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Mr. CORTNEY. It is attached to the hearings of the House. The brochure attached to my statement is a survey of foreign-business men, while this is a brochure that our coinmercial policy committee prepared.
It was attached to the proceedings of the House.
Senator FLANDERS. Thank you. Of course this paragraph as read will go into the record.
Senator FREAR. Yes, sir.
Senator FLANDERS. I am assuming that the benefits to be that benefits will be derived in the long run by this country from this movement toward having each of the trading nations of the world doing that which it can do most efficiently. On that assumption some of our own industries would, in a sense, be marked up and others be marked down.
Some would be stimulated by their own efforts, and others unable to meet competition, would go down in their ability to meet world trade conditions.
Some industries would disappear from some countries—from our country—and other industries will increase. As to what disappears, and what increases, the decisions of the GATT will have a very important effect.
It seems to me a rather perilous thing to say to this industry:“We are going to make it more difficult for you to compete”—and mark it really for disappearance by removal of tariffs.
It is quite a responsibility to take. I hope you would agree that these things should be done only gradually.
Mr. CORTNEY. This is what the Trade Agreements Act has always provided for, and besides, Senator, may I respectfully draw to your attention that on our domestic market here, businesses disappear every day because of keen competition.
You would be shocked if I would tell you how often my own company is hurt by some new product which is brought out by competitors.
Now should I go to the Government and complain about it?
Senator, I share the conviction that either we are free men and responsible for our acts or we stop being free men.
It is as simple as that.
Senator FLANDERS. In this hearing, the previous witness and I had a discussion as to the effect of internal competition in the United States in the textile industries going from New England to the South. We suffered from that, but we accepted it.
Now it seems to me the conditions are a little bit more serious in world trade and particularly so far as the smaller businesses are concerned.
I have used as a type, a very small business, it is the business of making spring clothes pins, and I am known to the Tariff Commission and to the President's economic advisers as a man who appears on behalf of the makers of spring clothes pins in the United States.
Now it is a fact that we have two factories of that industry in my State, but I am more concerned about the principles involved.
It has seemed to me that to carry out in full force the doctrine of the advantages of differential costs as between nations and industries, that the burden of giving up the fight will have to fall in too great
a degree on small industries, of which I use the spring clothes pin as the type.
It is the big industries, with widely varied products which will best adapt themselves to changes in the tariffs and increases in competition.
I do not like to see that added to the present handicaps of small business, I do not like to see that added to it, because I have a very strong sympathetic feeling for the small town and the small business as a way of life.
I do not like to see that way of life disappear, and I very much fear that it will tend to disappear more rapidly than big business disappears, as we reduce these tariffs on the products of small industries.
I am glad of the peril point and I am glad of the escape clause. It preserves something that is a way of life which I would not want to see disappear.
Mr. CORTNEY. Senator, I am not aware of any industry which matters to this country, which has disappeared because of the Reciprocal Trade Agreements Act.
I am not aware of any.
And, secondly, Senator, may I also respectfully draw your attention to the following fact: When we talk about these matters, we see the obvious thing, but we do not see the facts which are not apparent.
We see whoever claims that he has been injured by imports, but we do not see those who have been hurt because we do not export. In fact, it strikes me that there are so many more people involved and interested in exports than there are in imports, and yet those who make the biggest noise are those who claim to be injured by imports and not those who are engaged in exports.
It is a great puzzle to me. There are certainly 442 million American people involved in the export trade one way or the other and they should really clamor for the reciprocal trade agreement.
Instead of that, we hear chiefly noise from people who are hurt, who are supposed to be hurt by imports.
Be what may, the United States council has accepted the position that in certain cases the escape clause is good so that I am not going to defend my own convictions against those whom I am representing, namely, the trustees of the United States council. I have to abide by their position.
Senator FLANDERS. Well, Mr. Chairman, I will be very brief for the remainder.
I just want to say that I have some intimate knowledge of 1 area, which is my own State, and of 1 industry, which is the industry in which I made my living for 50 years, lacking 2 months, when I came here to the Senate.
The State is Vermont. The industry-
The company with which I was connected before I came here, had agencies and branch offices in Europe and sold machinery as far away as what we now call Indonesia, before the turn of the century.
I see that industry less and less able to export. It is compelledand I do not think it is necessarily a bad thing--more and more to
establish branch plants abroad in order to be able to compete for foreign business.
Now that is a tendency, and I just call attention to that as something that is happening. It seems to me pertinent to this subject we are discussing.
My other field of knowledge is my own State, and I see various local industries making heavy weather of it, not merely the clothespin industry, but the textile industries, and the plywood industries, due to foreign competition. I am not willing to think of these particular small industries impersonally, statistically, objectively.
I just cannot do it, particularly since it seems to me to represent, as I said, a way of life which I would not like to see lost.
That is one of my difficulties in dealing with this whole subject.
Mr. CORTNEY. Senator, I appreciate your sentiments; they are quite natural and they do you honor.
But what would these small industries do if some new devices were discovered, and that happens every day?
Take for example the famous zipper which our ladies are wearing now
Senator FLANDERS. We do not have any button factories in Vermont.
Mr. CORTNEY. You see, but some States have button factories. No one likes to be hurt in his daily life.
I do not like it when I am hurt by my competitors.
I do not like it when I am hurt by the $64,000 program on TV, and so forth and so on, and you would be interested that when you speak to Europeans they will tell you the following thing “We cannot compete with the United States."
You are aware that we are exporting nearly $9 billion of finished goods with a high labor content and importing only about $2 billion.
These are the figures for 1957.
Now the Europeans tell me, How can we compete with the American industries? You have got a very big market, mass production, mass consumption, low interest rates on capital, an abundance of sayings and capital, cheap fuel and energy, and all kinds of advantages which we have not got and therefore how can we compete with you?
Senator, my conviction, reached during a long life is that we ought to erect a statue to the price mechanism. This is the great master and the protector of our liberty.
We can always interfere with the price mechanism but we shall interfere only at the risk of our freedom.
Senator FLANDERS. Nevertheless, the things in which we are strongest are now having heavy going. It is not so easy for the automobile, it is not so easy for other mass-produced machinery to meet European competition as it used to be.
The expansion is in a considerable measure taking place abroad instead of here. I think we have got to look at those things. So I feel in a very friendly frame of mind toward the peril point and the escape clause.
Mr. CORTNEY. Senator, you raised the issue of the automobile industry and I cannot resist the temptation to make the following remark
Senator FLANDERS. I can make the same remarks you are going to make, but you make them.
I think I might find you in agreement. Mr. CORTNEY. I find it abnormal and not good for our own sake and very detrimental to the rest of the world, that one year we should be producing 712 million automobiles and the next year we should not know whether we can produce 4 million automobiles.
It is simply due to a lack of restraint and unless we put some wisdom the mechanagement of our home strah in the management of our domestic affairs we shall be in trouble and the rest of the world will be in trouble together with us, Senator.
Senator FLANDERS. On the automobile, let me say that I believe the industry has made its own difficulties. Mr. ČORTNEY. That is right. Senator FLANDERS. You and I agree on that, don't we?
Mr. CORTNEY. That is right, Senator, that is exactly what I wanted to say.
Senator FLANDERS. The fact is however that it is going to be difficult to compete under sensible conditions with our wage rates and with the extension of our productive methods abroad by the same companies who are making automobiles here. Ford, General Motors, and others have their factories abroad and that is the tendency. Just what the end will be, I don't know.
But, I still am grateful for the escape clause and the peril point. You and I will agree to disagree on that.
Mr. CORTNEY. May I tell you, Sonator, I began my business career by importing into this country steel back in 1924?
Senator FLANDERS. In what? Mr. CORTNEY. In the United States, to import into the United States, steel.
Senator FLANDERS. Yes.
Mr. CORTNEY. Now it took me about a year of investigation of the market and I spent lots of money for—or what was lots of money for me at that time—to know how to import here, to whom should I sell, and how should I sell.
If there had been any escape clause at that time I would not have done it, and I know many people who have benefited from the imports I have brought into the United States. I could deliver a speech for 1 hour on this subject.
Senator FREAR. Let's limit that a little bit this morning, sir. [Laughter.]
Senator Carlson ?
Senator FREAR. As you recognize, we do not like to limit the time of our witnesses, Mr. Cortney, but we do have a long list and we try to be courteous to all of them and I want to say to youMr. CORTNEY. Yes, sir.
Senator FREAR. To you a personal message, that the company of which you are president has an establishment in my hometown and we are very proud of it. Mr. CORTNEY. Thank you, Mr. Chairman.
Senator FLANDERS. May I apologize to the succeeding witnesses for the length of time that I have taken?
Senator FREAR. I am sure they will accept it, Senator.
I understand Mr. Trescher has relinquished his time temporarily to Mr. Charles H. Percy, Committee for a National Trade Policy, because of your urgent departure time. STATEMENT OF CHARLES H. PERCY, PRESIDENT, BELL & HOWELL
CO., CHICAGO, ILL., REPRESENTING THE COMMITTEE FOR A NATIONAL TRADE POLICY, INC.
Mr. PERCY. Mr. Chairman, I am appearing this morning on behalf of the Committee on National Trade Policy.
Would it be possible for me to submit this testimony in writing and use the few minutes that we have to just talk from my own experience and present practical examples of some of the problems we are facing in foreign competition and possible solutions for them. Also to report to you on the significance of two meetings I have attended this month?
The first one was in Europe early this month.
Senator LONG. May I ask, Mr. Chairman, that this statement be incorporated in the record so Mr. Percy may comment from it?
Mr. PERCY. Thank you.
Senator FREAR. Without objection, the statement of the witness will be made a part of the record.
Mr. PERCY. The reasons that I feel that it might be more useful to report directly to you on these two meetings are their pertinence and the fact that the discussions embody most of the principles that have been talked about in this committee.
The first was a meeting in Europe early this month with the representatives, top industrialists, of 10 of the Atlantic Community countries, the American delegation being headed by Mr. David Rockefeller, and the European delegation by Dr. Fritz Berg, who is the chairman of the Council of European Industrial Federations.
The second meeting was early this week, 2 days ago, with 13 top Russian industrialists. I think it might be interesting to tell you of my observations made over a period of a day and a quarter of intensive questioning on both sides.
Senator FREAR. Where was that meeting? Senator FLANDERS. Who did you say these industrialists were? Mr. PERCY. These were 13 Russian industrialists who are on exchange visits, and Bell & Howell was 1 of 6 companies that the State Department asked to participate so as to enable industrialists from this country to go to Russia and see the counterpart type of plants over there.
The statement that I am submitting in writing this morning is made on behalf of the Committee for National Trade Policy. This committee has 29 directors and they represent the heads of such companies as National Cash Register, General Mills, Gillette Co., Jack McCloy, the chairman of the Chase Manhattan Bank; Tom Watson, president IBM; Ralph F. Straus, director of R. H. Macy.
This is a committee of people interested in expanding the trade of this country and they represent a cross section of agriculture, industry, labor and 126 national organizations who believe in this expanded trade policy.
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