major dairy products tend to support the returns to farmers for milk and butterfat sold. It is, therefore, reasonable to expect that imports of cheese on an unrestricted basis would result in increased purchases of dairy products under the price-support program.

(d) The law states that import controls are necessary for cheese and makes no distinction as between different types of cheese. The different types are competitive with each other in varying degrees. In view of the recent substantial increases in imports of most types of cheese in combination with recent decreases in United States production of most types of cheese, and also in view of the probability of having to purchase supplies of Cheddar cheese under the price-support program, the Department determined that import restrictions would be applied in the same manner to all types of cheese.

2. Butter.-Butter has been under import control for a period of many years and no imports have been authorized for commercial sale in domestic trade channels in the United States. The control was initially placed into effect during World War II in order to implement international allocations agreed upon by the Governments of the Allied countries. In 1949 and 1950, surplus supplies developed and it was necessary to purchase large quantities under the price-support program for milk and buttermilk. Import controls, therefore, were continued in order to permit the orderly liquidation of Government-owned stocks, pursuant to legislative authority provided in Public Law 590 of the Eighty-first Congress. Under the present price-support program for milk and buttermilk, the Department stands ready to purchase creamery butter at a price of 66 cents per pound for grade A and 64 cents per pound for grade B. While no purchases under the 1951 support program have been made since last April, current market prices are very close to the Department's paying prices and it is possible that Government purchases will be necessary in the near future. Storage stocks of butter and cream are fairly large and were built up in a period when no butter was being imported. Even in the absence of imports butter production thus far in 1951 has been running below a year earlier. In view of these considerations it was determined that no butter imports could be authorized at this time under the act. The Department now holds some stocks of butter acquired under the price-support program during the spring of 1951.

3. Nonfat dry milk solids.-Nonfat dry milk solids are currently being purchased by the Department of Agriculture under the price-support program for milk and butterfat. The Department holds about 35 million pounds of dried milk acquired under this program, and any imports would cause additional expenditures under the Government price-support program for milk and butterfat. The Department has placed nonfat dry milk solids under import control and no imports are being authorized at this time.

4. Casein. Increases in imports of casein above the 1950-51 level would tend to discourage and impair domestic production of casein below present levels and would cause an increase in production of nonfat dry milk solids and an increase in Government purchases of nonfat dry milk solids for price support. Casein is produced from liquid skim milk and the Department is purchasing dried skim milk (nonfat dry milk solids) under the price-support program. Therefore, import controls on casein were required. Under the control order, imports of casein are permitted at a level equal to the quantity imported in the year ended June 30, 1951. Domestic production of casein probably cannot be expanded rapidly in view of shortages of critical materials and for other reasons. The United States has imported large quantities of casein for many years, and these imports supplement domestic supplies in meeting requirements of this product for manufacturing purposes in paints, glues, and high-grade paper.

The foregoing paragraphs set forth the basis for the action taken by the Department of Agriculture in the administration of the provisions of section 104 relating to dairy products. The provisions of section 104 are mandatory and in determining whether import controls must be imposed no consideration can be given to the broad effects of import restrictions of the type required by the act upon international trade and upon our relations with friendly nations. The position of the Department with respect to the proposed repeal of section 104 has already been presented to the committee by Under Secretary McCormick in his testimony on August 31, 1951.

Sincerely yours,

CHARLES F. BRANNAN, Secretary.

United States imports of selected types of cheese and casein: Prewar average and by years, 1945-50 and January-June 1950-51

United States production of milk on farms, butter, cheese, nonfat dry milk solids, and casein: Prewar average and by years, 1945-50, and January to June 1950-51

the record for today.

That will close

(Whereupon, at 12:20 p. m., the subcommittee recessed, to reconvene at the call of the chairman.)

CLARIFICATION OF SECTION 402 (d) (4)

THURSDAY, SEPTEMBER 13, 1951

UNITED STATES SENATE,

SPECIAL SUBCOMMITTEE OF THE

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The subcommittee met, pursuant to notice, at 10 o'clock, a. m., in room 457, Senate Office Building, Senator A. Willis Robertson (chairman of the subcommittee) presiding.

Present: Senators Robertson, Sparkman, Benton, Capehart, and Bricker.

Senator ROBERTSON. The committee will please come to order. The first witness this morning is a witness for the American Federation of Labor. Will you give the reporter your name, please?

STATEMENT OF PETER HENLE, ASSISTANT ECONOMIST,
AMERICAN FEDERATION OF LABOR

Mr. HENLE. Peter Henle, economist, American Federation of Labor. Senator CAPEHART. Mr. Chairman, I would like to ask a few questions before the gentleman proceeds. I have read his very interesting statement and I want to ask him a few questions.

I notice on the ninth page you say:

for this reason the American Federation of Labor urges this subcommittee to report to the full committee and the Senate a simple amendment repealing existing section 402 (d) (4) of the Defense Production Act.

Did you prepare this statement?

Mr. HENLE. Yes, sir.

Senator CAPEHART. Was this statement and the views expressed, as I have just read them, presented to the board of directors of the AFL?

Mr. HENLE. Let me say this first, Senator, if I may:

I notice that my wording refers to the existing section 402 (d) (4). I am referring by that to the amendment that was added recentlySenator CAPEHART. My question is, Did the board of directors or trustees of the American Federation of Labor approve that statement? Did they see this statement of yours?

Mr. HENLE. I would like to say, before I read my statement, if I may, that President Green of the AFL wanted me to convey to the subcommittee his personal regrets that he himself was unable to be here. He, as you may know, is already in San Francisco for the American Federation of Labor convention, which opens on Monday. I talked to President Green before he left, and outlined the issues that are involved