from Arthur B. Sinkler

This special "Tari:ff Edition" has been Prepared to answer questions on this issue Which is Vital to Hamilton and the jeweled American watch industry, I commend it to Your attention. timely TOPICS April-May 1964

in this issue . • •

Letter from the President 3

Is Made In U.S.A. Here To Stay? ...... 4

Who's Who in the Swiss Watch Cartel . . . 6

Glossary of Terms ...... 12

Watches, Tariffs and the Law ...... 14

Honor Roll Anniversaries ...... 15

Cover: Magnified 30 times, "Hamilton-U.S.A.'' is easy to read on the popular grade 761 ladies 22- jewel movement. Will the · "U.S.A.'' remain on the bridge of Hamilton watches? The cover article be­ ginning page 4 offers some facts on the question.

Editor ... ._ ...... Richard F. Charles Photographers: Harold W. Richter-Wallingford, Rob­ ert Taylor-Lancaster Regional Corresp0ndents: L. J. Lane--Canada, Mary Burgess-Milford, Conn., Trudy Born-Bienne, Swit­ zerland, Mary C. Gestey-Wallingford. Gestey-Wallingford. Reporters: Lancaster-Wally Bork, Sally Bushong, Max Caldwell, Ray Ellis, Ron Fenstermaker, Sam Gast, Marilyn Kuntz, Charles McCamey, Thomas Reese, Frank Remley, Ronald Roschel, Carl Yecker, Wallingford-Alfred Draghi, Fred Long, Robert Mc­ Guire, Jean Case.

timely TOPICS is published bimonthly for employees of the Hamilton Watch Company, its divisions and subsidiaries by the Public Relations Department. CCopyright 1964 by Hamilton Watch Company, Lan­ caster, Penna. Contents may be reproduced with credit. 2 HAMILTON WATCH COMPANY

LANCASTER, PENNSYLVANIA

Arthur'.1 8. Sinkler PRESIDENT

To: All my Fellow Employees

This issue of timely TOPICS is arriving in your homes just prior to the company's appearance before the Tariff Commission in Washington beginning May 12.

On that day Hamilton, Elgin and Bulova will appear to present the watch industry's case for the preservation of domestic watch manufacturing.

You will be reading much about this case in the newspapers. The basic facts of the matter, together with opposing points of view, are included to give you the fullest possible understanding of the s itua ti on.

For a quick summary of our activities see the section titled What Are We Doing on page 13.

Sincerely,

Arthur B. Sinkler HERE TO STAY?

"YES!" say Bulova, Elgin and Hamilton as the remaining U. S. jeweled watch makers battle the Swiss Cartel.

AREL y DO COMPETITORS in the same business watch imports has been harmful to the watch R agree on major issues. But on May 12 the business, has held back quality product develop­ three American watch manufacturers-Bulova, ment and denied the American consumer the best Elgin and Hamilton-will put competition aside watches at the lowest cost. Further, they con­ and appear jointly before the Tariff Commission tend, the tariff increase hasn't helped those it was to prevent the Swiss watch cartel from gaining designed to aid (the domestic manufacturers) complete control of the U.S. market for jeweled and has additionally stimulated large-scale smug­ lever watches. gling and abusive use of legal loopholes. The Swiss watch cartel has been attempting for The U.S. watch manufacturers point out that years to gain complete control of the American any across-the-board reduction of duties will watch market because it is the largest and most make it economically impossible to continue profitable. With the passage of the Trade Expan­ watch manufacture in this country; that pro­ sion Act of 1962 and the advent of the "Kennedy duction capacity is now at a point of irreducible Round" of CATT negotiations, "The Swiss have minimum; that any such action would hand the decided that now is the time to strike and knock Swiss the full monopoly which a Federal Court us out," says Hamilton President Arthur B. Sink­ decree, recently issued, was designed to prevent ler. "They want to close our research laboratories, and, finally, that the U.S. would wind up as the disperse our engineers, and take the whole Ameri­ only major nation with no jeweled watch manu­ can market for themselves." facturing industry. This reservoir of skills and So once again the domestic manufacturers will facilities wo'uld thus be unavailable for defense journey to Washington in defense of a meager needs in time of emergency. They add that the 153 of the jeweled lever watch market and pre­ Swiss already enjoy all but a small percentage of vent what has traditionally been anathma to our the U.S. market but are seeking 1003 domination. government and American consumers: monopo­ listic control of a market or product. Pertinent Background Review

The Gist of the Situation The three jeweled watch manufacturers, The Swiss watch industry, through its govern­ Bulova, Elgin and Hamilton in 1951 produced ment, has pressed the U.S. State Department to over 3,000,000 movements and employed 8,400 reconsider the 1954 escape clause action which watch workers. By 1962, production had declined raised duties on most categories of watches. The to about 1,300,000 with employment down to Swiss say that the 1954 increase in tariff on approximately 2,500 watch workers.

4 timely TOPICS Voicing concern for the American jeweled watch industry, the heads of the remaining domestic manufacturers appeared jointly before the U.S. Tariff Commission. From left: Henry Margolis, Elgin president and chairman; Arthur B. Sinkler, Hamilton president and chairman; and Gen. Omar N. Bradley, Bulova chairman.

U.S. Technology: On a production-hours-per­ "This complaint attacks restrictive controls upon movement basis, American plants of the three the American jeweled watch industry which companies are operated with slightly greater ef­ have retarded the growth of the industry and weakened its competitive position. It is impera­ ficiency than comparable plants in Switzerland. tive that our domestic watch industry be fre e This includes the three plants which the domestic from practices which curtail domestic produc­ companies own in Switzerland. Furthermore, tion and restrict the importation and exporta­ United States watch technology is equal to, and tion of watches." in many cases, surpasses that of the Swiss. In recent years domestic producers have become Despite this decision, the cartel is continuing the leaders, as evidenced by the Hamilton electric its efforts to drive what is left of the U.S. industry watch and the Bulova electronic "Accutron," both out of business and obtain the remaining 153 of which were researched and developed to a of the U.S. jeweled watch market. production basis in this country. The Swiss as yet have not marketed a successful battery-powered Defense Importance: The domestic watch wrist watch. manufacturers are currently doing vital design, Swiss Cartel: The high degree of Swiss domi­ research and production work on a wide variety nation of international trade in jeweled watches of military and space projects. Supporting this is generally attributed to the close control of diversification of domestic producers into defense production and marketing exercised by tlie and space assignments are the constant techno­ Swiss Government in collaboration with various logical and production demands of watch manu­ groups of producers and wholesalers of parts, facture that sustain and nourish the mici·o­ watch tools and machinery. (This, in part, ex­ miniaturized skills. If domestic manufacture is plains the restrictions on production of watches eliminated, it will not be possible to maintain and exportation of parts and machinery.) these trained people and facilities, thus making The Federal Court in New York, after eight the U.S. the only major power to eliminate a years of legal battling on an anti-trust case, re­ domestic industry under the banner of free trade. cently held that this cartel imposed severe re­ Other nations-Russia, France, Japan, Great strictions against American companies, and had Britain-have taken vigorous and successful crippling effects which violated the U.S. anti­ action to develop and to maintain domestic trust laws. The nature of the restrictions were de­ watch-making industries. scribed by the U.S. Department of Justice when Regardless of all other arguments, the NUB it filed the suit. of the matter is this: If the Swiss succeed in ob-

April-May 1964 5 Who's Who

Effective control of the manufacture and dis­ tribution of Swiss watch products is achieved by the watch cartel exercising total control in Switzerland and extending its control to Swiss watch sales organizations in other countries including the United States. The Collective Convention (center of chart) is the basic contractual agreement between the three main manufacturing units (Watch Federation, Ebauches, S.A., and United Parts Manufacturers). Through this agreement the cartel regulates production, arbitrates dif­ ferences and conducts inspections and in­ MADE IN U.S.A. (continued) vestigations. Other important cartel affiliates are: Swiss Watch Chamber: an association of taining a reduction or elimination of tariff watch industry organizations functioning as duties, the link between the Swiss Government and the watch industry. The Chamber also ad­ (a) The President would, in effect, be handing ministers regulations governing exports, de­ fends the watch industry and studies foreign the Swiss Cartel the very monopoly which the competition. Federal Court's recent decree is designed to pre­ Superholding Organization: Swiss corporation vent, and organized in 1931 to control production of the most essential watch parts. ( b) The U.S. would wind up as the only major Ebauches, S.A.: owns or controls stock of power with no jeweled watch manufacturing other corporations engaged in the manufac­ industry available for marshalling in defense ture of incomplete jeweled-lever watch move­ ments (known as ebauches) in Switzerland. emergency situations, and Organized in 1926. ( c) We would face the unique and disturbing United Parts Manufacturers: an association of situation where foreign interests, giving nothing manufacturers of parts other than ebauches, organized in 1927. in return, forced the elimination of a domestic Watch Federation: association of assem­ American industry. blers and manufacturers producing finished watches, organized in 1924. Watchmakers of Switzerland Information Some Additional Fundamental Considerations Center, Inc.: a New York corporation organ­ ized. in 1948 with stock owned equally by the • World trade is a two-way street. The Swiss Watch Federation and Ebauches. This organi­ interests who are asking for free trade and elimi­ zation promotes sale and repair of Swiss watches, serves as propaganda agency for the nation of tariffs in the United States have Swiss watch industry and liaison with the U.S. historically prevented any importation of watch market. It also maintains surveillance over parts or movements into Switzerland. While there watch activities in this country and renders weekly reports to the Federation and are no duties on watches going into Switzerland, Ebauches. watches made in other countries are simply not The American Watch Association: an asso­ handled by Swiss retail outlets. ciation of importers of Swiss jeweled lever watches and movements with headquarters For example, the Swiss cartel has repeatedly in New York City. Members include: Benrus, refused Bulova, Hamilton and Elgin permission Gruen, Longines-Wittnauer, Eterna, Rolex, to bring into Switzerland for incorporation in Movado, Cyma, Wyler and others. their own Swiss watches, in their own Swiss plants, certain parts which the U.S. companies

6 timely TOPICS in the Swiss Watch Cartel .... ~ .... Federal Government of SWITZERLAND Influence or Liaison

~l Control or .Jl J2..JU J;L.W.Jl. .1l. Stock Ownership ISWISS WATCH CHAMBER I

Co,yJi?i t c.:.:_f4(';-

COLLECTIVE CONVENTION SUPERHOLDING (Controls and Enforces Cartel Regulations) ORGANIZATION ''

EBAUCHES, S. A. UNITED PARTS WATCH FEDERATION (Plates, Bridges, (Manufacturers and Assemblers MANUFACTURERS Pinions, Train) of Finished Watches)

Watchmakers of Switzerland Information Center

u en en :;:; r- LL! en c.!l en ~ en r­ z <( u E"' Cl en LL! z c.!l Cl z -' en en u en :;:; B z :J LL! ::!: I en en LL! ~ :J <( c.!l LL! -' -' LL! en 0 z ::!: ~ ~ -' <( <( en LL! en I E"' u.. > LL! I Z Cl. <( en <( ~ a: a: <( en en z en r- <( en -' en w LL! Cl. c.!l Ci <( <( B LL! w :J -0 ~ a: -' ~ Ci Cl LL! u u ::; :J c.!l Cl z c: <( Cl. u LL! z u r- -' a: I u en -' z ::!: Cl en 0 ~ z u z r- w en LL! ~ -' LL! <( a: Cl. 0 x :J LL! "' en er -' <( LL! LL! Cl >- :J LL! 0 <( LL! u LL! Cl. <( ::!: I Cl en -' z a: ..., r- > r- -' a: r: <( -' aJ -' a: en LL! <( <( r- u.. > LL! ~ z -' 0 u 0 z :J I 0 w a: :3 <( z <( -' c.!l en Cl ::!: ::!: en Cl. > Q u u z w <( I LL! LL! LL! > z -' a: z <( w al ::; I LL! ~ c.!l ...J u LL! a: LL! -' >- r- a: u en u en

Sources: La Suisse Horlogere 2 1114 % owned by other Wa tch Industry Orga nizations U. S. Commerce Departm ent

April-May 1964 7 MADE IN U.S.A. (continued)

consider superior to those available in Switzer­ Effect of Tariff on Swiss Watch Industry land. Swiss Cartel Position: The Swiss group • The Swiss, who now have 833 of the U.S. maintains that the tariff discriminates market, seek 1003 and would be hardpressed to against them and consequently hurts the meet the production demands. For some years fl Swiss economy. now Switzerland has had a labor problem to the extent that 253 of its workers are imported and U.S . Manufacturers' Position: During the on temporary visas. In the watch indush·y the last decade, and while the U.S. market labor force is 103 foreign. In March of 1964 a was under the escape clause proclama­ government decree froze employment at present tion, Swiss watch production grew 573 from an levels in all industry in Switzerland. annual average of 28 million watches to 44 • Contrary to popular opinion, the watch million in 1962. Most of these ( 38 million ) are business does not constitute the bulk of the jeweled-lever watches. nation's income. Watches account for only 153 The Swiss jeweled watchmaking indush·y not of Switzerland's exports. only has most of the American market, but the major share ( 61 3 ) of the free world sales as Summary of Basic Issues well. It is not possible-by any yardstick-to Under terms of the Trade Expansion Act of show injury to the Swiss economy or the watch 1962 and prior to that act under Executive Order cartel. 10401, the U.S. Tariff Commission is obliged to survey the situation annually and make a report Defense Importance of U.S. Watch Industry to the President. Eight such reports have been made-from 1956 through 1963-which have re­ Swiss Cartel Position: In 1958 the Gov­ peatedly supported the necessity of maintaining ernment found that the domestic watch the 1954 decisions. Over this period there has P manufacturing industry was not essential been a pattern of consistency to the arguments to the national security and that the import of of the Swiss that enable us to anticipate with watches posed no threat to the defense effort. some assurance the arguments which will again U.S. Manufacturers' Position: The 1958 be advanced for the elimination of the escape decision was not a truly military decision. clause relief and for further reductions in tariffs. It was a study made upon application The following is a re-cap of the opposing points by the U.S. industry for further tariff assistance. of view on the major issues. The defense importance of the U.S. watch

8 timely TOPICS MILLIONS OF UNITS Sou rce: Ta riff Commission FREE WORLD 40 1946- 55

JEWELED 35 LEVER 1962 WATCH 30 PRODUCTION 25 20 -~- 15

10

5

FRANCE JAPAN SWITZERLAND UNITED UNITED WEST KINGDOM STATES GERMANY indush·y was previously established by reports to any product in world markets. U.S. watch indus­ Presidents Truman and Eisenhower by the Na­ try could continue to operate profitably under tional Security Resources Board and the Office of lower duties. Defense Mobilization. The same conclusion was U.S. M. an. ufacturers' Position: Bulova, reached, unanimously and bipartisanly, by the Elgin and Hamilton all have plants in Preparedness Subcommittee of the Senate Armed Switzerland from which they import into Services Committee. the U.S. and export to world markets. These The 1958 result was influenced by the Swiss plants are no more efficient than Bulova, Elgin cartel and the American importers and a desire and Hamilton's domestic operations. In spite of of the government at that time to avoid further the efficiency of their U.S. plants, the disparity of tariff increases. The actual demands of the mili­ labor rates-i.e. United States of $3.24 vs. Swiss tary services for assistance from the U.S. jeweled $1.22 (including fringe benefits) per hour­ watch companies-especially in new weapons­ would not permit them to continue producing has not slackened. domestically if tariffs were reduced. Further, the strategic importance of a domestic U.S. watch companies do not dispute the fact jeweled watch industry to national security has that they could operate profitably as importers been recognized by such other nations as France, -all of them import substantial quantities of Japan, Germany and Russia, all of whom protect jeweled watches from their Swiss plants, and and support their domestic watch industries. have diversified their U.S. operations. The real The Swiss themselves "protect" their industry issue is that, with across-the-board duty re­ by statutes and agreements. Swiss watch regu­ ductions, the U.S. would lose the small re­ lations extend even to control or prohibit the ex­ maining part of its jeweled watchmaking industry change of parts from the U.S. plants of Bulova, and the accompanying skills and technology. Elgin and Hamilton and their Swiss-based op­ erations. Tariff Help To Domestic Producers Swiss Cartel Position: The domestic pro­ Effect of Tariffs on U.S. Watchmakers ducers were not aided appreciably by Swiss Cartel Position: The U.S. watch P the tariff boost of 1954. industry can operate without duties be­ U.S . Manufacturers' Position: The main fl cause the world knows U.S. firms have result of the tariff increase in 1954 is that the ingenuity and know-how to compete with the United States industry is still in

April-May 1964 9 MADE IN U.S.A. (continued)

existence. At the time of the 1954 hearings, the U.S. industry was found by the Tariff Commis­ Defense and sion to have suffered serious injury. The injury found was already so great that Waltham was Space Contributions of not able to recover. Bulova, Elgin and Hamilton have been able to maintain production, which U.S. Watch Industry would have been impossible without the increase. Imports of jeweled watches have leveled off and Bulova, Elgin and Hamilton have made ex­ so has U.S. production. The 1954 increase was tensive research, development and production obviously of assistance in bringing about this contributions to America's defense and space precarious balance. programs. A partial list of projects: Tariff Trends In World Business Space Exploration Swiss Cartel Position: Tariffs are con­ Apollo Mariner II n trary to the present trend in world trade. Explorer Mercury r Failure to reduce U.S. tariffs on watches Gemini X-15 is not in keeping with the U.S. policy toward the "Kennedy Round" of negotiations. Space Communication Satellites U.S. !Janufacturers' Position: U.S. policy Nimbus Tel star toward reduction of tariffs was applied to Relay Tiros the watch industry in the early stages of Syn com U.S. efforts to foster world trade. The 1936 trade agreement with Switzerland opened U.S. markets Missiles to the Swiss, as evidenced by the great increases Atlas Sidewinder in imports subsequent to the agreement, particu­ Bomarc Talas larly after World War II. Perhaps no other in­ Terrier Shillelagh dustry in the United States has a smaller share of Tartar Corvus its own market. Redstone Sparrow U.S. trade policy and the policy of all other Polaris Hawk trading nations has been to reserve the right to Minuteman Pershing take an "escape" where necessary. This escape, in the case of U.S. watches, was taken only after the

10 timely TOPICS MILLIONS OF UNITS Sou rce: Tariff Commission UNITED STATES JEWELED 3.0 LEVER ------r;;K WATCH 2.5 ------~------PRODUCTION 2.0

1.5

1.0

.5

1951 '52 '53 '54 '55 '56 '57 '58 '59 '60 '61 '62 '63

U.S. industry had been reduced below safe those imported by Bulova, Elgin and Hamilton minimums. Other countries have been forced to from their own Swiss plants. This money is used take similar action to protect their industries from in Switzerland and in the United States to further Swiss watch imports. the efforts of the Swiss watch cartel to obtain a The purposes and benefits of free world trade reduction in U.S. duties. are not served when an industry vital to one trad­ Watch Smuggling and Tariff Laws ing nation is destroyed by the cartel of another nation. Indeed, the cartel itself is a restraint to Swiss Cartel Position: The high tariff has free trade. led to substantial increase in watch P smuggling. As long as the duty continues Watch Tariffs and the Swiss Public to offer increased temptation, smuggling will con­ Swiss Cartel Position: The Swiss people tinue to flourish-and it now represents between believe in free trade and look to the a half-million to three million watches and watch fl United States as the leader. The Swiss movements annually. press and the Swiss people will not understand U.S. Manufacturers' Position: Smuggling any failure of the U.S. to reduce duties on was a problem long before the tariff in­ watches. crease, and it is always a problem where U.S. Manufacturers' Position: The Swiss there is a duty on any article of value that can be people and the Swiss press fully under­ concealed easily. stand the need for protection on certain The interest of the U.S. producers in sup­ Swiss items despite the international move to­ pressing smuggling is greater than that of the ward freer trade-for example, the Swiss govern­ Swiss. Virtually all smuggled movements are ment's protection of local agriculture. made in Switzerland. With respect to watches, the position of the Nevertheless, the U.S. industry is in complete Swiss press and the Swiss people reflects the agreement with the Swiss and other elements of attitude of the Swiss Government and the Swiss the watch industry that effective legislation watch cartel. The Swiss have an "arm" called the should be enacted in the current session of Watchmakers of Switzerland Information Center, Congress. A legislative proposal worked out with Inc., designated as its "propaganda agency." The the Bureau of Customs has been introduced (HR Watchmakers of Switzerland activity is supported 6426, HR 6427). by a fee or tax of 121/2 cents on every watch It is not sensible to eliminate smuggling by movement exported from Switzerland including measures that would also eliminate the U.S.

April-May 1964 11 MADE IN U.S.A. (continued)

Glossary of Terms industry, especially when other measures are available. Cartel ... an international syndicate, combine or trust generally formed to regulate by agreement some field of business. Legal Loophole-Virgin Islands Concession ... agreement by a country to reduce a tariff, usually based on mutual reductions. Swiss Cartel Position: Maintenance of a Duty, duties ... a levy or tax on goods imported tariff wall is inconsistent with officially into a country. (Also called tariff.) sanctioned alternatives, such as the im­ Escape Clause . .. provision of the Reciprocal Trade fl portation of jeweled watch movements, duty-free, Agreements Act (1934) permitting the President to increase tariffs or impose quotas after a finding by the through the Virgin Islands. In effect, the tariff Tariff Commission that increased imports cause or barrier encourages abuse of the duty-free privi­ threaten to cause serious injury to domestic industries. lege given the Virgin Islands to stimulate in­ GAIT . .. General Agreement of Tariffs and Trade. dustrial development. An international accord signed in 1948 to foster world trade. Agreement consists of tariff rates agreed to by U.S. Manufacturers' Position: The U.S. negotiations and general rules for fair conduct of international trade. It provides a forum for tariff nego­ industry can be destroyed by duty-free tiations and a means for settling trade disputes. The imports through the Virgin Islands just 58 nations signing the accord account for more than as effectively as it could be destroyed by duty­ 80 percent of non-Communist world trade. free or low duty imports directly from Switzer­ Kennedy Round ... The informal designation of the 1964 GAIT negotiations. So called because the impe­ land or any other country. The legal loophole as tus came from passage of President Kennedy's 1962 represented by the Virgin Islands situation Trade Expansion Act. should-and must-be closed. Quota ... a restriction on the quantity of a particu­ Again, however, the solution is not reduction lar commodity which can be imported during a speci­ fied period, usually a yearly limitation. of the U.S. duty. To eliminate the present tariffs Tariff Commission .. . A six member commission and thereby destroy the American watch manu­ created in 1916 by act of Congress. Its members are facturing industry, as a solution to the problem, appointed by the President for six-year terms. They is no more realistic than cutting off a foot to cure advise the President and the Secretary of the Treasury on the effect of specific imports on domestic industries. an ingrown toenail. Trade Expansion Act ... A 1962 U.S. law providing The most effective solution would be to re­ the President with broad powers of tariff negotiation move watches completely from eligibility for with other nations. The act also provides for relief of duty-free treatment under the law relating to domestic industries adversely affected by reductions and for restrictive action to be taken against products the U.S. territories or to require that enough imported by members of a cartel. local Virgin Islands' labor be employed on those

12 timely TOPICS Source: Tariff Commission UNITED STATES 9,000

JEWELED 8,000 LEVER 7,000 WATCH PRODUCTION 6,000

WORKERS 5,000

4,000

3,000

, 2,000

1,000

1951 '52 '53 '54 '55 '56 '57 '58 '59 '60 '61 '62 '63

products to make manufacturing costs rise to In addition to the various cartel units described more nearly meet the "landed" costs of watches on pages 6 and 7, companies charged with produced in countries that must pay tariffs. violation of United States laws include: Benrus, Concord, Etema, Gruen, Movado, Girard Per­ What Are We Doing? regaux, Omega, Cyma, Rolex and Longines­ The final decision depends on the findings of Wittnauer. the Tariff Commission and the action to be taken • April 15, 1964-Hamilton, Elgin and Bulova by the President. However, the American watch presented another petition to the Tariff Com­ manufacturers are exerting all efforts to lay the mission under provisions of the 1962 Trade Ex­ facts presented here before the proper authori­ pansion Act asking the Commission to recom­ ties. The following actions have taken place or mend that the President impose import quotas are planned: on Swiss watches. • March 13, 1964-U.S. watch manufacturers • May 12, 1964-Hearings will be held by appeared jointly before the U.S. Tariff Com­ the Tariff Commission on watches of 17 jewels mission to present facts concerning watches con­ and less. Bulova, Elgin and Hamilton will again taining more than 17 jewels. make a joint declaration of facts. • April 15, 1964-Hamilton and Elgin* filed • In addition to the formal hearings, the a complaint with the Tariff Commission charging individual companies have also met with appro­ that the Swiss watch industry is a cartel operating priate government representatives to acquaint in violation of United States anti-trust and tariff them with the threat to the American watch laws. The complaint states that watches made by industry. the Swiss should be excluded from the United States until the illegal activities of the cartel are And what of the future? According to Mr. stopped. Sinkler, "In my dealings with the Tariff Com­ mission, I have always found them to be fair men who render equitable decisions. Without * No adverse inference should be drawn from the failure attempting to predict their final decision, I feel of Bulova to join in this complaint. Bulova is a defendant the weight of evidence is on the side of the in the watch cartel case (U.S. v. The Watchmakers of Switzerland Information Center, Inc., et al.), in which American industry, and the Tariff Commission it and the other defendants have filed notices of appeal will reaffirm its earlier judgments. The outlook to the Supreme Court from the final judgment entered on January 22, 1964. is hopeful."

April-May 1964 13 needs of the American watch manufacturing "The Congress shall have Power to regu­ industry, passed the Fordney-McCumber Tariff late Commerce with foreign Nations, and Act establishing a customs duty on watches con­ among the several States and with the taining more than 17 jewels. This duty was Indian Tribes .... continued in the 1930 Tariff Act which estab­ lished other rates for all. watches and parts in­ "The executive Power shall be vested in cluding watches containing 17 jewels or less. a President of the United States of In an effort to improve international trade and America." relations, the Congress in 1934 enacted the Recip­ ... Excerpts from Articles I and II of the rocal Trade Agreements Act. This act gave the Constitution of the United States, Sep­ President authority to negotiate duty reductions tember 17, 1787. with nations who would reciprocate with equiv­ alent lowering of restrictions. Further, the 1934 act also gave the President the authority to re­ voke concessions if a vital American industry was endangered. This latter is the so-called "escape clause" provision. It was with the hope of mutual advantage to Watches, Tariffs the U.S. and Switzerland that a reduction of American watch duties was made in 1936. The rates established at that time were in effect until and the Law 1954 when the President-on the advice of the Tariff Commission - exercised his escape clause" authority and withdrew a substantial part of the 1936 watch tariff concession. The 1954 Presidential ruling is still in effect. URING THE FLEDGLING years of the American Each succeeding year through 1962 the Tariff D Republic, the regulatory and executive Commission and the President found that no re­ powers of Congress and the President combined consideration of the 1954 action was necessary. to set up and collect tariffs or import taxes on Due to a change in the law, the Commission's commodities produced abroad and offered for 1963 report made no finding either way, but said sale in the United States. the long-term trend of the domestic watch indus­ The purpose of the tariff was twofold: first­ try remained as in previous years. and in those years, foremost-it served as a The Congress-again looking to expand inter­ source of revenue. As a matter of fact, tax on national commerce-passed the Trade Expansion imported goods was the major source of federal Act in 1962. Among its many provisions the act income during the early days of the Republic. states that products under "escape clause" A second role of the import tariff-of increasing proclamation can not be listed for tariff negoti­ importance as our nation developed-was to give ations with other countries. Watches, of course, a price advantage to American products as they are in this category. competed with foreign goods in the U.S. market. Late in 1963 the Swiss watch cartel, acting As America grew from an under-developed through the Swiss Government, pressed the U.S. nation to an industrial power, the function of State Department to reopen the tariff question tariffs as a source of federal income lessened and and thus possibly remove watches from the the import duty became the chief method of aid­ "escape clause." Further, the Swiss Govern­ ing certain American industries which were ment threatened to refuse to bargain during subject to injury from foreign products. forthcoming world trade conferences if watch This import duty also encouraged developing duties were not on the U.S. list for negotiations. industry and relieved it from the unfair practices To settle the question, the U.S. Tariff Com­ of international business monopolies or cartels mission decided to hold a complete reevaluation attempting to "comer" the U.S. market for a of the regulations and rates concerning watches particular commodity. in March and May of 1964. The results of these In 1922 the U.S. Congress, recognizing the hearings will not be known for some months.

14 timely TOPICS March-April-May 1964

HONOR ROLL ANNIVERSARIES

Augustus Rice, Plate (Wallace)

Charles M. Habecker, Flat Steel Florence E. Haug, Watch Assembly

Lloyd E. Fichtner, Models Lab Margaret L. McCue, Service Cecil D. Hamric, Service Mary S. Smith, Tabulating James E. Jolly, Tool (Wallace) Ralph W. Ulmer, Automatic

George Bonyai, Wallace Design Harry P. Gerlach, Maintenance Harriet H. Brachendorf, Movt. Assembly Jane H. Mann, Plate Walter F. Breen, Jr., Watch Assembly Fred J. Straub, Purchasing (Wallace) Catharine R. Breneman, Train Richard Weaver, Train John K. Denlinger, Machine Shop Robert P. Wuchert, Hand Die (Wallace)

Arthur H. Dirks, Automatic Charles K. Hickey, Watch Assembly Ruth K. Harple, Movt. Assembly Mildred E. Rineer, Dial

R. Donald BuHenmyer, Machine Shop William S. Kreider, Spring James S. Cunningham, Manufacturing Stocks Catherine C. Reynolds, Automatic Roy D. Gable, Movt. Assembly G. Earl Rinier, Jr., Small Tool Charlotte F. Herr, Spring Donald D. Scacchetti, Silversmiths

Craig A. Banner, Parts Scheduling Joseph Jason, Hand Die (Wallace) Henry Blumenshine, Metals Processing Katherine V. Kolb, Inspection Philip Blumensh~e, Metals Processing Gladys LaCroix, Sterling Flatware James P. Burger, Escape Dorothy E. Martin, Mfg. & Ind. Prod. Walter J. Camp, Spinner (Wallace) Dorothy G. Poff, Contract Casing Joseph A. Grubb, Inspection John Reber, Jr., Watch & Parts Mfg. Richard S. Gundaker, Dial John A. Van Hom, Research Gloria J. Heiser, Escape

April-May 1964 15 /-/AIL4 / LTO/\/ BULK RATE VVATC/-/ U.S. POSTAGE PAID COIL4PA/\/V LANCASTER, PA. PERMIT NO. 1384 *LANCASTER.l°:PENNSYLVANIA

Car-1 A. Ycckcr- 535 W. Vine St . La'.1.c a s tc r, Pa,.

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