STUDY OF SOVIET OIL OFFENSIVE BLOCKED

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64B00346R000100220081-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 15, 2016
• Document Release Date: June 21, 2004
• Sequence Number: 81
• Publication Date: July 16, 1962
• Content Type: OPEN

1962
Approved For Re1gg1a_"L Q14B(+aW0100220081-2
dawn's early light he saw "the Star-Spangled
Banner" still flying above the ramparts of
the embattled fort and penciled on an en-
velope the words destined to become our na-
tional anthem. In it we sing:
"Blest with vict'ry and peace may the heav'n
rescued land,
Praise the Power that bath made and pre-
served us a nation.
Then conquer we must when our cause it is
just,
And this be our motto-'In God Is our
trust'."
And now we imprint upon our coins and
our currency what we boldly profess as our
national motto: "In God we trust." This
motto long recognized by tradition was made
official by a congressional act in 1956. And
to the binding documents of state we affix
the great seal containing the Latin words
"Annuit Coeptis" above the ever-watching
eye symbolizing God's providence.
And who among us cannot recall the an-
xious,days of World War II when we so fer-
vently espoused our cause as of the divine
will and prayed expectantly for His bless-
ings. Kate Smith was a beloved symbol of
the Nation as she sang:
"God bless America land that I love,
Stand beside Her and guide her,
Through the night with the light from
above."
And but recently we have added to our
pledge to the flag that which was implicit
all the time.
"I pledge allegiance to the flag of the
United States of America and to the Republic
for which it stands; one nation under God
indivisible, with liberty and justice for all."
So then we, as a nation, have recognized
God and sought His help not only from the
beginning but throughout all our history.
Let us, therefore, come to our third ques-
tion. Do we not need now to seek His help?
HIS HELP NEEDED NOW
Never before have the lines been so sharply
drawn between atheistic communism and
theistic democracy. In a recent speech
Senator WILLIS ROBERTSON said: "This is a
time when our beloved Nation is threatened
from without by a deadly foe and at the
same time is threatened by destruction from
within by spiritual indifference and moral
deterioration.- The conflict.of deepest con-
cern is not might against superior might.
The major issue that faces us today is. this:
Will America accept the moral challenge of
this hour? This, my friends," said Senator
ROBERTSON, "is the world leadership to which
we are called: to stand before the nations
of the entire world and say with young
David: 'Thou comest to me with a sword and
shield: but I come to thee in the name of
the Lord of hosts: "
Communists repudiate all that we hold
basic to our Constitution. Our Nation is
built on the moral law, revealed in nature
and engraved on the heart of man. The
best known and noblest of American state
papers declare forthright that "certain un-
alienable rights among them which are life,
liberty, and the pursuit of happiness" are
ours by right of endowment from the
Creator. We believe in God and the moral
law and base our civil laws on an ancient
God-given Mosaic code. The will and way
of the Almighty is built into the foundation
of our country. This is not so of Commu-
nists. They reject all concepts of God or
of moral law. Karl Marx was an atheist.
Lenin was an atheist. Joseph Stalin was an
atheist. Nikita Khrushchev is an atheist.
Shall we also become atheists? A cryptic,
perhaps prophetic sign, on a church bulletin
board was posted above newspaper clipping
announcing the Supreme Court decision. It
said: "Congratulations, Khrushchev."
How desperately we need a national faith
for which men will fight, yea, even die. As
a chaplain who served in both World War
II and the Korean war I would not belittle
the many cases of glorious heroism of which
I am' fully aware. This, however, does not
blind me to the shameful showing made
by many Others of the choice young men of
modern America. Lt. Col. William E. Mayer
interviewed hundreds of U.S. prisoners
shortly after their repatriation from Korea.
He is regarded as the Army's foremost au-
thority on prison behavior of some 7,000
Americans. We can hardly believe his find-
ings. - We excuse ourselves by exaggerating
the effects of "Communist brainwashing,"
but some cold, cutting facts come through.
Colonel Mayer's report indicates the most
significant factor in the collaborations,
even in the unduly large number of prison
deaths, was what the soldiers themselves
called "give-upitis."
Does this not chill your spirit? Doesn't it
cause you to stop and reexamine this super-
toleration philosophy than "anything goes,"
the consequence Of which is inevitably that
"nothing counts." Is it not time that we,
as a Nation, took stock of our spiritual
heritage and determined whether or not we
have depleted our moral resources? Don't
we need more than physical fitness pro=
grams? Don't we need more than scientific
advancement programs? Don't we need to
give rebirth to some old fashioned ideals
for which the young men of America will be
again willing to fight to the finish?
And more than this. What of our na-
tional leadership to a world floundering In
a conflict of cultures? Shall we not de-
clare ourselves to be a people of Almighty
God? Especially in this church, wherein
Woodrow Wilson was baptized, we need in
this hour to echo the words (now inscribed
at his tomb) that great President used in
submitting the peace treaty to the Senate
following World War I. "The stage is now
set, the destiny disclosed. It has come about
by no plan of our conceiving, but by the
hand of God who led us into this way. We
cannot turn back. We can only go forward
with lifted eyes and freshened spirit to fol-
low the vision. It was of this we descended
at birth. America shall in truth show the
way. The light streams upon the path
ahead, as nowhere else."
I, as thousands of other Americans, have
stood in Independence Hall in Philadelphia
and seen the chair in which Washington sat
presiding over the First Continental Conven-
tion. Except for a bit of carving at the top
of the back of the chair it is perfectly plain.
The little carving that Is there appears to be
a relief of a half sun, rays emanating from
it. The records of the convention show that
just as the last members were signing the
document, Benjamin Franklin remarked to
someone near him: "I have, through the
course of these sessions " * * looked at that
[carving of a sun] behind the President with-
out being able to tell whether it is rising
or setting. But now, at length, I have the
happiness to know it is a rising, not a setting
sun." We need that kind of reassurance to-
day.
WHAT SHALL WE DO?
Let us come now to this final question.
Should we not clarify our national status as
relates to God? A cartoon in the New York
Journal American shows a penny upon which
is inscribed "In God we trust." Above it
hovers the begowned arm of a Supreme
Court Justice, mallet and chisel in hand,
engaged in the eradication of the words.
In this predicament our national motto is
undergoing a more apt rendition which
reads: "In God we trust-or do we?"
We are suspended in uncertainty. Shall
we leave all public prayer outside the church
under suspicion of lawlessness? Are chap-
12689
lains in the Armed Forces only quasi-legal?
Are we defying the law of the land when
we open public assemblies with divine peti-
tion? Must we bootleg our religion into our
schools? How shall we. publicly celebrate
Christmas? Will it, as of pagan times, be a
Roman holiday, a sun festival of the winter
solstice? Will we return to pre-Constantin-
Ian days? Is prayer to Almighty God again
to be driven to the secrecy of homes or the
catacombs of the church?
Nay, is it not true that the ethics of the
situation, and the genius of American life
are on the side of those who believe that
public prayer is a national privilege. It is
the product of our culture. It comes of our
heritage. We dare not abrogate, nor abolish
it. To do so would be the peril of our na-
tional soul.
So in the end we come back to the place
we began. We remember Moses' ancient
admonition to Israel. "Beware lest thou
forget God. And if you forget the Lord your
God I solemnly warn you this day that you
shall surely perish. Like the nations before
you " * * you shall surely perish."
In America we have frequently been stirred
up by the memory of dire events that threat-
ened our destiny. "Remember the Alamo,"
"Remember the Maine," "Remember Pearl
Harbor," are all familiar battle cries. Has
the awful time come when we must respect-
fully, yet solemnly say, "Remember God"?
PRAYER
"Lord God of hosts, be with us yet, lest
we forget, lest we forget." Being with us in
our churches and in our homes, be with us
also in our legislative halls, in our market
places, in our school rooms, In our judiciary
courts, In our battle fronts and wherever we
are. For. Christ's sake. Amen.
SECRETARY OF HEALTH, EDUCA-
TION, AND WELFARE
Mr. I.EFAUVER. Mr. President, like
many of my colleagues, I feel a mixture
of regret and yet anticipation about the
resignation of the Honorable Abraham
Ribicoff as Secretary of Health, Educa-
tion, and Welfare.
I am very sorry to see him leave
Washington. At the same time, it is
comforting to know that very probably
he will be coming back next January to
join us In the Senate.
There may be others of whom the same
can be said, but, to my knowledge, Sec-
retary Ribicoff has been perhaps the
hardest working member of the Cabinet.
This observation is based on the fact
that at least half of the legislation pro-
posed by the administration in the 87th
Congress has come from HEW under his
direction.
Mr. Ribicoff mastered the intricacies
of this legislation in a very short time.
He was always helpful in furnishing in-
formati,on on matters of concern to the
Congress, and his testimony before its
committees was always extremely clear
and forthright.
I particularly recall a statement of his
before the Subcommittee on Antitrust
and Monopoly in support of many of the
provisions of S. 1552, the drug industry
antitrust bill. He said, in effect, that it
is time the Government guaranteed
American human beings the same pro-
tection in drugs as hogs, cattle, and
other barnyard animals have been given
for years.
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I' know that Secretary Ribicoff will be an opportunity now awaiting us in this
missed by the President, both as an able area that must not be missed.
administrator and as an equally able It has been evident for some time that
policymaker. I wish him well in his the West has not come to grips with the
forthcoming campaign for the Senate in Soviet oil offensive. Although there
Connecticut, where he is widely re- have been general discussions, no con-
spected and loved. The Cabinet's loss crete program has emerged. We con-
will be the Senate's gain. tinue to regard the problem primarily
It has also been my privilege to know as a matter of trade, when it deeply
Mayor Anthony Celebrezze, of Cleve- affects the security of the United States.
land, Ohio, for many, many years. I In fact, a few days ago, a high official
know him to be a thoughtful man, a good of the Common Market Executive Com-
administrator, and one highly respected mission was reported to have said that
by all citizens of whatever political faith. the Soviet bloc's interest in trade with
He is a man who does not "pass the Europe would limit Soviet political cam-
buck." He knows how to make deci- paigns against the European community.
sions. He is thoughtful and considerate in my judgment, that is highly overopti-
of everyone. The President Is to be com- mistic. Past experiences should dispel
mended for selecting Mr. Celebrezze to any doubt that Soviet trading is aimed
succeed Secretary Ribicoff. I know that at political accomplishments.
Mr. Celebrezze will have a successful The increasingly dangerous propor-
careeer in the new position to which he tions of the Soviet oil offensive are evi-
has been appointed. dent in a comparison of Soviet oil ex-
ports to the free world in the last dozen
pro-
SENATOR JAVITS TO RUN FOR years. In 1950, the Soviet Union pro-
duced about 37.9 million metric tons of
REELECTION petroleum and exported about 3 percent.
11r. KEATING. Mr. President, the By 1955, Soviet oil production had risen
Senate will be interested to know that to 500 million barrels annually. This
my distinguished colleague in the Senate total doubled in the next 6 years, 1.1
[Mr. JAVrrs] has today announced his billion barrels, as the Soviet Union be-
candidacy for reelection. came the second largest oil-producing
Having worked with JACK: JAVITS for country in the world.. Soviet oil exports
many years in the Congress, I can think totaled over 600,000 barrels a day during
of few people who match him in sheer 1960, or 14 percent of its total pro-
intellectual ability and in his vast Imowl- duction.
edge of the major legislative issues with In other words, its exports rose from
which we deal. His devotion to public 3 percent in 1950 to 14 percent in 1960.
service has won him tremendous respect Although this total if, still far below total
and admiration throughout the Nation. Western oil exports, it is the manner in
Even those who differ with JACK JAVITS, which Soviet oil has penetrated Western
and there are plenty, admire his amaz- economies which threatens our security.
ing : talent to speak his mind. His de- The Soviet Union is selling oil to the
batting skill is well known in this body. West at cutrate prices in a calculated
Mr. President, I have a warm and sin- effort to undermine the competitive
cere esteem for my colleague. He has position of Western oil countries. The
been a valuable ally and friend to me price of Soviet oil is over 50 percent
since 1958, when I made that magic cheaper than Western oil. Since the
journey down the long corridor from the Soviet Government maintains a trading
other body to the Senate. monopoly, the major oil companies of
I personally shall devote myself with the West cannot match this price.
great energy in the months ahead to la- Royalties to producing countries alone
bori#ng for a resounding victory by JACK add 50 percent to the costs of the free
JAVrrs. I have every confidence that he world oil companies. The Soviet Union
will run a vigorous, hard-hitting, clean is able to recoup its loss of revenue in
campaign. I shall be a willing and the Western market by selling oil to its
eager comrade in arms, captive satellites, who must depend
j solely upon Russian fuel, at very high
1`17DY OF SOVIET OIL OFFENSIVE ) prices.
BLOCKED In other words, they sell to Poland
and other captive Countries at prices
tion: against the growing Soviet oil of- world countries.
fensive was highlighted recently in a Oil is a highly marketable product.
hearing before the Internal Security Selling oil to the West enables the
Subcommittee. The testimony given by Soviet Union to obtain foreign exchange
Samuel Nakasian, an international to be used for highly developed Western
lawyer who has studied the problem for tools and equipment. Over half the
many years, pointed out the seriousness total exported Soviet oil is bought by
of this threat to free world economic Western nations, with Finland and Ice-
stability. land now virtually dependent upon
A crucial meeting is scheduled this Soviet oil for their energy. The most
week at the Interior Department that serious case of Soviet oil penetration in
should throw additional light on the Western Europe is in Italy, a vital mem-
whole subject and may enable a critical ber of NATO and of the Common Mar-
repoft to come to light at last. I shall ket. Estimates have been made suggest-
discuss this meeting and the administra- ing that as much as 20 percent of Italy's
tion',roadblock which has held up more oil is supplied by Soviets. The Soviet
vigorous action in a moment. There is Union now receives valuable and stra-
tegic pipeline equipment from 'Italy in
exchange for oil. This material allows
the Russians to speed up their oil pro-
ducing capacity and delivery systems
faster than otherwise. Thus, in effect,
the West, through purchase of Soviet
oil, is contributing substantially to the
undermining of its own oil industry.
The real danger from the flood of
Soviet oil is that it could eventually make
Western Europe dependent upon the
Soviet Union for its energy, unless the
flow of oil from the East can be checked
now before it becomes too late. Also,
some European industries may become
unduly dependent on Soviet purchases
of machinery.
Soviet oil also has endangered seri-
ously the economic stability of many
underdeveloped nations. By deliberately
undercutting the price of free world oil,
the Soviet Union has hampered the eco-
nomic development of most of the oil-
producing countries of the free world,
who must depend upon the sale of oil
for their economic progress.
A recent meeting of the Organization
of Petroleum Exporting Countries, which
comprises eight States representing 90
percent of the free world's oil exports,
emphasized the real seriousness of this
problem. These countries have called
for the opening of negotiations with
Western oil countries in order to raise
the price of crude oil up to the level of
1960 prices.
In 1960, the major oil companies re-
duced their prices in an effort to com-
pete with Soviet oil. The lowering of
oil prices has seriously dislocated the
economies of these eight countries, ac-
cording to the organization's report.
Unless the price of crude oil is increased,
these countries announced that they will
consult with each other on steps that
will have to be taken to achieve the price
rise. Yet if these prices are further
raised, additional free world markets will
undoubtedly be tempted by the low-
priced Soviet oil.
Western oil companies are at a serious
competitive disadvantage now. An in-
crease in price would further hurt them.
Yet, at the same time, the oil-producing
countries depend upon oil royalties to
develop their economies, and the Cutting
of oil prices has decreased royalty pay-
ments to them. What can the West do
to meet this price-royalty squeeze and
compete more efficiently with the
Soviets?
First of all, the U.S. Government can
take serious cognizance of the situation.
What has been sadly lacking so far
is detailed, authoritative reporting on
the overall threat, and executive lead-
ership in laying down policy lines to
cope with the problem. Amid the some-
times contradictory recommendations
that have arisen, there has been no sug-
gestion of a uniform Government pol-
icy-in fact, there has been no public
indication of a serious Government in-
terest at all. My effort to highlight the
problems of Soviet economic warfare has
been consistently cold-shouldered.
Last fall during hearings conducted
by the Internal Security Subcommittee
on the export of strategic materials to
the Soviet bloc, I was greatly disturbed
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 1962
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by the contradictory positions of Gov-
ernment officials, in this vital area. At
one point in the , hearing, Assistant
Commerce Secretary Jack Behrman
stated that we were not in an economic
war with the Soviet bloc. Then, at an-
Secretary of State for Economic Affairs,
did say that official consideration has
been given to the possibility of using our
economic strength to obtain political
concessions from the Soviet bloc.
A select committee of the House of
Representatives studying the same
problem of trade with the Communist
camp noted the same absence of a clear
official policy in our economic relations
with the Soviet bloc. During the course
of this hearing, Secretary Behrman re-
versed himself and stated that our Gov-
ernment was considering the economic
threat of communism.
The picture therefore has been uncer-
tain and distorted. No one has been
able to stand up with authority, lay
down the problem in all of its many
complex ramifications, and offer any rec-
ommendations for action, either by the
companies most directly concerned, by
e Common Market, on by all of them
concert.
hose of us who are deeply concerned
a
p
me
of
avail
As
impact of Soviet oil exports
ree world. This should undoubt-
ow, the staff work on the docu-
been virtually completed.
e reports indicate that it is
nearly
additio
of all th
ing Red
and important charts. It
the oil industries and needs
the world. This report will be a tre-
mendous asjition to our present grasp
Yet, incrible as it may seem, this
hold-up is the ipnfusing and to some
extent contradic'pry position that the
executive branch pf the Government has
taken with regardto conflict-of-interest
provisions, particu\arly as they apply to
advisory groups. A real question has
been raised as to whether the industry
representatives, botl.of the working sub-
committee, which has prepared the re-
port, and of the full commission, are to
be considered dovernment employees
during the months that they have con-
their ability to carry on their own jobs
in industry may be seriously impaired, .-
will sign it and it has
ed to the Secretary of
leased to the public.
4he present unfortunate
It-is impossible to meet the worldwide
Soviet threat under archaic concepts
which prevent the U.S. Government from
using the brains, ability, and know-how
of private enterprise to meet Soviet chal-
lenges. Particularly in the economic
field, it is vital that businessmen be per-
mitted to study, discuss, and make rec-
ommendations as to Government policy.
It is unfair and obviously ridiculous to
suggest that after these persons, em-
ployed by private industries, work to-
gether and with Government represent-
atives on a report which is to be publicly
disseminated and studied, they may be
barred from dealing with these problems
in their private capacities for 2 years.
In effect, this means that the oil com-
pany executives, who are working on this
report; may be unable to serve their com-
panies in meeting the Soviet oil problem
directly. Such procedures, especially in
an area of this sort, are tying our own
hands.
This very week representatives of the
National Petroleum Council are expect-
ing to meet with Interior Department
and Justice Department representatives
to discuss this problem. Specifically, the
National Petroleum Council is most con-
cerned with the Presidential memoran-
dum of February 9, 1962, relating to
members of advisory groups and the
question of whether they are represent-
ative of an individual company or of the
whole oil industry.
There is a decided need for more study
of conflict-of-interest statutes with re-
spect to advisory groups. At the mo-
ment, on the vital issue of Soviet oil,
there is an immediate need for clarifica-
tion and accommodation by the Govern-
ment agencies. .The Communists will
.not wait while we quarrel over our own
.laws and regulations.
Only when this report has been re-
viewed, issued, and studied can we pro-
ceed to develop policy recommendations
and legislation, if necessary, to meet the
Soviet oil menace and the threat it poses
to the free world. It is absurd and dan-
gerous for this kind of confusion to hold
us back in our cold war confrontation
with the Soviets. The need for this re-
port Is urgent. The need for more vigor-
ous competition with the Soviets in the
economic field is pressing. I strongly
urge the executive branch of the Govern-
ment to resolve the conflict promptly so
that we can start working on it seriously
right away.
Mr. HUMPHREY. Mr. President, I
suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The Legislative Clerk proceeded to call
the roll.
Mr. KUCHEL. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. KUCHEL. Mr. President, I ask
unanimous consent that I may tempo-
rarily yield the floor to the able Senator
from Rhode Island with the understand-
ing that I do not lose my right to the
floor.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
PUBL:{C WELFARE AMENDMENTS OF
1962
The Senate resumed the considera-
tion of the bill (H.R. 10606) to extend
and improve the public assistance and
child welfare services programs of the
Social Security Act, and for other
purposes.
Mr. PELL. Mr. President, I rise today
to express my very great satisfaction
with the amendments recently submitted
by the Senator from New Mexico [Mr.
ANDERSON] to his bill, S. 909. I am
proud to have been a cosponsor of the
original S. 909, as well as of the amend-
ments recently submitted by the dis-
tinguished Senator from New Mexico.
The amendments strengthen and im-
prove the original bill. First, and most
important, virtually everyone over 65 is
now covered. Specifically, protection is
afforded for the 21/2 million older people
who are not under social security and,
hence, were not covered by the original
Anderson bill. Now included are unin-
sured persons on old-age assistance and
other public-welfare programs, widows
whose husbands died before becoming
insured, and persons who are without
health.-insurance protection under other
public programs.
Second, the amendments tend to de-
centralize the role of the Federal Gov-
ernment in a national health-assistance
program, The Secretary of Health,
Education, and Welfare is to be given
specific statutory authority to delegate
some of the more sensitive administra-
tive functions to nonprofit organizations
experienced in the providing of health
services: Those who have criticized
this legislation as an opening wedge of
Goverranent intervention in hospital
affairs will be comforted by an arrange-
ment which permits private, voluntary
organizations to act as intermediaries
between the hospitals and the Govern-
ment. The amendments also provide
that tl,Le Federal Government would use
State agencies to judge whether hos-
pitals which are not accredited by the
Joint Commission on the Accreditation
of Hospitals are qualified to participate
in the program.
Third, the amendments provide an
option to beneficiaries to continue pri-
vate health insurance protection and to
encourage private health insurance
supplementation.
The Anderson bill, as amended, has
the support, I am pleased to say, of
many Senators on both sides of the aisle.
It represents an excellent demonstration
of the positive results of a democratic
system in operation. Numerous confer-
ences have been held in response to crit-
icisms and opposition from a variety of
sources. We Democrats owe a consid-
erable debt to our Republican colleagues
for their responsible efforts to broaden
the oriiginal version of the bill. The
present bill as it now stands deserves
the support of the Senate. It is my
very strong hope that it will be passed in
the near future.
Mr. KUCHEL. Mr. President, I ask
nanunous consent that, under the same
understanding, I may now yield to the
istinguished senior Senator from Geor-
ia [Mr. RUSSELL],
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The PRESIDING OFFICER. Without
objection, it is so ordered; and the Sen-
ator 'from Georgia is recognized.
Mr. RUSSELL. Mr. President, the
pending proposal-the so-called Ander-
son-Davits amendments-is undoubt-
edlyamong the most controversial Con-
gress will consider at this time. The ad-
herents of both sides of this question are
almost fanatical in their support; and
every Senator knows, from his mail and
other communications, of the very deep
general interest in this question.
Mr. President, there is no doubt in my
mind that a majority of the American
people are willing to support some ade-
quate plan that will prevent our senior
citizens past 65 from suffering for want
of hospital care. It has always seemed
to me that a proposal that would finance
itself by imposing a tax to defer its cost
was a conservative approach. I am
strongly disposed to vote for it well-con-
sidered, carefully planned, and carefully
thought out program in this area.
However, Mr. President, we are calle
been subjected to the tests ordinarily
giver} legislation, and which has not fol-
lowed the usual legislative process. This
is a. new and highly involved question,
and it involves the expenditure of large
sums of money.
If committee hearings are important
in any case, they are certainly demanded
in this instance before we enact such a
highly complicated measure. There has
been no opportunity for those on either
side of the question to speak and present
their', views to the proper committees of
Congress. The only estimates of the
cost's of the plan and its method of op-
eration are those which have been given
us by the authors of the bill.
The original so-called King-Anderson
proposal has been completely rewritten,
not by a committee representing all
shades of opinion, but by a small group of
Senators who represent the strongest
proponents of the medicare idea.
Mr. President, I have consistently in-
sisted that it is Trost unwise and im-
proper for the Senate to consider and
enact legislation of general interest
which has not followed the required or-
dinary procedures. I have repeated on
this floor in debate, time and again, that
only an extreme national emergency
can justify junking our committee sys-
tem in the consideration an enactment
of legislation. The only place where an
American citizen has the right of peti-
tion s before a congressional committee.
The last of the several editions of this
bill that we have had presented by its
authors may be as desirable and as ef-
fective as the authors insist. But it is
brought before us without providing the
opponents with an opportunity to be
heard and without the benefit of: the
professional and actuarial testimony and
data that would enable the Senate to
know, just what it is doing in voting
such a comprehensive and far-reaching
piece of legislation.
As I see it, the vote on this proposal
involves the integrity of our parliamen-
tary ',procedures. I cannot conceive of
a more dangerous precedent than to start
taking up bills of this magnitude with-
out a written record of hearings and
without a committee's having given the
subject thorough study, in order to be
able to advise the Senate and help us
arrive at a proper decision. Such a
precedent would plunge the Senate Into
tumult and confusion, and, if followed,
would change the whole character of
our legislative processes. We should not
sacrifice our whole procedure upon an
altar of expediency.
I wish to reiterate, Mr. President, that
regardless of the subject matter involved,
I always have in the past-and I shall
continue to do so in the future-strongly
oppose abandoning orderly procedure
and evading and bypassing committee
consideration, particularly on legislation
as far reaching as that embraced in the
amendments which are before us.
I do not know of any other bill which
has inspired such great differences of
opinion; and if we were to pass this bill)
solely on the testimony of its autho
however, high may be our opinion
July16
Under our present law, both individ-
uals and corporations today enjoy ex-
traordinary advantages by operating
overseas. An American citizen who re-
mains out of this country for 17 of 18
consecutive months is exempt from in-
come taxes on the first $20,000 of his an-
nual earnings. He may exclude from
taxable Income many items which are
not deductible for his fellow citizens
living at home. Of course, an Ameri-
can residing abroad permanently enjoys
full exemption from income taxation but
suffers no loss of citizenship rights. The
practice of setting up separate corpora-
tions to produce individual pictures is a
tax-avoidance technique which consti-
tutes serious abuse of an intended
incentive to expansion of industrial ac-
tivity and of admission of the need for
diversified risk. Companies retaining
income abroad and reinvesting in over-
sea operations enjoy special benefits
inasmuch as corporate earnings are not
MOTION PICTURE FIL
Mr. KUCHEL. Mr. President, the
klieg lights which made Hollywood the
world film capital for most of this cen-
tury are dimming rapidly. Unless Con-
gress acts to plug a gaping loophole in
our tax laws, the door. of American mo-
tion picture production-with the conse-
quent unemployment of large numbers
of skilled and relatively well-paid work-
ers and a deplorable loss of international
prestige-appears inevitable.
Motion pictures are an invaluable in-
formation media, and deserve all the en-
couragement which our Government is
capable of giving them. As the cold war
has dragged on, the message of America's
high standards of living, political ideals,
social and economic opportunities, and
technological achievements has been
carried to peoples around the globe
through both televised showings and
theater exhibition to foreign audiences.
The postwar years have brought
alarming trends in film production to
the point where America's leadership
not only is seriously challenged, but a
shocking proportion of the pictures fi-
nanced with U.S. capital and featuring
American personalities is being made
abroad.
The time has come for Congress to
take a hard look at the fact that cer-
tain unintended tax advantages are a
major factor In this situation. If we act
soon, there remains a. chance to reverse
the flight of film production from this
country.
The tax reform bill still under con-
sideration in the Senate Committee on
Finance contains provisions approved
by the House which would exert a brak-
ing effect upon the shift from domestic
to foreign motion-picture making. We
should not fail to enact remedial legis-
lation to plug a gap which makes other
nations tax havens for Americans and
encourages the shooting and processing
of more and more films abroad.
I deplore the fact that both companies
and individuals have been and are taking
advantage of such shortcomings in our
revenue system. I even question wheth-
er it is patriotic, considering the fact
that this industry and those who com-
pose it have enjoyed generous public
support, lavish publicity and attention
and even acclaim, from our people.
America has had reason to be pro,
of outstanding figures who have f'
characters, encouraged, and inspirc'u-
diences with made-in-Hollywood! m
vehicles. Likewise, technologicaed-
vances in sound, color, better pho?>ra-
phy, and the like have made a HoIWood
studio label the hallmark of high Ality?
Let us not forget that the cir1irto-
graph, as our grandparents knerit, was
the product of American inventii enius.
How distressing it is now to see iirld-re-
nowned personalities, still proL1Y pro-
claiming their American citize{hip and
entitled in event of personalt'buble to
protection of the U.S. flag-mod com-
panies which pioneered in dreloping a
global and profitable trade nth Ameri-
can capital, turning more pd more to
production abroad. I am named they
forget that over several gesrations the
quarter and half-dollars f the ticket
purchasers nourished bot name play-
ers and other key figureiand respected
companies now seeking tji refuge by op-
erating abroad.
The effects of this trod are multiple.
Aside from Federal revue losses due to
loopholes in our nation! tax system, our
Nation suffers the chati reaction of re-
duced purchase of rav materials, cur-
tailed spending for paver and water and
transportation, decliiing local receipts
from real estate prcloerty levies as stu-
dios and laboratories close, disappearing
employment opportunities for support-
ing players, extras, laboratory personnel,
film editors, and literally dozens of spe-
cialist groups.
There is another alarming symptom,
one which all who are disturbed about
juvenile delinquency, lawlessness, sub-
version, and Communist aggression
should bear in mind in appraising the
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