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When these allotments were made for foreign countries during this past year, 1947, was it contemplated by the Department of Commerce. that there would be this shortage in our domestic use at the present time?

In other words, was the oil shipped out with full knowledge that there would be this shortage? And if so, why?

Mr. FOSTER. Mr. Chairman, during the spring of 1947 the industry and most experts were of the opinion that there was plenty of oil. As the spring developed it became obvious that there was an increasing shortage of petroleum products. Due to that fact, on June 30, 1947, we again controlled the shipment of petroleum products for export. Up to that time there had been considerable question.

The shortage has progressively worsened, I think, well beyond the best judgment of the experts in the industry and in Government. We have been faced with a winter much more severe than we have had for many years. Due to that combination of factors, due to shortages of transportation, we are now faced with the situation which you point out.

However, it does seem to me that there are degrees of need, and certainly there is great need in other countries as well as in our own. You must recognize that the only control we have, Mr. Chairman, is to control the amount of material that leaves this country. We have no power to direct it to the particular urgent emergent conditions here. If we keep more petroleum here-and we are doing that; we have reduced the amount progressively ever since the shortage became apparent-if we keep it here it may go to the points of greatest need or it may not. We would have no control over that.

I do think we have a moral responsibility to the other nations who depend upon us for this material. I think we have a responsibility that goes back over many years. If we are to carry out the moral responsibility and the thing which has given this Nation its strength with the other freedom loving countries I think we must continue to carry out that moral responsibility.

If we were today to shut off a small proportion of our total petroleum production it would mean the difference between complete collapse in some of those countries as contracted with a very modest addition to our supplies in this country.

I am sure that this committee will give consideration to that point. (The matter referred to is as follows:)

71869-48-pt. 1-2

[graphic]

EXHIRIT 1.-United States exports of crude petroleum and petroleum products to U. S. S. R., monthly, July-November 1947

1

Petroleum, crude.

Aviation motor fuel.

Naphtha, mineral spirits, and finished light

Keroene.

Gas oil and distillate fuel oil.

Residual fuel oil.

Lubricating oils:

Lubricating greases, excepting graphite.

Paraffin wax:

Petroleum coke.

Natural gas.

1 December trade statistics not available at present.

2 Less than one-half the specified unit.

Prepared in the Department of Commerce by Special Programs Division, Areas Branch, Office of International Trade, from basic data of the Bureau of the Census, January 1948.

The CHAIRMAN. Of course, I realize that there may be some obligations such as you have referred to, or at least there is a desire upon our part to be helpful to others. But the question finally resolves itself to the point that we all, even in our individual affairs, cannot be as charitable as we would like to be, not because we do not have it in our heart, not because we do not have a sincere desire, but because of the necessary limitations that make it impossible for us to be.

It seems to me that the situation to which you refer, in which we have some obligations abroad, must likewise be considered from the standpoint of our ability to comply with the needs of others. And it is in such respect that this committee is very much interested. It recognizes that, of course, our first responsibility rests with those at home. As the old saying is, charity begins at home.

So that there is a responsibility beyond that of doing good to others, which is of primary importance, and that is to what extent we can do good to others without affecting that our own personal economy.

It seems to me that the several statutes that have been passed by the Congress, two extensions of which were adopted during this past year, leave a clear indication on the part of Congress that they do not wish any of these goods in short supply to leave the country, unless there be a certificate or a finding upon the part of the Department of Commerce that it does not impair our own economy.

Under the spirit of those laws which Congress has already adopted, and the responsibility that it has placed upon the Department of Commerce, just where does our own economy fit into this proposition? Who makes the certificate that these exportations can be made without impairing our own economy? Who has done it? Who has found that to be the fact? What were the facts upon which that decision was made?

Those are things that this committee would like to know.

Mr. FOSTER. I appreciate that, Mr. Chairman. Certainly the first requirements are to take care of our own people at home. However, it is necessary, in carrying out those responsibilities to which you referred, to balance as between the needs. The needs for this small amount of our available supply are great. The balance, and the certificate, if you choose to use that word, although there is no definite certificate, is done by a small group of people chosen from all of the interested agencies.

We have a mechanism of a review committee which includes representatives of State, the Office of Defense Transportation, the Armed Services, Interior. Those determinations are made in that group. They are checked by an advisory committee at the Assistant Secretary level, and the determinations are made after full consideration of the domestic and the international needs.

I cannot say that material we ship has no impact on the domestic economy. The determination must be one of balance. We believe that the decisions made can be made with full knowledge and full consideration of the points you have made as to the needs at home and abroad.

I must say that we have not, during the past year, had the opportunity to consider each of these fields in as great detail as we would have liked to have done it. This entire operation has been carried on by a group of a little over 150 men, and that has been controlling not only

petroleum but all of the other export items which this Nation ships abroad.

I think they have done an amazing job, and I wish to state that publicly.

We have now been able to expand that group, and we are conscious of these very difficult decisions which you speak of, and it is on that basis that we attempt to move forward.

The CHAIRMAN. I have many more questions that occur to me that would be appropriate to ask of you, but it is my intention not to take further time at this moment to ask those questions, and to give the other members of the committee the opportunity that I know they are desirous of having.

Before they do start their questioning: I am not aware that the control laws that have been passed make any provision whatsoever for balancing of needs, as you term it. It provides, if I remember correctly, that licenses shall not be issued for those items that are in short supply as would impair our own economy.

You have justified, in your opinion, the action of the Department on this so-called balancing of needs. I am not aware that that is one of the elements that is set forth in those acts. However, you may have my thought in mind as you answer the questions of the other members of the committee.

Mr. Lea?

Mr. LEA. Do you have any of the laws present, referred to by the chairman, so that as this point they could be set in the record to show the standards Congress has set up?

Mr. FOSTER. I believe we do, Mr. Lea.

Mr. Lea, if I may read the section that bears on the point you have made, and that the chairman has raised just prior to that, Public Law 188, section 2 (b), reads as follows

The CHAIRMAN. When was that passed?

Mr. FOSTER. It was passed on July 16, 1947; approved July 15, 1947.

The CHAIRMAN. Then it is an extension of a previous control act; is it not?

Mr. FOSTER. That is correct.

The CHAIRMAN. When was that passed?

Mr. FOSTER. That was passed March 31. That was a 3-month extension.

The CHAIRMAN. When was the original act passed?

Mr. FOSTER. July 21, 1940.

The CHAIRMAN. 1940?

Mr. FOSTER. That is right.

The CHAIRMAN. So that these acts that you now refer to, in 1947, are in effect an extension of an act that was originally passed in 1940? Mr. FOSTER. With considerable change in the wording and some of the intent.

The CHAIRMAN. If there are any changes that would in any way have a bearing upon these questions that we are discussing this morning, you may point them out.

Mr. FOSTER. I think this section would have that bearing, Mr. Chairman. [Reading:]

The Congress hereby declares that it is the general policy of the United States to eliminate emergency wartime controls of materials except to the minimum extent necessary;

1. To protect the domestic economy from the injury which would result from adverse distribution of materials which continue in short world supply;

2. To promote production in the United States by assisting in the expansion and maintenance of production in foreign countries of materials critically needed in the United States;

3. To make available to countries in need, consistent with the foreign policy of the United States, those commodities whose unrestricted export to all destinations would not be appropirate.

4. To aid in carrying out the foreign policy of the United States.

Mr. LEA. In determining amounts that should be sent to foreign countries, have you always complied with the requests made by those countries as to the amount they require?

Mr. FOSTER. I would state, Mr. Lea, that we have practically never complied with the total request. In view of the shortage in this country, we have felt it necessary in almost every instance to reduce the amounts which they stated were of highest essentiality. We had to go beyond that in order to protect the short supply in our own nation, since we have only had under control since the first of this year those items which were in short supply in this country.

Mr. HESELTON. Mr. Lea, would you yield, before we leave that law

Mr. LEA. Very well.

Mr. HESELTON. To get on the record the section dealing with the certification by the Secretary of State, and the required certification by the Secretary of Commerce?

The CHAIRMAN. I think it deals with the question of licenses, rather than the word "certification," does it not?

Mr. HESELTON. I am reading from the Herter committee report. Mr. FOSTER. That is only in the case of those items which we direct abroad by the exercise of priority powers, not the ones that we simply license for export.

Mr. HESELTON. In any event I think it might be helpful to have it in the record at this point.

Mr. LEA. Very well.

I think it would be well to place it here for the record. You may place it in the record, if you will, Mr. Foster.

Mr. FOSTER. We will place that section which is, of the same Public Law 188, section 33 (b) 1 (f), and refers only to those exports which have a priority granted directing the export of those particular goods.

Mr. HESELTON. That does not fully answer the question. By "critical materials," it provides for materials critically needed in the United States; does it not?

Mr. FOSTER. For a certain purpose.

Mr. HESELTON. Why not read the law?
Mr. FOSTER. I would be very glad to.

Mr. Fisher will read that law.

Mr. HESELTON. I mean that section, so we will know what it is. Mr. FISHER. I will read the original subsection, of which this is a further subsection. Section 3 (b) [reading]:

Title 3 of this Act

that refers to title 3 of the Second War Powers Act

and the amendments to existing law, made by such title, shall remain in force until February 29, 1948, for the exercise of

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