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90-19 NOMINATIONS OF ROBERT E. LEE AND

LAWRENCE C. McQUADE GOVERNMENT

Storage

HEARING

BEFORE THE

COMMITTEE ON COMMERCE

UNITED STATES SENATE

NINETIETH CONGRESS

FIRST SESSION

ON

NOMINATIONS OF ROBERT E. LEE, OF ILLINOIS, FOR

REAPPOINTMENT AS A MEMBER OF THE FCC, AND

LAWRENCE C. McQUADE, OF ARIZONA, TO BE ASSISTANT

SECRETARY OF COMMERCE

AUGUST a, 1967

Serial No. 90-19

Printed for the use of the Committee on Commerce

KANSAS STATE UNIVERSITY LIBRARIES

US. GOVERNMENT PRINTING OFFICE

82-541 WASHINGTON : 1967
COMMITTEE ON COMMERCE

WARREN G. MAGNUSON, Washington, Chairman

JOHN 0. PASTORE, Rhode Island

A. S. MIKE MONRONEY, Oklahoma

FRANK J. LAUSCHE, Ohio

E. L. BARTLETT, Alaska

VANCE HARTKE, Indiana

PHILIP A. HART, Michigan

HOWARD W. CANNON, Nevada

DANIEL B. BREWSTER, Maryland

RUSSELL B. LONG, Louisiana

FRANK E. MOSS, Utah

ERNEST F. HOLLINGS, South Carolina

FREDERICK J. LoRDAN, Staff Director

JAMES J. BARRY, Assistant Staff Director

MICHAEL PERTSCHUK, General Counsel

RALPH W. HORTON, Assistant General Counsel

II

NORRIS COTTON, New Hampshire

THRUSTON B. MORTON, Kentucky

HUGH SCOTT, Pennsylvania

WINSTON L. PROUTY, Vermont

JAMES B. PEARSON, Kansas

ROBERT P. GRIFFIN, Michigan
4

CONTENTS

STATEMENTS

Commissioner Robert E. Lee, reappointment to Federal Communications Page

Commission 2

Biography 1

Endorsements 2

Lawrence C. McQuade, to be Assistant Secretary of Commerce 6

Biography 6

Endorsements 12

III

NOMINATIONS OF ROBERT E. LEE AND LAWRENCE C.

MeQUADE

THURSDAY. AUGUST 3, 1967

U.S. SENATE,

COMMITTEE ON COMMERCE,

Washington, D.C.

The committee met at 10 a.m., in room 5110, New Senate Office

Building, the Honorable John 0. Pastore presiding.

Senator PASTORE. This hearing will come to order.

This has to do with two nominations. It will be a very simple issue

before the more dramatic meeting on pipeline safety for which most

of you have come.

I am very happy to have here this morning Mr. Robert E. Lee,

member of the Federal Communications Commission, who had been

reappointed by the President of the United States. This is a hearing

on his nomination. This is the third term on the Federal Communications Commission. His initial appointment was made in 1953 and he

was reappointed in 1960.

Each nomination has been for a full term of 7 years. The term

presently under consideration is for a period of 7 years from July 1,

1967.

A copy of his biographical sketch has been submitted to the committee and will be made a part of the record at this point.

(The biographical sketch follows:)

BIOGRAPHICAL SKETCH OF COMMISSIONER ROBERT E. LEE, MEMBER OF THE

FEDERAL COMMUNICATIONS COMMISSION

Robert E. Lee is serving his second term as a member of the Federal Communications Commission.

Appointed by President Eisenhower and confirmed by the Senate, he began

his first term on October 6, 1953. Reappointed and reconfirmed, he started his

second seven-year term on July 1, 1960.

Commissioner Lee came to the Commission from the House Committee on

Appropriations, for which he was Director of Surveys and Investigations.

He first entered Federal Service in 1938 as a Special Agent for the Federal

Bureau of Investigation.

Born in Chicago on March 31, 1912, Commissioner Lee was educated at DePaul

University College of Commerce and Law.

He is Chairman for the Government Industry Committee for the Development

of All-Channel Broadcasting.

He is Chairman of the F.C.C. Educational Committee concerned with Instructional Television.

He is a member of the Congressional Country Club, Washington, D.C.

Commissioner Lee is married and the father of three children.

He is a Roman Catholic and a Republican.

Senator PASTORE. I would also like to insert in the record an

editorial appearing in the Evening Star, Washington, D.C., entitled

"Lee Stays On."

1
2 NOMINATIONS

ale editorial follows:)

[From the Evening Star, Saturday, July 29, 1967]

LEE STAYS ON

President Johnson's decision to reappoint Robert E. Lee to a third term as

member of the Federal Communications Commission makes sense on several

counts.

Lee, a Republican and originally an Eisenhower appointee, has distinguished

himself by a series of forward-looking moves on the FCC. He saw, long before

many others, the potential of Ultra High Frequency and became a vigorous

advocate of UHF stations to bring more programming to the public and to expand

educational television.

Largely as a result of his efforts, Congress in 1964 adopted a law requiring all

new TV sets to be equipped to receive UHF stations. Lee also has been an outspoken supporter of FM radio at a time when this medium was the forgotten

orphan of broadcasting.

The commissioner has, on occasion, demonstrated an unusual independence of

mind. He has espoused pay television, arguing that it could be used to teach

surgical procedures to medical students, for example, and offer correspondence

courses to laymen. Lee was present at the opening of a UHF station in 1965 in Austin,

Texas, a fact that did not escape attention of the press, for this new channel broke

a 12-year monopoly by the Johnson family's TV station there.

The FCC a few days ago announced plans to make a comprehensive study of the

future of communications

'

ranging from satellite broadcasting to banking by telephone. It is good to know that Commissioner Lee will be around to prod and question as the FCC undertakes this new look at the future.

Senator PASTORE. Mr. Lee, I don't think we have to prolong this

in any manner. You have been a member of the Commission now for

a number of years. You are well known by this committee. We know

of your background. We know of your assiduous work. I said time and

time again you are a fine public servant.

The only thing I have against your appointment is that you are a

Republican.

[Laughter.]

Now, tell me, you have been very much interested in the development of UHF. Where do we stand with that?

Mr. LEE. Well, I think that it is safe to say in the top 100 markets,

UHF is an assured success. We have stations going on the air at the

rate of about two a month now. I think there are 155 commercial

UHF stations on the air. Most of the educational stations are UHF

and they are being activated maybe one a month.

I think that the all-channel bill that you helped us with really

made the difference. The stations are not all making money, but they

can see the trend and it will be all right. I think that by 1970 we

won't be talking about UHF and VHF; it will all be television.

Years ago we used to talk about low band V and high band V.

That is gone. I hope that the term UHF will be gone by 1970 or

perhaps sooner.

Senator PASTORE. Recently the FCC in a precedent setting action

expanded the application of the fairness doctrine to include cigarette

advertising. This committee has been in receipt of a number of communications regarding that action. Would you explain for the record

what the status of that policy ruling is at the FCC?

Mr. LEE. We have petitions for reconsideration by WCBS and I

think that the report on the petition for reconsideration will clarify

the intent of what we had in mind. Everyone feels that where is this

going to stop; beer and wine; auto safety? We agreed to the position
NOMINATIONS 3

that we took unanimously with the complete understanding that this

was a very unique item since the Congress required the labeling,

since the Surgeon General's report indicated that it was detrimental

to health.

We do not intend to extend it into any other area. I can hardly

think of any 

Senator PASTORE. I think you are in a rather extensive area. I am

one of those who feel strongly that a grave mistake is made by many

smokers in not recognizing the fact that there is a very serious health

hazard involved; so much so that this committee took a very, very

strong position with regard to that which finally resulted, which was

the printing on each package of cigarettes the warning that appears

thereon.

Of course, at the time there were some who felt that we should

have included such a warning in the area of advertising. There was

some objection to that.

Let me ask you this question: What caused the Commission to

take this action? Who are the people that brought it to your attention,

or was that a matter that you and your public function assumed?

Mr. LEE. No, we acted on a complaint from a lawyer in New York

against WCBS. I forget his name. He picked a very unique subject

and we really spent quite a bit of time on this. But we had to respond

to the complaint and our response in effect was that he was not

entitled to equal time.

We thought the station through their cancer spots and so on had

met their obligation and we pointed out we relied on the judgment

of the station to a great extent. We did, however, indicate that it was

in the area of fairness. The broadcasters were pretty upset about it

but I do not think they need have any concern.

• We have another letter from some temperance groups with respect

to beer and wine and I am quite sure that—I know where I stand

on it. I am not going to say they need equal time.

Senator PASTORE. On the other hand, you do have many, many 

dramatic productions where sometimes in the process you depict

something that is offensive to a particular people or a particular race,

a particular religion. Is this fairness doctrine going to extend to other

commercial• products?

Mr. LEE. Well, all the fairness doctrine means, I cannot summarize

it any better than to say that you should be fair. We receive any number of complaints from various people such as you mentioned. In

every case we asked the station for their explanation.

In all but a handful we found that the broadcaster had fulfilled his

obligation.

Many people will view or listen to a particular program and will

find a viewpoint they do not like and they will complain. If they

listened to the station all the time, they would find in other program

segments that their viewpoint was at least expressed.

Senator PASTORE. Now, the FCC recently issued its order on phase

I of its investigation of the Chairman made by the American Telephone & Telegraph Co. in its interstate and foreign communication

services.

This committee, as well as many Senators have been in receipt of

many letters complaining about the Commission's action. What is

the status of this investigation?
4 NOMINATIONS

Mr. LEE. The American Telephone & Telegraph Co. has indicated

that they will file a petition for reconsideration. I think it is probably

due tomorrow.

In due course, very quickly I would think, we will analyze and

respond to this petition for reconsideration.

Senator PASTORE. Now there has been a great deal of discussion

about frequencies for land mobile purposes. What action has the Commission taken in this area?

Mr. LEE. We consider this just about No. 1, perhaps No. 2 problem

at the Commission. We have had a Land Mobile Advisory Committee

working for almost 2 years under the direction of Commissioner Cox.

They will be submitting a report to us within the next few weeks

pointing out what alternatives there are.

We have authorized some tests that are going on right now in

Washington with a view to sharing VHF frequencies.

Senator PASTORE. Did that have to do with the Police Chief Layton

case in the District of Columbia you are discussing now?

Mr. LEE. Not specifically. This particular test we hope will result

in the ability to assign more frequencies to police and fire and safety.

services. We also have a proceeding underway to examine our allocation table with the possibility of abandoning some UHF channels for

the use of the land mobile people.

Senator PASTORE. An article appeared in the Washington Post

under the date of August 1. The title of it: "City Life, Four New

Police Channels Tied Up in FCC."

What do you have to say to that?

Mr. LEE. I asked one of my people to check on that yesterday and

I just don't have any response to it yet.

Senator PASTORE. I think the position of the District, of the Chief

of Police is their request for these four channels is languishing before

the FCC. It strikes me this has to do with law enforcement. I think

expedition ought to be the theme song.

Mr. LEE. I am surprised that the petition was filed in May. It is

being processed. I discussed it yesterday at our regular Commission

meeting and we instructed the Chief of our Safety and Special Services

Bureau to try and find a way to look at all applications and to pick

out police and fire and grant them, and grant waivers if necessary.

Some of the users of land mobile have started to come in and ask for

waivers in a particular area.

For example, you might find there are frequencies available in

Baltimore that are assigned to a forestry service and they are not

being used but since we assign on a block basis, we have made a number

of waivers for police. In other words, giving them the 

Senator PASTORE. I would hope when you go back to your office

you will give this more intense care and let us know by way of memorandum just about where it stands, what the prospects are and how we

can expedite these applications because we are in a situation today—I

don't want to belabor this—where communications and police enforcement and police protection is of priority consideration in regard to

protection of property and life.

Mr. LEE. You may find that it will be granted about tomorrow.

Senator PASTORE. Knowing you as I do, I hope it will be tomorrow.

Now the question I ask, you were anxious to get out of public service

and go to private enterprise and I could understand from a very per..
0

NOMINATIONS 5

sonal point of view what your reasons for it were but now you are

being appointed to a 7-year term and I think the President of the

United States has made a fine decision.

Do you expect to serve out the 7 years?

Mr. LEE. I expect to serve out the full 7 years.

Senator PASTORE. If God gives you the health and strength.

Mr. LEE. Assuming I stay healthy; yes.

Senator PASTORE. Let me say this to you from a very personal

point of view, and it really did please me immensely when the President

decided to reappoint you. It even gratified me more when you agreed

to serve for another 7 years. I repeat again that you are a credit to the

Commission, you are a credit to this committee, you are a credit to

your country. 

You don't want to talk about your party affiliation [laughter] but I

am very happy to see you aboard.

Mr. LEE. I really appreciate that more than I can express. Thank

you.

Senator PASTORE. Any questions?

Senator HARTKE. I would like to add my own endorsement. I

endorse everything Senator Pastore said and a little bit more.

Mr. LEE. Thank you very much.

Senator PASTORE. Thank you very much. Does anyone else want

to testify for or against this great man? [Laughter.]

(Mr. Lee subsequently filed the following letter:)

FEDERAL COMMUNICATIONS COMMISSION,

Washington, D.C., August 9, 1967.

HOD- JOHN 0. PASTORE, •

U.S. Senate, Washington, D.C.

DEAR SENATOR PASTORE: This is in further reference to the application of the

City of Washington for four additional channels for police use, which was discussed in the hearing on my reappointment and in my letter to you dated August 4.

Today the Commission granted this application and a similar request from the

City of Yonkers New York. I would like to call your attention to the fact that

the request of the City of Washington was understood to be part of an expansion

of the City's police communications system, and no sense of immediate urgency

was indicated.

The staff has given assurance to the Commission that similar requests will be

given top priority in processing for Commission consideration.

Sincerely,

ROBERT E. LEE, Commissioner.

• All right, Mr. McQuade, will you come forward?

Mr. McQuade, if you forgive me, I have another committee appointment and Mr. Hartke will take over. He is more kindly than I am.

Mr. MCQUADE. Thank you, sir. 

Senator HARTKE. This is a hearing on the nomination of Lawrence

C. McQuade of Arizona to be Assistant Secretary of Commerce.

Mr. McQuade, we are delighted to have you with us this morning.

You may proceed with any statement you care to make.

Mr. MCQUADE. Well, I hadn't come prepared to make a statement,

Senator. I have, as you may be able to tell from the biography which I

submitted earlier, been working in the Government for 6 or more

years and in the Commerce Department since November 1963. In

that time I served as the Deputy Assistant Secretary in this Department, as assistant to Secretary Connor and now I have been serving

as the Acting Assistant Secretary since February 1 of this year.

Senator HARTKE. All right. Your entire biographical sketch will be

made a part of the record.
6. NOMINATIONS

(The biographical sketch follows:)

BIOGRAPHICAL SKETCH OF LAWRENCE C. MCQUADE

Lawrence C. McQuade has been serving as Acting Assistant Secretary of

Commerce for Domestic and International Business since February 1, 1967.

Mr. McQuade grew up in Tucson, Arizona, where he attended local schools.

After graduation from Tucson High School, he entered Yale University where

he received a bachelor of arts degree in economics, Phi Beta Kappa, cum laude.

He also holds a bachelor and masters degree from Oxford University as a Rhodes

scholar and a law degree from Harvard Law School, cum laude.

Mr. McQuade practiced corporate and financial law with Sullivan & Cromwell

in New York City from 1954-1960. Between 1961 and 1963 he served as Assistant

to the Honorable Paul H. Nitze, Assistant Secretary of Defense for International

Security Affairs. Mr. McQuade joined the Commerce Department in November

1963, serving Secretary Luther H. Hodges as Deputy Assistant Secretary of

Commerce for Financial Policy, and then as the Assistant to Secretary John T.

Connor between 1965 and 1967. In February 1967 he undertook his present assignment as an "acting" basis.

Mr. McQuade has written various articles on antitrust law, economics, defense

and foreign policy. He is a member of the Council on Foreign Relations.

Senator HARTKE. And a letter from Senator Carl Hayden of Arizona

will be made a part of the record which expresses complete support and

Senator Paul Fannin has indicated by verbal expression he wants to

give endorsement to Mr. McQuade for this position. I understand that

a financial statement will be submitted to the committee, which will be

in the file available to those people entitled to see same.

I have some questions concerning foreign trade prepared by our

staff to which I would like your answers.

Mr. MCQUADE. I will be very pleased to do so.

Senator HARTKE. Is Commerce consulted by the Department of

State to determine the commercial ramifications of our foreign policy

before it is adopted? For example, were trade factors considered prior

to the adoption of our policy to promote a Latin American common

market?

Mr. MCQUADE. The record of consultation with the Department of

Commerce where foreign policy has commercial ramification is spotty.

It is likely to be very good where the tradition has been established

among particular people in a particular bureau or on particular issues.

On the other hand, it is much less good where such a tradition has not

been established. Often, the absence of such a tradition is the fault

of the individual within the Department of Commerce and not a lack

of receptivity by individuals in the Department of State. Of course,

in the Kennedy round of tariff negotiations under, the leadership of

the special trade representative, there was full involvement by the

Department of Commerce. This is consistent with the important role

which the Department has always played in tariff negotiations of this

sort.

With respect to the second half of the question, trade factors were

of a major consideration in the adoption by the U.S. Government of a

policy of promoting a Latin American common market. While no one

from the Commerce Department participated in the Punta del Este

conference, the basic preparation for it in Washington was developed

by an interagency group in which Commerce had a representative.

Senator HARTKE. In light of your answer to the foregoing questions,

do you feel that the coordination between the Departments of State

and Commerce of our foreign policy, our commercial policy, and our

foreign aid programs is adequate?
NOMINATIONS 7

Mr. MCQUADE. I believe that there can always be improvements in

-the coordination of foreign policy, commercial policy, and of foreign

aid programs. The essence of effective government is to make intelligent choices among competing programs and policies and seek the

optimum achievement in our overall national goals. For this reason,

it is important that the Commerce Department, with its set of objectives, work closely with the Department of State and the Agency for

International Development to work out a sensible balance within the

U.S. Government which will best serve a variety of valid goals which

we should all be seeking to achieve.

Senator HARTKE. What do you think about last resort AID financing?

Mr. MCQUADE. This is an involved question and its significance

varies in different countries and for different types of financing. When

I was Chairman of the Interagency Group on Export Financing under

the Cabinet Committee on Export Expansion in 1964 and 1965 we

were successful in modifying AID's written policy directive, which had

proscribed AID financing where alternative sources of financing were

available from other free world sources at reasonable terms. If literally

applied, this meant that as other developed countries increased their

involvement with LDC's they could choose the more commercially

advantageous projects for financing—with AID deferring to them and

being left with the projects with less appeal from a short- or long-term

commercial veiwpoint. Thus, AID would be the lender of last resort.

On our initiative, the AID regulations were changed in 1965 to allow

AID to finance projects with significant commercial follow-on potential

even though other countries might be interested in the projects. The

revision is careful, however, to say that this is only one factor for consideration. It is very important that the recognition of U.S. commercial objectives in AID programs not obscure or interfere with its prime

mission of accelerating development in the less developed countries.

Since 1965 there has been increased emphasis given to the relationship of AID to commercial trade. This has resulted in the establishment of an interagency group under the Cabinet Committee on the

Balance of Payments to review whether AID financing which is

tied to U.S. procurement resulted in additional U.S. exports to aidreceiving countries or whether it substituted for normal commercial

financing. This group has studied this question in depth in Turkey,

Chile, and Peru and is now studying the situation in India, Pakistan,

and Brazil. Naturally there are great differences among countries,

and the feasibility of techniques, such as specifying commodities which

would result in additional U.S. exports, also varies depending on the

country's import regulations, et cetera.

As a general answer to this question, I feel that AID should systematically evaluate the commercial as well as the developmental aspects

of project and should favor commercially advantageous projects

which are consistent with development goals. Where other aid donors

are interested in a project, AID should consider the terms being

offered and other factors before encouraging the use of non-U.S.

financing. Admittedly it is difficult for AID to make an optimum

selection of projects and commodities to be financed when the aidreceiving country decides which projects to bring to AID and which

to other donors, and which commodities will be financed with AID

funds and which with their own free foreign exchange. However, we

will continue to explore AID arrangements and techniques which may
8 NOMINATIONS

benefit U.S. commercial trade without detracting from AID's primary

developmental mission.

Senator HARTKE. I notice that the new Office of Facilitation in the

Department of Transportation is planning to undertake programs

designed to develop standardized containers acceptable internationally, to establish an international through bill of lading, and to

establish international joint through rates, through routes, and through

liability. All of these programs should help promote international

trade. Will Commerce consult closely with DOT in the development

and implementation of these programs?

Mr. MCQUADE. We have agreed to a proposal by the Department

of Transportation that it take over from the Commerce Department

the responsibility for the chairmanship of the National Facilitation.

Committee, which is the interagency group coordinating Federal programs in facilitation, including simplification of documentation used

in international trade, facilitation of containerized shipments, and

the like. In doing so, we recognized the fact that often the impact of.

facilitation measures is felt most directly by transport enterprises and

thus becomes a matter of particular interest to the Department of

Transportation. We were also influenced by the belief that the Transportation Department might have more funds and more staff available

to work in this area than we see likely to get.

At the same time we know that the import-export community, the

organized travel industry, and the individual traveler also feel the

impact of facilitation measures, and this directly engages the interests

of the Commerce Department, in view of its responsibility for programs to promote international trade and travel. To assure a proper

balance of interests under the new arrangements for the National

Facilitation Committee, we have reached an understanding with the

Department of Transportation to the effect that the Commerce

Department will have a leading role in the National Facilitation

Committee activities affecting international trade and travel, which_

we regard as including documentation and containerization programs._

We are prepared, of course, to cooperate fully with the Department

of Transportation within the framework of the National Facilitation

Committee. We are confident that the Department of Transportation

equally recognizes the responsibilities of the Commerce Department

in facilitation and plans to carry on its activities in close coordination

with us.

Senator HARTKE. Will the conclusion of negotiations in the Kennedy

round pose special problems or create particular advantages for our

trade promotion program.

Mr. MCQUADE. The main thing it will create is new opportunities

for international trade. The categories of U.S. goods which may find

their way into foreign markets should open more widely. U.S. machine

tool manufacturers, for example, face tariffs upon sales of production

machinery in Canada which are reduced from 22.5 to 15 percent. This

is but one example. Yet it suggests that the relative attractiveness of

particular foreign markets for particular U.S. products will shift in

reflection of new lowered duties. We will be selecting the themes of

our trade shows, trade centers, and trade missions to take the best

advantage we can of the most attractive product sales opportunities

in both old and new foreign markets.
NOMINATIONS 9

The time is at hand for seizing the sales opportunities offered by

•reduced protection that will be effected in foreign markets in the next

few years. These reductions will, as I have said, be given weight in

developing our U.S. Government trade promotion programs. However, the major responsibliity for making the most of the opportunity

offered by a truly global market rests with American businessmen,

who have all of the tools, including managerial skills, capital resources,

advanced technology, marketing ability, skilled labor, high productivity and economies of scale, to meet the toughest competition.

Western Europe is an excellent example of the opportunities created

by the Kennedy round for U.S. exporters. Before passage of the

Trade Expansion Act of 1962, many businessmen feared that once

internal tariffs were eliminated in the EEC and EFTA, they would

be faced with a choice of investing in productive capacity in one or

both of these blocks or run the risk of being excluded from these

markets by external tariff barriers. These tariff walls, that might

have seriously affected our exports to Europe, will now be reduced

by an average of about 35 percent on industrial products. With

approximately one-quarter to one-third of our exports moving to

Western Europe, it is quite obvious what the implications for U.S.

exporters might be without the Kennedy round now that the internal

barriers of these countries are in the final stage of elimination. Significant concessions made in other major markets, such as Canada

and Japan, offer equally good opportunities for U.S. traders.

We are now planning our future trade promotion events with an

eye toward the lower foreign duties on those products that offer the

United States the best opportunities for increased exports.

Senator HARTKE. Are the opportunities for achieving greater efficiencies in our export promotion program through the wider use of

data processing machinery being fully exploited by the Department

of Commerce?

Mr. MCQUADE. Much remains to be done, Mr. Chairman. However, we are devoting a lot of attention to this. Our emphasis is on new

data techniques which provide new ways to match up incoming information—economic, trade opportunities, et cetera—with specific U.S. firms

ready to take advantage of such data. The American International

Traders Index is the key to such a program. We now have 23,000

firms on the index.

Full utilization of data processing techniques has definitely not yet

been achieved. However, this is a high priority area within the Department and we are moving ahead as rapidly as funds permit.

Senator HARTKE. Does the Department of Commerce have programs to broaden the background and training which commercial

attaches, particularly those dealing extensively with trading companies, receive?

Mr. MCQUADE. This is a matter to be worked out jointly with the

Foreign Service. We have made a start, at least, in training commercial officers but of course there is much more that can be done.

We are also undertaking programs to train key Foreign Service local

employees engaged in commercial work. This training is given both

in the United States and by teams visiting foreign countries.

The report of the National Export Expansion Council Action

Committee on Export Promotion, chaired by John Kimberly, made
10 NOMINATIONS

a specific recommendation with regard to the selection, training, and

utilization of officers who directly advise American businessmen

participating in international trade. It recognizes the advantages to

be obtained by exchanging or rotating personnel between Commerce

headquarters in Washington, Commerce field offices throughout

the United States, and at oversea posts of the Foreign Service. The

possibilities of such arrangements have been studied for some time in

the Department, but recently we have made substantial progress in

setting up an administrative procedure to achieve this rotation.

Senator HARTKE. Should the Commerce Department develop special

programs to insure that American exporters will enter markets in

developing countries which may emerge in the future as substantial

customers for American products?

Mr. MCQUADE. I believe this to be desirable. Today with the limited

funds available to us and with the pressing current balance-ofpayments problem, we concentrate our efforts on the industrialized

countries where short-term results can be obtained. However, we

believe that our basic mission includes a concern for the longer term

markets and we also believe that our goods can be key elements in

the development process of the lesser developed countries.

We have a number of ideas for the LDC's, including new techniques,

such as trade and development service centers, expanded sample

display service centers, contract projects on a joint Governmentindustry basis, et cetera.

Earlier this week, I was in Mexico City to participate in the opening'

ceremonies of EXPO-META, a Commerce-sponsored trade exhibit

of U.S. packaging and food processing equipment. This sales effort,

pleased the Mexicans, for it promises to meet their specific needs and

enhance their effectiveness in both domestic and foreign markets. For

the United States, it means machinery sales, servicing revenue, and

often sales of inputs. This two-way benefit has great appeal.

On the whole, the progress to date on our LDC trade promotion

programs seems to mark an opening phase in a bigger and worthwhile

undertaking.

Senator HARTKE. Is the Department of Commerce developing

programs to assure the wider distribution and availability of data

indicating the current and future trade potential of different foreign

markets?

Mr. MCQUADE. Yes. However, we would need more funds if we

were to undertake significantly more foreign market identification

studies and expand market research projects undertaken by contract.

One good thing we have recently worked out is a new program with

the Foreign Service to make general economic reports on countries

more pointed in terms of U.S. trade and investment interests. These

reports are very current and can be obtained on a subscription basis.

Senator HARTKE. Can the Department develop a joint industryGovernment trade program, by contract or otherwise, which will

provide export incentives in the short run?

Mr. MCQUADE. In general, I think much can be accomplished in

this field, but I would not put too much emphasis on the short run.

The experience of the Department of Agriculture, where such contracts have been used for some time, is that a 5-year period may be,

required to plan and carry out meaningful projects.
NOMINATIONS 11

We think combination export managers can be given meaningful

incentives, especially in the less developed countries where the CEM

otherwise might feel the undertaking to be too expensive and too

long run to warrant attention.

Perhaps trade associations also offer prospects for useful collaboration. But I don't believe we have done enough homework to say just

what incentives might be most useful.

Senator HARTKE. The Kimberly report on export expansion discusses the desirability of avoiding the creation of our trade policy

on a crisis basis, and repeatedly refers to the need for consistent longrange planning. Can the Department of Commerce develop programs

to implement this recommendation, and if so, what type of programs

would you suggest?

Mr. MCQUADE. First, I feel that our trade policy is not conducted on

a crisis basis. The most prominent aspect of it has been the Kennedy

round. That involved many crises, but it was a carefully considered

part of a long-range policy toward more liberal international trade.

Second, our trade promotion programs have also had an essentially

long-term character. Export expansion has been a key theme of the

U.S. Government for over 6 years.

With respect to both of these facets of trade, I agree that there

continues to be a need for sustained, long-range approach by the Government and by U.S. business.

On the whole, I think that current trade promotion programs of the

Department of Commerce are sound. If we were given additional funds

to do more, we would propose to:

(a) Expand our hard-sell programs of trade fairs, trade centers,

America Weeks, etc.;

(b) Greatly increase our export market identification studies;

(e) Develop special programs addressed to the special situation

in different countries—developed and less developed;

(d) Expand our whole commercial information program, with

the results supplied to industry so that foreign sales will be planned

in the same way as domestic sales;

(e) Expand informational and promotional programs at home

through field offices and regional export expansion councils to

make U.S. industry more export-minded.

As to trade policy the legislation to follow up the Kennedy round is

under discussion within the executive branch and should shortly be

submitted to the Congress.

Senator HARTKE. I notice you had formerly been with the law

firm of Sullivan & Cromwell, a very distinguished firm in New York

actively engaged in governmental and political affairs. Is that where

you received your basic training?

Mr. MCQUADE. Well, it certainly was an important contribution to

my basic training.

Senator HARTKE. I am delighted to see you aboard. I have no

personal questions I want to ask you at this time. I do feel that the

Commerce Department, with its recognition as a separate and distinct

entity rather than being swallowed up, is better for the Nation and

I hope better for business and I hope business gets better.

Mr. MCQUADE. Thank you very much. I appreciate that.

Senator HARTKE. I might call to your attention I just noticed

there is a continuing drop in profits in every corporate structure and

Ar A
12 NOMINATIONS

I do think, as I understand it, the charge under the Organization Act of

Congress is its responsibility to the Commerce Department to develop

not alone international commerce but to develop commerce of the

United States so you are charged here with bringing the profits of

all corporations back up. [Laughter.] -

Mr. MCQUADE. Thank you very much. I hope I can deliver on that.

Senator HARTKE. Thank you.

Any other witnesses care to be heard in this nomination? If not,

these hearings will be closed.

(The letter from Senator Hayden follows:)

U.S. SENATE,

COMMITTEE ON APPROPRIATIONS,

Washington, D.C., July 20, 1967.

Hon. WARREN G. MAGNUSON,

Chairman, Senate Committee on Commerce,

Washington, D.C.

DEAR MR. CHAIRMAN: I have your letter of July 18, relative to the appointment

of Mr. Lawrence C. McQuade as an Assistant Secretary of Commerce.

As you know, Larry McQuade has been a Deputy Assistant Secretary of

Commerce since 1963 and is presently the Acting Assistant Secretary for Domestic

and International Business. I feel that he is well qualified and deserving of this

appointment and his nomination has my complete support.

I appreciate this opportunity to submit my comments to your Committee.

Yours very sincerely,

CARL HAYDEN,

U.S. Senator.

(Whereupon, at 10:20 a.m., the hearing was concluded.)

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