products is already exercising rationing or other forms of end-use controls.

The minimum essential requirements as determined by the Chief of the Fuel Branch in the Office of International Trade are then reviewed by the above-mentioned Committees, on which are represented all agencies concerned, particularly in the field of domestic supply, including the Department of the Interior, Department of State, Department of Defense, Department of Agriculture, and the Offices of International Trade, Domestic Commerce and Small Business of the Department of Commerce. A further scrutiny is made by the licensing officers at the time license applications are acted upon to determine the essentiality of end-use of particular shipments.

Requests for foreign countries for quotas are finally checked by American diplomatic agencies before export licenses are granted.

EXCERPTS FROM A LETTER OF THE ACTING SECRETARY OF THE INTERIOR DATED FEBRUARY 27, 1948, ADDRESSED TO CHAIRMAN WOLVERTON of THE HOUSE INTERSTATE AND FOREIGN COMMERCE COMMITTEE, RELATING то A SERIES OF PROPOSED EMBARGOES ON PETROLEUM PRODUCTS

While I am in complete agreement with the objective of the several resolutions, i. e., reduction of American petroleum exports to the greatest degree feasible, I strongly recommend against the adoption of any of them by the Congress.

While in a short supply position every barrel of petroleum is important, it should be understood that only in slight degree is the scarcity of petroleum products due to exports. Exports of petroleum products have been sharply curtailed and quotas have been approved in the first quarter equal only to some 2 percent of our total available supply. At the same time, petroleum imports are the highest in our history and during recent weeks have exceeded exports by an average of more than 100,000 barrels per day.

It must be remembered that since the earliest days of the petroleum industry, the United States has been the great petroleum-refining nation of the world and has built up dependence by other nations upon itself as a source of refined products. This situation has had numerous advantages to us in war and in peace from both an economic and a military standpoint. The nations which are now receiving our exports not only, as I have said, need them desperately, but can replace them nowhere in the world. The refining facilities in Europe and the Far East are still in large measure inoperable because of war damage and unsettled conditions. Moreover, many of the former sources of petroleum products for the European economy are now under Russian domination and their output unavailable.

In today's mechanized economy, petroleum products in the minimum quantities required are needed to maintain essential services and activities. Gasoline, Diesel oil, and bunker oil are indispensable to the maintenance of marine and inland transportation for the operation of fishing fleets, and of agricultural equipment essential to planting and harvesting crops. Gas oils are required if gas public utilities are to be able to manufacture a usable product and oil is necessary for heat treating and certain other industrial operations.

The Interior Department is and has been, as I have pointed out, a strong advocate to limiting exports of petroleum as much as feasible. Nonetheless, I can think of few acts which would give more impetus to the spread of ideologies abhorrent to us and to the growth of ill will toward the United States than to deny to friendly nations the comparatively small quantities of petroleum products needed to maintain essential services in order that we who already consume some two-thirds of the world's oil might have this small additional quantity.

HOW MUCH MIGHT BE GAINED? WHO WOULD BE HURT?

It is estimated that such an embargo, assuming it were imposed early in the month of March, would halt export shipments-which might otherwise take place-totaling 430,000 barrels of these products, comprising 70,000 barrels of kerosene, 230,000 barrels of gas oil and distillate fuel oil, and 130,000 barrels of residual fuel oil. These figures represent the full amount of presently unshipped balances against licenses already issued, plus an estimate of shipments that would probably take place under export licenses not yet issued. In terms of percentage of United States production of these products, this maximum possible "savings" represents less than one-sixth of 1 day's production. In other words, we are producing, within every 4 hours, and 24 hours a day, as much as we could possibly save by stopping these exports for 30 days.

House Joint Resolution 323, as amended and reported, would directly affect proposed shipments of these products to certain western European countries, particularly Sweden, Denmark, Belgium, and France and, to some extent, certain of the smaller Latin American countries. From the standpoint of effect upon these countries, we must not forget that their primary use of these products is for industrial and agricultural purposes, and not domestic heating as in the United States. Their fuel supply would be denied in the springtime, their planting season. Their demonstrated need is extreme.

Shipments to China, the Philippines, Mexico, Australia, and New Zealand, which would ordinarily be made from the west coast, would not be affected. Most of the deliveries to the United Kingdom. scheduled for the first quarter 1948 have already been made or are en route, and so also would not be affected. No shipments are scheduled or would in any event be licensed for eastern European countries during this period.

On the one hand, the petroleum stock position in the countries which might be affected by this proposed embargo is at extremely critical low levels. Already they have curtailed the operation of essential industrial plants and severely rationed petroleum for all users. With further aggravation of this situation by reduced supplies, measures would have to be taken to further curtail, and perhaps even stop, essential industrial activity, the continuation of public transportation, utilities, etc.

On the other hand, in the United States, consideration is already being given to disbanding the voluntary fuel coordinating system set up in the several States where shortages threatened this winter. The petroleum outlook makes them unnecessary. We must further recognize that consumption in this country has been, and still is, completely free and uncontrolled for all purposes-including pleasure and entertainment and all other less essential purposes.

NO AUTHORITY FOR GOVERNMENT CONTROL OVER RESERVES OR

DISTRIBUTION

It should be understood that export shipments are not made from any particular pool or reserves of petroleum products set aside by the industry for export. Nor does the Department of Commerce or any other department of the Government have any such pool or reserves under its control. It should also be emphasized that there is no authority in the Secretary of Commerce or in any other Government official to direct the distribution of such products to any particular peace or for any particular use.

О

CLARENCE F. LEA.
ROBERT CROSSER.
A. L. BULWINKLE.

VIRGIL CHAPMAN.
LINDLEY BECKWORTE.
J. PERCY PRIEST.
OREN HARRIS.

RICHARD F. HARLESS.
EUGENE J. KEOGH.
CARL HINSHAW.

MARCH 9, 1948.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. MARTIN of Iowa, from the Committee on Ways and Means, submitted the following

REPORT

[To accompany H. R. 5065]

The Committee on Ways and Means, to whom was referred the bill (H. R. 5065) to amend section 1700 (a) (1) of the Internal Revenue Code so as to exempt hospitalized servicemen and veterans from the admissions tax when admitted free, having considered the same, report favorably thereon without amendment and recommend that the bill do pass.

GENERAL STATEMENT

This bill would exempt from payment of the present 20 percent admissions tax levied under section 1700 (a) (1) of the Internal Revenue Code, free admissions furnished to hospitalized service personnel and veterans hospitalized in any Government hospital or institution. Thus, it restores, in part, an exemption from this tax which was applicable during the war period in the case of free admissions to military and naval personnel when in uniform, limiting the exemption, however, to free admissions in the case of a particular class of service personnel and veterans.

The general effect of the bill will be to permit many thousands of hospitalized service personnel and veterans to attend a wide variety of sporting events, entertainments, and other educational and recreational functions through the courtesy of free admission privileges. These privileges, however, to qualify as a basis for the exemption under this bill, must be extended by the operator of the place to which admission is otherwise charged. The exemption will become effective on the first day of the first month which commences more than 20 days after enactment of the bill. Accordingly, if it becomes a law, for example on or after March 12, 1948, it will not take effect until May 1, 1948. In view of the fact that the season for many highly enjoyable