Mr. TUTTLE. I cannot imagine it. I do not know about anything pecific there at all. It never occurred to me that we would have

ch an agreement.

I would gladly give you an answer to that question by tomorrow orning. It would be my pleasure to do so.

Senator SMITH. I just wanted to see how far these executive agreeents have gone.

Mr. TUTTLE. You mean whether it was an executive agreement f some kind with these Greek shipowners who acquired American hips after the close of World War II to exempt them in any way com Federal income taxes?

Senator SMITH. Yes.

Mr. TUTTLE. I will be glad to get the answer to you on that.

Senator SMITH. That is not precisely the point, but it does have a earing on the general situation here.

Mr. TUTTLE. Yes, sir; I will be glad to get the answer.

After what was said this morning, I do not think it is necessary to ake the final statement.

I have referred to Senate Joint Resolution 2 in this statement, hich of course, we need not assume would be enacted if these amendents were passed, but it does point up one other particular situation hat the Treasury is interestd in.

If that type of law is passed, that is, requiring the automatic termiation of any executive agreement at the end of 6 months following he term of office of the Executive then in office, it would have its ffect.

That is on the International Bank.

Senator SMITH. That could be taken care of by the then President. Mr. TUTTLE. That is right.

Senator SMITH. Why should we worry about that? He could go head and repromulgate it.

Mr. TUTTLE. Here is the trouble about it: It may not be of sufcient trouble to concern Congress or the people, but the International ank is financed by public subscription and private investors have bscribed $500 million in the United States.

It is entirely unlikely, it seems to us, that if we reserve the provision at it would automatically go out of existence, our agreement to it ould go out automatically 6 months after the expiration of the residential term, that the other 50 countries, or how many there are, ould have similar provisions, and most of them have terms of office hat change a good deal more frequently than ours.

I doubt seriously whether American investors would put their oney into an international bank of that kind.

Senator SMITH. That could be done by legislative enactment; could not? That would be a simple matter.

Mr. TUTTLE. You mean when the time came?

Senator SMITH. Before the time for expiration came.

Mr. TUTTLE. If we adopted that kind of resolution that kind of law could always be repealed, but it seems to me that the purpose or making these agreements subject to ratification by Congress is to ut something a little more restrictive than is now in existence, and it is more restrictive than it is now, it would probably have someing like the effect of Senate Joint Resolution No. 2.

Senator BUTLER. We could act on it tomorrow and get out of the whole situation, so what is the difference?

We can get out of it tomorrow, if we want, and the man knows that when he puts his money in.

Mr. TUTTLE. Under the International Bank agreement any member can get out any time it wants to.

Senator BUTLER. I say, that is all in there already, and the investor knows that.

Mr. TUTTLE. There is a good deal of difference taking affirmative action and having it terminated at a certain period of time.

Senator BRICKER. What you are talking about is neither one of these arrangements.

Mr. TUTTLE. No, sir. I believe that is all I have to say on the subject.

The CHAIRMAN. Thank you, very, very much.

Mr. TUTTLE. I do have specific statements here as to the effect on the various bureaus of the Treasury.

Senator BRICKER. Are they attached to your statement?

Mr. TUTTLE. They are attached to the statement.

The CHAIRMAN. The whole statement will be filed, Mr. Tuttle. (The statement referred to follows:)

STATEMENT BY ELBERT P. TUTTLE, GENERAL COUNSEL OF THE TREASURY ON SENATE JOINT RESOLUTION 1 AND SENATE JOINT RESOLUTION 43

The Secretary of State and the Attorney General have reviewed comprehensively the implications of Senate Joint Resolution 1 and Senate Joint Resolution 43 as they would affect the conduct of the foreign relations of the United States, and the constitutional position of the Federal Government. I propose only to mention briefly each of the substantive provisions of those resolutions, and to indicate by examples, within the scope of the responsibilities of the Treasury Department, the practical effect which the enactment of either of these constitutional amendments might have.

Section 1 of Senate Joint Resolution 1 would invalidate any treaty provision "which denies or abridges any right enumerated in this Constitution." Senate Joint Resolution 43 would similarly invalidate a treaty "which conflicts with any provision of this Constitution." Either of these provisions might be construed to invalidate a treaty which dealt with a subject matter ordinarily considered, under our constitutional system, to be under State rather than Federal jurisdietion, on the ground that it infringed the rights reserved to the States by the 10th amendment. Senate Joint Resolution 43 removes any doubt on this question by providing expressly that: "A treaty shall become effective as internal law in the United States only through legislation which would be valid in the absence of treaty." If the Government were rendered constitutionally unable to enter into treaties dealing with subjects ordinarily under the jurisdiction of the States, our structure of controls over the traffic in narcotic drugs would be seriously impaired. As you know, the Bureau of Narcoties is a part of the Treasury De partment and narcoties enforcement is one of our duties.

The system of Federal narcotic controls is based upon a series of international agreements which the United States has made during the past 40 years, s ne we took the initiative, under the administration of President Taft, in convering the first international conference to deal with the drug traffic. The United States is obligated, by these agreements, to control the production of opium, and to it. it the manufacture of opium derivaties to the quantities needed for medical and scientific requirements. Indeed, the United States has always taken the lead in pressing other countries to undertake this obligation. There had never been a serious problem of domestic production of the opium poppy until the outbreak of World War II. when our supplies of poppyseed for baking uses were cut off, and some enterprising farmers undertook to raise poppyseeds. Unfortunately, the same plant which yields poppy seeds will produce ernde opium and mop se. The Bureau of Narcoties feared that some farmers (or drug p»ddlers and að 1. *si might prove even more enterprising, and harvest the much more profitable seed

ods. It recommended, and the Congress enacted, the Opium Poppy Control Act f 1942, which forbids the growing of the opium poppy except under Federal cense, and limits such licenses to the quantities needed for medical and scientific equirements. Thus the Congress determined that we had better do without oppyseeds on our bakery products until imports could be resumed, rather than isk the temptations which growing the plant would provide. One of our States hought otherwise, and relying on the reservation of power provision in the 10th mendment, enacted legislation authorizing the growing of popy plants for seed, nder regulation. The courts held the Federal law to prevail, based on the treaty ower. Under Senate Joint Resolution 43, and possibly under Senate Joint Resoition 1, the State law would have prevailed, with danger both to our domestic arcotics controls and to our world position as the leading advocate of effective uppression of the drug traffic.

Section 2 of Senate Joint Resolution 1 forbids any treaty authorizing a foreign ower or an international organization "to supervise, control, or adjudicate ights of citizens of the United States within the United States enumerated in is Constitution or any other matters essentially within the domestic jurisdicion of the United States." The Senate Joint Resolution 43 text has no similar rovision. In the past decade, a number of synthetic drugs have been discovered hich have effects similar to the effects of opium derivatives, both for medicinal ses, and insofar as they involve the dangers of addiction. Under a protocol f 1948, the Manufacturing Limitation Convention of 1931 dealing with opium erivatives such as morphine was made applicable to synthetic drugs liable o cause addiction. The determination of whether a particular synthetic drug nvolves such dangers of addiction is vested in the World Health Organization. Apparently, section 2 of Senate Joint Resolution 1 would invalidate our acceptnce of the 1948 protocol, because the World Health Organization is an internaional organization which would "control rights of citizens (to manufacture ynthetics) and other matters essentially within the domestic jurisdiction of he United States (invading the right of a State to control manufacture of synbetics)." This would leave a serious hiatus in international narcotic regulaion. Unless some international organization can be given the responsibility for lassifying new drugs as habit forming, there will be great danger that the world market could be flooded with some new narcotic long before all the ountries could be brought around to regulating it.

Another example of an international agreement which might be invalidated y section 2 of Senate Joint Resolution 1 is the agreement which established he International Monetary Fund. United States membership in the fund was xplicitly authorized by act of Congress in 1945. Under the articles of agreeent of the fund, each of the fifty-odd participating countries has agreed not to hange the par value of its currency (except for certain minimal changes) ithout the concurrence of the Fund. Thus, the United States is bound not to hange the par value of the dollar (i. e., its gold content) without prior approval y an international organization. The power "to coin money, [and] regulate the alue thereof" is explicitly given to the Congress in the Constitution, and would doubtless be regarded as a "matter essentially within the domestic jurisiction of the United States," as that language is used in section 2 of the proosed amendment. While the fund may not change the United States dollar arity on its own initiative, but only veto changes proposed by member countries, his veto power might, nevertheless, be construed to conflict with section 2 of the proposed amendment, and thus render impossible continued United States articipation in the International Monetary Fund. The articles of agreement f the fund constitute today one of the few restraining influences on the proferation of discriminatory and restrictive currency practices throughout the world, which so seriously impede the liberation of international trade from a horass of governmental regulations.

Section 3 of Senate Joint Resolution 1, and section 1 of Senate Joint Resoluion 43 provide that a treaty shall become effective as internal law in the United States only through the enactment of appropriate legislation by the Congress. Such a provision, in my judgment, would seriously impair the expeditious conluct of our foreign relations. In the Treasury Department, we are concerned with a number of treaties which must be administered as internal law in the United States. Thus, a number of treaties have been made with foreign counries, and many others are under negotiation, to limit double taxation and to revent fiscal evasion with respect to income, estate, and inheritance taxes. In order to protect Americans from double foreign taxation of particular transacions, we must be prepared to offer similar exemptions to foreigners from tax

liabilities under our laws. In a number of instances, the Internal Revenue Code itself makes specific provision for exemption in accordance with treaties. Typically, treaties, rather than executive agreements, have been used in this field, although some arrangements of lesser scope have been made in the form of executive agreements. Negotiations are frequently protracted, and treaties entered into are typically reviewed very carefully in the Senate before ratification. The necessity for a further review by the Congress, with resultant delays, and possible deviation from the text agreed upon with the foreign countries, thus requiring further negotiation with those countries, would be a serious handicap to the achievement of the obviously desirable objectives of our activities in this field.

Section 4 of Senate Joint Resolution 1 would constitute a fundamental change in the division of powers under the Constitution by making executive agreements subject to regulation by the Congress. Moreover, such agreements would be subject to the same limitations as are proposed for treaties in the resolution. Similar provision is contained in Senate Joint Resolution 43, section 1. Executive agreements which affect the operations of the Treasury Department have ranged all the way from formal documents specifically authorized by the Congress, such as the articles of agreement of the International Monetary Fund and of the International Bank for Reconstruction and Development, to the most informal arrangements entered into in the day-to-day work of the Department, such as exchange of letters between enforcement officials of the Treasury and similar officials of foreign governments to provide for the exchange of information which would be of mutual assistance in law enforcement. Among the subjects which have been covered by agreements, with varying degrees of formality, have been aids to navigation, procedures and signals for safety and rescue at sea and in the air, arrangements entered into in the administration of the Trading With the Enemy Act, arrangements governing the establishment of United States Government foreign currency accounts in banks overseas, and a wide variety of others. Under the text of Senate Joint Resolution 1, all activities of this sort would have to stop until Congress had made provision permitting their resumption. and prescribing the manner and extent thereof. Senate Joint Resolution 43 would permit the traditional practice to continue, pending regulatory action by the Congress. What provisions the Congress would make in legislation regulating executive agreements is, of course, impossible to foretell. Presumably, there would be substantial restriction upon the powers of the Executive in this respect; otherwise there would be no point to the adoption of a constitutional amendment. Since major executive agreements have, in practice, been made under congressional authorization, the only result of an extension of congressional controls in this field would be the prescription of limitations on the great mass of detailed housekeeping and administrative arrangements with foreign countries. The efficient administration of the Government would, it seems to me, be impaired without any significant gain in congressional control over policy decisions. It should be borne in mind that the Congress has always had the unquestioned right to undo an executive agreement by legislation since such action by Congress would supersede the agreement under our constitutional system. The difference is that under the present system the agreements are valid and binding unless superseded.

There has been referred to another committee of the Senate a resolution, introduced by Senator McCarran (S. J. Res. 2), which would impose congressional regulations on the making of executive agreements. This is the type of reziation which the two proposed amendments before this committee would authorize the Congress to make. Section 3 of Senate Joint Resolution 2 provides that executive agreements would terminate not later than 6 months after the term of the President during whose tenure they were negotiated, unless extended by proclamation of the succeeding President. We cannot, of course, assume that if either of the proposed amendments became part of the Cons"ltution the Congress would necessarily enact the form of regulation proposed in Senate Joint Resolution 2. However, since Senate Joint Resolution 2 Las attracted wide interest as a method of regulating executive agreements, it won d be interesting to see how it would affect the conduct of our affairs involving foreign countries.

The International Bank for Reconstruction and Development was orzar red by an executive agreement which was expressly approved by the Congress and more than 50 countries are now members. Most of the funds for the bark's 1 ans must be raised in the private financial markets. The International Bank has already floated security issues aggregating some $500 million in the United

tates. If the basic charter of the bank were open to frequent renegotiation nd revision, investors might hesitate to hold its securities. If our participation a the bank need be renewed after each change of administration, foreign counries would doubtless also insist on the same privilege. There are now over 0 countries which are members of the International Bank, and I dare say that he majority of these 50 countries tend to change their administrations more requently than we do. It is true that we and the other members of the Interational Bank have each reserved the right to withdraw from the bank on short otice, and under appropriate arrangements to protect the creditors and the ssets of the bank. But it is one thing for a country to be free to withdraw, and uite another thing for each new administration in each of the fifty-odd counries to be required to take positive steps to reaffirm its adherence to the bank. The privilege of withdrawal has apparently not interfered with the ability of the ank to market its securities. I suggest that the need for reaffirmance of memership by each of the fifty-odd members each time there is a change of administration would present quite a different picture to a prospective investor n the bank's securities.

The various bureaus of the Treasury Department concerned with treaties and executive agreements have prepared memoranda describing their activities n this field and indicating the difficulties which they might encounter if either of the amendments before this committee became part of our Constitution. The articular examples I have given you are described more fully, and other exmples are given. I offer these memoranda for the record.

EFFECT ON FEDERAL CONTROL OF NARCOTIC DRUG TRAFFIC OF ADOPTION OF CONSTITUTIONAL AMENDMENT PROPOSED BY SENATE JOINT RESOLUTION 1 OR SENATE JOINT RESOLUTION 43

Under the amendment proposed by Senate Joint Resolution 1, a provision of a treaty which denies or abridges any right enumerated in the Constitution shall not be of any force or effect, and a treaty shall become effective as internal law n the United States only through the enactment of appropriate legislation by Congress. Under the amendment proposed by Senate Joint Resolution 43, a provision of a treaty which conflicts with any provision of the Constitution shall not be of any force or effect, and a treaty shall become effective as internal law in the United States only through legislation which would be valid in the absence of treaty. Under the latter proposed amendment it is clear that the United States could not become a party to a treaty designed to control the traffic in narcotic drugs where, as is usually the case, the treaty required implementation by Federal legislation in the field ordinarily considered within the reserved power of the several States under the 10th amendment. Under either proposed amendnent, however, it is urged that in conducting negotiations for a narcotic treaty, representatives of the United States would be seriously handicapped in their efforts to cooperate with representatives of other world powers in securing effecive international agreement upon the adoption of measures deemed necessary to control this traffic.

The control of this traffic has long been recognized as a problem necessitating International action and existing international agreements have imposed oblizations upon the United States and other high contracting powers to place certain restrictions not only upon the exportation and importation of these potentially langerous substances but upon the domestic production, manufacture and disribution as well. In implementing these obligations, it is necessary for the National Government to place appropriate restrictions upon domestic production and manufacture of these dangerous drugs, and to this extent it is clear that he effect of the international agreements is to deny or abridge the right that the citizen would otherwise have to produce or manufacture unlimited quantities of narcotic drugs, and that there must be implementing Federal legislation in the field ordinarily regarded as within the reserved powers of the several States. There are now pending consideration, in draft form, prospective international agreements which at least contemplate the adoption of further obligations, notably by way of limitation of production of crude opium, which would require the imposition of national restrictions on opium production and therefore interference with the right of an individual to produce unlimited quantities of crude opium. The question whether the rights so denied or abridged are rights 'enumerated in this Constitution" could be authoritatively and definitely determined only by the courts. If the amendment proposed by Senate Joint Resolution 1 were adopted, the executive department of Government would be unable,