of some of those who made these rules were affected. Just matter for thought. In our community, a small packer, who through depression days sacrificed profits to carry his employee's through, had no “historical record" of exports prior to the war. However, during the war at the suggestion of the Government he enlarged his plant, to meet his obligations to those in combat. Larger concerns were more careful of the profits. Yet the larger packers now reap the profits of foreign trade while he sells his goods to them for export at a price well below the export market price. Who needs protection, Swift & Co., Armour, Wilson? I think not.

The third paragraph is definitely true. Outmoded, outdated, mark them well.

The fifth paragraph mixes high ideals with carefully worded escape clauses, presenting as much double talk as any document could obtain. The balance of paragraph A is full of high motives but is no more based upon fact than the other parts. They (OIT) are going to protect the poor foreign traders. Those of us who deal daily with our foreign representatives know how well they guard prices. Inexperience and failure of intelligent treatment of the subject matter runs rampant throughout.

Now, let me show you what actually happens. December 5, 1947, I filed application for several hundred thousand pounds of lard to be shipped to a substantial client in Cuba. Bulletin 431 increased my hope, on January 20, my applications were returned without comment other than to conform it to 431. In the meantime my client had increased his order to a million pounds. I made the necessary applications to conform to 431, sent them air mail registered, to the proper office. OIT without notifying me had ruled that all new applications for first quarter must be received by January 21. However, I had employed an attorney in Washington and he called me to “tip me off" on this ruling. Fifteen million pounds of lard was allocated for Cuba, after great expense and personal trips to Washington, using every means at hand they grudgingly allocated 30,000 on my 1,000,000pound applications. I have repeatedly requested an explanation, as I am reliably informed that applications for 100,000,000 pounds of lard for Cuba were filed in the first quarter. Let us use figures for a moment; one one-hundredth of 15,000,000 pounds is 150,000 pounds. Grant that I am a small businessman, certainly no one should be allowed to take away four-fifths of my business because they happen to be larger concerns. I have called upon the Department to explain this and received no reply.

But that is not the end of the story. I refiled my applications, complying with all OIT requests. A few days ago these licenses were returned with the notation that no lard was available to cover these applications in the second quarter. Yet 16,000,000 pounds were allowed for Cuba, second quarter. In my naive manner, I had believed that "historical basis" was not in force, as the OIT stated in their published statements. Truly I had the right to believe these men would follow our Constitution and follow the Government precept, "Equal rights for all the people," not for the favored few.

On March 18, 1948, OIT issued Bulletin 457, Export Subject: Revised Export Licensing Policy-Revision of Current Export Bulletin No. 431. Photostatic copies attached hereto.

Paragraph D. This is a requirement that only creates confusion and expense. Certainly an acceptance of an order, subject to all the conditions stated therein, means absolutely nothing and only serves to confuse or disgust the foreign merchant. Yet some clerk thinks it is a good idea and under the almighty rule of our sovereign Government, we in the trade must kneel down in compliance.

Paragraph F. Here we arrive at the pinnacle of progress, that outmoded, outdated, anachronistic, historical basis for granting export licenses. Let us read paragraph A of Bulletin 431 again; surely, in view of those statements, no such criteria could be used again in granting licenses. After much mealymouthed paraphrasing we come to the gist of this innocuous document in the last sentence of paragraph F. When in heaven's name will a criteria be applied? Why would they attempt to interfere with foreign trade unless the quotas are oversubscribed? Are they refusing licenses on quotas not oversubscribed because they do not go to the favored few? Where in heaven's name is the free trade we offer the world and deny here, the right of citizens? Isn't it rather difficult to explain democratic processes to our foreign customers who suffer want merchandise because of undemocratic acts of this bureau? Remember, most of these newcomers are men who a short time ago were not only selling democracy around the world, but fighting for them. How can we explain dictatorial powers abused by undemocratic bureaus? As a lawyer, I can find no excuse for the violation of the Constitution by a Government agency. This bulletin not only violates the Constitution but also is in direct violation of the lowest type moral conception of honesty, by their own admission.

Export Bulletin No. 457 should be rescinded, all means at hand should be used to see that no employee follows the tenets thereof so that no ulterior motive may again be implied to the OIT.

Reference also: Department of Commerce, Office of International Trade, Bulletin No. 431, dated December 31, 1947, and Bulletin No. 457, dated May 18, 1948.

They said it was a communistic control contrary to American principles and certainly it should not be continued further. There was an excuse for it. Prior to this time, each exporter has gone along on the basis we had a war. You have not heard a squawk out of an exporter because of wartime restrictions. But somehow or other they cannot get it into their heads that the war is over.

They made those statements and then they came out in Bulletin No. 431 and made the statement that only in the event there was an oversubscription of an allocation would they then apply the historical record. For heaven's sake, are they refusing export licenses when it is not oversubscribed? This same communistic thing that is contrary to American principles comes right back in your face again.

I saw what happened in Italy and I will tell you now that the Italians had no idea Mussolini was going to lead them where he did, and I will tell you further if you do not do something about it, we may be led into the same thing. If I see it at any time in my government I am going to raise hell about it. That is exactly what I intend to do. It has been to my detriment before but I do not care. It is a proposition of getting an honest, fair governmental organization that does not lie and does not use excuses and does not play favorites. That is exactly what they are doing.

Mr. FORISTEL. Do you urge this committee to ask that they reduce their positive list of items?

Mr. MORGAN. I do not think there is any question but what it should be reduced, with the possible exception of one thing.

Mr. FORISTEL. Steel and petroleum, possibly?

Mr. MORGAN. I know of one thing particularly. I do not know of the petroleum condition. I know if we interfere with the building up of our Army, it is a dangerous procedure. I am a Reserve officer and I feel we must protect ourselves. I am scared to death that if we do not protect ourselves at this time-if it inconveniences me or anybody else, all right, but let us protect everybody from going through what we went through before. I say, do not let us interefere with that. Mr. FORISTEL. We should still have some controls over steel; do you think?

Mr. MORGAN. Definitely.

Mr. FORISTEL. And oil, perhaps?

Mr. MORGAN. I think that is possible. I do not know the oil market. I have never been in it, but from what I have heard I think that is true, because we need those reserves to protect our Nation. Mr. FORISTEL. Anything else?

Mr. MORGAN. I should like to refer to a document here entitled, "Applications for Export Licenses" by myself which covers the shipment of lard into Cuba and Mexico. This is as follows:

APPLICATIONS FOR EXPORT LICENSES BY HAROLD MORGAN AND A. A. NAVARRO FOR SHIPMENT OF LARD TO CUBA AND MEXICO

In licensing lard for shipment to Cuba in the first and second quarters of 1948 we were faced with a problem of apportioning export allocations that were very much oversubscribed. The export allocation of lard for Cuba was 15,000,000 pounds in the first quarter. Against this allocation, the Office of International Trade received 693 applications for license from 93 applicants. The total amount applied for was 107.8 million pounds, or more than 7 times the allocation. Incidentally, the amount requested for the 3-month period was 25 percent more than Cuba imported during an average year prior to the war. Of the 96 applicants, 34 were exporters who had not shipped lard to Cuba regularly during either the prewar period or the war years. The Morgan Co. was classified in this group of new shippers, and each applicant received 30,000 pounds. Under the licensing procedure in effect prior to January 1, 1948, members of this group would have received a maximum of 5,000 pounds, and it is unlikely that all of them could have been given a quota. The 30.000 pounds assigned to new shippers in the first quarter of 1948 was made possible by reducing the quotas granted to historical shippers and by allotting only 60,000 pounds to lard producers who did not have a prewar record of shipping lard to Cuba.

Applications by A. A. Navarro did not arrive in the Office of International Trade in time to be considered against the export allocation of lard for Cuba in the first quarter.

The problem of assigning quotas to applicants for shipment of lard to Cuba was even more difficult in the second quarter. Against an allocation of 16,000,000 pounds of lard the Office of International Trade received 1.218 applications from 232 applicants. The total amount requested was about 100,000,000 pounds, or slightly less than in the first quarter. The number of applicants in the group having a historical record of shipping lard to Cuba and in the group of lard producers not having such shipping records was almost the same in the second quarter as in the first quarter. However, the number of applicants in the new shipper group increased from 34 to 153. In order to permit participation in the allocation by a maximum number of the new shippers it was necessary to reduce the quota for each applicant in that group from 30,000 to 10,000 pounds, reduce once again the proportion of the allocation assigned to the historical group, and omit new shippers who had received quotas of 30,000 pounds in the first quarter. Even with these adjustments it was not possible to grant quotas to some of the

new shippers who applied in the second quarter. We could have granted quotas to all applicants in this group by reducing the quantity below 10,000 pounds, but it was obvious that in doing so the allotments for each would not have been economically feasible to ship. In this quarter the applications by A. A. Navarro were given consideration. The applicant, being a new shipper, was

included in that group and allotted 10,000 pounds.

In view of the situation as described above, it is apparent that the competition in shipping lard to Cuba is such that licenses cannot be granted to all applicants without seriously disrupting the established channels of trade in lard between United States exporters and Cuban importers.

In the matter of licensing lard for shipment to Mexico, it should be understood that Mexico has an import licensing system that limits imports in line with export allocations from the United States. In the second quarter the Office of International Trade received from the Mexican Government a list of importers who had been granted import permits to receive specified amounts of the export allocation from the United States. If export licenses had been granted by the Office of International Trade to applicants whose customers were not on this list, the licenses could not have been used. The list of recommendations by the Mexican Government did not include importers from whom the Morgan and Navarro companies had orders to supply.

(Witness excused.)

STATEMENT OF R. I. DUGAN ON BEHALF OF REX WELDING & ENGINEERING CO.

Mr. BALLINGER. State your name.

Mr. DUGAN. R. L. Dugan.

Mr. BALLINGER. Your business?

Mr. DUGAN. Rex Welding & Engineering Co.
Mr. BALLINGER. You are vice president?

Mr. DUGAN. Yes, sir.

Mr. BALLINGER. All right. Proceed with whatever statement you wish to make to the committee.

Mr. DUGAN. The statement I wish to make has reference to specifications as called for on bids in our particular line which is called spot-welding equipment, and I want to cite a particular instance.

In July of this year we had advice that the Ordnance in Detroit was interested in securing a spot welder. We contacted our Detroit office and asked them in turn to get the specifications on the welder that they were inquiring about. When the specifications were received, it was apparent that the specifications had been copied word for word from circulars issued by one of our competitors. All companies have a certain amount of patents. These items that they quoted indicated that in order to comply with the specifications you would have to comply with the patents. We were unable to quote on a deal of that kind.

Our interest is in seeing that the specifications are issued more general in scope rather than in detail as to what a machine shall consist of. In other words, we are more interested, and think the Army and Navy should be more interested, in what a machine will do rather than how it is made.

The second item that we are particularly interested in is the matter of securing war contracts, or defense, or whatever word you want to use on it. Some months ago the AAF brought quite an array of samples of parts down here and had them on display, which many of the businessmen attended. They were told that they could participate in bids on any of this material, or, at least, that was the general im

pression. However, on inquiry, after the meeting was over, it developed there were no particular bids on that stuff to be asked. That was merely to give an idea what we might get at a later date.

We filed with the AAF, with the Ordnance, the Signal Corps, Navy, and so on, and in spite of rumors, which is all we can base it on, there are many inquiries being circulated here in Kansas City, for instance, we to date have received only two. One of them was for an item, as I recall it, some type of windshield that required gold plating. Unfortunately, we are not in the position of gold plating anything. The second item called for a series of transformers. We, of course, make transformers for our welders. But these were special. As a matter of curiosity, we checked up with one of the leading transformer manufacturers as to their delivery and so forth and found that the delivery they would offer to us as a purchaser was 18 months. Yet this specification called for delivery within 90 days after submission of the inquiry. I think that terms of this sort are most unreasonable in view of the conditions that exist with regard to the material and other supplies.

Mr. Chairman, that is the extent of my complaint.

Mr. BALLINGER. That is all.

Chairman PLOESER. Let me assure you that this will get to all the procurement branches of the armed services from this committee. We will ask the to explain to us. The same questions have been in my mind on many occasions. This complaint of yours is not altogether

new to us.

Mr. DUGAN. I did not think it was.

Chairman PLOESER. We do not agree with the procedure either in a good many cases.

Mr. DUGAN. I think it can stand remedying.

(Witness excused.)

STATEMENT OF W. J. SMALLEY ON BEHALF OF SMALLEY AUTOMOTIVE SUPPLY CO.

Mr. BALLINGER. Give your name.

Mr. SMALLEY. W. J. Smalley.

Mr. BALLINGER. What business do you represent?

Mr. SMALLEY. The Smalley Automotive Supply Co.

Mr. BALLINGER. Are you president or owner of it?
Mr. SMALLEY. Yes; president and owner.

Mr. BALLINGER. Do you have a complaint you want to make to the committee?

Mr. SMALLEY. Well, I gave Congressman Reeves some information a while back in a letter that, as I understand it, is a matter of your records now.

We have many things in our industry which, in my judgment, are not in keeping with good merchandising. I would like to separate our business just a little.

First, one of our channels is the oil-filling business.

Mr. BALLINGER. You mean filling stations, and so forth?

Mr. SMALLEY. Most of those men are lessees for the company. They have been requested and insisted by their suppliers that they buy only their own products.