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It is true that if our labor force were put to work on supplying the deficiencies of our own people, the meeting of their needs could keep that labor force fully employed for some years. Furthermore, in theory, it is true that this country could so adjust its working hours and so dispose of its labor force as to afford added leisure as well as higher living levels to all, and thus perhaps avoid dependence on foreign markets.
Yet it would be wholly visionary to expect these courses to be pursued within any predictable term of years. Therefore, it becomes clear that United States business and agriculture must expect to sell abroad if it is to maintain employment at present levels, to maintain the mass purchasing power that employment means, and to maintain the prosperity that continuation of both implies.
Yet the collapse of international monetary exchange since the war, the prostration of a large part of the rest of the world, and the continued disruption of traditional channels and mechanics of world trade, combine to render extremely complex and difficult the revival of peacetime markets for American goods, much less their expansion. To this point, much of the basic difficulty has been concealed by the distortions accompanying immediate postwar conditions.
Basically, the situation now is just what it was when we were lending billions upon billions of dollars after World War I. Now, great loans are being made, some effects of lend-lease spending are still present and vast sums of United States money are being spent, in effect, as direct relief grants to the rest of the world. In addition, we are forcing commodities into occupied countries through uneconomic means, in the sense that there is little or no exchange value attached, and are spending large sums of money upon maintaining military establishments abroad which, whether desirable or undesirable from other points of view, do afford the countries where such forces are maintained some additional United States dollars.
This means that we are simply underwriting our own production for export instead of arranging to receive goods in return for goods.
That is one of the principal facts of American vulnerability. Another is the fact that even with the full functioning of such United Nations agencies as the World Bank, the International Monetary Fund, the Food and Agriculture Organization, and the International Trade Organization-even with all of these operating at their most effective, the bulk of the funds for them would have to come from this country for so long as the world remained crippled economically.
In the long run, the only way whereby investment of American funds abroad, whether directly or through UN agencies, can be secured is by increased world trade, freely flowing goods, and freely flowing exchange. So long as the barriers that have split the world into senseless economic units continue, then just that long will the full potentialities of a reconstructed world economy go unrealized. No nation can really live in self-sufficiency. Even if it could, it would have to do so on a narrowly restricted living standard, a living standard that would hurt others as well as itself. In the end, those areas that produce specific commodities most efficiently must become the chief suppliers of other areas with those goods. To the extent that the world economy approaches that goal, to that extent will there be an appreciable rise in world living levels.
Thus, the security of our investment itself is at stake in the discussions centeirng about revival of world trade and the measures to be taken to promote such a revival.
But perhaps of even more significance is the vulnerability of the United States with respect to general economic depression. We have heard much talk of late, about recession and everyone seems to look rather calmly toward an economic adjustment. Lower prices are, of course, essential to continued stable economic conditions in the United States. But what is not generally realized is the grave danger that a recession can turn into a very real and very disastrous depression, unless great care is exercised.
The very dominance of the United tes the world thus becomes very perilous, for if the world at large reads into economic tremors in this country the beginnings of a genuine earthquake, then tremendous harm can follow. As has been indicated, United States supplies and funds are the hope of a great part of the world. If the process of adjustment in this country takes the form of reduced production, of falling exports, of contracting expenditures abroad, along with unemployment and increased public spending for domestic relief, then the world at large will almost certainly rake fright. That will feed upon itself, and thus the very fear cycle that causes depressions in one country will spread over the world.
Expanded world trade is not by any means the only step to be taken to guard against this contingency or against others discussed herein. But it is a very real and tangible step, one that ought to be taken.
The National Farmers Union firmly believes that the Department of State is on the right track in this matter, and that success must attend the conversations and negotiations now going on in Geneva. So far as farmers are concerned, there are two principal interests at stake. One is simply general prosperity, both in the world and at home, for such propserity is the most fundamental guaranty of a market for agricultural products. The second is that expanded trade inevitably will include expansion of trade for agricultural products, perhaps even more than for industrial.
It is wholly obvious that arbitrary and unskillful actions in adjusting tariffs and other barriers could cause widespread suffering to some segments of our people, including growers of some crops. We believe that public subsidy should be used to provide cushoins for such groups. But we also believe that the overwhelming interest of farmers as a whole is on the side of lowering of all barriers, including our own, and that those minorities now engaged in uneconomic industries should not be permitted to obstruct action that is so manifestly for the good of the great majority of farmers.
Specifically, we strongly oppose such actions as the amendment of the pending wool bill to provide for discretionary 50-percent increases in tariff duties, in order to protect domestic price levels. Here is a particular agricultural case of the kind on which our stand has repeatedly been made clear. We endorsed the bill introduced by Senator O'Mahoney last year giving wool a support price along with other farm commodities. We still favor such action, and urge that subsidies be used both to assure income of wool producers and to assure consumers of prices lower than they otherwise would pay. We also believe that such subisidies should be graduated over a period of years, in order to enable wool growers who do not wish to compete with foreign wool to change over to other industries. But wool growers clearly cannot expect to go on forever levying what amounts to s tax on all other groups, inluding all other farmers, and forever collecting from the Federal Treasury.
Moreover, we cannot expect the Nation as a whole to agree to the wrecking of conferences seeking expanded trade when the demands of such isolated groups make it impossible for the United States to deal with other countries. The Farmers Union realizes that American representatives must have something to bargain with in dealing with other countries, and it believes neither industry nor agriculture is exempt from that principle. We believe that Federal funds should be used to make such tariff bargaining possible without causing undue hardship to the affected groups. We believe, moreover, that a real leveling of industrial tariffs is long overdue and offers prospective benefits at least as great as the lowering of other tariffs.
In the end, farmers cannot but benefit from such expansion.
For all of these reasons, we strongly favor the negotiation of multilateral trade agreements of the kind now being discussed and fear chiefly that the reduction, and elimination of world barriers will not go far enough and fast enough. Equally, we hope for the approval of a real and workable International Trade Organization, along the lines proposed originally by the Department of State in November 1945, and urge that the ITO include provision for a system of world commodity agreements on agricultural products of the kind particularized by the FAO Preparatory Commission in its report last winter.
Mr. COLMER. Mr. Chairman, I am appearing before your committee in behalf of Chester A. Delacruz, of Biloxi, Miss., who was scheduled to appear in person but was unavoidably prevented from doing so. With the consent of the committee, therefore, I would greatly appreciate the opportunity of reading the statement which Mr. Delacruz would have given had he been able to be here.
The CHAIRMAN. You may proceed, Mr. Colmer.
STATEMENT OF CHESTER A. DELACRUZ, ON BEHALF OF THE
CRAB- AND SHRIMP-CANNING INDUSTRY
I am Chester A. Delacruz, of Biloxi, Miss., and I represent the Gulf-South Atlantic Oyster Canners Association and the National Shrimp Canners Association, with headquarters in New Orleans, and I am also speaking for the crab-canning industry.
These canning operations are located along the coast of the Gulf of Mexico from Texas to Florida and in the States of South Carolina, Georgia, and Florida on the Atlantic. We pack oysters, shrimp, and crab successively throughout the year. Crab also is packed in New England States, and crab and oysters are canned in the Pacific Northwest.
Gentlemen, the American crab-canning industry fought for 11 years to obtain an increase in the tariff rate on canned crab. That increase to 222 percent was secured in 1941. We would like to retain it.
Leaders of this industry filed protests in 1930 with various congressional committees and obtained passage of a bill by which the Tariff Commission made a thorough study of the cost-of-production relationships between Japanese-and American-canned crabmeat. The Tariff Commission held extensive hearings both in Seattle and in Washington, D. C. This fight culminated 11 years later in 1941, when the President authorized a 50-percent increase in the tariff on canned crabmeat. That was in August. In December- just 3 months later- Pearl Harbor occurred and the country went to war.
The canned-crab industry was able to contribute to the country's food supply despite the shortages of tin, of labor, and the high price of the raw product and despite other wartime difficulties. In fact, the industry was able to increase its production to such an extent that today it is a lustry, thriving industry. Figures from the Fish and Wildlife Service indicate its growth quite clearly.
Up to 1940 the average annual production of cannad crabmeat was 546,000 pounds. In 1941 it was approximately 1,225,000 pounds; in 1942, 2,225,000 pounds; in 1943, 1,500,000 pounds; in 1944, 1,750,000 pounds; in 1945, 1,100,000 pounds.
The figures for 1946 are not yet available, but the National Canners Association sent out a questionnaire to their members early this spring. That questionnaire indicated that crab canners in 1946 apparently had come close to packing 5,000,000 pounds. That questionnaire also indicated what the crab-canning industry hopes to do in 1947– the first year in which we are beginning to operate with an easier labor situation, although the tin supply is still short. The results of that survey show that 70_canners are planning to enter the crabcanning field this spring. Even more important, the first 13 canners replying to that survey stated they have invested $6,413,745.54 in equipment since 1941. This season will be the first real operation under that tariff increase in 1941.
It so happens that Russia has taken over a portion of the crab fisheries formerly operated by Japan and has already put out feelers in this market on distributing it here. Russia, even though it is not attending the trade conferences, is asking for a reduction in the present tariff, which is 22% percent.
Japan, which was the heaviest operator in our market in prewar years, is again scheduled to ship canned crabmeat here. Twenty thousand cases of canned crabmeat from the 1945-46 pack is being placed on the market this week by the U. S. Commercial Company. We believe that this amount is merely the forerunner of much more to come.
The American crab-canning industry is asking that the present 224 percent be retained on canned crab-that this infant industry be allowed to test its strength under the tariff that was raised just 3
months before war started. We consider it a moral obligation on the part of the executive branches of the Government to allow us this opportunity, and we ask the intercession of this committee and of Congress to permit this chance.
Another product we pack is canned oysters. These oysters were on the market before the war; but during those years of food scarcity, canned oysters moved into new trade channels and the packers have found new markets and new customers for them. We want to keep those markets.
It happens that canned oysters were imported from China and Hong Kong before the war in minor amounts. We do not worry about those sources, but we are concerned over the prospect of Japan entering the oyster-canning field in an intensive way. Japan, in need of foreign exchange and dependent on outside sources for her raw materials, will have to use every resource at her command to gain materials for exchange. Fisheries is her principal resource. We already have information that canned oysters will be an important item. We are asking that the present tariff of 8 cents a pound be kept in effect.
Now, there is another matter. We are in a predicament with relation to shrimp from Mexico. Shrimp imported from that country has increased from a little over 3,000,000 pounds in 1941 to more than 12,000,000 pounds in 1946. That shrimp is produced more cheaply than our own, and it is cutting into our midwest markets most effectively. We hear that the Mexican operations are expanding in every direction--boats, freezing, and canning plants—and production is expected to double this year.
Shrimp was tied to the free list in the trade agreement made with Mexico in 1943. That was during wartime and shrimp canners had no time to appear at the hearings, though they would have appeared had they known what the imports of shrimp from Mexico were. Information on imports was censored during the year, you know.
Gentlemen, American shrimp canners are planning to ask Congress to place a quota on the amount of Mexican shrimp that may come into this country, and we wish to state emphatically that we support the bill of Congressman Domengeaux, H. R. 2187, which has been sent to your committee. We pray that the Committee will grant us an early hearing.
Gentlemen, I thank you for your courtesy and consideration in allowing me to appear before your committee.
(The following table was submitted:)
Imports of shrimp from Mexico
4, 419, 306 1937 2, 580, 741 1943.
5, 746, 545 1938. 3, 242, 809 1944.
6,081, 509 1939. 3, 797, 231 1945.
7, 873, 888 1940. 4, 912, 552 1946.
12, 056, 001 1941.
3, 115, 933 Source: Fish and Wildlife Service and Department of Commerce.
BARNES, RICHARDSON & COLBURN,
New York 6, N. Y., June 12, 1947. The CLERK OF THE WAYS AND MEANS COMMITTEE,
Washington, D. C. Sır: Pursuant to committee authorization, there is attached hereto, for the purpose of filing, a supplemental statement of the American watch manufacturing industry, in connection with hearings involving the administration of the Reciprocal Trade Agreement Act.
Will you kindly cause it to be made part of the records of the hearings?
BARNES, RICHARDSON, & COLBURN.
AMERICAN WATCH MANUFACTURING INDUSTRY SUPPLEMENTAL STATEMENT ON
RECIPROCAL TRADE AGREEMENTS Act, BEFORE THE COMMITTEE ON Ways AND MEANS, HOUSE OF REPRESENTATIVES EIGHTIETH CONGRESS, FILED PURSUANT TO COMMITTEE AUTHORIZATION
It is to be regretted that we find it necessary to file this memorandum to correct misstatements, distorted facts, and unjustified conclusions presented to this committee by the importers of Swiss watches and by the Department of State.
Swiss import monopoly.—We made 1,124,000 jeweled watches in the United States in 1946. There were imported from Switzerland in the same period 9,681,000. We have been accused of attempting “to create a monopoly. On the contrary, in 1946 we had only 13 percent of the American market. What we are trying to obtain is only an equality of opportunity in that market.
The importers boast of absorbing $425,000,000 of American consumer purchasing power in 1946. About $250,000,000, at least, was clear profit. The same thing, to a greater extent, existed throughout the war.
Using the Tariff Commission's method of analyzing the competitive situation, the Swiss, in 1935, for example, had 22 percent of the jeweled-watch market in the United States. In 1946 they had 87 percent. If this trend is not stopped we are far on the way to a Swiss monopoly in the United States to complement the Swiss Government cartel monopoly in Switzerland, and to the strangulation of a strategic American war industry.
The Department of State, in encouraging the unrestrained growth of this monopoly, is obviously catering either to the Swiss interests or to the fetish of free international trade, and not to the best interests of the United States. In the administration of the Swiss trade agreement it has displayed weakness which has aided and abetted the establishment of this monopoly.
Watch machinery from Switzerland.- The Swiss are now refusing to ship watch machinery heretofore supplied to the American watch industry for more than 50 years and which has been on order before 1946, and in some cases even paid for unless it be "leased” under a form heretofore denounced by our Supreme Court. This offer to lease instead of agreed-upon outright sales is a breach of good faith. The Swiss knew the lease suggestion was illegal but offered the explanation that it was made in order to prevent sales of such machinery to Russia, and our Department of State swallowed this tale. After 2 years of prayer for help from our Department of State, the American watch companies were advised “that the matter is hopeless”—they can do nothing about it. We have suggested to Mr. Clayton that he might tell the Swiss that if they did not live up to their obligations he would recommend cancellation of the Swiss trade agreement; but trade agreements are sacred-they must not be touched- and an American industry is not “injured" until it is "ruined"; and so we have no machinery--we only have 87 percent of our market taken over by the Swiss.
The least understandable statement of the Department of State is that the Swiss importers of uncased watches have required cases, straps, bracelets, boxes, etc., before being marketed in the United States and that the importers are a more important industry than the domestic manufacturers.
The American market will take only so many watches. They have to be cased whether the movements are made in Switzerland or in the United States The number of cases depends entirely on the number of watches the American market will take, and that number remains exartly the same whether they be filled with: Swiss-made or American-made movements. The gradual curtailment of imports would permit the gradual increase of domestic production, and the number of cases sold by American case manufacturers would remain exactly the same. The Department of State's treatment of this question is wholly inadequate, based on lack of information as to the existing market conditions, and is wholly unresponsive to the needs of this American industry confronted by a foreign government monopoly competitor. This Swiss monopoly is now practically complete. The supreme power of America resides in Congress. Is it the intention of Congress to allow this industry to be destroyed and this monopoly completed by permitting its delegated power to the executive branch, to be exercised to the detriment of this war-essential American industry?