Mr. WELLES. It would also apply to wool; yes. Senator THOMAS of Oklahoma. As a matter of fact, we are in the market for millions of pounds of wool for making blankets, uniforms, and so forth. Mr. WELLES. Exactly. Senator THOMAS of Oklahoma. In your opinion the provision in question would have the same adverse effect in respect to wool as it would have in respect to corned beef? Mr. WELLES. Exactly. "BUY AMERICAN" LAW IN EFFECT Senator HAYDEN. As I understand, the Department is not asking for the repeal of the existing law, which is to the effect that if the commodity can be found in the United States in satisfactory quantity, at a price which does not exceed the price of the foreign article by more than 25 percent, it must be bought in the United States. In other words, that is more or less of a tariff amounting to 25 percent. It is not proposed to change that law; but you contend that the provision in the bill goes beyond the 25 percent and constitutes an absolute, utter embargo, and that under no circumstances could we buy any foreign materials. Mr. WELLES. That is entirely correct. All I am talking to the committee about this afternoon is the particular provision in the bill. As I understand, you refer to the so-called Buy American Act. Senator HAYDEN. Yes. Mr. WELLES. I am not addressing myself to that this afternoon. I am simply speaking about this particular embargo provision. Senator BYRNES. The so-called Buy American Act still exists and will control any purchases? Mr. WELLES. That is my understanding, Senator. Senator ADAMS. Is there any essential difference between this provision and the Buy American Act, except that the Buy American Act fixes a standard of 25 percent, whereas the provision in the bill would provide that we may not buy such articles even though the variation is greater than 25 percent? Mr. WELLES. No matter what the differential may be, as I understand. Senator ADAMS. Mr. Smith, the clerk, informs me that the 25-percent provision is not in the statute, but is in the regulation. I am not familiar with it. Mr. WELLES. That is our understanding, Senator Adams. Senator MCKELLAR. Mr. Chairman, I think perhaps the discussion about the 25 percent ought to be off the record. If that law is satisfactory-and the Secretary says there has been no complaint—then the less we say about the matter on the record the better, it seems to me. Mr. WELLES. Let me qualify that statement. I want to be strictly accurate. I have seen no recent complaints with regard to that act. Senator ADAMS. To be accurate, I think the Secretary said he was making no complaint about it this afternoon. Senator BYRNES. I suppose the Secretary was being cautious, as usual. I am not interested in whether the discussion is on the record or off the record. The question before us is entirely different. To repeat Senator Thomas's question, you know of no discussion at this time about anything except the beef question, do you? PROVISION WOULD PROHIBIT PURCHASE OF WOOL Mr. WELLES. Well, as the provision reads, Senator Byrnes, of course it would prohibit purchases of wool. Senator BYRNES. Yes. Mr. WELLES. It would be far more far-reaching than this beef question; but, as you know, the beef issue has been a live issue for so long that it has come very much to the fore. AMERICAN PRODUCERS ENTITLED TO PREFERENCE Senator ADAMS. Mr. Secretary, I would assume, of course, that you would agree that our American producer is entitled to the preference, in the expenditure of money appropriated for various governmental agencies? Mr. WELLES. I am willing to go along with you on that, Mr. Chairman. Senator ADAMS. The question is how far that preference should go, is it not? Mr. WELLES. I think it is very largely a question of degree; yes. Senator ADAMS. Yes; and if it were not for the international complications, you would not be disposed to put very close limits on it? I gather from your statement that you are more concerned over the international effects on the mental attitude of South Americans by reason of the enactment, than you are by the matter of principle itself. In other words, if it were a principle that had stood on our books for some time, it would be of no particular concern to our State Department? Mr. WELLES. It would have been of very great concern to me. Of course, I think the immediate situation is what brings up the urgent aspect of the problem; but, as I see it, any measure written into statute form which makes it impossible for us to buy, to any considerable degree, noncompetitive products from our neighbors, I think is highly detrimental to the cause which we all have at heart. Senator ADAMS. Of course, when you say "noncompetitive," that is quite different; because what we are thinking about here are competitive products. Of course, no controversy would be raised here as to noncompetitive items. The question is as to the purchase of competitive items, and that is what some of our people are apprehensive about. In other words, some of our wool people have been in contact with me today and have asked permission to come here and make statements. They are apprehensive that a preference in price will be given to foreign wool; and, of course, we have a statutory and economic policy of trying to protect American products as against foreign products available at lower price. That policy is what is getting us into this particular problem. Senator MCKELLAR. With that policy I am in entire accord; but at the same time if these gentlemen are correct in saying that we do not have enough wool in our own country to clothe our own boys in the Army and the Navy, and to keep them warm, why, then we have to look the thing straight in the face. Senator THOMAS of Oklahoma. I do not know; we may have enough. However, if we make that limitation, there will be an undue price, which I do not think they need. PRESENT PRICE OF WOOL Senator MCKELLAR. What is the present price of wool? Senator THOMAS of Oklahoma. It has almost doubled since the war started. General CORBIN. About $1.09 for the high-grade wool. Senator BYRNES. Mr. Secretary, are you prepared to make a statement as to the amount of goods the Army has purchased under existing law, and as to how much beef has been purchased? I should like to know that from someone. Mr. WELLES. I am sure, Senator Byrnes, that Judge Patterson and Mr. Nelson could give you those figures. Senator BYRNES. Suppose we ask them. Senator ADAMS. Here is a telegram which came to Senator Glass from Mr. Mollin, secretary of the American National Livestock Association, sent from Albuquerque, N. Mex.: AMERICAN NATIONAL LIVESTOCK ASSOCIATION IN FAVOR OF REMOVAL OF RESTRAINT Understand provision restricting purchase of foreign products similar to that just stricken from Navy appropriation bill has just been inserted in Army fifth supply appropriation bill, which will reach your committee in a day or two. Our association, relying on promises given us by Donald Neelson and Douglas Mackechie, confirmed by purchasing officers of both Army and Navy, do not consider this provision necessary under present emergency conditions. AMERICAN NATIONAL LIVESTOCK ASSOCIATION, Senator MCKELLAR. That is pretty strong evidence. Mr. WELLES. I am entirely at the service of the committee. Is there anything further? Senator ADAMS. We want your advice, because, as you know, this is a rather acute situation. This is, in view of the things that have happened legislatively, the Senate having taken one position and the House having taken another, we are at a point where we are trying to work out the right answer so that the two Houses can agree. We are anxious to have the views of the State Department, because they represent one angle of it-the international angle. Of course, we are interested in the War Department angle, Secretary Patterson. Of course, we also have the domestic producers. They do not all seem to be in accord on it. REMOVAL OF RESTRICTION WOULD PROMOTE GOOD RELATIONS WITH SOUTH AMERICAN COUNTRIES Senator BYRNES. Your opinion is that if the Congress can see its way clear not to insist upon including this item, it would be of material assistance to you in promoting good relations with the countries to the south of us? Mr. WELLES. It would be of the greatest possible value to us, particularly at this time. Senator BYRNES. And, if it is not done, that it will impair your efforts? Mr. WELLES. To a degree which I cannot exaggerate. Senator MCKELLAR. We want all the facts, because when we go to conference we have this thing staring us in the face from the body at the other end of the Capitol, and we must have the facts. (Mr. Welles submitted the following tables in connection with his statement:) United States: Imports of canned beef, domestic saughter, and farm price, Prices (straight average of midmonth) received by United States farmers for beef cattle, "parity," and prices received as percentage of "parity," 1930-40 Prices (midmonth) received by United States farmers for beef cattle, "parity" prices, and prices as percentage of “parity," by months in 1939, 1940, and 1941 Canned beef, including canned corned beef:1 United States imports and unit value 1926 to 1940 The 1 Imports shown comprise only the canned beef dutiable at 6 cents a pound under the act of 1930. imports of canned beef dutiable at 20 percent ad valorem are insignificant. 2 Preliminary. Source: Compiled from official statistics of the U. S. Department of Commerce. STATEMENT OF DONALD M. NELSON, DIRECTOR OF PURCHASES, OFFICE OF PRODUCTION MANAGEMENT Senator BROOKS. This beef could be purchased under the "Buy American" plan with the 25 percent differential, could it? I mean, you can buy at more than 25 percent differential from South America, can you? CANNING FACILITIES OF PRESENT PACKING INDUSTRY TO BE UTILIZED TO FULLEST EXTENT Mr. NELSON. Mr. Senator, you can buy it under the "Buy American" Act for the reason that I will explain. We are probably going to use the complete canning facilities of the present packing industry unless it is enlarged, which it would be difficult to do, with the machinetool situation in the state that it is in at present. Senator BROOKS. I think that is a very vital thing to get in this record. Mr. NELSON. When we talked to the cattle growers' association about it, and told them the whole story, they were very reasonable. They say the point, and thought I acted very patriotically. CHANGES IN WEIGHT SPECIFICATIONS ADVANTAGE TO CATTLE GROWERS Senator ADAMS. Just what assurances were given to the beef producers? They were influenced to acquiesce in the program which they have heretofore opposed very bitterly, because of what they say were certain assurances given to them. Can you tell us what those assurances were? Mr. NELSON. Yes, sir, I can, sir. They wanted certain changes in the specifications which the Army was perfectly agreeable to make, and the Navy also; as the Senator said, a change in the weight of the carcass, a decrease in the weight of the beef carcass that we would buy, and an increase in the weight of the lamb carcass at certain 303230-41- -4 |