Mr. OXHOLM. Mr. Steer, with your very detailed knowledge of the timber conditions on the Pacific coast, the class of timber they have in British Columbia and the class of timber in Washington and Oregon, does it not seem rather peculiar that the statement should be made that if we don't ship high-grade Douglas fir logs that foreign countries will go to Canada?

Here is what happened. Last year and the year before last between 50 and 60 percent of our exports of Douglas fir logs to the world went to British Columbia. The British Columbia exports of No. 1 grade logs, according to their official statistics, have decreased since 1927 from 36,000,000 to 4,000,000 feet, 10 years afterward. I think we all realize that the supply of high-grade timber of this character in British Columbia is dwindling; that the position of that industry, depending on the high-grade logs, is very serious, not as serious, perhaps as in some other countries, but why should we export this and support their industries and the Japanese industries and the German industries, and all these other industries in foreign countries, when we have a practical monopoly on the raw material that Mr. Silcox tells us we must conserve?

Now, it is a question, Mr. Chairman, to my mind, of national welfare. Are we going to permit this theory of free trade or any other idea that anyone in the Department may have to interfere with national welfare? Is it good policy to permit one group of people to jeopardize our future position by exporting this raw material that we all realize we must have in the future? Is it fair of that industry to overcut and tell our industries that if you can't take all that we produce, regardless of conditions, then we will feed your foreign competitors?

Those are the questions of practical nature that we are facing, and I would like, Mr. Steer-as a forester and as an impartial person, a person that has made more of a study of this particular thing than anyone I know, do you think that it is a reasonable thing that we are asking?

Mr. STEER. In other words, you mean do I think that this bill is a reasonable bill?

Mr. OXHOLM. Yes; I would say from the point of public welfare. Mr. STEER. Well, I don't want to sidestep your question, but I am going to. Mr. Silcox made some remarks on that subject, and I frankly don't feel called upon to testify as to that effect when the Chief of my Bureau has already spoken.

Senator HOLMAN. In other words, you don't want to be put in the position of either confirming or contradicting what he said; is that the idea?

Mr. STEER. Yes; I think that is all there is to it; the Chief of my Bureau has expressed the viewpoint of the Forest Service.

Senator HOLMAN. Would you care to express an opinion on the diameter limitation that we have written into this bill?

Mr. STEER. No; only to this extent, Senator: I don't see that it makes much difference how the logs are graded or scaled in this country. It doesn't amount to a whoop and a holler how we grade them here. The proof of the pudding is what are they used for, where they go.

Senator HOLMAN. That substantiates my contention.

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Mr. STEER. Well, it may or may not, Senator, but I am not familiar with the foreign plywood industry. But I was in Europe during the late unpleasantness, and I don't think it paints an accurate picture to compare the standards of wood utilization in this country with those of the central European countries as I have seen them.

Senator HOLMAN. I think that covers the point; thank you very much, and again I am grateful to you for the pains you have taken to compile these data.

Senator BILBO. Senator Holman, have you any other witnesses? Senator HOLMAN. No; I have none.

Senator BILBO. Is there anyone who wants to be heard against or for this measure?

Senator HOLMAN. Is there anybody here from the State Department?

STATEMENT OF LEROY STINEBOWER, OFFICE OF THE ADVISER ON INTERNATIONAL ECONOMIC AFFAIRS, DEPARTMENT OF STATE

Mr. STINEBOWER. My name is Leroy Stinebower, Office of the Adviser on International Economic Affairs in the Department of State.

Senator HOLMAN. Have you worked in the timber industry?
Mr. STINEBOWER. No, sir.

I think, Mr. Chairman, that the views of the Department were set forth in a letter of the Secretary to this committee on May 8, which I believe Mr. Hull asked to be inserted in the record.

Senator BILBO. That is already in the record.

Mr. STINEBOWER. I am here to endeavor to restate or elucidate any questions that might arise out of the statements that the Secretary included in his letter to this committee.

I might add one other thing, that the major concern of the Department in connection with this bill is in its bearing on our general commercial policy. We have been engaged for a number of years, now, on a broad attack on all forms of unreasonable restriction to international commerce, whether on the import side or the export side, and we have also been engaged for an even longer period in a very decided effort to combat restrictions imposed by other countries upon the export of raw materials needed by American industry. Senator HOLMAN. They do exist, don't they? There are restrictions?

Mr. STINEBOWER. Yes.

Senator HOLMAN. But your idea is not to restrict Americans into foreign countries?

Mr. STINEBOWER. Our idea is to resist with the utmost efforts and powers that we have, the restrictions that are placed upon raw materials destined for American industry and in order to do that it generally is most effective to have as clean hands in going into such a contention as we can.

Senator HOLMAN. In the same way, America 20 years ago sunk a lot of our battleships in the course of construction, on the theory that if America didn't arm, the rest of the world wouldn't, but where are we today? It is a lovely theory.

Senator BILBO. I understand that the general policy he is announcing is to make America a free trader.

Senator HOLMAN. Regardless of what other nations do to us. It is a lovely academic theory, but it never put any men to work. Go on, I am listening.

Mr. STINEBOWER. The United States is one of the largest consumers of raw materials in the world.

Senator HOLMAN. It isn't going to continue to be with 13,000,000 people out of work.

Mr. STINEBOWER. We have a great deal of interest in continuing to receive those raw materials and process them in this country, rather than to be compelled on every occasion to buy the finished product. Now it has definitely been the experience of this country and of other countries that restrictions on exports, particularly of raw materials, have been as restrictive and in many cases ever more difficult to deal with than are import restrictions in other countries, which prescribe an obstacle to the export of American commodities.

Senator HOLMAN. Did you ever hear the old adage that it makes a difference whose ox is gored? Out there, timber is our bread and butter, and when you give that away to sell typewriters it doesn't feed the loggers and the lumbermen and the people that are living out there in that great territory.

Mr. STINEBOWER. Well, of course, you don't give away either your timber or your plywood. To the extent that you give away-if you call it such-I would prefer to say to the extent that you exportyour plywood, that also does not sell your typewriters. This is not a case of forcing export trade in order to sell another commodity.

Senator HOLMAN. I am a manufacturer-of course, I shouldn't engage you, a witness, in argument, but I want to get this across-I am a manufacturer, not a manufacturer of plywood, by the way, but this is true of all manufacturers. Why do you say that we only cut 2 percent or 1 percent? That may be just enough to put me out of business. Go ahead.

Mr. STINEBOWER. I feel much in the same position as the preceding witness. I would prefer to attempt to answer any questions that you may put to me.

Senator HOLMAN. I have a lot of prepared questions, and I beg your pardon for interrupting you, but I feel rather deeply on this thing when I see the chaos out in my country, which is naturally such a rich country.

Is there any objection if I ask questions, or have you something further you want to say?

Mr. STINEBOWER. No objection.

Senator HOLMAN. Apparently there was a letter addressed by the Secretary of State to Senator Bailey, dated May 8, concerning this peeler-log bill, wherein it is claimed that the export of peeler logs and the export of plywood made from these logs are mutually exclusive in regard to timber conservation. Does the State Department know that foreign countries import our peeler logs for veneers to cover the interior portions of plywood made from interior materials? This method of utilizing high-grade logs is considered as one of the highest forms of efficient utilization of wood, and is the basis of conservation and reforestation. In other words, are you familiar with that fact?

Mr. STINEBOWER. I have been informed of that.

Senator HOLMAN. Does the State Department know that British Columbia is the largest market for our high-grade Douglas fir logs, and that the plywood and high-grade wood products are manufactured from these American logs and exported to the world's markets? In this manner the Canadian shippers are benefited by lower labor costs and Empire preference, thereby successfuly competing with the export of finished wood products from America. Are you familiar with that fact?

Mr. STINEBOWER. May I, if this is an appropriate place in which to take it up, say that it may be that the definition of "conservation" which is contained in Secretary Hull's letter to Senator Bailey is not the same definition that you would adopt? The only point that was. being made in that letter, as I understand it, was that to the extent that there is a question of whether we shall export Douglas fir logs in the form of peeler logs, or whether we shall export them in the form of plywood, the question of conserving those peeler logs themselves does not arise. If you export the product in the form of plywood, you are still exporting the log. That was Secretary Hull's point.

Senator HOLMAN. Where I differentiate from that thought is this, it is the old question that I brought up this morning, of a flood and a drought. We rush in and cut them right now and either work them up and get rid of them in a comparatively small period of time and ruin that resource for all time, for future generations, and so on, and then have an increased unemployment problem; whereas, by conservation, as I use the word, it means to make a steady flow of manufacture and employment incident to manufacture. Do you get the difference?

Mr. STINEBOWER. Yes. There would be no disagreement from the Department that to the extent that you do not export the logs, either in the form of logs or of plywood, there is undoubtedly, there is certainly, conservation.

Senator HOLMAN. Well, that is that conservation of "Woodman, spare the tree" that was referred to around here.

Of course there probably is an irreconcilable difference of theory. My theory is that the prosperity of this country and the employment of its people is contingent upon the continued operation, regular employment, of many people, the most people, at good wages, and I think that we get that in refined manufacture and not in stripping our country of an irreproduceable resource, in a comparatively short time. Does the State Department realize that through the unrestricted export of high-grade logs the reciprocal trade agreement program is placed in jeopardy because log-importing countries are placing prohibitive tariffs and outright import prohibitions on the American manufactured wood products in order to protect their own labor and wood-conservation industries? In other words, foreign countries are doing the very thing that the State Department objects to our own people doing in our own protection.

Mr. STINEBOWER. In that connection may I say that in every agreement that has been negotiated to date a very real effort has been made to get the maximum that could be obtained from the other countries on our lumber products.

Senator HOLMAN. In other words, the other country regulates what. we shall do?

Mr. STINEBOWER. That is hardly a correct way to put it. In large part it depends frequently in the course of negotiations upon what kind of a bargain you are able to make, what you can offer to the other country.

Senator HOLMAN. You see, the other country is the controlling factor.

Does the State Department realize that no other country has any appreciable quantity of high-grade softwood logs available for export and that Germany, Japan, Scandinavia, and other countries would not send their ships thousands of miles to our shores for the raw material if it could be obtained from any other source?

Mr. STINEBOWER. I believe there has been some testimony here this morning to the effect that there is Douglas fir which is satisfactory to foreign producers of plywood to be found in Canada also. Senator HOLMAN. In limited quantities, and not such high grade. Does the State Department realize that the American industry has, through years of efforts, developed a market in foreign countries for finished wood products and that during recent years the exportation of logs from this country is causing a serious loss in our foreign markets for finished wood products? Furthermore, is there any other country in the entire world which has permitted its development to take place on an unrestricted scale?

Mr. STINEBOWER. I am afraid I don't follow the latter part of that question.

Senator HOLMAN. Well, I will give you this one.

The unemployment situation in the north Pacific is extremely serious and has been aggravated by the change from the exportation of finished wood products to that of the exportation of logs. Does the State Department place its free-trade program ahead of that of unemployment relief and timber conservation?

Of course those are political questions, and I don't think you are called upon to answer them really. You are in the Department and I am really beating somebody else over your shoulders and that is not fair to you personally.

Anyway, I would like to get these questions into the record, and there is no use of my reading them, but I would like to put my questions itno the record, if I may, because I think they are pertinent to a consideration of this subject.

Senator BILBO. Very well.

(The balance of Senator Holman's questions are as follows:)

The State Department contends that an embargo on high-grade Douglas fir peeler logs in the United States would transfer this export business to Canada. Canadian official sources give the export of Douglas fir peeler logs as less than 1 percent of the total of exports. The stands of high-grade Douglas fir timber in Canada is, according to the same source, very limited. How can British Columbia under these circumstances take over the log export trade of high quality fir if an American embargo is put into effect?

To what extent does the Department of State protect the interest of American capital invested in Canadian timberland, logging operations, and wood-conservation plants? If these interests come in conflict with the corresponding American interests in the States of Washington and Oregon, what is the Department of State's attitude toward American labor engaged in these industries in Washington and Oregon and how is the position of our labor affected by Canadian and other foreign competition using our logs?

On what basis does the State Department make the statement that an embargo on high-grade Douglas fir logs will cause a lowering of the prices of