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to just make some statement to the committee about voluntary controls and the control program that he has been administering.

I want to call the Secretary's attention to this fact that I have an amendment before the Banking and Currency Committee-not this committee. This is the joint so-called watchdog committee-to prohibit the shipments of any materials whatsoever to Communist nations. I would like to have him put on the record what he has done.

Secretary SAWYER. You are now talking about export controls? The CHAIRMAN. That is right; and we would like to learn a little about the other controls you are administering, too.

Secretary SAWYER. There are two kinds of controls that have been lodged in my Department, allocation and priority powers under the Defense Production Act, and export controls under the Export Control Act. I might say one is about as troublesome as the other, but General Harrison has taken the responsibility for most of the controls under the first.

Now, your question, I take it, is directed at export controls?
The CHAIRMAN. That is right.

Secretary SAWYER. I am very glad to try to answer the question. Of course, export controls have been in effect for many years. Shortly before I became Secretary of Commerce a change was made in the policy with reference to export control, the basis of which was to keep from the so-called satellite nations strategic materials.

The CHAIRMAN. There is enough power in this law we passed on controls to give you the authority to do whatever in your judgment is necessary?

Secretary SAWYER. I think I have ample power. The power under which I act in connection with export control is given by an act which was passed long before this present emergency occurred.

The CHAIRMAN. That is right.

Secretary SAWYER. I may say, incidentally, Mr. Chairman, in my judgment it is of the greatest importance that that power be continued. It expires next June, and that is one of the matters I think the new Congress should take up at a very early day.

The CHAIRMAN. Do you think it would be better to amend this law or extend the same law?

Secretary SAWYER. I think a mere extension of the power we now have would be sufficient; but that certainly must be done, for we would be in a chaotic situation from the standpoint of export controls if that were not done.

Now, following that decision, we immediately began to work on the matter of differentiating between the types of exports that we were dealing with, and I organized in the Department of Commerce a so-called requirements committee. I certainly was not wise enough, nor did I feel anyone in my Department was wise enough, to make the final decision on what materials should be controlled and what materials should not be controlled.

So we set up a committee called the Requirements Committee, the membership of which came from about eight agencies, including the Department of Defense, the Department of State, ECA, the Atomic Energy Commission, and so forth. That committee did make and does make the original recommendation with reference to what materials should be controlled.

Now, roughly speaking, all materials which are exported fall in three categories: First, those which are, as the phrasing goes, under general license. That means they can be shipped out without any license whatever. They are innocuous things that have no significance whatever from a strategic standpoint, nor from the standpoint of short supply in this country.

The second group, which is known as the "positive list", is a list of materials which are controlled by license. In other words, you cannot ship any out of this country unless you get a license to do it.

The third group, which is the secret list, covers this matter of strategic materials that you are principally interested in. That list has been changed from time to time and is always under scrutiny and being revised, through the OIT acting in my Department-and I have the final responsibility for it. There has not in any case since I have been Secretary of Commerce been licensed for export a commodity, nor a quantity of a commodity, which the Military Establishment said would be of any benefit to potential enemies. I think it is highly important that that be made clear.

The CHAIRMAN. What is that again, Mr. Secretary? You have not approved any license for export of a commodity which the Military Establishment said would be of any benefit to potential enemies?

Secretary SAWYER. We have not licensed during the period that I have been Secretary of Commerce for export from this country any commodity and there is some distinction as to quantities. They have agreed certain minor minimum quantities could go out because they could not be of any importance in a military way-which the Military Establishment, which sits on this committee, said should not go out. In other words, we have used at all times the opinion of the military, who ought to know. We do not pretend to know what is strategic, what items should go and what items should not.

The CHAIRMAN. What about transshipment? That is what I heard about. I understand now a lot of walnuts, for instance, are being brought into this country from Manchuria. Of course, I understand they are being shipped in here by the British; is that correct?

Mr. MCKENNA. We received a statement they were shipped through Vancouver and by rail to the east coast in competition with some of the other nuts in this country.

The CHAIRMAN. I am wondering if our allies can ship things out of this country as easy as they can ship them in. What I am getting toif a ship brings something in, it can take something out.

Secretary SAWYER. Yes.

The CHAIRMAN. I want to ask you for the record, because as I understood you the other day when you issued that order, you were not going to permit any transshipments out of this country, of strategic materials destined for unfriendly countries, and I want you to state for the record if that is correct.

Secretary SAWYER. I will be glad to answer your question, and also the question you asked a moment ago.

When that ship leaves this country we do control what goes out of this country, including foreign commodities going through this country. Your question to me a while ago was: Do I need any more power as far as controlling exports? My answer was that I would like to see

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the Export Control Act extended. In fact, it is absolutely necessary to continue the power to control exports.

But I did use the power that was given under the Defense Act recently-the order was actually signed, the first order, by General Fleming, by which we have forbidden the carriage of any cargo destined to Communist China, by American ships-we cannot order other ships.

The CHAIRMAN. You are talking about this act here?

Secretary SAWYER. Yes.

The CHAIRMAN. That is what I want you to discuss.

Secretary SAWYER. Under the provisions of the Defense Production Act we forbade any American ship even to touch any Communist Chinese port.

The CHAIRMAN. And airplanes, too?

Secretary SAWYER. That is right; and planes, too.

The CHAIRMAN. You are certain nothing is getting out of this country?

Secretary SAWYER. I see no reason to add to our powers at the moment, and if I do—I mean if the situations arise, I will certainly come to your committee and say so.

I do not claim, of course, that the operation of export controls is perfect. That would be silly. We are dealing with a most complicated situation. It is a most troublesome situation.

What we are trying to do is, as situations arise from time to time, meet them in a practicable and sensible way.

Now, I want to say this on behalf of the OIT, which is the Office of International Trade in the Department of Commerce-that they have been tremendously overworked. When this first load was laid on them in 1948, it was just incredible the few people that we had that were supposed to do the enormous job of sifting these licenses and deciding which could be granted and which could not be.

The Congress in July, I think it was, gave a special appropriation, and after that we began to reduce the backlog. Businessmen were coming in by the hundreds, asking to have their licenses processed for perfectly legitimate export items about which there was no question, because we had to sift all of the applications to see which ones could go out and which ones could not.

Now, we had a similar situation in September in connection with cotton. Secretary Brannan called me up and asked me if I would put controls on the export of cotton from this country. The Congress had indicated by an amendment to the Export Control Act that the control of the exports of agricultural supplies should be in the hands of the Secretary of Agriculture. I had not objected to that; in fact, I was very well satisfied to have it that way. But the actual machinery handled by us in the Department of Commerce was used by the Secretary of Agriculture to implement his policy decision on cotton.

Well, what was the result?

Within 3 days we began to get 500 applications a day for licenses to export cotton out of this country, and we now have a tremendous backlog.

The CHAIRMAN. Let me ask you-in this present deficiency appropriation, have you got a sufficient request for funds to catch up with this thing you are talking about?

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Secretary SAWYER. I think we have, yes. I think the Congress has been very fair with us on this, and they have recognized the tremendous situation that faces us. As far as I am informed, we are perfectly satisfied with what your committee and the House committee has done.

Senator CAPEHART. Mr. Secretary, do we understand that every item that has been exported from the United States since you have been Secretary of Commerce-and that is 3 or 4 years ago

Secretary SAWYER. It seems that long, but it is not. It is 21⁄2 years.

Senator CAPEHART. 2 years?

Secretary SAWYER. Yes.

Senator CAPEHART (continuing): Has been approved by the military people of this Nation?

Secretary SAWYER. No; every individual item has not been approved by the military because there are thousands of items that do not have any strategic value.

Senator ČAPEHART. Let me rephrase my question. Every item that has been exported from this country since you have been Secretary of Commerce that had any military value has been approved by the military men of this Government?

Secretary SAWYER. It has not been exported if they said it had strategic values to certain areas. It has been exported to England, France and Canada and other countries.

Senator CAPEHART. Let me put my question this way, then: All merchandise that has been exported to all countries has first been approved by the military to find out whether or not it had any military significance to other countries; is that what happened?

Secretary SAWYER. It has been passed by this Requirements Committee, of which I spoke, on which the military is represented.

What I said, and I am glad to make it plain, was that in no case has any strategic item which the military said should not be licensed for export been licensed. That is true today and has been true every day since I have been there.

Senator CAPEHART. I know little about it except what I read in the papers. Does that mean, then, the 5 or 6 or 7 shiploads that the socalled O'Conor committee was talking about, that were returned and unloaded and some of them were caught on the high seas-does that mean that the military men of this Government had approved those shipments?

Secretary SAWYER. I would like to explain the shipments of those five ships.

In the first place, most of the things on those ships were not strategic at all. You have seen some comment on the question of medicine, and I would like to answer your question and use this specific instance:

We had ample supplies of medicine, like penicillin and so on, in this country, we had so much we did not need it all here. And the policy, which was not just my department's policy but the over-all Government policy, was that there was no reason why we should not ship those medicines anywhere in the world where it would relieve human misery. And we did that.

Recently we noticed-and this did not come from any investigation by any committee or anybody else-in OIT we noticed there were tremendously increasing demands for some of these medicines from

Communist China. The only explanation that we had, the logical explanation, was that they were being bought and hoarded there to be used as money, just as opium and other things that occupy small space are used as money. They are better than money, I guess, in fact over there.

We found that out and stopped it, and we have stopped all shipments to China of strategic materials or nonstrategic materials or anything. We not only have refused to license exports to China, but we do not even allow the ships and the planes to touch at China, as the Senator said.

The CHAIRMAN. What about Hong Kong, Mr. Secretary, in relation to transshipments?

Secretary SAWYER. You read in the papers we put such strict controls on Hong Kong they are yelling their heads off about it. We want to be sure there are no transshipments.

The CHAIRMAN. That is what I am worried about. We have been given a lot of trouble with transshipments.

Secretary SAWYER. My instructions are we are to do everything we can to prevent transshipments of goods where we have control over it, transshipment of goods to areas to which we do not make shipments.

I would like to make one or two further statements, if I may, Senator, as long as you have asked this question which I know you are interested in.

Senator CAPEHART. May I say I think it is very important because I think the military people of this Nation should control the export of any material that may be of assistance to our enemies or may be of assistance to any other country that might well become our enemy. Secretary SAWYER. They do.

Senator CAPEHART. I think they should, and I was surprised to hear you say that up to this time, or since you have been Secretary of Commerce, that you have consulted with them and they have approved everything.

Secretary SAWYER. I think probably a good many other people will be surprised, because there has been a contrary opinion circulated; but it is absolutely false.

The CHAIRMAN. What is that?

Secretary SAWYER. The opinion that strategic materials have been going out in quantities from this country and licensed by the Department of Commerce. There is not a word of truth in it.

Senator CAPEHART. In other words, I think what you want to say is that if they were strategic, the military people failed to call it to your attention, and you approved it.

Secretary SAWYER. I do not say they failed to call it to my attention. I think they have done an excellent job in that connection. What I say and started to explain in connection with these medicines People say, "Isn't it terrible to let penicillin go out of the country?" It is not regarded as strategic, it is in ample supply here. I say the theory was to try to mitigate the misery of the world anywhere. We made no distinction. Of course, we did not ship anywhere to a nation with which we were at war, or an area at war.

I would like to be specific, if I can, about Korea. You have seen statements that shipments of strategic materials have taken place since the war in Korea began. I will tell you what we did, and I will