Canada, Jan. 1, 1939.

271⁄2 percent and 3 cents per pound. 25 percent and 21⁄2 cents per pound.

Table 8 shows a comparison of the United States exports of dairy products to countries that have granted concessions on such products and exports to other countries.

TABLE 8-Dairy products: United States exports to countries granting concessions on United States export commodities and exports to other countries (including the Philippines-duty free)

Source: Compiled by the U.S. Tariff Commission from official statistics of the Department of Commerce.

The CHAIRMAN. Our next witness is the Honorable Richard M. Kleberg, of Texas.

Mr. Kleberg, we shall be glad to hear you at this time.

STATEMENT OF HON. RICHARD M. KLEBERG, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. KLEBERG. Mr. Chairman and members of the committee: I do not want to take very much of your time. The matters which I desire to call to your attention are matters which have to do with certain facts which apparently heretofore have played no very important part in the development of the so-called reciprocal trade treaties or agreements.

In the first place, in order to present what I have in mind, I think it wise to call the committee's attention to the fact that two major elements over which man has no control and which cannot be affected by legislation have more to do with human beings and their ability to produce than anything else; those are climate and soil.

Now, I speak with particular reference to trade agreements insofar as they affect this hemisphere. When you analyze the situation involved in this hemisphere, you find that you have two major zones to deal with, the temperate zone, which is divided into two parts: we occupy the northern part of it, and the southern part of South We do not have anything to do with the frigid zone as yet.

America.

And there is a large area lying in between known as the tropic zone, beginning in the southern part of Mexico, including Central America and Brazil, down to where the coffee zone in Brazil comes to an end. It can be best delineated by drawing a line across Brazil from east to west, just south of Sao Paulo, including, of course, the great State of Rio Grande do Sul in Brazil, and carrying straight on through to the Pacific Ocean.

In that central area, the tropical zone, the vast majority of the production of that zone is complementary to our economy and what we produce, and we have need for it. It is probably the least developed area today of the truly productive part not only of this hemisphere but of this world; in rubber, bananas, cocoa, quinine, silk, essential oils, mandioca, and all those products which fit into our economy here.

For several reasons there has been what might be stated as merely a natural development. There has been no real application of scientific endeavor nor effort to develop the productivity of those countries. Brazil, in the main, could, without much effort, but with some essential aid, be the greatest rubber and silk producing country in this world; and you gentlemen know that we need rubber and silk.

Now, for a moment, let us look to the other end of it and deal, for purposes of exemplification and clarity, with the facts having to do with the most productive country in the Southern Temperate Zone, Argentina. In the Argentine, you find a highly productive belt, something over 1,000 miles long and several hundred miles wide and, by comparison, we have no such area of production in this country, in our zone.

I know whereof I speak. At the present time, in Argentina, they are confronted with a terrific cataclysm. They are having a very severe drought, probably the worst one in their history. For the first time, Argentina is not even close to par in the production of things which she produces: beef, corn, wheat, rice; all of those things that are highly competitive to our economy.

Part of the Temperate Zone that is in Latin America is in the part which I did not mention, in Mexico. Mexico is potentially a great power in the production of livestock. Mexico, for many years, due to internal troubles, has never done anything more than what might be termed as piddling. They piddled with the livestock business. They do not have many cattle in Mexico now. But they have more than they have had heretofore.

So, when you take that picture and look at what you have to deal with, from the standpoint of climate and soil and productivity, without man's effort, you find that in the Tropical Zone you have a complementary economy, and in the Temperate Zone, in South America, you have a highly competitive economy; competitive not only because of soil and climate, but because of history; the customs, the habits, the actual economic state of the peoples that inhabit those countries.

In Argentina, you have no high industrial development. The beef-cattle industry is the principal industry in Argentina. The hides from Argentina are shipped to Europe and are tanned and reshipped back to Argentina, where they are converted into shoes and leather goods.

That is one of the major industries in Argentina at present, the making of leather goods out of hides that have been shipped across the ocean and tanned and shipped back.

You know what happens to their corn. I am not going to go into that. Members of this committee are thoroughly conversant with the way things are going down there.

Now it occurs to me that the object of these reciprocal-trade agreements is to develop to the utmost of our ability the recreation of proper relationships among the peoples of this hemisphere. You cannot do that, Mr. Chairman and members of this committee, in the case of the Argentine by extending to them a paternalistic, though friendly, hand. It cannot be done.

The people of the Argentine are just as highly educated as the people of these United States and, in the main, more highly educated. They are a very proud; they are a very sensitive people; and they are essentially of Latin extraction.

The Italian element is the largest element in the Argentine, without taking into consideration the Spanish, which is the background; there is more Spanish blood in the Argentine, of course, than all the rest put together. But in the case of the Italian group, those people migrated to the Argentine through the years, and they came from a crowded country-Italy. The German immigration was from a crowded country. Upon their arrival in that country, a land of open spaces, blessed immeasurably with productive power, and coming, as I say, from a crowded area into a country where the people were willing to accept them, they immediately, rapidly, willingly, and enthusiastically became a part of those people.

They stayed there. They became a part not only of the social life, but of the business life, and finally a part of the political life. Both Italy and Germany have exerted a major effort; partly it was a deliberate effort, in recent years, but in the past it was more or less a kind of natural result of what was going on.

The trade that Argentina has had heretofore has been primarily and objectively with the old country. Why? That is very patent. The products of the Argentine: wheat, corn, wool-the things that we deal in here they were commodities that were needed in Europe and they were not needed here.

Add to that this great influx of people to the Argentine to which I have referred. One-fifth of the people of the Argentine, approximately, are of Italian extraction. There is a very high percentage of Germans; not of the Nazi German-do not misunderstand me. I am talking about the old-type German, who was highly industrious, highly thrifty, highly educated; who spoke several languages, and, coming out of his crowded country, he enthusiastically did his best to become a good citizen of the Argentine:

The trade of the Argentine has historically been trade with the old country, a condition with reference to the Argentine which we should welcome to a certain degree. And I suggest to you that there is a way to do a good-neighbor part, a constructive part, with reference to the Argentine, by making concessions, if concessions are to be made, in providing Argentina with ways and means of getting her production over to Europe; assisting her as a friend, and as a clearing house to develop the ability to transport her enormous production in a service which must be done in the rehabilitation of war-torn Europe, Asia, and Africa.

With reference to the other countries, in the consideration of reciprocal trade agreements, it seems to me that the Congress heretofore has not had quite enough to do, Mr. Chairman, with the proposi

tion of seeing to it that this Government, through its representations, at least accords with and operates under the expressed intention of the Congress of the United States.

Policy making for the Government of the United States in foreign affairs is historically and constitutionally a function of the executive branch. But in the case of treaties, treaties of major importance, unilateral treaties, to say the least, have been treaties in which the Congress of the United States has participated at least to the extent of requiring Senate ratification.

There is no reason on this earth, Mr. Chairman, in the development of this great program which we have assumed-not because of a desire to do so but because of the Power which gave us what we have, our life, our liberty, and our reason; that particular Deity whom we worship has ordained apparently that this Nation through its development, under the exercise of friendly reason and enterprise, into a Nation upon which the eyes of the world are directed—I say there is no reason why, in the development of this great program, certain things cannot be done first.

In the war effort we are saddled unquestionably and inescapably with the job of doing our part toward the rehabilitation of the world. We ought to do that soundly, not as a Santa Claus. I am speaking earnestly, Mr. Chairman. We ought to do it with a knowledge of the facts. We ought to do it in a manner which would be appreciated and which would add to the respect to which this Nation is entitled, for the part which it has been forced to play in looking forward into the future, to the operation of these treaties.

The acceptance by a country of help, as a mendicant, as one who needs and must have alms and charity, and having the hand of opportunity extended to it-those are two different things. Feelings between countries, after all, Mr. Chairman, are merely a translation. through their respective governments of the actual feelings of people in those two countries, or more countries, toward each other.

Mr. Chairman, I made two trips to South America. This is the first statement I have ever made on this matter. I made reports to the responsible agencies of the Government that were interested, of what I had found, and had numbers of conferences with them.

But, despite that, the recommendations which I am going to boil down for you gentlemen here, have not yet been undertaken.

I think it highly proper for the Congress of the United States, if it is to act upon the proposition of extending reciprocal trade agreements, to indicate, within certain limitations its desire, as representative of the people of the United States, as to just what lines of endeavor should be undertaken by the executive branch in bringing about these reciprocal trade agreements.

I believe there should be some limitation upon the exercise, if you please, Mr. Chairman, of possibly too charitable an attitude on the part of those who represent this Government and are empowered to make these agreements.

You know, charity is a funny thing. It works, at its origin, at its inception, sometimes in a political way. But in the long run, finally the money you spend, if it has been spent strictly as charity and with a superior attitude which this Government has heretofore adopted with reference to some of these other countries, finally becomes translated into realities, and it becomes instead of a friend maker an enemy maker.