bacher, Director of the Office of Trade Promotion; Robert E. Simpson, Director of the Office of Economic Affairs; and Mr. Walter S. Shafer, Director of the Office of International Trade Fairs.

Gentlemen, we are pleased to have all of you with us this morning, and we are grateful for the views that you are going to bring us.

Before calling upon you, I should like to announce that there will be a meeting of this committee tomorrow afternoon to conclude this phase of the hearings if permission is granted by the House.

Before calling on Mr. Kearns, I wonder if Mr. McCulloch would like to make a statement at this time.

Mr. McCULLOCH. No, Mr. Chairman.

Mr. YATES. Mr. Kearns, we would be delighted to hear your statement at this time.

TESTIMONY OF HENRY KEARNS, ASSISTANT SECRETARY OF COMMERCE FOR INTERNATIONAL AFFAIRS

Mr. KEARNS. Mr. Chairman and members of the committee, it is a privilege to be here, and with your permission I would like to go over this testimony we have prepared.

In this case we have tried to present the operations of the Commerce Department as they affect small business and international trade.

As you know, we have submitted copies of the statement, and some of the examples of the material that we produce for the use of the committee, and I will refer to them as I go through the statement, if that is agreeable.

I wish to thank the committee for the opportunity to appear here today to describe what the Department of Commerce does to help U.S. business expand in the field of foreign trade. By the term "foreign trade" we mean exports, imports, foreign investment, and international travel.

Although our services naturally are available to all business firms, both large and small, we are convinced that our services are needed even more by small business. This is easily understood when it is realized that during the month of May, to cite only the latest month for which we have figures, there were 38,913 individual requests to the Department of Commerce from business for facts and assistance relating to foreign trade. Similar figures for previous months have been considerably higher. We are happy to tell you that these were handled with dispatch.

If I may be permitted a personal note, I should mention that throughout my adult life I have been a "small businessman." I have owned and operated a number of enterprises which fall well within the Government's definition of "small business." My experiences in financing for expansion and such other managerial responsibilities as meeting payrolls and seeking and keeping qualified employees, have been of inestimable value to me in the course of my official duties, for it is of the utmost importance that the Assistant Secretary of Commerce for International Affairs have a constant awareness of the small businessman's problems and interests. I believe that my personal familiarity with small business operations enables me in some measure to be of greatest possible service to the small business establishments who daily call upon us with international trade problems.

I should like to say also that we in the Department have an extremely close working relationship with the Small Business Administration which, in my opinion, works well to the benefit of the small business community.

We have frequent conversations with Mr. Wendell Barnes, the Small Business Administrator, and the Department of Commerce, through the Office of the Secretary, is represented on the Small Business Administration's loan policy board which provides an additional channel of information between the two agencies.

One tangible result of close cooperation is the Small Business Administration's publication, "Pointers on International Trade,' which was prepared with the assistance of Bureau of Foreign Commerce personnel.

May I begin by indicating why the Department of Commerce is deeply concerned with foreign trade.

Our basic statute enjoins the Department to foster, promote, and develop the foreign and domestic commerce of the United States. To this end the Department participates in the formulation of governmental policies having the purpose of creating a satisfactory climate both here and abroad, for the expansion of trade, tourism, and investment.

Our fundamental premise is that higher levels of international trade more exports, orderly imports, sound foreign investment, and expanding international travel-are in the total national interest.

We believe in and work toward the elimination of governmental restraints on trade here and abroad so as to provide free, competitive access to world markets and the greatest possible accessibility to world resources. We believe that these policies make good sense for the U.S. economy and the economies of the friendly countries with whom we trade. We are certain that through the known beneficial results of competitive trade and international trade is highly competitive, I assure you the U.S. confidence in free enterprise and its demonstrated benefits to all our people can be concretely demonstrated abroad.

We believe firmly that expanding foreign trade makes good sense for U.S. business and the U.S. economy. We also believe that it makes good sense as a means of telling the world of the benefits of free enterprise.

The Department of Commerce participates in the formulation of the Government's policies respecting our foreign trade and foreign economic relations. We are members of the National Advisory Council on International Monetary and Financial Problems, and in this connection review proposals for foreign loans, policies respecting Government guarantees for U.S. firms investing abroad, and financial arrangements with foreign countries.

We are members of the Council on Foreign Economic Policy, which is responsible for giving general direction to U.S. foreign economic relations. We are also members of the Trade Agreements Committee.

And, of course, the Secretary of Commerce is Chairman of the Trade Policy Committee, the Cabinet level group which advises the President on our trade-agreements program, problems of import competition, and so forth.

In all of these committees, as well as working groups and special panels, the Department of Commerce is always mindful of the interests and needs of all U.S. business, and specifically small business.

For several years we have been urging policies in the direction of trade liberalization by foreign countries, particularly for the elimination of restrictions against purchases of U.S. products by countries no longer having a dollar shortage. Great progress has been made in this direction, and in most important respects the major trading partners of the United States in Europe and the rest of the world have now greatly eased restrictions on dollar purchases.

Following the recent General Agreement on Tariffs and Trade discussions in Geneva, for example, Germany agreed to remove all nontariff restrictions on a substantial number of goods, the United Kingdom announced a major move in removing discriminatory restrictions against a wide range of consumer goods and foodstuffs from the dollar area, and the Netherlands announced that it would cease to apply restrictions against dollar area imports for balance-of-payments rea

sons.

The result, of course, is to open doors for additional U.S. exports, and to give U.S. business firms, small and large, the opportunity to compete in the world markets on the traditional bases of price, quality, service, and the many other factors which lead to contracts and sales.

The U.S. private business interests naturally depend, in large measure, on their own resources and initiative for the promotion of international trade, both export and import, but to operate successfully they require reliable sources of basic information about economic and market conditions in trading areas abroad, and about foreign firms active in foreign trade operations.

Guidance to American business in the interpretation of these facts, and assisting newcomers to the foreign trade field, are also essential in the development of an expanding international trade.

U.S. companies often obtain information of this type by sending their representatives abroad, or through trade associations, banks, market research agencies, and other privately owned organizations providing such services for profit.

However, the complete satisfaction of these needs calls for a much broader program of promotional and informational activities than is usually within the means of private individual firms or associations. For this reason, certain activities are generally regarded as the responsibility of the Government.

Because of the limitations of personnel and money the small businesses of America are less able than the large to gather and analyze the essential facts on which to base decisions as to trade, travel, and investment-thus Government, and particularly the Department of Commerce, procures and supplies to them this prerequisite information. Small business just cannot afford international divisions, with expert people traveling the world to develop the facts they must have for prompt and responsible action.

The principal governmental responsibility for the direct promotion of international trade rests with the Bureau of Foreign Commerce in the Department of Commerce. This Bureau operates through the 33 field offices of the Department of Commerce located in the principal trading centers, and through the Foreign Service of the

United States, which, as the committee knows, maintains missionsembassies, legations, and consulates-in foreign capitals and many other principal business centers.

Specific private means of disseminating information to business include the facilities of American trade associations, most of whom issue periodic bulletins to their members, special releases to trade papers regularly read by members of a trade or professional group, and announcements in the general press respecting developments of broad general interest.

Trade associations, business groups, banks, and private business consultants and research organizations, regularly draw on governmental sources for essential informational material.

Through these means, both governmental and private, U.S. foreign traders are given information dealing with foreign populations and their characteristics; taxation, export, import, and exchange controls; the currency systems; foreign laws, including labor, health, and safety legislation, relating to the establishment and operation of business firms of all types; foreign markets for various commodities; import availabilities; prices and price control; historical and political background information; statistics of foreign and domestic trade, banking, and finance; production, including manufacturing, mining, agriculture, fisheries, and forests; foreign transportation systems; power supply and its characteristics; labeling, copyright, trademark, and patent laws and regulations.

These enumerate some of the responsibilities of the Department. The Department of Commerce, through its Bureau of the Census, gathers, processes, and analyzes a large body of data of fundamental importance of business in its distributing and marketing activities. The potentialities of Census Bureau data for U.S. market research are large. These are inherent particularly in the mass of foreign trade statistics compiled, as well as in the censuses of manufactures, distribution, agriculture, and population. Only from the statistical records of the Bureau of the Census can much of this information be obtained.

These facts are valuable, then, not only to the U.S. world traders, but also to our trading partners abroad who are interested in the U.S. market.

Marketing information-indicators of a basic character suggesting which countries might offer the best prospects for particular U.S. firms interested in trade-is essential to small business firms in their business decisions. The Department of Commerce is constantly improving its informational services, including more diversified and comprehensive publications, so as to provide this type of information in as much detail and as speedily as possible.

Basic economic indicators of the U.S. national economy, current analyses of the economic situation and business outlook, the U.S. balance of international payments, and general economic research on the functioning of the American economy also are provided by the Department of Commerce.

The dissemination of information must be broad to insure that all segments of the business community are serviced. It is, therefore, the aim of Government trade promotion specialists to provide the services required by business in as convenient a form as possible, and to de

velop new techniques to channel facts to every potentially interested businessman.

The Department serves a wide business clientele. Foreign traders, desirous of importing from, or exporting to, foreign countries; business firms seeking agents, distributors, or representatives abroad; concerns wishing to open foreign branches overseas; investors looking for opportunities to place their money, experience, or technical skill in new or established enterprises in distant lands; salesmen and buyers of foreign merchandise; trade and professional associations-all rely upon the Department of Commerce for current and reliable information as a basis for their plans and operations.

Last year the Bureau of Foreign Commerce and the Department of Commerce field offices surveyed by personal interview 800 firms engaged in international business. These 800 were chosen at random, and of the 800 firms interviewed, 28 percent were large, 30 percent were medium size, and 42 percent were small. Consequently, the information received is, we believe, typical of all business firms engaged in international business.

We have a copy of this survey that is available for the committee, as you desire, to see the responses from the businesses.

(The survey is in the files of the subcommittee.)

The survey shows there is wide agreement within the business community on the value of economic and commercial information from foreign countries in the international operations of their businesses.

Those interviewed were asked to give their evaluations in terms of the contribution such information makes to the profits and the expansion of their businesses. It is sometimes felt that economic and commercial information from abroad is of value principally to the larger firms. This survey clearly demonstrates that small businesses as well as larger firms find this kind of information to be valuable in their operations.

Approximately one-half of the entire sample interviewed were subscribers to the Bureau of Foreign Commerce publications. Thirty percent of the subscribers were large businesses, 30 percent were medium size, and 40 percent were small.

On the basis of this survey, as well as on the basis of our daily operating experience, we are convinced that the Department is providing valuable services to both large and small firms in the expansion of their international business. We feel certain that these services are being used equally by both large and small firms.

To illustrate the services made available to businessmen, I should like to describe several specific aids. There is also provided for the committee's use a group of selected representative samples of BFC publications.

From what has just been said, I believe it is fair to say that the Department endeavors to service U.S. business generally in its foreign trade undertakings. However, because small business generally is not able to afford the expense of information gathering and analysis, and cannot maintain extensive company representation in international commercial circles, the Bureau of Foreign Commerce fills a void and provides the assistance which smaller firms could not obtain otherwise. Businessmen making policy decisions, regardless of the size firm they are directing, must have at their disposal complete information