Mr. POTTER. Well, sir, to me it is hearsay, and I did not see the export figures on that. I understand, however, that many of those products were made in Switzerland. Again I do not blame the Swiss for that. They had an outlet for their merchandise, but they had to sell it in exchange for coal and other things. It is unfortunate. perhaps, that it went to the German Army, but it did.

Mr. CURTIS. But it should be of concern to the United States Government when it is formulating a policy that may determine the life or death of our own jeweled-watch industry.

Mr. POTTER. Yes, I should think so.

Mr. CURTIS. What is this Swiss Chamber of Horology, Mr. Potter?

Mr. POTTER. Horology is right; the Horological Swiss Chamber. I would rather give the correct name to you, Mr. Curtis, but I do not have it, but we call it the Swiss Watch Chamber. I think, generally speaking, that the Swiss have an understanding of what the Swiss Watch Chamber is when you are over there talking to them about it. Mr. CURTIS. It is more than a trade association?

Mr. POTTER. Well, I would think it is a protective association.
Mr. CURTIS. Yes.

In reference to this war work that we have talked about, did Elgin and the other American watch companies confine themselves to Government work during the war years, or were you able to produce any watches during that time?

Mr. POTTER. There again I can only speak for the Elgin Watch Co. In June 1942 we were prohibited from the making of any further watches, and we were told outside of certain groups that were then in the higher-up stages of manufacture we were to leave all of the parts and the other assemblies in the plant as they were and not touch them.

The Elgin Co. did, in June of 1945, get some relief from WPB because they realized that we were not getting enough orders to keep our skilled people busy, and they gave us an opportunity to make some watches. They gave us a little brass so that we could keep those people busy. That was in July 1945.

Mr. CURTIS. In your opinion, when the State Department acquiesced in the Swiss refusal to sell watch machinery, was that consistent with their antimonopoly and antitrust and anticartel objectives of trade that they have announced?

Mr. POTTER. Mr. Curtis, I do not have to answer that question. Everybody knows that it is not.

Mr. CURTIS. And it was very evident that they did receive information and pass on it with reference to the refusal to sell this machinery? Mr. POTTER. NO. Let me say this, that the Department made the agreement. I was over there in July or August of 1946.

I wondered why certain machines were not being shipped, or the orders were not being taken for them, and we were told that there was in the making a new division of the watch alliance or association, we will call it, called Machor, which was a group of the watch-making machinery people who were going to get together and did get together and offered us a contract.

Mr. CURTIS. If my memory serves me correctly, when we were discussing the Swiss Trade Agreement Treaty a couple of years ago the

99616-47-pt. 2—43

State Department pointed out that one of the concessions the Swiss had made was to reduce the Swiss tariff on wheat coming from the United States.

I checked on that and found that while they had reduced the tariff there was a footnote wherein the Swiss reserved the right to impose a quota on the wheat.

That, of course, is something that does not pertain to you exactly, but I think it is something that is worth while mentioning in the committee.

I want to ask you one more thing: About how many employees are engaged in the American jeweled watch industry?

Mr. POTTER. We are about 8,000 at the present time, that is, in the jeweled watches only, including Hamilton, Elgin, and Waltham. Mr. CURTIS. And about how many are there in the Elgin Co.? Mr. POTTER. We have now 3,600 people, and we are short about 600 people at present.

Mr. CURTIS. And your plants, in addition to the one at Lincoln are at Elgin, Ill.

Mr. POTTER (interposing). And Aurora, Ill.

Mr. CURTIS. And at Aurora?

Mr. POTTER. Yes.

Mr. CURTIS. How many employees do you have in the Lincoln plant at the present time?

Mr. POTTER. We have about 900 employees there.

Mr. CURTIS. I think that is all, Mr. Chairman.

Mr. DINGELL. Mr. Potter, you come before the committee as spokesman for the watch industry as a whole, I take it?

Mr. POTTER. Yes, sir.

Mr. DINGELL. You are confining your case entirely to the problem as it affects the watch industry?

Mr. POTTER. I have tried to confine my case here entirely to the treatment that we received from the State Department in an attempt to get relief under the reciprocal trade treaties; yes, sir.

Mr. DINGELL. I am trying to elicit from you whether you are concerned solely and only with the problem of the watch industry? Mr. POTTER. That is right.

Mr. DINGELL. And that is what you are confining your remarks to? Mr. POTTER. Yes, sir.

Mr. DINGELL. I am glad you are limiting it to a certain specific industry, because Mr. Cenerazzo appeared here, and referred to what he thought were the mistakes in the trade agreement as a whole, and he used pretty strong language about it which did not sit well with me. My people in Michigan have repeatedly endorsed the Trade Agreements Act, and over 600 substantial manufacturers that export their products to the European countries have endorsed the Trade Agreements Act. They have never repudiated it. They endorsed it on two different occasions and they are of the same frame of mind today, so I do not like to have someone come in here representing the employees or at least some of the employees in the watch industry, either the jeweled or the nonjeweled watch industry, or call it what you want to-I do not like to have them come in here and tell me the whole thing is a fraud and a farce when my people in Michigan do not think so.

Mr. POTTER. Well, the General Motors Corp. has a plant in Switzerland.

Mr. DINGELL. Yes; they have, and in various other countries. So, if we define this and limit it to the watch industry we can go a little quicker and further and pursue this matter much more efficiently.

I will tell you frankly that I am disappointed in the fact, and I have said it in previous hearings, that announcements come over the radio announcing Benrus time and Bulova time.

Why do we not have Waltham time, and why do we not have Howard time and Hamilton time? We in America have wondered why they do not have. I have sometimes wondered whether the American manufacturers, to be perfectly brutally frank, were not just coasting along behind the protection of the tariff.

Mr. POTTER. I would like to make an answer to that.

Mr. DINGELL. Yes.

Mr. POTTER. We have not had enough money ourselves to give that money to advertising.

Mr. DINGELL. But I assumed, of course, that the growth of the imports over the years, about which complaint is made, was due to the fact that our manufacturers were not aggressively fighting for the home market. It was not always that way. The complaint is made about the relative dominance of the local market today?

Mr. POTTER. Yes, sir.

Mr. DINGELL. But it was not always that way, because in days gone by we never heard of Benrus and we never heard of Bulova Fifth Avenue watches, and we never heard anything about these other watches, and that was the time when those people started to advertise, and our people evidently did not advertise because I never saw their advertisements until recently.

Mr. POTTER. I think I can give you an answer to that. In coming to the smaller watch there was a small margin of profit in that and the protection was not sufficient to take care of advertising. The big watch, for instance, does not have the same amount of labor in it as the small ladies' wrist watch or as the men's wrist watch, and, consequently, you get a big labor cost, but not the same amount of protection that we do with the other watches.

Mr. DINGELL. Does not the cost of the average Swiss watch run about $3 to $4? I was corrected by Mr. Cenerazzo on that. He said that cost averaged between $3 to $5. Is not that the cost of the works and the movement rather than between $3 and $5?

Mr. POTTER. Today, I think you are perhaps right, about 20 francs. Mr. DINGELL. And on top of that you have the tariff. The tariff was reduced under the trade agreements from 83.5 percent, which was the tariff prior to 1936, and it was cut down to 63.5 percent. Is that correct?

Mr. POTTER. That is correct; but today the equivalent ad valorem protection is 24 percent.

Mr. DINGELL. And it is still 24 percent?

Mr. POTTER. It is now 24 percent, but it used to be 80 percent.

Mr. DINGELL. It is 63.5 percent actual protection, and you can calculate it in any way you want to, and call it what you want to, but in actual dollars it is 63.5 percent of the actual ad valorem value.

Mr. POTTER. No; today it is 24 percent of the ad valorem value. Mr. DINGELL. Of the ad valorem value?

Mr. POTTER. Yes, sir.

Mr. DINGELL. You mean there has been another cut made below the 63.5 percent?

Mr. POTTER. No, sir; I do not; but the value of the watches has gone up in the meantime, which is the same thing.

Mr. DINGELL. Let us talk about what it is on the record. It was 83.5 percent, and then it was cut under the trade agreements to 63.5 percent.

Mr. POTTER. And then, taking your own figure

Mr. DINGELL (interposing). Mr. Potter, I do not want any draggedout story

Mr. REED (interposing). You are not letting the witness answer the questions.

Mr. DINGELL. I am asking the questions as they are. It was 63.5 percent under the trade agreement, after having been 83.5 percent?

Mr. POTTER. Mr. Dingell, if you will kindly take the valuation as given to you by the Department of Commerce of $47,438,659, that is the value, the declared value of the merchandise that came in in 1945, and the duty thereon was $11,487,000. Now, what is the result; 24.22 percent.

Mr. DINGELL. That is your method of calculation; but I asked you a perfectly logical question, which was, Mr. Potter, that the original tariff was 83.5 percent under the tariff agreement, which was cut to 63.5 percent under trade agreement; is that correct?

Mr. POTTER. Substantially correct.

Mr. DINGELL. That is all I want to know.

Now, you can calculate it any way you want to in order to show where the damage comes to your industry.

Mr. POTTER. Yes; you are correct. At the time the trade agreements were made in 1936 that was true.

Mr. DINGELL. Now, that is not sufficient to protect your industry, you say, or you contend here, as I understand it.

Mr. POTTER. Yes, sir.

Mr. DINGELL. It is not sufficient to protect your industry against the inroads of the foreign jeweled watches now; is that correct?

Mr. POTTER. Yes, sir.

Mr. DINGELL. So, then, we put on a quota; for a while we put on a quota in addition to the tariff; is that correct?

Mr. POTTER. What do you mean by quota?

Mr. DINGELL. We restricted the importations to a certain number

of watches?

Mr. POTTER. No, sir; you did not restrict one thing. You asked the Swiss if they would kindly do something about a quota.

Mr. DINGELL. All right, we asked the Swiss to put on a quota. Now, your contention, of course, is that the Swiss have violated their quota agreement?

Mr. POTTER. No; I have not said that, sir.

Mr. DINGELL. But that is, nevertheless, your contention that they did not live up to their quota; is that it?

Mr.POTTER. I did not say that, sir.

Mr. DINGELL. What do you say, then, about the quota?

Mr. POTTER. I say this, that there were 9,654,000 watches that were brought into this country in the year 1946.

Mr. DINGELL. I thought I got it in your statement, on page 4, at the very top of the page, where you say, "Some 8,425,000 watches were directly imported into the country during 1946."?

Mr. POTTER. Yes.

Mr. DINGELL. And this was almost three-quarters of a million more than the agreed to export limitation?

Mr. POTTER. That is right.

Mr. DINGELL. Relative to the limitation under the quota?

Mr. POTTER. That does not say that the Swiss have broken their word on it. We say this exceeded the limitations.

Mr. DINGELL. In other words, they came in in excess of the limitation?

Mr. POTTER. That is right.

Mr. DINGELL. I refer to the limitation as a quota limitation. Was there not a quota limitation?

Mr. POTTER. I suppose you could use that word if you cared to, Mr. Dingell.

Mr. DINGELL. I am not trying to trip you at all, Mr. Potter.

Mr. POTTER. No, sir.

Mr. DINGELL. I am not trying to in any way.

Mr. POTTER. No, Mr. Dingell, but I think you and I view it a little differently.

Mr. DINGELL. I think the quota limitation, or the limitation, call it what you want to call it, was included under the Swiss-American watch agreement. You contended after the tariff failed to hold that we should put on a quota in addition, and now when the State Department under the tariff agreements voids the quota provision entirely, the watch industry, as I understand it, is contending for a limitation of quota. Am I correct in that deduction?

Mr. POTTER. I think we can say this, that from a quota standpoint it has proven unworkable, and the only relief that we have is to get back to adequate protection.

Mr. DINGELL. In other words, to a higher tariff?

Mr. POTTER. Yes, sir.

Mr. DINGELL. What would you consider ample tariff protection, Mr. Potter? Is the 83.5 percent sufficient, 83.5 ad valorem?

Mr. POTTER. Under the present agreement that is all we can get. We would like to get back to that now.

Mr. DINGELL. You would like to get back to the 83.5 percent tariff? Mr. POTTER. We would like to get it back now to what it was before the cut, and then we will try to take care of possibly new situations when the time comes with some suggestions.

Mr. HOLMES. Would the gentleman from Michigan yield?

Mr. DINGELL. Yes.

Mr. HOLMES. I think, for the sake of the record, there was some confusion in the earlier questioning in regard to tariff rates, as to whether they were specific or ad valorem, and I think that should be straightened out.

Mr. DINGELL. I think we finally came out to an understanding, that I was speaking of ad valorem, and Mr. Potter bases it on the relationship of the amount of tariff to the actual amount of duty paid.