TABLE 1.-Principal concessions made on Argentine agricultural imports into the United States, effective Nov. 15, 1941-Continued

The CHAIRMAN. The next witness is Mr. Carl H. Wilken, Raw Materials National Council, Sioux City, Iowa. Is Mr. Wilken here? Please identify yourself by giving your name and address for the benefit of the record, Mr. Wilken.

STATEMENT OF CARL H. WILKEN, ECONOMIC ANALYST, RAW MATERIALS NATIONAL COUNCIL, SIOUX CITY, IOWA

Mr. WILKEN. My name is Carl H. Wilken, economic analyst of the Raw Materials National Council at Sioux City, Iowa.

The CHAIRMAN. How much time do you think you need without interruption?

Mr. WILKEN. About 7 or 8 minutes.

The CHAIRMAN. You may proceed.

Mr. WILKEN. At previous meetings with this committee I have pointed out that the Raw Materials National Council is an independent research organization supported by citizens in the Sioux City area.

Today my purpose in appearing before your committee is to point out the tremendous importance of trade agreements to the people of the United States and the future of the world as a whole. Trade agreements and the conditions under which they operate strike at the very heart of our form of government and fundamental economy. Our forefathers fought a war to establish their right to govern themselves and protect themselves against exploitation. They drafted the Constitution as a framework of Government and economy to protect our civil, religious, and economic freedom.

The history of the world proves that the loss of economic freedom is the road to the loss of civil and religious freedoms. Even in our Nation unsound economic practices in the past have led to such centralization of Government that many fear the loss of the freedom that our people have enjoyed.

Our forefathers provided the needed protection when they drafted the Constitution, but politics, selfishness, and social reform have prevented the protection from being rightly used. Both the Democratic and Republican Parties can be charged with improperly exercising the economic powers given to the people in the Constitution. It might be well to analyze our fundamental economy as it was put into operation under our form of government:

The people of any nation, to enjoy economic freedom, must have a proper measure of value for the goods and services they produce. It is impossible to maintain freedom where human labor is exploited through low wages for their services.

Our forefathers recognized this fact and gave Congress the right "to regulate the value of our dollar," which is our medium of exchange and our measure of values. There has been much confusion about parity prices for farm products, but a study of the Nation as a business reveals that parity prices mean a 100-cent dollar or a measure of value that places the farmer on an equal economic status with industry, labor, and other groups. The parity equation applies to all goods and services.

The very essence of our Government is equality, and equality must extend all the way. Equality of price in measuring the dollar value

of goods and services must be maintained if our form of government is to endure.

In order to implement the right of Congress to maintain proper dollar values, the first session of Congress, in its third act, provided for tariffs, not as a bar against imports, but as a means of revenue and at the same time a protection for domestic price, which in turn is dollar value for goods and services in the United States.

The matter of tariffs must be considered from the standpoint of the welfare of the people. Our standard of living is an example of its value. Tariffs can be compared to fire. Fire is one of the greatest blessings for our progress and well being. Yet it can be very destructive. We don't outlaw fire because of the destruction it might cause, but control it to serve our best interests.

In the same manner tariffs should be controlled for the best interests of our domestic economy and our form of government. To use tariffs to create monoply is an improper use. Tariffs, governed by arithmetic, should be used to protect our price level at a point where raw material prices, wages and finished goods prices can be stabilized at the point of a 100-cent dollar or parity. To reduce tariffs below that point undermines the economic security of our Nation. Maintaining a prosperous United States is the greatest service that we can render to ourselves and other nations. Under our form of economy our Nation outstripped the world in progress and living standards to the extent that we, a nation of 132 million people, were doing half of the dollar business of the world while the other 2,000,000,000 people were doing the other half.

In material things, for example, we were buying 70 percent of the automobiles the world produced, while the rest of the world was buying the 30 percent. As you all know, it takes dollars to buy automobiles. The American people were able to buy them because they were paid wages and prices which permitted them to have a car as part of the living standard.

In comparing relative price levels, using the United States as a hundred, Great Britain is 50 percent and Japan less than 10 percent. Actual records from the Ministry of Labor in England give the average wage in 17 leading industries as $1,060 per year on the basis of a 52-hour week as compared to 27 leading industries in the United States paying an annual wage of $2,060 on the basis of an average of 43 hours per week.

Applying this ratio to our own Nation as a business we have the following result: In 1942 the United States had an income of approximately $120,000,000,000 with a price level of approximately 100, using the year 1926 as an index of 100. Simple arithmetic proves that with 50 percent of the price level in 1942, our income would have been only $60,000,000,000. This represents a difference of $444 annually for every man, woman, and child in the United States.

That is what I meant, Mr. Chairman, when I stated that the matter of trade agreements is of tremendous importance. Any legislation that might mean the loss of $60,000,000,000 a year to the people of the United States ought to be important, especially so with the Nation facing a $200,000,000,000 debt as a result of the war.

Quite recently, using the record of the Nation as a business, we projected the income of the United States to 1946. At that time, with

as a base for the monetary units of about 50 percent of the world and silver as the monetary base for the other 50 percent.

"The price of gold has been stabilized by the Government fiat at $20.67 per ounce for some years. Silver, the monetary medium for India, China, Mexico, and some other nations, fluctuated on the world market from day to day in the same manner as other commodities, such as corn, cotton, wheat, etc.

"During this period, 1910-14, the relative price established by trade under stable conditions and the law of supply and demand, was as follows: Gold had a price by Government fiat of $20.67 per ounce. Cotton averaged 12.4 cents a pound, corn average 57.4 cents per bushel, and silver averaged 57 cents per

ounce.

"The relative price was a natural point of equal exchange-in recent years called parity-between gold, cotton, corn, and silver. Other commodities, of course, can be averaged in a similar manner.

"WORLD-WAR INFLATION AND DEFLATION

"During the First World War we had inflation of commodity prices as compared to gold. Silver, receiving the same treatment as other commodities, also fluctuated in price. Gold, however, having no intrinsic value in war industries, and having a price fixed by fiat, remained at $20.67 per ounce. As a result gold would not buy as many pounds of cotton or corn in the war period as in the period from 1910-40.

"With the fixed value of gold based on the 1940-14 period, it was only natural that prices would decline after the war in an attempt to realine themselves with gold, which was the base for monetary values in much of the world's monetary system.

"In 1920 this decline took place and wiped out many inflated equities and prices. Had this deflation been allowed to continue until it reached the level of prices that existed in the 1910-14 period, it would have thrown the world into a state of complete bankruptcy and no country would have been able to pay the obligations of the World War.

"DEFLATION HALTED

"It was only natural that nations, in order to protect themselves, took steps to prevent the decline of commodity prices which, after all, determine the earning power of nations. The United States of America, because of its economic self sufficiency resulting from natural resources which make it 98 percent independent of world supplies, quickly emerged from the post-war depression and through tariff protection stabilized its price level during 1925–29 at a new period of normal, or 100, called parity.

"NEW NORMAL PRICE LEVEL

"As the result of this stabilization at a higher price level, the income of the United States rose from an average of 31 billion in the 1940-14 period to an average of 78 billion dollars in 1925-29, or an increase of 47 billions per year. With this increase in income the Nation was able to start retirement of its World War debt at a rapid pace; and if prices had remained at that level the Nation could have been debt free in a few years.

"During all these years from 1910–29, the price of gold remained at $20.67 and also remained the base for our monetary unit. This record proves that gold does not necessarily control commodity prices. For example, in the 1910-14 period, an ounce of gold could be exchanged for approximately 166 pounds of cotton, while in 1920-29 it would buy only 100 pounds of cotton.

"With inadequate tariff protection or the necessary flexibility to provide against fluctuating world prices, imports of farm products and other raw materials flowed into the United States which had become the only stable market in the world. The extent to which this took place can be ascertained from the records of the Department of Agriculture or the Department of Commerce. In the period 1925-29, because of relatively higher prices in the United States, we imported $1,750,000,000—foreign value-more farm products than we exported. This finally forced downward commodity prices, the foundation for the earnings of the people, and destroyed the only stable market left in the world at that time. "An indirect effect of these importations was to prevent other nations from having access to these raw materials, which we purchased in excess of our own products, thus causing unrest and poverty.