U.S. CONSUMER PAYS THE PRICE OF COFFEE AGREEMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP66B00403R000300290004-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 23, 2016
• Document Release Date: February 5, 2014
• Sequence Number: 4
• Publication Date: July 20, 1964
• Content Type: OPEN SOURCE

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15774 CONGRESSIONAL RECORD ? SENATE
to the jurisdiction of the Committee on
Rules and Administration.
After those matters are disposed Of, it
is anticipated that the next order of
business will be Calendar No. 1111, S.
2642, a bill to mobilize the human and
financial resources of the Nation to com-
bat poverty in the United States.
Action on that bill will be followed by
Calendar No. 1123, H.R. 11380, the so-
called foreign aid bill.
It is anticipated and hoped that there
will be reported to the floor of the Sen-
ate during this week appropriation bills
covering -the District of Columbia, the
legislative branch of the Government,
and perhaps the independent offices ap-
propriation bill.
Mr. DIRKSEN. Mr. President, will the
majority leader yield?
Mr. MANSFIELD. I yield.
Mr. DIRKSEN. Does the Senator an-
ticipate that on Tuesday there will be be-
fore the Senate for consideration the bill
relating to trading in Irish potato fu-
tures, both of the rules resolutions, and
the antipoverty bill?
Mr. MANSFIELD. Yes.
Mr. DIRKSEN. But not the foreign
aid bill on Tuesday?
Mr. MANSFIELD. I do not believe the
Senate could get through with all those
matters tomorrow. The best we could do
would be to lay down the so-called anti-
poverty bill tomorrow night because, un-
der an agreement reached some 2 weeks
ago, the minority has until midnight of
the 21st to file its report. Therefore, the
first time we could get the foreign aid bill
before us would be when the Senate con-
vened on Wednesday. My guess would
be that very likely the foreign aid bill
would not come up until Friday or per-
haps Saturday.
Mr. DIRKSEN. But it will follow?
Mr. MANSFIELD. Yes; unless an ap-
propriation bill came in between, that
might not take too long.
Mr. MORSE. Mr. President, will the
Senator yield?
Mr. MANSFIELD. I yield.
Mr. MORSE. The probabilities are
that the foreign aid bill will not be
reached until Friday.
Mr. MANSFIELD. That is the way it
looks now, if the Senator will allow for
flexibility. It might be Thursday, but I
do not think so.
Mr. MORSE. The probabilities are
that it might not be reached until Mon-
day, but Friday or Saturday would be
my guess.
Mr. MANSFIELD. We shall see.
Mr. DIRKSEN. Perhaps the majority
leader would like to give us his present
plan with respect to the bill to imple-
ment the coffee agreement, and whether
or not he sees that in the picture for this
week, or is it further along? ,
Mr. MANSFIELD. I wish I could give
a definitive answer to the distinguished
minority leader, but, to put it mildly, the
situation is in a state of flux.
Mr. MORSE. Mr. President, will the
Senator yield?
Mr. MANSFIELD. I yield.
Mr. MORSE. I know the Senator will
do everything he can, but I think it is
important to consider the coffee 'agree-
ment as soon as possible. As Senators
know, we are in conference this week
with our friends from Latin America in
connection with the OAS matter. I am
sure that the coffee agreement is going
to be on the lips of 'many of them.
Speaking only for myself, and no one
else, it would greatly strengthen the
persuasiveness of the American delega-
tion at that conference if we could at
least give some assurance that it will
come up, and be voted either up or down,
because to them this is a matter of eco-
nomic life.
Mr. DIRKSEN. It is, however, beset
with difficulties that are real and practi-
cal.
Mr. MORSE: That is true, but we may
as well face them and have them behind
us, rather than leave our friends from
Latin America suspended in the air.
Mr. MANSFIELD. Mr. President, if
the Senator will Yield, one of the reasons
for the delay is that the leadership
wishes to discuss this matter with the
distinguished Senator from Florida [Mr.
SMATHERS] , who will be in' charge of the
bill.
Mr. DIRKSEN. Prior to the time the
Senate recessed for the convention in
California, it runs in my mind that we
discussed the possibility of taking up
the beef import measure.
Mr. MANSHP_,I.D. Yes; that will be
brought up at the appropriate moment.
Mr. DIRKSEN. Some time later?
Mr. MANSFIELD. Yes.
THE RIOTS IN HARLEM
Mr. KEATING. Mr. President, I feel,
as a Senator from New York, that while
it is not a Federal problem, I should
have a word to say about violence in the
streets of New York. Such violence is
no way in which to solve whatever
grievances exist either in Harlem or any
other community.
I am certain that every responsible
official and civic leader is deeply shocked
by these events. Such extremist actions
do not promote freedom or justice;
rather, they serve to inflame passions
and incite racial hatred. Only hate
mongers, racists, and demagoges can
benefit from such demonstrations of
lawlessness and anarchy.
Legal remedies exist against any al-
leged police brutality, both under Fed-
eral and State laws. If such legal rem-
edies are inadequate, they should be
strengthened. Nothing will be solved
by extremist appeals to lawlessness and
violence. Every possible step must be
taken to restore order and to bring rea-
son and moderation to this situation.
I have been asked whether I felt there
should be Federal intervention. My an-
swer to that query is "Not at this time."
The police force of the city of New York
should be -able to handle the situation.
I am sure that the officials of the city
of New York feel as deeply, concerned
about this situation as do I. But I can-
not condemn in strong enough terms the
use of violence or lawlessness to bring
about any ends in this free country.
July 20
U.S. CONSUMER PAYS itiE PRICE
OF COFFEE AGREEMENT
Mr. HRUSKA. Mr. President, H.R:
8864 is entitled "An act to carry out the
obligations of the United States under
the International Coffee Agreement,
1962, signed at New York on September
28, 1962, and for other purposes." That
is a long title.
Its real purpose can be stated more
-briefly, and in shorter words. Its real
purpose is to push the price of coffee
up, and to hold it up. That is the sum
and substance of this legislation.
The basic principle of the Interna-
tional Coffee Agreement can be described
in simple terms. Essentially, it is an
arrangement to control the price of cof-
fee throughout the world, by limiting
the quantities that will be permitted to
be sold. Under this arrangement the
countries that produce the coffee and
ship it abroad accept quotas on their
exports; that is, limits on the quantity
of coffee that each may ship -and sell/to
other countries?but of course by doing
so, these exporting countries receive
higher prices and thus, more Money for
less coffee.
It is the well-known old principle of
pushing up the price by restricting the
supply on the market.
If ?such a thing were done domestic-
ally, we would call it a monopoly or
trust or restraint of trade and vigorous-
ly prosecute those involved under the
antitrust law. In this case, governments
have lent the sanction of law and thus
the color of respectability to it.
Now, what is involved? Who will pay
the cost of this scheme? The consum-
ing countries, of course. And although
there 'are other countries which import
coffee, the United States is the most seri-
ously affected by far. Actually, this
country each year consumes more than
half of all the coffee exported throughout
the world. We import over 3 billion
pounds of coffee a year. We drink 450
million cups a day. That 'is equal to
21/2 cups per day for every man, woman,
and child in the United -States.
How much will this agreement cost
us? Mr. President, each penny-a-pound
increase in the price of green coffee costs
this country about $30 to $35 million a
year.
Defenders of the treaty argue, of
course, that it is designed to protect con-
sumers as well as producers. Unfor-
tunately, the terms of 'the agreement
with coffee producing nations and the
testimony at the hearing do not support
that argument. Article 27, paragraph
(1) , of the agreement states, in 'part:
'The members * * * agree on the desira-
bility of operating the agreement in a man-
ner such that the real income derived from
the export of coffee could be progressively
Increased so as to make- it consonant with
their needs for foreign exchange to support
their programs for social and economic
progress.
Then, in paragraph (2) of article 27,
the agreement states:
The members agree on the necessity of as-
suring that the general level of coffee prices
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4"
1964 CONGRESSIONAL RECORD ? SENATE
does not decline below the general level of
such prices in 1962.
In other words, the agreement sets a
floor, but not a ceiling on coffee prices.
There is a bland statement of platitudes
In article 1 of the agreement, which re-
fers to "equitable prices," but nowhere
in the treaty is there any definition of
that term, and there are no provisions
to carry out that objective.
In May of last year, Secretary of State
Rusk wrote:
The objective of the new International
Coffee Agreement is to stop the long-term de-
cline in revenues from coffee exports by
stabilizing prices at a level no lower than the
general level of coffee prices in 1962.
The Presidential message urging House
enactment of this implementing legisla-
tion, H.R. 8864, stated:
The purpose of the agreement, which I
fully endorse, is to check the disastrous de-
cline in coffee prices that began in 1955, by
holding a floor under these prices at the gen-
eral level prevailing in 1962, and to bring sta-
bility to coffee markets by preventing major
fluctuations in price.
The report on the agreement itself by
the Committee on Foreign Relations said:
The main purpose of the agreement is to
prevent a further decline in the world price
of coffee which has dropped more than 50
percent since 1954, the year of the all-time
highest price.
In the phrasing of all these platitudi-
nous assurances, it will be noted that the
emphasis is on stopping the decline, pre-
venting the price from going any lower,
and in stabilizing the price. Little or
nothing is openly admitted about the de-
sire to boost the price.
Yet the fact is that we have already
learned from experience how this mecha-
nism can be used as a new kind of rocket
propulsion fuel, to send the price of coffee
into orbit.
On May 21, 1963, the Senate gave its
advice and consent to the treaty. Our
instrument of ratification of the treaty
was deposited in December of 1963. Im-
mediately, the price of coffee started to
climb. Making comparison on the basis
of the wholesale price of Santos 4's, the
most commonly quoted type of Brazilian
coffee, for the full year 1963, the average
price was 34.11 cents per pound. The
price of coffee had advanced just slight-
ly during the last months of 1963 and
averaged 37.45 cents per pound in Decem-
ber. -
But after the U.S. ratification of the
treaty was made formal, in January the
price averaged 44.83 cents, a gain of a
full 20 percent in a single month. Then
in February and March it went up some
more, reaching a high of about 51 cents
at one time in March. It has now re-
ceded slightly, but not very much.
Altogether, the increase has amounted
to about 50 percent-17 cents a pound
above the 1963 level to the peak reached
so far. And we have no proof that we
have seen the maximum yet.
Supposedly, there were built-in safe-
guards to protect the consuming coun-
tries from this kind of price gouging.
Supposedly our representation in the In-
ational Coffee Council, which has its
to stop prices from skyrocketing. The
majority report of the Finance Commit-
tee states:
The interests of the United States are pro-
tected by the fact that it will hold a mini-
mum of 400 votes out of the total of 1,000
consumer votes in the International Coffee
Council, the governing body of the agree-
ment, and will also be a member of the exec-
utive board. Since practically all important
decisions, such as adoption of the budget,
establishment of the quotas, or the produc-
tion control program, require a two-thirds
vote of the consumers and producers voting
separately, the United States holds sufficient
votes to prevent actions which might be con-
sidered adverse to our policy interests, to
our business community, or to the American
consumer.
Despite these assurances, we have
found that our voting strength will not
protect us. Last fall, there began to be
received the first firm indications of seri-
ous damage to the Brazilian coffee crop.
It became clear that the price would in-
crease unless prompt action was taken
to increase available supplies of coffee
on the market by increasing the quotas.
The International Coffee Council con-
sidered the matter. The other consum-
ing countries voted unanimously with
the United States for at least a moderate
Increase in quotas, to relieve the upward
speculative pressure on the coffee mar-
ket.
But the agreement provides that no
changes in quotas can be made unless
the consuming countries, and the pro-
ducing countries, voting separately, each
approve the change by a two-thirds
vote. Of course, the producing coun-
tries were not displeased at the price
rise. A vote for increased quotas would
have checked the price increase; for the
producing countries, that would have
been a vote against self-interest. At
the time ,there ?was great pressure on
them to approve increased quotas, be-
cause the United States had not yet for-
mally adhered to the Ordanization, and
there was doubt that this country would
go along. Coffee-producing interests
were afraid that the United States
might, after all, reject this legislation,
or withdraw from the Organization. In
that case the whole proposal would col-
lapse, since the United States accounts
for more than half of all coffee imports.
On that ground, a number of the cof-
fee-producing countries were persuaded
to vote against self-interest, and go
along with the proposed increase in
quotas. Even so, the increase was de-
feated, since it received less than a two-
thirds vote of the producing countries.
Surely nothing could reveal more
clearly our lack of power in such an in-
ternational conclave. We had been
delivered into the hands of our antago-
nists?insofar as fixing the price of cof-
fee is concerned, that is. They had the
votes, they had the control, and we had
to accept their decision. That first test
of the agreement showed clearly that the
coffee-producing countries of Africa,
Latin America, and Asia can and will
? dominate the market.
h
is true t
at about 3 months later,
In February of this year, after the price
had already climbed about 10 or 15 cents,
tern
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15775
the Council was willing to vote an in-
crease in quotas. Even then, we must
remember, that action was taken in part
to ward off the danger that the United
States might after all not adopt this im-
plementing legislation. This bill was
then still before the Senate and had not
yet been acted upon, and prices were in-
creasing at an unparalleled rate. There
was nervousness among coffee-producing
countries that the American housewife
would see through the whole scheme, rise
in revolt, and induce this body to block
our participation and thus bring the
whole project to a grinding halt. On
that basis the producing countries, per-
haps reluctantly, voted quota increases.
It may be that that will be the last
quota increase they will vote voluntarily.
Once we have approved this legislation,
our last major defense will have been
given away.
What does this particular bill do? It
does two major things. It provides that
we may require certificates as to country
of origin for all coffee imported here.
Second, it provides that we may limit,
reduce, or stop altogether any imports of
coffee from countries which have not ad-
hered to the International Coffee Agree-
ment.
The purpose of these two powers is to
enable us to help to enforce its control
over the world coffee market by the In-
ternational Coffee Organization. They
have no other purpose. When quotas
had been set, we would help to enforce
the quotas?whether we agreed with
them or not?by rejecting coffee imports
from any country that might secede from
the International Coffee Organization, or
from any individual producer in a mem-
ber country who might try to ship us
coffee without securing an export license
or certificate from his own government.
In effect, the United States would be-
come an enforcing arm of a world coffee
cartel, devoted to raising the price of
coffee and keeping it high. And since
we are by far the largest importing coun-
try, we would be the chief enforcing arm
of the cartel. That is what this bill pro-
vides.
We are told that our attitude toward
this bill is a reflection of our sympathies
for the poor people of Latin America.
Possibly, the American housewife would
not mind paying a little more for her cof-
fee if the additional money would really
go to help relieve starvation and suffer-
ing. But there is persuasive evidence
that this money would not go to the poor
in Latin America. As the minority views
on the bill well state:
The chief beneficiaries of the International
Coffee Agreement are government treasuries
which levy heavy taxes on exports, coffee
speculators, and a few large landowners, and
the American housewife will pay the bill.
It is not even a program to help the
poor peasant, but rather a form of for-
eign aid, disguised to deceive the unsus-
pecting public.
When the agreement itself was before
the Senate Foreign Relations Committee
for consideration, the Senator from Ar-
kansas [Mr. FULBRIGHT] said very can-
didly:
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15776 'CONGRESSIONAL RECORD ? SENATE July 20
It seems to me that to make an argument
that this agreement is in the interest of the
consumers is something less than frank. It
is really in the interests of our national for-
eign policy, isn't it? * * * It is in the interest
of our foreign policy like our foreign aid bill.
If each penny increase in the price of
coffee costs the American consumer $30
to $35 million, then the increase of 15 to
17 cents a pound that we have experi-
enced since last fall is costing American
consumers well over $500 million annu-
ally. It is as if we had levied a sales tax
on the American housewife, and had then
taken that revenue and handed it over to
the coffee-producing countries. The dif-
ference is that this kind of foreign aid
? does not have to be approved in detail
by the Foreign Relations and Appropri-
ations Committees of the Senate.
Neither does it necessarily go where
? It is most needed. It does not go to the
poor who need it, nor for capital invest-
ment which at least would build up the
economies of those countries. Instead
it goes to the large landholders, who
? may use it for conspicuous consumption
at home, or who may secrete it in num-
bered and anonymous accounts in Swiss
banks; or it goes to the government of the
exporting country which levies its tax on
coffee thus exported.
Mr. President, we are told that we are
under a moral obligation to pass this
? implementing legislation, since we have
- already approved the International
Coffee Agreement. It -is true that the
Senate was persuaded to give a form of
advice and consent to that treaty. I
refer to it as "a form of advice and con-
sent" because it was clearly stated and
we were clearly told at the time that our
ratification would not be depositea and
that the treaty would not be binding
upon us until Congress had had an op-
portunity to pass upon this implement-
_
ing legislation. Now we are told that
since the Senate approved the treaty, we
are committed, we are obligated, and
that it would be unthinkable for us to
reject this legislation at this late date.
In this matter as in so many others,
Congress has been led down the prim-
rose path by promises from the other end
of the avenue. I think the story can
best be told in the words of? the Senator
from Illinois [Mr. DOUGLAS] in his in-
dividual views on the bill:
We were told by the distinguished chair-
man of the Foreign Relations Committee last
year when we were considering the formal
coffee treaty that even if we did approve it,
it would not go into effect or be binding upon
us until the Congress passed the legislation
now before us. I am sure the able and honor-
able Senator from Arkansas, who made that
pledge, did so in complete and utter good
faith. Secretary Rusk, also a highly honor-
able man, made a similar pledge to the
minority leader. (See CONGRESSIONAL RECORD,
May 21, 1963, p. 8624.) We assumed, there-
fore, that the ratification of the treaty would
not be deposited unless and until the imple-
menting legislation was passed.
The Finance Committee was delayed in
considering the ithplementing legislation in
the fall because of hearings on the long de-
layed tax bill. But in December our com-
mittee squared away to consider the meas-
ure. I shall never forget the hectic morning
when the State Department started off by
urging speedy hearings on the coffee agree-
ment and then within an hour urged just as
strenuously -that action be withheld until
after the tax bill was passed. I do not
blame anyone for this. Assistant Secretary
Dutton manfully took the blame for this,
but it was obviously not his fault as he was
merely the messenger. Then, at the sugges-
tion of members, the chairman asked a high
authority whether if we withheld action as
requested, there would be any danger that
the treaty would be deposited and hence go
Into effect even though no implementing
legislation had been passed. He reported to
us that he had been assured that this would
not be done. The committee, therefore, felt
it safe to postpone the hearings on coffee and
get on with the tax bill. No sooner was this
done, however, than individuals on the com-
mittee, of whom I was one, were informed
that, due to the pressure of time, the State
Department would deposit the treaties after
all. I was asked if I had an individual objec-
tion and replied that I did not regard mys.lf,
as one Member of the U.S. Senate, as being
Sufficiently important to alter the policy .of
the U.S. Government, but that I thought the
Finance Committee had been treated cava-
lierly to say the least and that promises had
been made which had not been fulfilled.
Mr. President, it is not too late for us
to stop and think. This may be our last
chance, but we still do have this chance
to pull back from this dangerous and
harmful agreement before it is too late.
It has well been said:
If H.R. 8864 is adopted there can be but
one result. Prices will remain high and con-
tinue to penalize the domestic consumer. A
solid floor has been built, but nothing has
been done to set an upward limit.
The time has arrived when we had best
begin to look after our American interests,
instead of trying to assume the burdens of
surplus coffee producers in many nations.
This bill should be defeated.
To this viewpoint, this Senator whole-
heartedly subscribes.
This outcome as provided in the bill
is not unexpected. It was forecast by
those who voted against ratification of
the treaty last year. This Senator is
among those ,who did so, At that time,
we felt it ill-advised and against the best
Interests of America, with her adverse
gold flow, and against the interests of
our citizens and the consuming public.'
The provisions of the pending bill bear
us out in our fears.
The administration advocated and
forced a tax cut earlier this year. But
the pending bill is the equivalent of an
Increase in taxes levied by coffee pro-
ducing countries upon the large and
widely spread coffee drinking population
of our 50 States. It is a bill which vests
in the foreign nation cartel members the
power to retain .and even increase that
tax and to pocket the proceeds for them-
selves.
? This is not a good bill. It is a bad bill.
jhould be defeated.
THE CHALLENGE AHEAD IN HIGHER
EDUCATION
Mr. HRUSKA. Mr. President, each
year the University of Nebraska wel-
comes back its graduates to the campus
in Lincoln for an alumni roundup.
Two of the speakers at this year's re-
union on June 13 concerned themselves
with the problem fo providing higher
education for the years immediately
ahead when campuses across the Nation
are becoming increasingly crowded.
Dr. Clifford Hardin, chancellor of the
university, and Mr. Charles Thone,
president of its alumni association, dis-
cussed this subject in thoughtful terms,
expressing concern about the challenge
we face, yet confidence that the chal-
lenge will be met.
I ask unanimous consent, Mr. Presi-
dent, to have printed in the REcomi the
remarks by Chancellor Hardin and
President Thone.
There being no objection, the remarks
were ordered to be printed in the RECORD,
as follows:
REMARKS BY CLIFFORD M. HARDIN, CHAN-
CELLOR, UNIVERSITY OF NEBRASKA, LINCOLN
As I visit with you today, I want to do so
as a Nebraskan who is proud of his State,
proud of his neighbors, and grateful for the
privilege of speaking to the alumni of this
great university on behalf of a large group
of colleagues at the university who are
"Cornhuskers" by deliberate choice, and who
intend to continue to be "Cornhuskers" in
the long and interesting years ahead.
We are thrilled to be associated with great
Nebraska builders like Sterling McCaw,
George Cook, and Peter Kiewit?and we are
proud of all of our great and distinguished
alumni wherever they may live and work.
If I were to use a text today, I would use
a statement sometimes quoted by engineers:
"You can move forward and still be bumped
or trampled because you did not move fast
enough." ?
The April issue of a little publication
called News Front, which bills itself as man-
agement's news magazine, contains an
article entitled "Knowledge?New U.S. In-
dustry." Here are a few quotations from
this article: -
"It is not generally realized how far the
United States has gone in the transition from
a production-oriented system to a science-
based, or idea-oriented economy.
"Education now generates at least one-
fifth of the U.S. growth rate.
"The `knowledge industry' accounts for
nearly one-third of the entire- economy, and
is growing twice as fast.
"U.S. business spends $17 billion yearly
to educate its personnel, or one-third as
much as is spent on the nation's public and
private school system.
"More than one-fourth of the Nation is
engaged in education (51 million students
and 2 million teachers).
"Investment in education has increased
the output of the economy and the income
of those educated equal to a return on in-
vestment of about 10 percent, according to
the Chase Manhattan Bank."
And then they refer to a paragraph in
Clark Kerr's Godkin lectures when he says:
"We are just now perceiving that knowledge
may be the most powerful single element in
our culture. What the railroads did for the
second half of the last century and the auto-
mobile for the first half of this century may
be done for the second half of this century
by the knowledge industry."
News Front also quotes from Prof. Theo-
dore Schultz: "The contribution of educa-
tion to economic growth between 1929 and
1959 exceeded that of physical capital."
Following this series of citations, the ar-
ticle then editorializes on their meaning as
follows: "The knowledge revolution is also
changing the economic geography of the
Nation. The dominant 'growth' institution%
of the future will be, not the factories, but
the Nation's intellectual organizations?the
research corporations, industrial laboratories,
experimental stations, and universities.
"These, in turn, attract industry. This
is clearly shown by one of the Nation's
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