IMTATIONAL 3MIK FORn- ECONSTRUCTIOI AI DEMOPMEi COPY Public Disclosure Authorized

TO 0-17 - AMERIGAN TPADE POLICIES AFD THE WORLD 001,TO4Y Public Disclosure Authorized

EERFACTS

FROM THE H1ARINGS BWO1 THE FINACE COMMITTEM OF

THi U. S. SENATE ON THE TRAD AGRM T TS =XTESION

ACT OF 1951 (FERUARY -APRIL 1951) Public Disclosure Authorized Public Disclosure Authorized The following extracts illustrate the nature of the opposition to larger imports into the United States and were compiled in connection with the discussion in 30-17, Aerican Trade Policies and. the World MconoMy. July 9, 19539 prenared by K. Varvaressos and R. Zafiriou,

July 22, 1953 TABLZ OF CONTETS

Paoe No, Resolution No. 4. Protest Against Foreign-Made Goods (By Delegate William Nagorene, Wisconsia State Federation of Labor) 1 Resolution No. 11. Unfair Foreign Competition (By Delegates Harry H. Cook, Arthur J. O'Hara, Ivan T. Uncapher, Ernest A. Merighi, American Flint Glass Workers' Union) 1 Statement of Edward F. Vonderahe, Manager, Glove Division, Gloversville Knitting Co., Gloversville, N.Y.; Accompanied by Edwin G. Martin, Attorney, American Knit Handwear Association, and Harry Moss, Jr., Secretary, American Knit Handwear Association 3

Statement of the Forstmann Woolen Co., Passaic, New Jersey 3 Statement of E. L. Torbert, Chairman, Foreign Trade Committee, Vitrified China Association 5 Statement of J. J. Stein, Executive Secretary, California Art Potters Association 10 Statement of Gordon H. Harrower, Chairman, Committee on Foreign Trade, American Cotton Manufacturers Institute, Pomfretv Conn. 12 Statement of Robert N5. Kastor, Camillus Cutlery Co., Camillus, N.Y., Accompanied by Lewis A. Pinkussohn, Jr., Camillus Cutlery Co. 1,3 Brief in Opposition to the Inclusion of Woven Wire Cloth, Paragr'iph III. Tariff Act of 1930, in the Forthcoming Reciprocal Trade Agree- ment Negotiations at Torquay, England 16 Statement of Walter W. Cenerazzo, National President, American Watch Workers Vnion 16

Statement of Harold D. Rhynedance, American Optical Co., Buffalo, .TY. 19 Statement of Arthur Besse, President, National Association of Wool Manufacturers 19 Statement of Abrabam Mittenthal, Director, National Authority for the Ladiest Handbag Industry 21 Statement of H. L. Coe, Representing Bicycle Institute of America, Inc. 22 Statement of John Breckinridge, Representing Northwest Nut Growera 27 Views of American Fountain Pen Industry, Brief Submitted to the Committee for Reciprocity Information, Foreign Trade Agreement Negotiations With Several Foreign Nations at Torquay, England (By Karl D. Loos and John Breckinridge) 30 Page No. Statement of John Breckinridge, Representing the Fountain Pen and Mechanical Pencil Manufacturers Association, Inc. 32

Statement of Hon. Cleveland M. Bailey, a Reresentative in Congress from the State of West Virginia 33

Letter to Chairman of Finance Committee, United States Senate, from Terry' s Sewing Machine Company, Passaic, New Jersey 34 Pae 143 RESOLUTION NO. 4. PROTEST AGAIRST FORMIGN-MADE GOODS

(By Delegate William Nagorane, Wisconsin State Pederation of Labor)

Whereas organized labor, during the past decade, has made wonderful strides of progress and has become an effective force in the economic and political field, and

Whereas the right to join a labor organization for security as to wages, work- ing conditions, and otherwise is no longer a question of form but of necessity to bargain collectively, and second to this to demonstrate a cooperative spirit for ccl- lective buying for union-made and union-label products which can be had for the ask- ing; to ignore this in practice is to disregard a condition of union membership and will fail to imDress merchants of its value as a commercial asset, and

Whereas certain American industrial plants are confronted ith a new menace by imports of foreign-made commodities, especially shoes produced by low-wage conditions, and in some instances slave labor, that may, if not checked, ultimately demoralize, by unfair comietition, the shoe industry and shatter the economic status of thousands of shoe workers, and

Whereas Boot and Shoe Workers Unions have made overtures in the form of written protest to congressional Representatives at Washington, D. C., seeking relief, and

Whereas we are officially informed that there are approximately seven million AFL organized vorkers plus members of their immediate families in the United States with a vast buying power for union-made and union-label merchandise, which if used, intelligently can prove a dominant factor and discourage to some extent the purchas- ing of foreign-made goods which carry no union stamp or union label: Therefore, be it

Resolved, That le cannot emphasize too strongly the necessity of making special efforts for increasing the demand for union-label goods, union house cards and service buttons, and request the officers of the American Federation of Labor to use every method they deem advisable to stress the importance of purchasing union-label merchandise, and be it further

Resolved, That the American Federation of Labor in convention assembled at Houston, Tex., go on record protesting the influx of foreign-made goods from European and Asiatic countries ithose low cost of production is a serious threat to the wage rates established by the American Federation of Labor.

Referred to comittee on resolutions.

RESOLUTION NO. 11. UW'AIR FOREIGN COMPETITION

(By Delegates Harry H. Cook, Arthur J. O'Hara, Ivan T. Unca her, Ernest A. Merighi, American Flint Glass Workers' Union.)

Whereas lower wages than those prevailing in the United States account for the principal comoietitive advantage enjoyed by foreign countries when they ship dutiable merchandise into our domestic market, and mp2

Whereas these lower wage scales permit dutiable goods to be sold at lower prices in this country than our own producers can meet without reducing wages or cur- tailing emnloyment, and

Whereas copetitive imported goods that derive their salea advantage from lower wages are as destructive of our own labor standards as were sweatshop oerators in this country before the adoption of a national minimum wage, and

Whereas our labor organizations have no means of organizing the workers over- seas in an effort to raise their standards and our minimum wage laws do not extend beyond our own countryg and

Whereas it is no more necessary that foreign exporters have a cometitive ad- vantage derived from low wages in order to sell in this market than it is for sweat- shop operators to make a regular practice of grossly underselling fair employers in order to compete with them, and

Whereas a healthy import trade can be created upon a basis of fair cometition and can, in fact, thus be expanded, just as the elimination of sweatshops in the domestic economy contributes to healthy economic expansion, and

Whereas limitations on imports need not be restrictive in order to create com- petitive parity but on the contrary, by creating the basis of fair comnetition, would contribute to the growth of trade in the international field no less than fair com- petition does in the domestic, and

Whereas over 60 percent of the imports into this country are now and have long been free of duty because they represent goods in the production of which other countries enjoy a natural advantage of climate, soil or resources and which are com- plementary to, rather than competitive with, the output of our own factories, and

Whereas the remaining 40 nercent of competitive imports, if uninmeded in any way, would leave our workers at the mercy of low-wage rivalry, a process that would have only one ultimate effect, namely, the impoverishment of our labor force, and

Whereas many members of unions affiliated with the American Federation of Labor bnow from direct and bitter experience the disastrous consequences of low-wage foreign competition which has not been properly offset by a rate of duty or other protective measure to insure its fairness: Therefore, be it

Resolved, That the American Federation of Labor, while fully recognizing the many ecor omic benefits of a healthy foreign trade, declare its disapproval of such competitive imports as derive their competitive advantage from low wages prevailing abroad, unless this unfair advantage is appropriately offset or guarded against to assure competitive parity; that the undermining of labor stnrards through wage com- petition on an international scale cannot be accepted as a legitimate form of econo- mic improvement; that it is not necessary, as a condition of selling successfully in the United States, to offer goods at prices that substantially undercut the market; that the most healthy and voluminous trade can be built around fair comnetitive methods rather than seeking to base it upon price advantages that threaten loss of employment and reduction in wages; and finally that the American Federation of Labor express its concern over further tariff reductions that will expose our workers to unfair competition from foreign wages and thus undermine the wage standards built up in this country over the years.

Referred to committee on resolutions. Pae 203 STATZ4qET OF DWARD F. VOIDRAHE, MAAGER, GLOVE DIVISION, GLOVERSVILLJE DITTI-0G CO., GLOVERSVILLE, N.Y.; ACCOMPANIED BY EDWIT . MARTIN, ATTOR7Y, AMERICAN LNIT HAnWEAR ASSOCIATION, AND HARRY MOSS, JR., SECTT.ARY, AMERICAN KNIT HANDWAR ASSOCIATION

MR. VO1DERAE ... This countryls tariff rates have now been reduced so far that they are, on the average, among the lowest in the world. Imported goods are now sold throughout the land, and some of the largest advertisements in our magazines ex- .tol the merits of foreign merchandise. In this connection it is interesting to note that, in almost every instance in our field, it is the larr price of the imported product that is emphasized.

In spite of all that may be said to the contrary before this committee, it is really to you that small industries like ours must turn to see that our interests are protected.

Our industry is not against foreign trade or trade agreements as such4 We be- lieve in trade, but we do not believe that our industry, or most small industries, can survive unrestrained competition frmlow-wage countries. Furthermore, we are Oonvinced that it will not, in the long run, be to the advantage of the American people to be dependent upon foreign sources for their supply of wool gloves and iittens.

At present a large part of our glove production is for the military and inmports from Japan are supplying most of the civilian demand. Japan's proportion of the total is increasing rapidly. Without adeq uate protection the domestic industry can never regain entry into a lost civilian market. Without a substantial part of the civilian market, the industry cannot continue to exist.

Page 233-234 STAT22N3-T OF THE FORSTWNAT WOOLIT CO., PASSAIC, N. J.

The Susceptibility of the Wool Textile Industry to Foreign Cometition

The primary reason why it is impossible to meet the competition of manufactur- ed wool products from abroad on an even footing lies in the differential of labor rates. In England (which is our chief competitor), the average rate for productive workers is 36 cents p,er hour; in Italy, 24 cents; In France, 20 cents; and in Japan, 9 cents, whereas in the United States the average wage rate is approximately $1.42 (the average wage rate of the Forstmann Woolen Co. is $1.49).

Expressed in other terms, the labor rates of our industry are approximately 4 times higher than those of England, 6 times those of Italy, 7 times those of France, and 16 times those of Japan.

In addition to these differentials, the Textile Workers Union of America, 010, which is currently on strike in approximately 160 mills in our industry, has pre- sented demands that in total exceed a further increase of 50 cents -er hour. We have no efficiency of either labor or management which can overcome such differentials. According to studies of the United States Tariff Commission, the efficiency of the American textile worker as comPared with the British is only 1.3 to 1 in our favor.

In addition to these extreme differences in labor rates, our foreign cometi- tors can build mill structures and install machinery at less than one-half the cost which we must face in this country.

An added factor which accentuates the difference in labor rates as between this country and abroad is the relatively high labor content of the products which we manufacture. This is best illustrated by a comparison with the mass oroduction of the automobile industry. According to prewar census figures of 1939, we find that 397,537.workers in the automobile industry produced finished products valued at $4,039,930.733, or in other words, one worker produced $10,162.40 worth of automo- biles. In the same year, 140,022 workers in the wool textile industry manufactured cloth valued at $685,311,713 or $4,894.31 worth of cloth per vorker.

Because of the mass-production nature of the automobile industry, one auto workers produced a value more than twice as areat as the outturn of a worker in our industry, Therefore, if automobiles are exported from Detroit to foreign markets and are counter-balan-ced by importations of wool textiles in equal value, two jobs would be destroyed in America for every one created,

Page 235-236 Previous Experience Under The Trade Agreementg Act

Referring specifically to the Forstmann Woolen Co., the manufacture of men1s wear apparel fabrics is a very important segient of this company's business. The cometition of foreign fabrics from low labor cost countries was particularly disrup- tive in this particular field. To say that such competition did not affect the merchandising of our fabrics is to disregard the very manner in which our market operates. In fact, such price competition has an unsettling effect on the market, which goes far beyond the actual volume of foreign fabrics that are actually imported.

We can defini.tely assert that the yardage of men's wear fabrics delivered by this company in the -ear 1950 represented a decrease of approximately 50 rercent from the year 1947. Put in other words, this loss of men's wear business was equivalent to a drop (from 1947 %o 1950) of approximately 1,245,378 hours of productive labor. This loss of oroductive, labor was the equivalent of 635 men working at 40 hours -)er week for one entire yea:. Not only were foreign fabrics comparable to ours being landed in this country at prices appreciably less than the prices which we were forced to charge; the landed costs of foreign fabrics were even less than the cost of our direct labor and raw material, without overhead armark-up.,

The IMnact of Korea

When the Korean incident burst upon the world on June 25, 1950, it set off a chain of circumstances which temporarily altered this situation. It immediately be,,- came necessary for our Government to plan vastly increased purchases of military fabrics, and the first of the ever mounting list of military contracts was issued. On top of this, the civilian demand was artificially stimulated, and the mills of the wool textile industry again could provide full employment, It should be emphasized, -5- however, that this is a temporary and artificial condition brought about by the im- pact of actual military operations in Korea and the rearmament program necessitated by the mounting threat of a possible World War III. The activity of the mills and the full emloyment of their neople was not by any stretch of the imagination an evidence of their ability to meet foreign cometition under anything approaching normal con- ditions.

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Page 236-237 The Productive Potential Of 'oreig Mil1

The wool-textile mills of urone and Great Britain have the potential produc- tive ca:Lcity to take over our entire domestic market if they were afforded the oppo- tunity. Surprising as this statement may seem, it is substantiated by the following figures taken from an official brochure published by the United States Tariff Commission in 1949, entitled "oolens 9nd Worstpds Renort .1o. 2 9 %. This bulletin shows that in the late 1930's the mills on the Continent and in the United Kingdom, plus installations in Australia and Japan, had available 14,404 combing machines, 21,784,000 sindles, and 369,659 looms. The installations in the Soviet Union have been deducted from these totals. During the same period, the wool textile industry in the United States had 2,613 combing machines, 3,676,000 spindles, and 50,756 looms.

While many of these foreign mills suffered physical. damage during World War II, we have reason to know that not only has this damage been repaired, but in many res-ects these mills have been modernized by the acquisition of the latest and most efficient machinery. Consequently, it is fair to say that their potential -oroduction, if anything, is greater now than it was before the war.

The potentiality of this foreign comoetition can 'he viewed from another angle, namely, the consumtion of raw wool. Again referring to Report Yo. 29 of the United States Tariff Commission, in the year 1937 the countries of Europe and Great Britain, plus Australia, and Japan, but excluding the Soviet Union, consumed 2,616,000,000 pounds of wool. In the same year, the United States consumed 776,000,000 pounds.

It is important to note more recent figures on the'consumption of raw wool. By far the most important raw-wool market in the world is in Australia. For the cur- rent wool-buying season in Australia we find that the shipments to date of wool by bales to the countries of Muroy,e and Great Britain and Japan, but excluding the Soviet Union, amounted to 1,320,000 bales, whereas the shipments to the United States amounted to 176,000 bales.

Page 275-276 STAT=M77X OF E. L. TOPBRT, CHAITVAT, FOREIGT TRADE C0MMITTmR, VITRIFIM CHIIA ASSOCIATION

The vitrified china industry in the United States needs adequate tariff pro- tection if it is to continue to exist in a condition of healthy activity. To survive and thrive the vitrified china industry needs tariff protection for the very ordinary and simple reason that china can be produced abroad, transported to this country, and sold here at a price below that at which American potteries can produce and sell their products. -6-

The problem is, in essence, purely a wages problem. The American eimloyer cannot afford to pay American wages and sell in com)etition irith the distressingly low wages paid in so many foreign countries, Currently the wages paid to American pottery workers in the vitrified chir industry are about 4 to 42 times wages paid English pottery workers; 6 times the rate paid German pottery workers; and 12 times the rate paid Japanese pottery workers. *..

Page 277-280 eve MR. TOR3RT. On the English china, originally 70 percent ad valorem and 10 cents specific, it is now 35 percent, is it not, Mr. Martin?

MR. ]MARTII. Yes.

THE CKAIRMIT. 35 percent on bone?

MR. TORBERT. Yes.

SEEATOR KERR. How much does that 35 nercent amount to on the bone china?

MR. TORBERT. If the value of English bone china is $5 a dozen and if that is the foreign value and they paid 70 percent, that would be $3.50 and that is now cut by 50 percent, so it is about $1,75 a dozen.

SETATOR KER. What does the conrarable American product sell for?

MR. TOR3ERT. Well, comparable products have about the sam price. We have comparable products we make in Syracuse that will comnare very favorably 1-ith bone china.

You see, in this country we never had an oportunity to develop a large fine china industry because of the imports. Fow, I have been associated, Senator, with the pottery business for 51 .vears with the present company and present association, and prior to that for 8 years in the purchasing and jobbing business. I have a chart showing imports from 1884 up through the World War.

Now, those imports originally came from England. Then Germany learned how to make the type of products we needed in this country. For a good many years they struggled to get the business because of their lower labor cost. They finally learned hov to model and design for the American market and the imports from England declined and they went up from Germany. Then came World War I and they declined.. With its ability to imitate Japan goes u0; and in the 14 years prior to World War II Japan shipped into the United States over 90,000,000 dozens of tableware.

THE CHAIRMIAN. All right; proceed with your statement.

MR. TO:RBERT. We contend that in a country like the United States which years ago restricted immigration because it felt that it was no longer in need of an in- creased labor force, and in which a fairly large amount of unem0loyment is becoming normal--a country which is already much more highly mechanized than any other country in the world--no efficient and well-managed industry should be allowed to dis- appear or even be crippled merely because it does not admit of extreme mechanization, and, because of that fact--with the necessarily accompanying high percentage that wagel. are of its total costs--is unable to conmete unaided with the products of low-wage foreign competitors.

We contend, further, that it is virtually a breach of faith for the United States Government to throw such an industry to the dogs, or indeed in any way to in- jure it, merely to help some of our over-develored mechanized industries to throw their products on foreign markets.

But something more than jobs for Americans, something going even deeTer than protection of American workers from low-cost labor of other countries, is involved in the tariff on pottery.

Our country needs the pottery industry. It needs it not only for em-oloyment and wages but also because few other industries attract a similar group of skilled workers and artisans. Few others imnart to their workers an equal pride in creating beauty as well as a product, a lasting and enriching satisfaction coymiletely unknown to the assembly line automaton whose whole energies are bent, for instance, to bolting fenders.

The protection afforded.the domestic industry by the American tariff, which has sustained the pottery skills and existing enterprises in this cuntry, was plainly justified from this standpoint when World War II came to America. Entirely aside from the contribution of the industry in providing essential wartime civilian require- ments and the chinaware needs of our Armed Forces and workmen in war plants, the existing skills and enterprises were drawn upon to provide new mnitions of war. Working closely with the Army, the industry developed and supplied large quantities of a new type of tank-destroying land mine. This contribution was recognized by the award of the Army-Navy Z. The industry also developed a srecial type of ceramic product, ianufactured to previously unheard of tolerances, which was an essential part of ridar equipment.

SENATOR MITLIKIN. Mr. Chairman, may I remind the witness that out in Colorado at Golden we have a great outfit by the name of Coors.

MR. TORBERT. Yes, sir.

SE1TATO:R MILLIKIN. TheS' -Vt into the business of manufacturing chemical por- celain which, I understand, is a product which corares very favorbly with that pro- duced in other countries and which served to fill a great war need.

MR. TORBTRT. It was very fortunate for us that Coors manufactured that chemi- cal porcelain, which had been imorted from Germany. It came through in wonderful share and they did a splendid job.

THE CAIRMAN. Proceed.

MR. TORBERT. It appears that we shall have even greater responsibilities in the ensuing critical period. The pottery with which I am associated has now under way three special projects for the Research and Development Division of Ordnance Department, United States Army.

Let us remember, then, that something more than economics enters here. For the making of pottery has a peculiar aesthetic appeal. It gives opportunity for the cultural development of our people and reflects in itc product this aspect of our civilization. -8-

The only ancient craft which exists today as a great industry and yet remains a craft is deserving of fair and full consideration in the brcad picture of our cur- rent hopes for :eace, prosperity, and human advancement.

I have referred to the cultural peacetime aspects and the wartime need of the pottery industry. To illustrate just what I mean, I will with your n.ermission pre- sent for your inspection samples of typical American tableware production, as well as samples of American pottery wartime production, one of the latter being a steatite part required by radar, the other a nonmetallic nondetectable antitank mine.

(Samples were exhibited to the committee.)

M. TORBMRT. It may interest you to know that the fuze in this antitank mine was developed for use at temperatures ranging from 40 degrees below zero to 170 de- grees and over. It was the first time that any such fuze had been developed.

These samples are typical of the type of ware we are trying to produce in this country; and all we want is a good chance, a fair opportunity.

THE CHAIALT9 Is your industry now working at full capacity?

MR. TORBERT. The industry, as indicated by Mr. Martin, receded sharly in the early part of 1950. In our own plant we were off 20 percent. The Korean situation immediately changed the picture and we are now crowded. We have many Government orders for equipment for camps for the soldiers in Texas, and at training stations for the Air Force; and -oresumably we will now be getting orders, very large ones, from the Navy.

SENATOR KERR. What do you need for oneration?

MR. TORB!RT. What do we need?

SEFATOR K1RR. Your chart shows that about 65 percent of your total cost is for labor. That is one of your needs-labor. What else clo you need?

MR. TORBERT. Yes; that is right; 65 percent of our selling price is labor.

SENATOR 17BR. What is the rest of it?

MR. TORB3RT. Materials, fuel, packages, insurance, and so forth.

SENATORAR. How much of it goes, for instance, for clay?

MR. TORB3RT. Materials comprise about 7 or 8 percent.

SEYATOR KZRR. How much for fuel?

MR, TORBERT. About 5 or 6 rercent.

SSENTOR KRR. What about power?

MR. TORBERT. I am not the comptroller, Senator. We can put that in the recotd, if you would like.

SEM3TATOR IMR. I was just curious to find out why some of these very ingenious -9-

and energetic and keen business operators in these industries did not go out into Oklahoma and start one of those plants, where the power and fuel is so much cheaper and the labor is so much more highly productive and all the natural resources are so abundantly available.

MR. TORBERT. Well, a great many potteries have grown up like Topsy.

SMUATOR 1MRR. I notice some in the Southwest.

MR. TORBERT. Yes, sir.

SETATOR KWRR. You could save much of the transportation that is required.

MR. TOR33RT. Well, the transportation is a very small nart of the cost.

SENATOR IR. But it is still a cost.

MR. TORBMT. That is right. Now, the biggest consumption is in the popula- tion centers. We feel we are pretty well located, but we have had a very nice invi- tation to start a plant down in Arkansas.

SEATOR MILLIKIN. I have a question or two. Have tariff cuts been negotiated with the principal supplying nations?

MR. TORB3RT. The one with Czechoslovakia was not with the chief supplier.

SEATOR MILLIKIN. Czechoslovakia, of course?

MR. TORBERT. The one in France is also not with the chief supplier.

SEITATOR KERR. Who is the chief supplier?

MR. TORIWRT. Germany nnd Japan; Japan first ind then Germany.

SEIATOR MILLIKIN. And then, of course, Czechoslovakia is an iron curtain country, and it continues to export its chinaware products to this country.

MR. TORBERT. Quite a little of it.

SE1ATOR MILLIKIN. There is quite a little skill over there, is there not?

MR. TORBERT. Oh, yes.

SEATOR MILLIKUIT. Quite a little skill.

MR. TORB3RT. Yes; we were so concerned with this general situation when busi- ness dropped off in 1950 that I went over on the other side to try to get an idea of where we were going, and what was going to harpen to us, and I spent 2 or 3 months in England, Germany, and France, making a first-hand observation. I went to dispel any doubt about the productivity per manhour in America and abroad. I saw some of the finest, most advanced machinery I every saw in the potteries in Englando

I saw a machine no bigger than a sewing machine. I asked where it came from- the Rolls Royce engineers, a beautiful machine.

I think the productivity per man is just as high in any of the English pot- teries or German potteries as it is here. -10-

Page 281-283 STATEMENT OF J. J. ST3IN, MXCUTIVE SMC:RETARY, CALIFORNIA ART POTTERS ASSOCIATION

Here are the seven specific reasons why our industry is opposed to the exten- sion of the Reciprocal Trade Agreements Act as it has been administered by the State De-partment:

(1) Half of the total domestic consumption of art pottery in terms of value is now supplied by four foreign countries, namely, Japan, Italy, 3ngland, and Germany. The imorts from these countries have been steadily increasing. Since 1943 and through 1949, the ratio of imports in domestic consumption has risen from 3.2 percent to 36 percent. Based on preliminary figures covering the last portion of 1950, this ratio will climb to 44 T)ercent for 1950. Now, letIs look at what has happened to the domestic industry in the past 5 years. In 1946, the entire domestic industry em- ployed 12,000 people in 1,200 plants, and produced $40,000,000 worth of ware. At the present time there are approximately 6,000 people employed in 600 plants producing only $25,000,000 worth of ware. At the present rate of imports, the domestic industry has lost half its market. A reduction in tariff will serve no other purpose than to hasten the deterioration of the domestic industry.

(2) Our industry cannot com)ete with foreign countries which have wage scales only a fraction of those we pay. For example, the average wage currently paid California art pottery workers is $1.25 per hour. Contrast that with 12 cents paid to similar workers in Japan, 30 cents to workers in Germany and Italy, and 40 cents to English workers.

SEITATOR MILLIKIlT. Is it correct to say that the more pottery truly becomes an art product, the higher labor quotient in it?

MR. STEIN. That is true. I bring that out later, just a little bit later in my article.

Our inability to compete with such countries is not based upon a comoarison of wage scales. Of fundamental imnortance is the fact that the art pottery industry in the United States, as well as in any foreign country, is a handcraft industry. Mass production methods and mechanization have only a limited application in the manufac- ture of artware articles. The deolgn, qtality, and appeal of art pottery can only be achieved through hand craftsmanship. Thus, whether art pottery is made here or else- where, the same high labor content is present. Approximately 65 to 70 'percent of the cost of making art pottery is labor.

MR. ST1IN4 No. 3, our opposition to the act is crystallized by a development which robs the California potter of any advantage he may have previously possessed due to his originality and ingenuity. Many importers now ship fast-selling California articles to a foreign country where they are identically copied and offered for sale in this country at prices which reflect truly "slave labor" compared to prevailing California wage rates. There is little practical help or protection we can secure to stop this flagrant pirating of design. But must we also be subjected to further in- Jury by a lowering of tariff rates? In our opnion, a reduction in tariff under the Reciprocal Trade Agreements Act rewards those who prey on the originality of the -11-

American potter. Does such action by our Government encourage American free enter- prise?

(4) Our industry, I believe quite understandably, opposes any inference that it is "expendable". But of far greater importance is the underlying principle of the act which requires some all-wise agency of our Government to decide which industries may continue and which shall be sold down the river. As a victim of the act we are no longer dealing with an economic theory but with cold reality.

SE"17ATOR MILLIKIIN. Where do these imports come from?

MR. ST2IN. Mostly from Japan, Italy, Germany, and England, but principally from Japan.

SENATOR MILLIKIN. Do you get any important competition from Sweden?

MR. ST3IN. Nos sir; it is not significant.

SEATOR MILLIKI0. They make very fine glassware.

MR. ST-]IN. Yes.

SETATOR MILLIKI1T. Do they not?

MR. STIN. They are noted for their glassware, and they do have several ceramic companies there, but they do not constitute any comnetition.

SENATOR MILLIKIN. Thank you very much.

MR. ST3IN. No. 5, our industry opposes the curtailment of job opportunities in this country for skilled American craftsmen in order to perpetuate the low living standards now in effect in Japan, Italy, Germany, and France and even in Britaino We object to any policy of our Government which seeks to reduce tariffs regardless of justification. Why should foreign potters be subsidized by our Government through constantly decreasing tariffs? Why is it necessary for the Government to increase the already highly favorable comaetitive advantage foreign potters now enjoy over domestic producers?

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(7) The industry objects to the act because it deprives American craftsmen of an opportunity to earn a livelihood in occupations of their own choosing. As the act now functions, it retards the expression and development of a truly American art. Is there any reason or justification for our Government to force American women to look to some foreign country for style and utility in ceramic household items? Why must such household articles be a reflection of European or Oriental ideas and tastes? There can be no American artware unless the industry is -permitted to survive and grow. The domestic industry does not seek aoecial favors or grants or subsidies. We merely ask that our Government be as considerate of our present and future welfare as it is of our foreign competitors.

We recommend that if the act is extended it be amended to allow domestic in- dustries to protest misclassification of imports. As an example, china artware from Denmark is being classified as works of art dutiable at 10 percent ad valorem rather -12- than chinaware dutiable at 45 percent ad valorem. The present classification cannot be protested by the industry because the rate of 10 percent is a trade-agreement rate.

On the basis of the above-enumerated reasons, our industry requests that an ex- tension of the Reciprocal Trade Agreements Act be rejected unless and until specific safeguards are written into the act which will protect the American art pottery indus- try and similar industries. We recommend an effective "escae clause" which will en- able speedy, clear-cut, and -practical remedial action when the continuation of a domestic industry is threatened by competition from low-wage countries. House bill 1612 as amended provides this protection.

Page 441-442 STAT2M MT OF GORDON H. AROWM, CHAIRMAT, 00H1H1ITTEE ON FOREIGN TRADE, A1MRICAT COTTON AUTOFACTURERS INSTITUTE, POMIT, CONNT. see In the meantime drastic tariff reductions have been made on cotton goods. The process was begun prior to World War II, was accelerated at Geneva in 1947, was carried further at An;ecy, and is again under way at Torquay. Not including Torquay, the results of which we do not yet Iow, the average tariff reductions have been ar- proximately one-third, with many individual items cut as much as 50 nercent, and s-till others by as much as 75 percent.

Consequently the stage has now been set for a tidal wave of cotton textile im- ports into the United States. It would have occured this year, had it not been for the extreme cotton shortage, which was cotton fiber shortage, which has forced cur- tailment of export programs in most countries. In the period 1946 to the middle of 1950 our domestic markets were saved only by the famine conditions which prevailed in textiles throughout most of the world and by the 4-year period of time required to rebuild the productive capacities of Japan and continental Europe.

Unless another major war intervenes, we shall with the coming of the next cot- ton crop, or at most the second, be confronted with the most serious foreign competi- tion within the United States that we have known since the maturity of our industry.

068

It is folly to consider a tariff program of fixing rates on which we have to comnete and then have those rates vitiated by the fluctuations af foreign currencies.

I can say that in our own mill, one of our most valuable products was complete- ly thrown out at the time of the devaluation of the British pound. About 10 to 15 percent of our product was in a certain quality group and we competed successfully with England on just about an even basis, and the devaluation of the pound took us right out of that picture completely, and within a couple of months. There was no- thing we could do about it. We have never been able to get back into it again, and that is what I mean also by the dislocation of loomage.

We are a small mill, and we did not stop those looms. We immediately threw those looms into comOetition with somebody else. Consequently there is an over-all dislocation taking place, which it is impossible to put your finger on. In the generic description of the President's announcement with res*pect to Torquay, where they say negotiations are going to be made on fabrics of yarn count number over 60, there could be myriads of fabrics. -13-

THE CHAIRMAN. What is your own fabric?

MR. HARRO131R. Mostly cotton goods and some blends of cotton and wool.

THE OHIRMAN. In your own mill?

SENATOR EMRR. What kind of cotton goods?

MR. HARROWER. Fine yarns.

THE CHAIRMIAN. Fine yarns?

MR. AR2ROW1R. Fine combed yarns.

THE CHAIXA. You use quite a little labor; labor makes up quite a great deal.

MR. HARROWR. Labor is a very appreciable element in our total cost, about 50 percent of our total cost being labor cost.

THE4 CHAIBMAT. After you get above the varn stage, why, labor increases throughout the textile field.

MR. HARROW5 Well, sir, it increases all the way through in the counts of yarns that we spin, which are fifties and finer, and the labor element is a very serious element, because all the processes throughout the manufacture of cotton and the preparation of cotton for the spinning of fine counts renuire very much more- the expenditure of much more labor than would be the case in the making of print cloths, for instance.

Page 460-462 STATT1MUT OF ROBERT NT. YkSTOR, 0AMILLUS CUTLRY 00. CAMILLUS, N.Y., ACCO ANTIED BY L4IS A. PIN%KUSSOHN, JR., CAMILLUS CUTIERY 00.

MR. KASTOR. I can give you the complete rates here. Here we are. Not more than 40 cents a dozen--I am talking about pocketknives only, now-1 cents each, 50 percent ad valorem; 40 to 50 cents, 5 cents each, 50 percent ad valorem; 50 cents to' $1.25, 11 cents each and 55 nercent ad valorem; $1.25 to $3 per dozen, 18 cents each, 55 percent ad valorem; $3 to $6 a dozen, 25 cents each and 50 percent ad valorem; over $6 a dozen, 172 cents each and 27 percent ad valorem.

Now for Sweden, over $6 on orname7ital knives, 10 cents each and 25 percent ad valorem. I can also give you the rates on scissors, if you are interested. We are not particularly interested, but I should think the scissors people would be down here, because they should be interested, because the imports of scissors are increas- ing every day.

MR. KASTOR. Now, gentlemen, just consider the part that this small industry has played in the defense program. If Italy, Germany, and Japan are overrun by the Russians some dgy--and who can say that they will not be--and if in the meantime these small but vital American defense industries have been destroyed by unfair foreign competition, this cannot be created over night. This is a 50-year development -14- program, mind you, to take its proper place in a defense program, or, God forbid, in an all-out war program.

SENATOR MILLIKIN. Whatever happened to the Barlow knives?

MR. KASTOR. We still make them, sir. But I must admit they are a little higher in price. I think that Senator George will know more about the Barlow pocket- knife than you do Senator, because that is where we sell them. Beck & Gregg Hardware Co. sells them down South.

TH3 CHAIRM4T Oh yes; I know about them.

MR. KASTOR. Now, gentlemen, I have something here to show you aoecifically so as to give you a better picture of what we are up against.

I show you these two cards, each bearing a so-called florist's knife. I want each of you gentlemen to examine them. Here this one is made by us, an honest Camillus knife made especially for the florist trade and sold in reasonable quantity by us to the wholesale florists' sup"Oly trade; and our price on this item, our To. o10C is $12 )er dozen.

Now, here on this card is an imitation, made in Japan, and offered by an im- porter in New York City at $9 per dozen to wholesale florists.

This imorter was a customer of ours. In fact, I will tell you what he did. He just took our sample and had it imitated in Japan, which is an old Army game. And it is evidence that his profit on the price of $9 a dozen would be the usual profit--

SENATOR 1E31R Wait a minute. That is what you call free enterprise; is it not?

MR. KASTOR. Very. It certainly is free enterprise, all right. We have no- thing against it. We just have to live with it.

His profit on the price of $9 per dozen would be 25 rercent, namely $2.25 per dozens So, the indications are-and I have since verified this--that this item cost him no more than $6.75 per dozen to land under the current duties. In short, that item cost $2.25 per dozen f.o.b. Japan.

SENATOR KEMM. And you just pay about 25 percent more in this country?

MR. KASTOR. No. We sell it for $12 per dozen.

SENATOR KERR. No. I was talking about the cost.

MR. KASTOR. Cost? Our cost is much, much more than that.

SENATOR kE. It is a little more than that?

MR. KASTOR. No, sir; it in very much more. I will come to that in a minute, as to why.

SENATOR KERR. Bear in mind, you are not required to answer that question.

MR. KASTOR. I am ready to answer it. -15.-

SE-1ATOR ER Fine.

MR. XASTOR. With facts and figures, sir.

Now, here is another example. Here is our No. 196, a well-made little charm knife. And I am going to leave these with each of you gentlemen. It is a fine item for a lady's purse or a gentlemen's key ring, incidentally. We will sell it at whole- sale for $3 per dozen. We are being offered these cheaper knives. And here they are, and I want you to look at them, gentlemen.

There is a batch of them-I do not want to leave all of them with you, but I will leave a few--from Japan, at prices ranging--I have it here--a price of 39 cents per dozen, because I wanted. to be fair about it, f.o.b., country of origin.

Now gentlemen--and I direct myself, Senator, to you--

SMATOR E1RR. Thank you.

MR. KASTOR. "What is the matter", you are going to say, "with the American pocketknife industry? Is it so inefficient?"

On the contrary, it is the most efficient in the world, and it is turning out a product which is superior to the best that Sheffield, Mngland, and Solingen, Germany, can produce. But--now, here comes the '"but"--let us have a look at the wages paid in our factory and those in the Solingen district of Germany. But the way, gentlemen, I was there in 1948. These are not figures made out of my head. They were verified figures at that time. They have not changed very much since then.

They were a little lower then, and we estimate that is what they are now.

The men and women in the Solingen district in Germany are being paid 30 cents per hour. That is the average pay there. The men and women in Camillus are being paid an average of $1.38 per hour. That is the average pay at Camillus.

SEYTATOR MILLIKIN. Is the machinery in the two countries roughly the same? They use the same kind of machines; do they not?

MR. KASTOR. I will put it this way. The machinery in Germany is the nearest approximation to our good mass-production methods.

S21ATO.R 4ILLIKIN. Roughly the same?

MR. KASTOR. The other countries are not as good and not as efficient. Let us just take this Japanese situation, Senator Millikin. We have no idea what they are paying. But it might be 10 cents an hour. I mean, based on information that we have here. Now, there you have the basis for those big discrepancies.

SER1TOR MILLIXIN. I think the other testimony I hear indicates that they are not getting 10 cents an hour. But pass that. Never mind.

MR. KASTOR. Gentlemen, I have no desire to belabor a point, but how long can this industry and its well-paid employees survive under the American standard of liv- ing if you continue to delegate your tariff rate-making powers to an adjunct or tail to the State Department's kite which, to use a mixed metaphor, has other fish to fry? -16- Pae 112 BRIEF IN OPPOSITION TO THE INCLUSION OF NOV WIRM CLOTH, PARAGRWPH III, TARIFF ACT OF 1930, IN TH3 FORTHCOMING RECIPROCAL TRADE AGREMUIT NEGO- TIATIOTS AT TORQUAY, ENGLA.1D

2g. Domestic y. Foreign costs of production:

There has never been any known source through which reliable data on foreign costs of producing woven wire cloth could be obtained. It is positively known, how- ever, that foreign-made wire cloth is offered for sale in this country at prices which are less than the United States cost of the wire and direct labor alone.

For example, in April of this year, a New York import house issued a circular in which they offered the following net selling prices, laid down in New York, in comparison with the United States direct-labor olus actual wire costs shown:

United States Cost for Wire Size, Importer's Direct Labor and Brass Wire Cloth Inches Selling Price Metal Alone

20 by 20 mesh ...... 0.0164 $17.35 $25.50 30 by 30 mesh ...... 0116 17.45 29.20 40 by 40 mesh ...... 010 22.90 25.80 60 by 55 mesh ...... 0076 24.75 29.00 100 by 85 mesh ...... 0044 30.50 32.60

The foregoing import selling prices must of necessity include something for overhead, profit, transportation, and duties. If our domestic costs for direct labor and wire alone exceed those net import selling prices, does it make any difference what the foreign costs are? These examples demonstrate that foreign nations need no further reductions in our ad valorem rates of duty on industrial wire cloth to help them, pricewise, to sell their wire cloth in the United States.

2h. Princi-al coneting foreign countrie Germany, Belgium, Netherlands, Canada, France, and Japan, in arproximately that order of importance, have always been the principal foreign countries from which woven wire cloth comes into the United States.

3. Extent of foreimn comnetition The extent of foreign comnetition since the war is not formidable, but its im- pact is already being felt. When a seller enters a market with a price materially below that of his competitors, it matters little hmi much he is offering volume-wise; his price automatically brings the whole market down to his level, or as an alterna- tive, prompts his competitors to withdraw from that market entirely.

Page 52f=527 STATMITT OF WALTER W. OMU2RAZZO, NATIONAL PRSIDMT, AMERICAN WATCH TORMRS UNION

MR. O=N4RAZZO. Two years ago when I appeared before this committee, I -17- presented to you the situation as it then existed in the American jeweled watch indus- try. Since that time the situation has deteriorated to a greater extent and to such an extent that I doubt if there will be a single company in existence 2 years from to- day whose sales will be composed only of jeweled watch movements manufactured exclu- sively in the United States.

t*o

MR. 013RAZZO. All the Jewels are imported. An interesting thing about thai, Senator, during the last war when Switzerland was completely surrounded by the Axis, the Jewels that were needed for military and airplane instruments were a critical problem. Large quantities of Jewel bearings were requisitioned from the stockpile which Zlgin, Hamilton, and Waltham had on hand, Where possible they were altered for use in airplane instruments that were so scarce that planes were being kept on the ground. Later, Elgin, Hamilton, and a few other companies went into the manufacture of jewels.

It is interesting to note on this jewel thing that they started manufacturing at Elgin, the average unit cost was about $1 a jewel. They could be imported from Switzerland for 3 to 7 cents prior to the blockade, and Plgin in a period of less than a year, and Hamilton and Byrd reduced that unit cost down to 21 cents, and they were getting somewhere, but immediately upon our going in and freeing occupied France and breaking the blockade, every single empnloyee that was employed on the pro- duction of jewels in the United States was laid off that t,e of work and the work was abandoned. But, to illustrate how important this was to the national defense, we were willing to pAy a dollar apiece for them to get them started and went down to 21 cents, and now today they are being brought in for somewhere between 4 to about 9 cents apiece, depending upon the size and the quality.

It is a very important thing to our defense, in my opinion, but, of course, you cannot ho.e to comete. The minimum wage in our country for a girl in a watch factory, the Minimum in any plant is about $1.07 an hour, that is a girl that is qualified on production, and in Switzerland it will run anywhere from 14 to 17 cents an hour for be.inners on up to about 39 cents an hour.

S"K'ATOR F?AZR. Do the girls in this country make as many per hour as the girls in Switzerland?

MR. 012"RAZZO. It is all a question of hand work and machinery. We have the same machinery that they have there. It is just a question of output.

The output of a machine is so many per hour and the girl is supervising it, and, of course, if you pay a girl $1 an hour and the output of the a'chine is 100 an hour, the unit cost is 1 cent apiece. In Switzerland the same machine is being run and the girl puts out 100 an hour and you are paying her 39 cents a hundred.

SEIATOR FEARe In your opinion, the whole difference is in the labor? MR. 0"V"RAZZO, Absolutely, lebor cost. I am convinced of that from my trip to Switzerland in 1949.. I am convinced that is the only basic differential between our industry and theirs, other than, of course, the cartel arrangement they have in Switzerland. Page 532

The State Department on the other hand, in my opinion, is not interested in what happens to the jobs of American workers and has simply set itself up a course that, come hell or high water--all tariff rates should be reduced regardless of the consequence upon the jobs of American workers. Why do I say this? Because the facts of the American jeweled-watch industry and what has happened to it, well known its jobs, are i to the Division of Commercial Policy of the State Department and at every hearing or conversation which we have held with representatives of this Department, they have been extremely hostile to the facts, common sense, and logic -oresented to them, and the position of our industry continues to deteriorate.

0**

Page 537

... American watch iiorkers who have given a lifetime to the skills of manufacturing, processing and assembling American jeweled watch movements, have no alternative live- lihood which will give them the same remuneration if their jobs are taken away from them. There is no one to pay into a pension fund for their old age if they are not working. There are no jobs available for them, particularly when they are over 45 years of age.

The shut-down of the Waltham Watch Co. on February 3, 1950, so arbitrarily by the Reconstruction Finance Corporation, has put on to the record what happens to American watch workers when they are laid off for a long period of time. We have better than 40 percent of Waltham Watch employees out of the 2,132 employees of that company that are still unemployed. Most of these persons are men and women over the age of 45 and many of those that are emloyed in other emnloyment are not utilizing their skills for there are no comarable jobs for them to go to.

I would like to amplify that, if I may. When a person over 45 years of age starts seeking employment, he is faced with this problem. The company that does the hiring has to pny an increased rate if they hire a person over 45 for workmen's com- pensation, they have to pay an increased rate for any group insurance contract, they have to take over the obligation if they have a pension plan of that employee, and if they hire a man over 55 he does not have enough pension accrual when he gets to be 65 to retire, and everybody forgets where he worked before he was 45, and the company feels they have the responsibility of letting a man go out with inadequate pension at 65, so people throughout America use every means not to hire people over 45 for that reason.

It becomes extremely hard for these people to get employment anywhere. I have consulted with many of them and helped many of them get positions, but the only place we can place people over 45, 50, 55, and 60 is with 1- and 2-man organizations where somebody feels that they want to give somebody a chance who has the ability and the skills, but large corporations definitely will not hire those people. -19- Paae 6i4 STAT313E OF 1ALOD D. PHY]1l!CE, AMERICAN OPTICAL CO., BUFFALO, !T.Y.

0ego

We are convinced the increasing rate of imports from Japan and Europe cannot be limited by domestic competition. In the case of microscopes which is this company's principal instrument, imports increased more than 100 rercent from 1949 to 1950.

THE HAIRA. You deal in generalities. They mean very little to me. What were the imported items?

MR. RHYkEDAiO. I am speaking of microsco-oes.

THE OHAIIAWT. You say that it reached 100 percent. What were the imports in 1949?

MR. =ffMAT0O4 My recollection is that approximately 2,600 of the type we manufacture were imported in 1949 and approximately 5,800 in 1950. The Department of Commerce has those figures.

The heart of this inability to comnete is in the low manufacturing cost of foreign instruments. We know this phase has been demonstrated to you on many occa- sions. It is a -oarticular aggravation in the case of our products vhere labor con- stitutes about 70 percent of the cost. Such instruments are not produced an an as- sembly,line basis but require a great deal of skilled craftsmanship that is developed only over a substantial period of training and apmrenticeship. To the best of our knowledge, the possible advantages of domestic production technology are insufficient to offset the tremendous difference in labor cost.

We are further convinced that price comnetition will further cut into our mar- ket so that in normal times, which we trust will soon ar-ear, we must consider whether it will be economically feasible to operate the instrument division which has failed in recent years to return a reasonable satisfactory profit where any profit at all results.

Page 642-643 STATMIT OF ARTHUR BESSE, PRESIDE11T, ITATIOITAL ASSOCIATIOT OF WOOL MAUFACTURERS

In 1947 the United States imported 4,632,000 square yards of woolen and worsted fabrics. The figure was 9,238,000 yards in 1948 and over 19,000,000 yards in 1950. Great Britain has already announced that the amount exported to this country during January 1951, was double the figure for January 1950.

This should surprise no one. Average wages in the wool textile industry in the United States are four times the average paid in Great Britain; our tariff rates have been drastically cut; the sharp reduction in the ratio of the pound sterling to the dollar has made it possible to land British fabrics here at much reduced prices.

Even further reductions in tariff rates on wool fabrics and other items are -20- currently under negotiation at Torquay, England, although it certainly would not ap- near that in view of increased importations the present rates were, to quote the act-- 9unduly burdening and restricting the foreign trade of the United States".

I am afraid the State Department and others have overlooked the danger of restricting the size of our textile industries, optical manufactures, the watch indus- try, and many others upon which we are totally dependent in times of emergency.

But you are not considering particular industries. You have before you a general bill, a bill which gives power to reduce tariff rates to the President and the State Department. I use the word "reduce" advisedly. The language of the act refers to increases but since the procedure contemplates only mutually-agreed-upon "bargains" it is difficult to visualize a foreign negotiator accepting a 50 percent increase in United States import duties as a concession.

Mr. Hull, in his memoirs, said, and I quote:

"Although tariff rates could be raised or lowered it was obvious we would re- duce them since no other country would sign an agreement to increase our tariffs. The purpose of the act was stated to be to improve our exports."

SETATOR TAFT. The first effect of a dangerous reduction is to eliminate the small companies and discourage new small companies starting as, for example, in the watch industry, to get it down, finally, to two big companies. In your wool industry you spoke of the elimination of a lot of small companies there.

MR. B3SSE. The companies have been largely smaller units. I have a list of them; if it would be of any interest, I could include them in the record.

SEFATOR TAFT. Also, I suppose, it is discouraging to anybody to start out, to begin a new company in an industry subject to that kind of competition?

MR. BESSE. There have been no new companies started for many, many years in the wool industry. There have been some units, that is, new units, in the South, but they are in every sense replacements of northern units that have moved there.

SEATOR TAFT. You do not, purely from the manufacturing standpoint, have to have a very large unit?

MR. 33SSE. ITo.

SE3TATOR TAFT. A small wool plant can be about as efficient as a big one, ex- cept in the question of selling?

MR. B3SS2. The largest company, the American Woolen Co., has 23 plants. In- stead of being concentrated as a single manufacturing organization, there are 23 separate plants.

SENATOR 7RIAR. It might be interesting to know what -percentage of the wool plants, these 45 plants that went out of business, were of the whole industry.

MR. BESSE. Assuming that everybody was operating at capacity, which, of course is not a proper assumption, it might represent as much as 8 to 10 rercent of the in- dustry. -21-

SMTATOR KRR. What is the production of the domestic industry now as compared to previous years?

MR. BESS. At the moment the production is considerably impeded by a strikes on the one hand, and an order of the Price Administrator that was not tailored for our industry, but taking it back to 1950 the production in that year would be about 25 percent, I would think, below our wartime peak during the last war.

SENATOR KR. What would it be with reference to any previous nonwar year? MR. B7SSv. It would be higher than the years before the war. Probably we would have to go back almost to 1923 to find a higher year, certainly in dollars.

Page 704-705 STATEMET OF ABPAHAM MITT7NTRAL, DIRECTOR, 11TIMIAL AUTHORITY FOR TH IADIES' KAITIMAG INDUSTRY

Wage increases granted since the year 1949 we estimate will increase average weekly earnings to $56 a week. Compare this vith the average weekly earnings in factories making handbags in forei n countries: England, $24; France, $16; Germany, $21; Italy, $34; Argentina, 416; Cuba, $14; for a workweek of 48 hours, whereas the workers in most factories in the United States have a workweek of 37p hours.

In the year 1938 when the United States began the first round of trade agree- ment negotiations the handbag indstry urged that there be no reductions in the tariff rates from 35 percent in effect at the time. Again in the year 1939, despite our pleas, in a trade agreement with the United KingOom the tariff rate on handbags was reduced from 35 percent to 25 percent. In the year 1941 in the trade agreement made with Argentina the tariff rate on handbags made of reptile leathers was reduced to 172 percent. In the year 1949, in the conference held in Geneva, the tariff rate on handbags made of leathers other than reptiles was reduced to 20 percent. In ad- dition a preferential duty made with Cuba reduced the tariff 14 percent on handbags made of reptile leathers.

During the war years the countries in Eurore that normally exported handbags to the United States were not in a position to take advantage of these reductions in the tariff rates. The only countries that took advantage of the reductions were Argentina ad Cuba, both of whom received preferential rates on handbags made of rep- tile leatherk, Most European countries are back to their prewar production, with many newly established factories fostered and supported by their governments, and as- sisted by United States aid.

The handbags from these countries are now being shipped to the United States in greatly increased quantities, and at prices that are impossible for the goods in question to be duplicated in the United States,

Until the year 1941 there were only a few wholesalers in the United States who imported handbags. Now there are at least 14 wholesalero, some of whom form'jrly were manufacturers of handbags in the United States and who discontinued manufacturing and are now importers of handbags exclusively. In addition, many of the large retailers throughout the United States import large quantities of handbags.

In former years these large retailers began placing their handbag orders with -22-

American manufacturers during the months of November and December for spring delivery, and during the months of June and July for fall deliveries.

These retailers now wait until January to place their orders for the spring season -and until August to place their orders for the fall season.

The reasons are they must wait until their receive their deliveries of import- ed bags before they know how much money they will have left to spend for their domes- tic purchases, and what styles and materials they will be open to buy. This results in shorter seasons for our manufacturers and longer periods of unemployment for the workers.

During the past 3 years the volume of sales of handbags in the United States declined from $200,000,000 in the year 1946 to $126,000,000 in the year 1950. If -present conditions in the industry continue throughout the year 1951, the sales volume may not reach more than $100,00O,000.

Profits for the manufacturers show a scant margln during the rast 2 years. An increase of imports into this market is certain to wine out whatever little profit still remains for the manufacturers and the industry in the United States.

Exponents of the continuance of the reciprocal trade agreements argue that suc action will help sustain foreign demand for United States merchandise and other equip- ment, but if that must be done through dislocation and destruction of other domestic industries, it is not serving its purpose. Producers of handbags see no reason why they sh,uld be sacrificed for the sake of heavy equipment, ampliances, or other dur- ables. Reciprocal trade was meant to be fair and it was never intended that the United States should subsidize foreign manufacturers to the extent that their prod- ucts would undersell our manufacturers and dep. rive our workers of an o-1portunity to earn a livelihood working In the industry.

SMATOR MI1LIKIN. Mr. Witness, that certainly was the explaied intent at the time the act was originally passed, but rast hearings here have shown there is quite a strong opinion among the promoters of the act that it is perfectly legitimate to wipe out what they judge are uneconomic industries in order to benefit exportation of what they consider to be sound industries.

MR. MITT7THIA, The 40,000 workers employed in the industry and who su7ly th; industry do not feel that way, and neither do the manufacturers.

SEDATOR MILLIKIN, I quite agree with you.

MR. MITTMT}TAL. It may be desirable to develop the friendship of the peoles of foreign countries, but how can that benefit our country if we lose the loyalty of the workers in our own country, when they cannot find employmont in an industry in which they have spent all or a greater part of their lives, knowing that the workers in some country are depriving them of the means of earning their livelihood.

PEge 873-876 STATEMT OF H. L, O0E, REPRESENTIN BICYLE ITSTITUTE OF ANERICA, ITC.

We cannot meet the ruinous price competition and still maintain wage levels which are four and a half times that of foreign manufacturers. Production in -23..

England, Germany, and Italy, in plants equipped with modern machinery, aided through Marshall plan financing, is comparable to our own. Those companies are the mass pro- ducers of bicycles and dominate the world markets. Our industry which has ample ca- pacity to fully suply the domestic demand must depend for its survival on retaining this market.

The British have long maintained such a high protective tariff that virtually no foreign-made bicycles find their way into that country for the sole purpose of .-re- serving the domestic market for their own manufacturers while we in the United States, through continuous reductions in tariffs on bicycles, have placed our own industry at the mercy of these foreign producers.

In order to survive, the bicycle industry in the United States must be permit- ted to compete with the foreign manufacturers on an equal and fair basis in our own domestic market. This will only result when proper consideration is given to the difference in cost of production here and abroad, largely due to the Aerican stan- dard of wages.

Superior merchandising, salesmanship, and technical improvements offer no de- fense against costs which, due to low wages, are approximately 50 percent of ours, nor can we emDect our jobbers and dealers, no matter how natriotic, to continue to sell American bicycles when they can make a much greater profit in handling a foreign make which would find ready acceptance during a time when the American industry is handicapped because of the defense program.

Production and Costs Foreign manufacturers, particularly in Great Britain, Germany, and Italy, have modernized and enlarged their facilities. They always have been Imass producers" in this industry, enjoying all of the advantages and economies of production line tech- niques and efficient operation. Their workmen are skilled in this tyne of vroduction and, from all information available, their production rer man-hour is at least equal to ours.

Waes Abroad.34 cents an Hour

That the wages paid in these foreign plants are far below the average in our industry is well known. According to a report supplied by the Ministry of Labor and National Services, the average earnings for the engineering trades in the Birmingham (England) district, which produces large numbers of bicycles, is stated to be 34 cents an hour for skilled workers, including their bonuses. Earnings of pieceworkers are somewhat higher, being reported at 37.2 cents per hour.

The American bicycle manufacturers have increased wages an average of 20 cent over per- 1946 levels and now are paying up to $2 per hour, the average for skilled workers being $1.75 per hour. The average in the industry is 11 percent higher than the national average in these trades, as reported by our Department of Labor, and 4 times the corresponding wages in England.

The average increase in the cost of materials used by our industry is 24 per- cent higher than paid in 1946.

The average cost of foreign materials# Darts, and supplies, reflecting the lower wage rates in these industries, is estimated to be less than one-half of ours. -24-

It is painfully apparent that we are now experiencing the effects of this low- wage production, devaluation of foreign currencies, and other benefits afforded through the financial aid which our Government is giving to the foreign countries.

British Prices Below American Cost

Difference in costs is now being reflected in the declared value for tariff purposes, of foreign-rade bicycles as evidenced by the statistics of the Denartment of Commerce. Recent shipments from Germany are entering at a declared value of $13.33 each.

Component parts, such as spokes, tires, tubes, chains, etc., manufactured abroad are now being sold in our competitive markets at approximately half the price of similar items of American manufacture.

A recent sales bulletin sent out by Raleigh Cycle Distribu'ors, Inc., Boston, Mass., states that their estimate of a possible increase of 100 percent in sales has proven "far too low."

There can no longer be any doubt that the 1threat" to the American industry, which has been apparent to us for some time, and which was formally delineated to your committee, has now materialized.

That substantially greater imports are imminent cannot be doubted, Recent shipments prove it.

British Survey of United States Market The British industry, encouraged by every possible assistance, financially and otherwise, from our Government, and supported by various concessions from their own Government, have made detailed studies of the potential United States market. Sales outlets, through dealers and other agencies, are being constantly increased. Adver- tising is being stepped up in preparation for a concerted drive to carture this market.

The recent lavish and costly exhibit of British bicycles at Grand Central Palace in New York City is typical of the aggressive merchandising approach now being used.

The following extract from a report of January 16, 1950, entitled 3ritish Production", prepared by our Embassy in London, is most significant:

"Since devaluation, Government officials and business organizations have urged bicycle manufacturers and exporters to concentrate their sales on the dollar market. While it is too early to say how far the possibility of offering reduced prices on British bicycles will go toward greater sales in the United States, certain manufac- turers have already reported increased sales.

IMr. George Wil5on, managing director of Raleigh Industries, Ltd., indicated that sales of their bicycles were expected to increase 100 percent. He stated-- "'Reduction in our prices in the United States resulted in a substantial in- crease in orders to our Boston plant. This means doubling our business in America during the coming year.1 -25- An official of the Hercules Cycle & Motor Co. stated that reports from the United States indicated that exports of British lightweight bicycles would be in- creased by as much as 150 percent following devaluation."

Zconomic Condition of the American Bicycle Industry-United States WaRes Increase 20 Percent

In contrast to developments abroad, the United States bicycle manufacturers have raised wages 20 percent since 1946. Our material costs are up more than 24 per- cent from 1946 prices. The volume of business has drop-ued substantially from the peak years of 1946 and 1947. Employment has decreased correspondingly. The best foreign market for United States bicycles--Canada--has been completely cut off and our sales in other foreign markets have suffered heavily.

Embryo Ghost Towns

The plants of many of the manufacturers in this industry are located in rela- tively small communities and furnish a substantial part of the vages on which the life of each community depends. The ermloyees are skilled in the techniques of this kind of work and trould have difficulty in finding equally remunerative employment elsewhere. Many of them own their homes and would suffer severe loss if forced to move, assuming they could find other jobs. Closing down of these plants would. affect not only those employees, but would have repercussions through the hundreds of other companies sup- plying materials and the components required by this industry. We have in the i)ast reneatedly pointed out to the committee the vulnerable po- sition of the bicycle industry if foreign manufacturers should make a determined ef- fort to invade our market. We have stated that, because of the dominant the British position of industry, and the equally large production of other foreign manufac- turers, which in the aggregate far surpasses that of our industry, we are at a tremen- dous disadvantage, not only in the foreign markets, but in our struggle to retain the American market, which we have created through long years of effort and at great ex- pense. To permit foreign products to now replace the American bicycles and reap the benefits which have been created at great expense and effort by American workmen and investors, is indeed a tragedy and a serious blow to our economy.

British Trusts In the United States we are confronted with the same factors which make it im- possible for the foreign automobile producers to compete with our great automobile industry. Foreign manufacturers have the same advantage in the bicycle industry that is enjoyed by the American manufacturers of automobiles.

The British manufacture of bicycles is controlled by two powerful trusts-Tube Investment Syndicate and Raleigh Industries Group, which are given every possible sup- port by the British Government. Unlike our automobile ihdustry which no longer de- sires any tariff protection the British have always, and still do, maintain a high duty on the importation of bicycles. They are protecting their own domestic sales by every possible device in order to insure that market exclusively for their industry. This is borne out by the official report of our Department of State, in which it stated: is

1It may be said that of the bicycles in use in the United Kingdom, 100 percent are British manufactured.11 -26- Page 880-881

There is 6 pounds and 8 shillings weekly wage of a skilled mechanic in the areas with which we have to compete. We are paying from $1.70 to $2 an hour. The State Deartment and the other people that advocate the reduction of tariffs point out that the American techniques and ingenuity of the Yankee for mass-production in- dustries make it possible for us to lick the world. That may be true in certain nar- ticular classes.

On the other hand, it so happens that the bicycle industry in the United States is only about one-fifth as big as the bicycle industry of England.

SM,ATOR HILLIKIN. How about your mechanical processes? Do you have any advan- tage there?

MR. 0O3. Not the slightest. They have the advantage of us due to their mass production facilities,

SEXATOR MILLIKIN. Do we have any advantage in the acquisition of mterials and supplies?

MR. OE. The British traditionally have had the inside track in the rubber market for tires, they have a good steel industry, their techniques in operation are fully as good as ours. We won't admit they are any bettei, but they have the advan- tage of this mass production, and they have the low wages, and they turn out a very excellent product, and I would say--

SEHATOR BUTL3R. What is the difference in wage scale?

MR. OE. Six pounds eight shillings a week for a skilled mechanic and we pay $1.75 to $2 an hour for the same man.

S31ATOR UTIlR. Give us what the weekly wage would be in dollars in England and here.

MR. 003. Forty hours at $2 would be $80 a week.

SENATOR BUTTLER. For us?

MR. 003. And we will say averaging it dowm, because those are the top wages, to $1.75, it would be $60 or $70 against 6 pounds 8 shillings.

SENATOR BUTLER. Twenty dollars a week?

MR. 00E.jo Eighty dollars a week.

S3E-&TOR BUTLER. For us.

MR. 003o. For us against 6 pounds 8 shillings for the British. If you put the pound at $2.50-,

SEITATOR BUTLER. That is about $20 a week.

MR. 0O. Yes. We are easily four times above them and the same is true with Germany and Italy where wages are even lower. -27- Now we have used every knovn device of ingenuity that is available to us. We have spent large sums of money in developing the sales in the United States. Our mar- ket is restricted now entirely, you might say, to the United States. 'Our exports havo disappeared due to exchange difficulties, reciprocal trade agreements, dominion preference agreements, and so forth. Canada, which was our best export market in the past, through orders in council 3 years ago virtually barred the importation of any American bicycles into Canada. They did that through their particular method of handling matters of that kind, by cutting down the percentage of dollars available for ourchases there in the different categories. The result has been that month after month we could not export a single bicycle to Canada, and the yearly total insignificant. is There is no possibility of recouping anything in that market. That is generally true in all other foreign countries.

SMIATOR 1ILLIKIN. Canada would have imnerial -oreference. MR. C00. Yes, they have a lower duty on British bicycles than for ours. While their wage rates are less than ours, they are completely protected with their embargo. The result is Canadian manufacturers of bicycles have more than tripled their output of bicycles since this order was put in effect.

Page 886- 88 8 STATMETIT OF JOHT BRECKINRIDGE, REPRSENTIMG YORTHEST NUT GRO1,ERS

Well, we already are in the process of being liquidated. The industry is bank- rupt; trees are being pulled out, orchards are being abandoned, growers are no longer able, in cases, most to get credit from banks because of the import situation, this entire situation and comes about by imports and the trade-agreements program. It comes about gecifically by the trade-agreements program, and the fact that agreements the trade- program has caused the administration to ignore other legal proceedings that have been provided for relief in such cases, such as section 336 of the Tariff Act, section 22 of the AAA Act, the countervailing duty, and the antidumping statutes. All of them we have tried and have gotten no relief. We have been ignored in almost every effort we have made to get relief. particularly We wa:ited to appear today to ask the committee if they would not try to break down, in one little test case, the veil of secrecy that has prevailed over many these years concerning how the trade-agreements program is administered.

The filbert, the duty on shelled filberts, was reduced from 10 cents to 8 cents per pound in 1939 in an agreement with Turkey. The 10-cent duty was already inade- quate, and substantial imports came in under it. But the real force of the imports was not felt until after the war, beginning in 1944 and 1945, when imports Jumped up to five--three to five times,-what they were prewar.

THE OHAIMAW Was the duty fixed at 10 cents per pound?

MR. BIMCK1RIDG. Ten cents per pound on filberts. -28-

THE CHAIFMAN. Shelled?

MR. BOCKINRIDG,1 Shelled. In 1930 it was fixed at 10 cents per pound, which was unduly low. In 1930 the filbert industry was just a growing industry, anr too much concern was not expressed over it; whereas the import duty on almonds was 16 cents, on shelled almonds; on walnuts 15 cents, where the situation is oractically the same. They com3ete with the same general areas, are produced in the same general areas, and the differences in relative costs of production are approximately the same. Even that low duty of 10 cents was cut to 8 cents.

THE CUAIRMAN. Has there been any subsequent cut made?

MR. 30KI1RIDGE. There has been no subsequent cut made, but shelled filberts are on the list lith a proposal to cut it to 4 cents a pound in these Torquay nego- tiations now, and unshelled filberts on i-1-hich the duty is 5 cents -ner pound, were bound in the Annecy agreement. I am going to comment on that a little bit more. THE CUIUAT. I see.

MR. BRCKI.1RIDG. They bound it at the time we were proceeding in the Tariff Commission, trying to get an incre.se under section 336 of the 1930 Tariff Act.

SE-ATOR MILLIKIN. What does a pound of shelled filberts sell for, Mr. Breckinridge?

MR. BR3CKI1RIDGE. In this country, I do not know the exact price today. In past years they have sold as low as 18 to 20 cents a pound, and that renresents about 38 percent of parity.

SENATOR MILLIKI. At the retail level?

MR. 370KINRIDG.. No, sir; that is at the wholesale level; whatever they at sold returned only 38 percent of narity to the growers, which does not even return the cost of production.

Now, again to illustrate that factor, the committee could talk with Senator Morse who did own a filbert orchard, and which he, in recent yearp, found that he was losing money on consistently. He'either sold it or pulled the trees out, I do not remember which. I think he pulled the trees out, but you can confirm that -ith the Senator.

It so happens that Mrs. McNary is in the room now, and she has a half interest in one of the very substantial filbert orchards in Oregon. She has lost money con- sistently since 1945, since the imports started coming in. That is the cut,-off period.

THE CHAIRMAN. Did the volume of the industry reach a relatively high level before--

MR. BRCKI1RIDG3. It reached a relatively high level during the war. TH CHAIRI-AT (continuing). The war?

MR. BR30KIITRIDGE. As I say, the industry only started in the late 1920's. THE CHAIRAT. Yes. -29-

MR. BR3:0KITRIDGE. And, incidentally, they started under the encourawement of the Department of Agriculture and the State departments of agriculture, encouraging them to plant filberts because they were peculiarly suited to that area and would provide diversification in an area vhich at times had been adversely affected by be- ing too specialized in lumber. It grew up through the thirties. There were a lot of new plantings in the late thirties, and there were a lot of new plantings during the war. It is still an expanding industry because it takes filbert trees 9 to 12 years to come into what is called commercial bearing, where it is exT)ected. to pay for it- self, without even making a profit. There are a lot of trees planted and growing which will come into production in the future, and which will result in a constantly increasing over-all crop for the next 10, 15, 20 years, because even after they get to a bearing age, say, 9, 10 years old, they continue incrqasing in the quantity they bear for several years.

But beginning in 1947 new plantings stoped. People saw that it was not a -profitable crop, and they stopped new plantings. They have actually pulled out several acres of them or abandoned them. They did not have enough return to properly care for the orchard.

Filbert trees, it is peculiar, but oril-inally they were vild bushes, hazel nuts. But when properly cared for they develoned into full trees, similar to almond trees, and when neglected and not taken care of--that is, cut off the saplings down at the bottom of the tree--they revert to a wild growth, which is not commercially feasible; I iean it will make no profit.

Many of the growers are doing that today because they have not had enough re- turn to pay for the care of the orchards. In many cases a large nercentage of the nuts have actually stayed on the ground. The return, narticularly on shelled filberts did not produce enough to even pay the cost of picking them up off the ground.

Page 908-909

SEATOR KERR. What is the present market value of the shelled filbert, present retail price?

MR. BR:0KINRIDG7. The present retail price I could not state, sir.

SEMTATOR KRR. Do you know what the present price to the grower is, or does he sell it shelled?

MR. B3CKINRIDGE. He sells it shelled and unshelled. The present price to the grower is substantially below -arity; as to the exact price at "hich it is sell- ing now; no, sir.

SWRATOR K]ER. Well, is it 6 cents per pound or 60 or 207

MR. BR3CKINRIDG. No, sir; 1rhat they are selling at today I do not know. SE1ATOR KERR: You do not know?

M. BRCKIORIDG73, No sir. But they are selling at below parity. -30-

SE1TATOR 2R.R. But the horrifying results to which you have referred have come about insofar as any positive action by the State Department is concerned, by their reduction of the import duty on the shelled filbert from 10 to 8 cents, on the one hand, and by their failure to increase the import duty on the unshelled filbert from 5 cents to 7 cents.

004

Page 917-919

VIEWS OF MMRICAN FOUNTAIN PPN INUSTRY, BRIEF SUBMITTMD TO THE CO1fITTE FOR R0IPROCITY IFORMATION, FORIGN TRADE AGREM3T LT3GOTIATIONS 'ITH SEVERAL FORNIGINT ITATIOYS AT TORQUAY, MTGLATD

(By Karl D. Loos and JohaBreckinridge)

The Tariff Act of 1922 provided a duty of 72 cents rer dozen and 40 percent ad valorem on fountain pens. The Tariff Act of 1930 did not change these rates, nor have they been changed in any foreign trade agreement to date.

Summary of Tariff Views

For a considerable time before the Tariff Act of 1922 and ur to the disruption of foreign trade by the Second World War (1939), Japan was consistently and overwhelm- ingly the principal supplier of imported fountain pens. For this reason the above- mentioned tariff rates were fixed by the Tariff Act of 1922 and left unchanged by the Tariff Act of 1930 in order to offset the unfair comnetitive advantage which other- wise would have been enjoyed by Japanese producers by reason of the ridiculously low wage rates paid in Japan in compariron with the -revailing wage rates in the United States.

These tariff rates were designed to equalize the costs of producing fountain pens in Japan and in the United States and to permit Jananese fountain pens to come into this country on a fair competitive basis, not at an unfair competitive advantage over American-produced fountain pens.

Wage rates in the United States and the living standards of American labor have increased enormously since the origina,l enactment of these tariff rates in 1922. In more recent years the United States Congress has enacted two minimum-wage laws forcing an increase in the average wage rates and cost of troduction of the American fountain-pen producers. A recent act of Congress st the minimum wage rate at 75 cents ner hour which has currently further increased wage rates and cost of produc- tion of American fountain-pen producers. While Japanese wage rates and costs of pro- duction have increased since 1922, it is common knowledge that they have not in- creased proportionately uith American wage rates. Consequently, the gap between Japanese and American costs of production is now greater than it was in 1922 and 1930.

The American fountain-pen producers are opposed to any reduction in these tariff rates. Because of the constantly widening gap in production costs and the in- creasing competitive advantage enjoyed by Japanese producers over American producers, the domestic pen manufacturers believe that any adjustment in these tariff rates -31-

should be upward as contemplated by the Trade Agreements Act and the above-mentioned notices which state:

"The following list contains descriptions of articles imported into the United States which it is proposed should be considered for nossible * * * imposition of ad- ditional import restrictions, or specific continuance of existing customs or excise treatment * * *.1

The American fountain-pen manufacturers are also opTosed to any binding of the fountain-pen tariffs because they feel that their right should be preserved, under current conditions of increasing costs, declining domestic and exnort demands, and postwar readjustment, to arply to the Tariff Comr-ission for an increase in these tariffs under the provisions of section 336 of the Tariff Act of 1930 if that should prove necessary.

In this postwar neriod of readjustment and rapidly changing conditions of costs and demand, the American fountain-pen producers do not consider the escape- clause rrovisions of trade agreements adequate protection or one that can be exercised with sufficient rapidity to meet the potential dangers facing them. Even without any change in the existing tariff rates, it is anticipated that imports from Japan, Germany, and other dollar-hungry countries will increase at an alarmingly injurious rate -nd this in the face of domestic conditions which have already made it necessary for the fountain-pen industry to undergo a serious curtailment of production and. em- ployment.

Historically, for many years prior to the Second World War, Japan was by long odds the principal supplier of fountain-pen imports and she will undoubtedly regain that position in the very near future because her wages and production costs are substantially lower than those in Germany, the United Kingdom, and other fountainpen producing countries. Japan is not included among the countries with which these trade agreements are to be negotiated. Under such circumstances no modification of the fountain-pen tariffs should be considered in these negotiations. The principal benefit would be to Japan rather than to any of the negotiating countries. The American fountain-pen industry includes 184 producing conmanies and is characterized by small-business producers widely distributed throughout the United. States. The great bulk of these 184 producing companies make the lower-retail- priced fountain pens ($1 and less) which constitute the greatest volume of American production and American consumption (75 percent). They are consequently 1-articularly susceptible to competition from Japan and other lowcost countries and are -narticular- ly susceptible to injury from any reduction in the existing tariff rates and the consequent invitation to increasing imports.

The American fountain-pen industry produces a surplus of the various price range fountain pens (from 10 cents each to $125 each) and there is, therefore, ab- solutely no room for absorption of imports into the United States market without the displacement of American production and employment. The only possible effect of a reduction in fountain-pen tariffs and the invi- tation of increasing imports, will be to reduce production and emnloyment in the American fountain-pen industry in order to make way for Japanese and other imports.

In the :?ast 2 years both domestic and import demand for fountain pens has fallen off drastically and there is no possible way of increasing imports of fountain -32-

pens without reducing production and employment in the American industry, along with the parallel effect of depressing American prices, profits and the wages of those who do remain employed.

The fountain-pen industry, which was a substantial exporting industry, has, since the war, been confrbnted abroad with an avalanche of increased tariffs, quotas, and narticularly embargoes imposed by forei,n countries normally purchasing American fountain pens. In the past 2 years the value of American fountain-pen exports has dro)oDed from $27,000,000 to $8,000,000. This drop in exports has been accompanied by a substantial reduction in domestic demand. This is certainly no time to reduce tariffs and encourage imports into an already oversupplied market.

60*

American Fountain-Pen Industry

There are in the United States 184 separate comanies producing fountain pens (and mechanical pencils). The number of producing companies has increased from 55 in 1937 and 70 in 1939 to 184 in 1947 (1947 census of manufacturers).

Six thousand two hundred and seventy-nine persons were employed in 1939 and this number increased to 15,553 in 1947. It has fallen off somewhat since 1947 due to declining domestic and export demand. and resultant decline in producti.on.

The value of fountain pens and mechanical pencils (and narts thereof) produced during 1947 was $137,574,000, f.o.b. plant (pens $106,965,000; pencils $30,609,000). This compares :ith $25,970,000 in 1937 and $24,881,000 in 1939.

For fountain pens alone, in 1947, the industry produced 5,759,750 dozen with an f.o.b. plant value of $106,965,000 (see exhibit A). This increase in both quanti- ty and value over prewar production and values is partially due to increased prices in the lower-price ranges (there have been no price increases in the higher-price ranges) but more specifically due to the necessity of supplying the pent-up demand both at home and abroad accumulated during the war. Again, the millions of GI students increased the use of fountain pens and other writing instruments substantial- ly after the war.

The peak of both demand and production was reached during 1947 and since that time both have fallen off sharply. The exact quantity -nd value of fountain pens produced since 1947 is not knowa. It is estimated that the current 1950 rate of pro- duction will produce approximately 75 percent of the 1947 quantity and approximately 60 percent of the 1947 value. Of course this curtailment in production has necessi- tated a curtailment in employment of approximately similar proportions.

000

PaZe-2 28-9a9 STATETT OF JOT BRCKINRIDGE, RMPIESM"TING THE POUTAIN PEN A-' MIKCATICAL P7NCIL fAtUMACTURRS ASSOCIATION, IIC.

At the present time Japan has not gotten back to where she is shipping large volumes of fountain pens and pencils to this country, but she is shipping large -33- quantities of ihat are called mechanical pencil movements or actions. Now, that is the inside portion of the pencil, the mechanism Ohich propels and repels the lead. SNATOR KERR. That which makes the pencil.

IM. BR30KINRIDGE. Yes, sir.

During 1950, 4,420,800 have come in and they are classified under a blanket clause in the Tariff Act, paragraph 397, covering articles of metal, not specially provided for, whether rartially or wholly manufactured. The duty on that is or was in the 1930 act 45 percent ad valorem, and was reduced in negotiation with Australia at Geneva to 22- -ercent.

We have had very serious difficulty with these imports that come in at a price and sell at a price of approximately 4-1/8 cents per pencil movement, and the cheapest at ihich they c.n be produced in the United States is 7 or 7-plus cents each. There ie again need relief, and for this reason we specifically support the escape-clause amendment that was nassed by the House, and we specifically support the reactivation of section 336, which is merely a striking out of the present prohi- bition in the Trade Agreements Act prohibiting the use of section 336 on any article included in a trade agreement.

I believe that substantially states our position, so far as we can state it in a short time. We do feel that the Trade Agreements Act has worked to our detriment on exports, and is working to our detriment on imports. We have been hit from both sides. With the suggested amendments, we believe it will give some reciprocity and provide for an escape or safety valve i-hen we are injured seriously, and we can fully contemplate that we will be.

Another factor we have run into in foreign markets, and this is particularly with respect to the Parker and Sheaffer Pen Cos., which exnort very substantial amoulnts. Parker has exported from 30 to 40 percent of her production, and Sheaffer has exported 10 to 15 percent of her production. We are finding now in India, which is one of our largest export markets, and was historically, that the market is flooded with Japaneseimitations which look Adentical to our own fountain pens and even have "Parker" and "Sheaffer" stamped on them, and we have been unable to get relief from that.

PaMe 9?8 STATMIM'T OF HON. OLEVELAD M. BAIJL7Y, A RP=RES-71TATIVE IN COGRESS FROM TIM STAT3 OF WEST VIRGIINTIA

If our national economy is to be a sound economy, we must maintain a favorable trade balance. Our exports must exceed our imports. Only on two occasions in the past 16 years, have we approached periods of normalcy. In the years just prior to World War I, we witnessed a sudden increase in foreign imports. American-made goods were in some instances, driven out of the market. Conditions were rapidly approach- ing normal, prewar and wartime defense activities halted this trend and a new cycle of abnormal conditions gripped this country. Another anproach to normal levels, came in mid-1950, only to be again interrupted by the Korean War emergency.

interesting It is to note, Mr. Chairman, that in both these instances as we came near to normalcy, we were faced with a gradual shift in our trade balance. In the month of October 1950 we faced an unfavorable trade balance when imports exceeded exports.

In this connection, Mr. Chairman, I should like to call the committeets atten- tion to the fact that had we not taken credit for approximately $100 million monthly of exports synthetically crRated by the use of the Marshall-plan funds, we i.ould have encountered an unfavorable trade balance for most of the year. What is the answer when 30A funds stop flowwing to Europe? The answer is plain--a continuing trade deficit.

I want it clearly understood that I am not opposed to the basic idea of re- ciprocal trade agreements. What I do oppose is the arbitrary administration of this legislation that closes every avenue of escane to "small business" and to those pro- ducers who .rithout the advantage of mass production, are unable to comete for even our domestic markets.

Page 1397

LETTER TO CKAIRMAN OF FIN1A]1C COMMITTEE, UNTITED STATES SEYATE, FROM TERR.Y'S SEWING MACHIKE COMPANYr, PASSAIC, 1nW J L'SEY

Mr. Chairman, we are certainly deviating from the high ideals which George Washington, Abraham Lincoln, and hundreds of other real Americans fought to protect. I think that the time has arrived when party policies, rules, and. regulations making possible personal gains to individuals or groups of people to the detriment of a vast majority be cast aside. It is about time we rolled up our sleeves -.nd did something about the alarming inrports of cheap, falsely advertised foreign goods which are be- ing dumped in our country in unfair comnetition with goods of our own manufacture. Again I say that the time has arrived for you and your committee to take this alarm- ing situation in hahd and find ways and means to protect the American industries, every man, woman, and child, and every legitimate retailer who has worked hard to make this great Nation what it is today.

. Ch"A. 1'1-, "F!ri s linit beo:-0 och "ecirroc-l tr-de agreements not go if American must industry, American wages, and American standards of living be preserved. are to I think that the Nation's lawmakers first consideration must welfare be the of the American workingman. Congress must not authorise any reciprocal agreement which trade would put American labor at the mercy of slave-labor comnetition. What I want to know, but cannot find out, is, why do we have to do without our share of the market while some foreign nations who are supposed to be our partners in fight- ing communism are able to do business as usual. We conquered Germany, Japan, and Italy in a war, and now reward them by permitting their cheap-labor products to be dumped wholesale in this country, thus clearing the road for them by putting all kinds of restrictions on our own products, and giving the foreigner clear sailing. -35-

I would like to quote from a speech made by Samuel Gomers (the father of the American labor movement) made in Cooper Union:

"All people suffer pain and hunger and in the main share similar sensations. But that doesnit mean all people are alike in all resnects.

"An American cant do a dayls work on a bowl of rice and some gruel, but a Chinaman and a Japanese can. And that goes as well for the -neasants of Italy, SPain, Germany, Russia, and many European countries. This doesn't mean that Americans are better than others, but, an American wants better things and better living conditions and he is willing to band together in a common cause to fight to preserve those high standards. In unity there is strength, and that strength will protect the American workingman against the competitive serf labor from across the sea.

"We must stem the tide of products made by cheap subsidized foreign labor or we'll have no jobs and live no better than those from whom we should protect our- selves."

Mr. Chairman, unemploymint, which we will have without war, means that the American public will not be in a position to buy goods whether they are made United in the States, Japan, Germany, or Italy. I say do something about this cancerous condition which is eating into our ftuture.