[S. 1108, 76th Cong., 1st Sess.] AMENDMENTS Intended to be proposed by Mr. McNary to the bill (S. 1108) to restrict the exportation of certain Douglas fir peeler logs and Port Orford cedar logs, and for other purposes, viz: On page 1, line 3, strike out the words "Douglas fir peeler logs shall not be exported" and insert in lieu thereof the following: "no Douglas fir, Port Orford cedar, or Sitka spruce logs shall be exported". Beginning on page 1, line 9, strike out down to and including line 11 on page 2. On page 2, line 12, strike out "SEC. 4" and insert in lieu thereof "SEC. 2". Amend the title so as to read: "A bill to restrict the exportation of Douglas fir, Port Orford cedar, and Sitka spruce logs." Senator BILBO. To begin with, I will submit, for the benefit of the record; the reports from the various Government departments on the bill. First, we have a very lengthy, full statement from the Honorable Cordell Hull, Secretary of State. (The document referred to is as follows:) The Honorable JOSIAH W. BAILEY, United States Senate. DEPARTMENT OF STATE, MY DEAR SENATOR BAILEY: I refer to the request from the Senate Committee on Commerce, received February 28, 1939, for a report on S. 1108, a bill to restrict the exportation of certain Douglas fir peeler logs and Port Orford cedar logs, and for other purposes. S. 1108, if enacted, would prohibit the exportation of Douglas fir peeler logs from the United States or any of its Territories or possessions, "except with the approval of the President on the joint recommendation of the Secretary of War, the Secretary of the Navy, the Secretary of Commerce, and the Secretary of Agriculture, after an application made to the Secretary of Commerce." For the purposes of the act, a peeler log is defined as "a log (a) having a diameter of twenty-four or more inches at either end; (b) suitable for rotary veneer cutting and capable of producing not less than 20 per centum of clear veneer, based upon the scale content of the log; (c) having not less than eight annual rings per inch at the smaller end; and (d) not containing such defects as shatter. excessive splits, loose annual rings, loose or soft heart decay, or any other defect which makes such a log unsuitable for rotary veneer cutting. Any defect appar ent at both ends of a log shall be considered to exist throughout a log." The act also prohibits the exportation of Port Orford cedar logs from the United States irrespective of size or quality. Provision is made for punishment in cases of violation. Although an unqualified prohibition on exports of the two products con cerned is not provided for, it is clear that the objective of the proponents of the legislation is that exports shall be the exception rather than the rule. There are two essential arguments advanced on behalf of this bill. It is claimed on the one hand that the bill will assist in the conservation of our Douglas fir and Port Orford cedar, which are limited in supply and difficul to replace; while on the other hand it is claimed that the exports of raw unfinished logs will be replaced by exports of finished plywood with a conse quent gain to this country of wages and other payments necessary for the con version of the logs into plywood. One of the two arguments may be vali but certainly not both, for the two are mutually exclusive. To the extent tha the enactment of the bill would prevent the cutting of trees, conservation woul result, but to the extent that it would simply shift the use of logs from foreig to domestic plywood producers, no conservation would occur. It can, however, scarcely be maintained that all Douglas fir logs now exporte would be replaced by exports of plywood. The countries which now purchas our peeler logs would shift their source of supply from the United States t Canada so far as possible, and would if necessary utilize other softwoods. T the extent that Canadian logs could be substituted for our logs, and to th extent that other softwoods could be used in place of Douglas fir, the loggin industry of the United States would suffer a loss in production, employmen and wages. However, even if such a shift in source of supply or substitutic b i U li 18 g of other logs were impossible to any great extent it is by no means certain that foreign countries would take our plywood in increasing amounts. It has been represented to this department that "no other nation can or will ship this class of materials for export." As a matter of fact, however, the exports of Douglas fir logs from Canada exceed and have a higher average unit value than the exports of such logs from the United States (see appendix II). It may be that more high-grade peeler logs are exported from the United States than from Canada and that some or many of the Douglas fir logs exported from the United States to Canada are reexported from that country. Nevertheless, if the bill under consideration should become law, the plywood industries in foreign countries could obtain supplies of Douglas fir logs from Canada. They might not be able to obtain as many high-grade peeler logs as they have been accustomed to obtain in the United States, but they doubtless could somehow adapt themselves to the use of lower grade logs. Canadian log exporters would thus be in a position to profit by any export restrictions imposed on log exports from the United States. The one sure result of this bill would be lower prices for the logs on which the export prohibition would exist (because of the decreased market for them) with a consequent loss to the logging industry. A study of the export figures for Douglas fir logs (appendix I) would not lead one to fear for the preservation of the supply from that development alone. Although exports were unusually large in 1936, exceeding 130,000,000 board feet, they were but slightly more than half that amount in 1938. Exports of Port Orford cedar logs (appendix I), which have been classified separately only since 1936, have never been large and have declined in the last 2 years to approximately one-third of the 1936 figure. Proponents of the bill apparently have sought to give the impression that foreign countries have made it practically impossible for our plywood manufacturers to maintain, much less expand, existing foreign markets or to find new ones. The fact is, the plywood industry has been able to develop export markets of considerable importance despite many difficulties, including foreign tariffs and other trade barriers. The United Kingdom, Belgium, and Canada have for some years been the three leading markets for American plywood (see appendix I). The United Kingdom alone usually accounts for nearly one-half of our total plywood exports. In the negotiations with the Government of the United Kingdom for the reciprocal-trade agreement which entered into effect on January 1 of this year, as in the case of similar negotiations with other countries, every effort was made to obtain a concession on behalf of our plywood exports. As a result, the United Kingdom duty on plywood (faced with softwood) was bound at 10 percent ad valorem. This automatically limits the preference in favor of plywood of British Empire origin to that amount. The specific French duty on plywood was reduced by 17 percent in the trade agreement with that country. The Cuban duties which vary accord. ing to the state of manufacture were bound at their former levels. The Canadian duty on plywood (not further manufactured than glued or cemented), which was 35 percent ad valorem in December 1935, was reduced by the first trade agreement with Canada to 30 percent and by the second trade agreement with Canada to 25 percent. These rates compare with our own rates of duty of 40 percent on all plywood except alder, which is 50 percent, and birch, which is 25 percent. But on even broader grounds than those given above it is deemed inadvisable to pass such a law as that under consideration. Any restriction on exports encourages other countries to do likewise. It must be strongly emphasized )[ that the United States is a country largely dependent upon imports of certain raw materials. Certain industries are occupied solely with the conversion of raw materials into more advanced products while many of our most important il industries require substantial amounts of imported raw or semifinished materials as necessary ingredients in the particular goods they produce. American interests have, in fact, already suffered from foreign export restrictions and it is not to our interest to encourage them. The arbitrary stoppage of the flow of any product into its accustomed channels of trade always causes consequences not originally envisaged. Not only are foreign purchasers and users of the 1 product harmed but the domestic exporter, those dealing with intimately allied processes and industries (i. e., tool suppliers, shippers, insurance companies, banks), and those domestic importers and other exporters who may be affected by consequent developments must readjust themselves at their own expense to the new conditions. te 15 th ir i Under the reciprocal-trade-agreements program we are making significant progress in the restoration and expansion of our foreign trade which is of such great importance to the prosperity of this country. The fundamental inconsistency between this liberal trade policy and the proposed export restriction is apparent. For the reasons indicated, the Department recommends that S. 1108 be not passed. I am making no comment upon the administration questions involved in the proposed bill since they do not fall within the jurisdiction of this Department. Sincerely yours, CORDELL HULL DOUGLAS FIR LOGS Year PORT ORFORD CEDAR LOGS 1 Year Year PLYWOOD Senator BILBO. Then we have a report from the Department of the Navy. (The document referred to is as follows:) The CHAIRMAN, COMMITTEE ON COMMERCE, NAVY DEPARTMENT, United States Senate, Washington, D. C. MY DEAR MR. CHAIRMAN: The bill (S. 1108) to restrict the exportation of certain Douglas fir peeler logs and Port Orford cedar logs, and for other purposes, and certain amendments which Senator McNary intends to prpose to the bill, have been referred to the Navy Department by your committee with a request for suggestions concerning the merits of the bill and amendments and the propriety of their enactment. The purpose of the bill S. 1108 is as indicated in its title. The amendments intended to be proposed by Senator McNary would extend the restriction on export to Sitka spruce logs as well as to Douglas fir logs and Port Orford cedar logs. The materials mentioned above, to which the provisions of the bill S. 1108 apply, are not considered or classified as strategic, critical, or otherwise essential for purposes of national defense insofar as the Navy Department is concerned. No comments, suggestions, or recommendations are made, therefore, relative to the bill S. 1108 or the amendments thereto intended to be proposed by Senator McNary. Sincerely yours, WILLIAM D. LEAHY, Acting. Senator BILBO. Following that, a report from the War Department on the bill, and an additional report on the proposed amendments to the bill. (The documents referred to are as follows: Hon. JOSIAH W. BAILEY, Chairman, Committee on Commerce, United States Senate. WAR DEPARTMENT, Washington, March 8, 1939. DEAR SENATOR BAILEY: Careful consideration has been given to the bill S. 1108, entitled “A bill to restrict the exportation of certain Douglas fir peeler logs and Port Orford cedar logs, and for other purposes," which you transmitted to the War Department under date of February 2, 1938, with a request for information and the views of the Department relative thereto. No existing laws known to this Department will be affected by this bill. The legal effect of the bill would be to prohibit the exportation of Douglas fir peeler logs and Port Orford cedar logs, both as defined within the bill, from the United States, territories, or possessions except with the approval of the President on joint recommendation of the Secretaries of War, the Navy, Commerce, and Agriculture, after an application made to the Secretary of Commerce. The bill provides penalties for its violation. Neither Douglas fir nor Port Orford cedar products, to any appreciable degree, enter into present War Department requirements; nor are their products required for military uses in the event of a major war emergency to such an extent that they could not be replaced by other timber products, the timber for which is in sufficintly abundant stand in the United States. The passage or nonpassage of this bill would have no effect upon the War Department from a national defense viewpoint. This report was submitted to the Bureau of the Budget, which advises that there is no objection to its submission to your committee. Sincerely yours, Hon. JOSIAH W. BAILEY, Chairman, Committee on Commerce, United States Senate. LOUIS JOHNSON, WAR DEPARTMENT, DEAR SENATOR BAILEY: Careful consideration has been given to "Amendments intended to be proposed by Mr. McNary to the bill (S. 1108) to restrict the exportation of certain Douglas fir peeler logs and Port Orford cedar logs, and for other purposes," which you transmitted to the War Department under date of February 15, 1939, with a request for information and the views of the Department relative thereto. In reporting to you on S. 1108 the War Department expressed its views as follows: "Neither Douglas fir nor Port Orford cedar products, to any appreciable degree, enter into present War Department requirements; nor are their products required for military uses in the event of a major war emergency to such an extent that they could not be replaced by other timber products, the timber for which is in sufficiently abundant stand in the United States. "The passage or nonpassage of this bill would have no effect upon the War Department from a national-defense viewpoint." The amendments proposed to include Sitka spruce logs do not in any way change the position of the War Department in reference to this proposed legislation. This report was submitted to the Bureau of the Budget which advised that there will be no objection by that office to its submission to your committee. Sincerely yours, HARRY H. WOODRING, Senator BILBO. Next we have a report from the Department of Commerce. (The document referred to is as follows:) Hon. JOSIAH W. BAILEY, DEPARTMENT OF COMMERCE, OFFICE OF THE SECRETARY, Chairman, Committee on Commerce, United States Senate, Washington, D. C. MY DEAR MR. CHAIRMAN: Reference is made to your letter of February 2 1939, in which you requested the views and recommendations of the Department on S. 1108, a bill to restrict the exportation of certain Douglas-fir-peeler logs and Port Orford cedar logs, and for other purposes, and your letter of February 15, 1939, concerning certain amendments to S. 1108, proposed by Senator McNary.. During the past 10 years there has been a steadily increasing export trade in certain types of logs which has proved detrimental to the export of lumber and other forms of fabricated wood products. This has been particularly noticeable in the export of Douglas-fir-peeler logs to Japan, Canada, and other foreign |