shifting currents of commerce. The flexibility of operation which the Trade Agreements Act makes possible will enable us to adjust our commercial policy to the actual conditions of our post-war economic situation in all its branches.

I am sure that statement is an accurate one. I think there are going to be many situations arise that we cannot foresee. I am wondering whether by any chance if this act was not extended, it would put the State Department in a better position to meet the then existing conditions than they could possibly be if their hands were tied by agreements already in existence?

Secretary HULL. I wish that you could know how many instances during this war our trade agreements with other countries have protected our trade from unwarranted war regulations and other arbitrary acts and methods of commerce practiced by other countries. At the end of the war we will be able to be ahead of other countries with a practicable, feasible, and flexible agency with 9 years of gradual development. That can be used all the more expeditiously by us and we would hope as rapidly as possible by other countries in avoiding all of the monetary and credit and general economic chaos that happened after the other war. We will be all the better prepared to grapple with that.

Mr. WOODRUFF. Mr. Secretary, I judge from what you say that you would like this act extended for at least a short period after the war to give you an opportunity, and others in your Department, to learn just what conditions would be at that time.

Secretary HULL. I have always been very frank. We started on a policy of gradually developing what we hoped would be a generally

accepted, nonpartisan economic policy for this Government and for other governments interested in international trade. We have pursued that as a fixed policy from which we have not deviated, a policy conducted by the Congress and the executive branch in the sense that it has been renewed at the end of every 3 years under the same identical terms and conditions for whatever length of time the judgment of the Congress and the Executive may suggest.

Mr. WOODRUFF. I know, but as a matter of fact, the changed conditions you speak of will apply to those nations we have agreements with as well as other nations, and it may be very desirable to change the provisions of the agreements now in existence. Conditions at that time may seem to make that desirable.

Secretary HULL. The general principle that will have to be considered with regard to these chaotic economic conditions, such as occurred after the other war and such as there will be a tendency toward at the end of this war, will be whether we follow the same narrow economic policy that we did before, which was so utterly destructive to the extent that an economic policy can be destructive; or whether we are going to decide that there must be an increase in trade among nations, and broaden our policy. That goes to the whole matter, I think, which you are bringing up. We must make up our minds as to which of the two courses we shall pursue. They go in precisely opposite directions.

Mr. WOODRUFF. Mr. Secretary, in your statement you called another thing to mind that I think I would like to discuss with you. Everyone realizes that since we have been in this war the cost of labor in this country and everything going into the manufacture of products, the cost of farm labor and the consequent additional cost of farm production, has been such that there will be a greater spread between the cost of producing things in this country after the war compared with the conditions existing in other countries. I mean by that that unless we do something to meet those changed conditions and those changed costs, we can hardly expect to retain a substantial interest in our own markets unless conditions very radically change all over the world. Secretary HULL. I am going to make this comment on what you say, and then offer a little comment in general, if I may.

A very big businessman was in my office the other day. Incidentally, may I say that it has been immensely gratifying to find the number of people in all walks of life, such as manufacturing, industry generally, agriculture, and labor, who are taking a broad view of this situation and are not dwelling on the minutiae of it. This businessman said that we would have imports over here that will swamp us when this war ends, and conveyed the same idea that you seem to express.

Well, I said that I just happened to remember that for the first 4 years following 1918 we exported $9,700,000,000 more of goods and commodities than we imported, and our labor was given the chance to produce that amount. So I do not know just how apprehensive we should become about those conditions to the neglect of this bigger and broader economic policy which will take care of those and other conditions.

Mr. WOODRUFF. Mr. Secretary, may I say in response to that that our exports for 3 or 4 years following the other war were caused in a very large degree by the fact that it took foreign nations, the war

ridden nations in Europe and the balance of the world, practically 3 or 4 years to get back to their peak production. During the interim they called upon us for the things they had to have. I believe that same thing is going to happen when this war is over. We will have to continue to supply the nations of the world with the products that they themselves cannot produce. I realize that. I realize that so far as American manufacturing and production in this country are concerned, we will not meet much competition from abroad for a short period and that during this period this policy, if continued, would not greatly injure any part of that manufacturing structure or production activity. I find now that in some recent years, we have not only been trying to maintain our market for our goods in foreign countries but we also at the same time have been building branch factories in practically all the countries of the world by which to manufacture the very things that we previously had manufactured here and shipped to those countries. I do not know how long we are going to be able to maintain our markets throughout the world if we continue to build up industries and agricultural pursuits in other countries to supplant the very things that we have been shipping to those countries. That is a problem, Mr. Secretary, that I wish you would say something about because I would be very much interested to have your opinion of it.

Secretary HULL. Well, frankly, we plowed through all those kinds of arguments and theories for 20 years after the other war. Every other nation did the same thing. Each country discussed these questions you are raising now. They had heated arguments about whether tariffs should be 140 or 135 percent and all such narrowly drawn issues as those. But the world during those years when we were going through the same arguments that we are this minute, was heading all the time as unerringly into the present catastrophe as a rifle shot can go. So it is time we took a broader view, if you will pardon me again for urging that point.

Mr. WOODRUFF. Now, the thought that naturally follows my statement of a moment ago is this: We have a wage standard in this country that, in my opinion, will be with us for rather a long time, and I find some difficulty, Mr. Secretary, in believing that we can continue to produce at the present cost of production and ship our goods to countries where the labor cost is a mere fraction, and a mighty small fraction, of the labor costs here. Now, we know that the labor cost in production runs anywhere from 60 to 90 percent of the cost of a given article, and that causes me to believe that instead of increasing our markets in foreign countries for the products of this country, we are going to find that we will have a decline in those markets so long as we continue to hold our standard of living in this country up to its present standard. I do not for one minute believe that we can maintain our standard of living which, as you know, is the finest that any people in all the world have ever enjoyed, while we maintain our present costs of production, or our higher wages and everything else that enters into the cost of production, if as a result of the policy under discussion we find ourselves anywhere near to open competition in our own markets with the products of the other countries. I do not believe our standards of living can stand that shock. I wish that you would comment on that.