Boats normally coming back light will now pick up bulk cargoes in Lake Ontario and move through to any port in a westerly direction on the chain of lakes for greatly reduced rates.

Two stone companies on the Canadian shore have come into the picture anticipating this boat movement (besides hoping for a tariff reduction).

One shown as (20) is at Picton, Ontario, and another at Port Colborne shown as (19). The Picton quarry was opened primarily for cement production and commerical stone is a byproduct material, and the Port Colborne company is being opened by a Canadian steamship company for back-haul purposes.

Now, to come back to the city of Cleveland stone situation.

Normally stone for road work is handled through dealers who have docks on the waterfront for reception of waterborne stone and plants located inland for reception of trucked, railed, or waterborne plus trucked stone.

These dealers either prepare this stone for delivery in ready-mix plants for road work structures or buildings, or batch it dry in trucks for easy handling in contractors' equipment.

Anticipating a large road program sponsored by the administration to give a spurt to the economy, these dealers would normally look for new cheap sources of aggregates.

As you may see by the aggregate map of the State of Ohio, there are many suitable sources to supply Cleveland. While all the nearby gravel and slag plants market in the Cleveland area by truck and rail, the two stone plants, Wagner & Sandusky Crushed Stone Co., at Sandusky, and the National Lime & Stone Co., of Findlay, ship most of the limestone into the Cleveland area by rail.

Waterborne stone for road work comes from the Inland Lime & Stone Co., the Michigan Limestone Co., with plants at Rogers City and Cedarville, and the Drummond Stone Co.

In the face of all this competition from land and water plants, men from the two Canadian plants have been actively soliciting business in the Cleveland area for the past year.

The Cleveland dealers know from previous experience that Canadian markets have been noted for dumping in the area when they have a surplus and pulling out when they have a good market elsewhere.

Considering the previous reputation of Canadian suppliers, dealers have given these representatives little encouragement. The net result is that a new dealer company is being formed to market Canadian stone.

Three stone companies supplying established Cleveland dealers by rail have recently succeeded in getting existing freight rates reduced from $1.71 to $1.51, July 1, in an effort to meet boat and Canadian competition. These freight rate decreases will be followed by decreased trucking rates.

Should this reduced rate prevent the stone companies from selling what they consider a normal supply of stone they will move south and west to invade the markets of other stone and gravel companies. One indirect result of Canadian competition would be to raise the base price of metallurgical limestone and have a long distance effect on the price of steel. Michigan Limestone, Presque Isle, Drummond Stone Co., and Inland Lime & Stone Co. produce stone primarily for the steel industry.

While I am acting as an individual in this hearing, I normally represent a company that seriously considered a capital expenditure of $2 million to build a plant at Marblehead, Ohio, to serve Cleveland as well as other ports on the lakes with waterborne stone.

This plant was considered to be economically feasible and the expenditure wise at this time partially because of the United States Government's present roadbuilding program.

Cleveland dealers prior to the arrival of Canadian representatives considered committing themselves to the Chemstone Corp. to 5-year contracts which were not considered seriously when the Canadian competition appeared. While this was not the only consideration in turning down the expenditure for the plant, I will say it was not the least.

There is far from a shortage of aggregates or competition for price of aggregates in the Cleveland area for the recently enlarged public works program. Bodies politic which award construction contracts for roads and public works in the Cleveland area are getting real value received when stone is bought.

Canadian aggregates coming in by boats, some of which are nonunion that depend on backhauls and stone produced by cheap labor, in the last have been classed as "dumpers" as evidenced by the independent action taken by Cleveland dealers.

Dumpers have so far helped to cause a lowered freight rate foisted on the rail industry which seems far from healthy. Truckers following suit in lowering rates should feel less interested in buying new trucks. A $2 million stone plant at Marblehead would employ about 100 men steadily and in the building would take steel, rubber, motors, besides employing engineers and men during construction.

I have outlined in briefest detail two specific and concrete instances you can get your teeth into where the new Canadian competition has helped disturb this industry.

I could go on at great length to show possibilities of how this foreign invasion will snowball disturbances of competition throughout the land plants of the State. The three land based stone plants serving Cleveland by rail will find a market for their stone as Cleveland's demand is reduced.

This will be at the expense of other stone producers throughout the State. The four water-based stone plants will do likewise. Gravel and slag producers (acceptable aggregates replacing stone) will do the same. Bear in mind, Cleveland is only one city in the State of Ohio. Consider, if you will, the cumulative effect in the all-port cities of New York, Pennsylvania, Michigan, Indiana, and Wisconsin.

At the risk of being repetitive, the tariff on limestone should be placed back at the old rate of $1 a net ton instead of being reduced from the existing 25-cent to 18-cent rate because of the changed transportation situation.

An estimated 20 plants now supply a typical area like Cleveland with much more stone or aggregates than is required for an enlarged public works program at prices which are highly competitive.

The public is and will continue to get a real bargain in construction stone in Cleveland because of the large number of producers and the tonnage they produce.

Normally when a large highway or public works program is underway the money spent for this construction moves rapidly from a prime contractor to subcontractors, roadbuilding machinery manufacturers, truckers, railroads, boat companies, and materialmen.

Consider, if you will, the reverse of this happening in the city of Cleveland, being magnified by a decreased tariff in a small segment of the material industry.

First, the railroads have already made a rate reduction giving them less revenue. Immediately truckers will lower their rates to meet the rail competition, to be followed by boat rate reductions. Established dealers in Cleveland will tighten up on purchases of equipment because of a new dealer.

This new dealer will have a temporary advantage in price of his material and will buy equipment, but if, as we suppose, the foreign people are merely dumping, these equipment purchases could be a boomerang to the manufacturers.

Should my company see a more favorable sales climate, it is reasonable to suppose they will look with more favor on a plant construction program already described.

Cleveland is one American city of about 25 on the Great Lakes. I personally believe in foreign trade, but I sincerely feel the country's best interests are served in this very minute part of our economy by having protection.

I recognize, sir, that we are a very small part of the industry as a whole, but we would like to add our voice to those of many other people in the hopes that the legislative branch of the Government will not bargain away the rights to regulate the economy in favor of the State Department.

The CHAIRMAN. Thank you very much.

Mr. BEUTHEL. I want to thank you, sir.

(The document referred to is filed with the committee.)

The CHAIRMAN. The next witness is Mr. Isadore Paisner.

Mr. PAISNER. Thank you.

STATEMENT OF ISADORE PAISNER, PRESIDENT, MANUFACTURING JEWELERS AND SILVERSMITHS OF AMERICA

Mr. PAISNER. Mr. Chairman and members of the committee, I wish to thank you for the privilege of appearing before you today.

My name is Isadore Paisner. I appear today as president of the Manufacturing Jewelers & Silversmiths of America, Inc. I am also an officer of Brier Manufacturing Co., a manufacturer of syndicate store jewelry located in Providence, R. Í.

The Manufacturing Jewelers & Silversmiths of America is a trade association representing substantially all of the low and mediumpriced jewelry manufacturing industry countrywide and has for 55 years carried on a wide variety of trade association activities for the benefit of the industry.

Ours is a typical small business, consumer goods industry which has been hard hit by an ever growing flow of foreign imports produced by workers paid pitifully low wages. Just before the war, these imports totaled about $12 million per year; immediately thereafter, this figure more than tripled the last year, the figure of im

ports had grown to the staggering amount of $17 million or about 12 times the prewar rate.

This phenomenal growth matches in timing and proportion the resurgence of the Japanese and West German jewelry industry and conicides with the reductions made in United States jewelry tariffs, most of which are now at about half of the 1945 rates.

Approximately 80 percent of the total jewelry imports in 1957 originated from these 2 countries, that is Japan and West Germany, with the Japanese accounting for approximately 60 percent of the total.

Almost invariably, the competition provided by these imports is of one kind: price competition based entirely on low wages.

The imports are styled like ours; in fact, many are direct copies. The quality is substantially comparable. The price, however, landed and duty paid from Germany is 50 to 60 percent of the price of similar domestic products, and from Japan, from 30 to 50 percent of such prices.

It has been suggested that the answer of our problem lies in mechanization and increased efficiency of production.

I can assure you, gentlemen, that where it is at all possible to do so, the domestic jewelry industry has taken advantage of new technological developments and has increased its efficiency.

We are drastically limited, however, by the high styled nature of our product which effectively limits mechanization to a very small percentage of our production processes. The Randall report recognized the limitations of this type of industry, which it described as the handcraft type industry where machinery is a relatively minor element and where quite obviously, with labor the major cost, imports can be not merely serious but destructive to the domestic industry without a tariff.

Thus limited by the nature of our product, we are compelled to resort to a very large percentage of handwork, placing us in virtually direct competition with low foreign wage costs. It is not difficult to see the impossible position in which we find ourselves when our average rate of pay, approximately $1.69 per hour, is contrasted with German rates of approximately 45 cents per hour and Japanese rates an incredible 15 cents per hour.

Because of the seasonal demand for our products, the industry must frequently work on an overtime basis. The premiums provided by our laws then substantially increase the already large differential between wage rates. The fringe benefits paid to our American workers in the jewelry industry are unheard of in the countries with which we are competing.

We have been assured over the past 10 years that we need not fear the reciprocal trade agreements program since Congress had provided an escape clause which would save us from such destructive competition.

We have no doubt that Congress intended that the inclusion of the escape clause would protect and preserve the jobs of our thousands of employees and the economies of the communities, such as Providence, R. I., and Attleboro, Mass., where a good deal of this industry is concentrated.

We are certain that the Congress fully expected that administration of the program would carry out the spirit of the remarks made by the

Secretary of Commerce as late as February of this year before the House Ways and Means Committee when he said:

I want to stress equally my belief that when we work for increased trade, we have a clear duty to see to it that we do not grant tariff reductions which cause serious injury to individual segments of American business.

Gentlemen, the safeguards for domestic industry which you enacted into law have been thoroughly emasculated in practice. You are aware of the escape-clause record.

Let me be specific about segments of our industry.

In 1954 we reported the following to the Tariff Commission:

The 1947 census reports that the domestic imitation pearl business was about $13,272,000-some 3,000 employees.

Japanese pearl imports at that time amounted to about $200,000, or landed, constituted about 2 percent of the total market of pearls. We estimate that *** the Japanese are now sending in about $3.5 million worth of pearls, landed value, which constitutes over 60 percent of the domestic market *** measured on a piece rather than a dollar basis, it would constitute over 85 percent of the domestic industry.

Employment is now less than 500 persons. At least a dozen plants are out of business.

Today, what I just read to you is from 1954-today even fewer are employed and these in specialty fields.

Pearl imports manufactured by 15-cents-an-hour Japanese labor have cost nearly 3,000 American jobs.

The 1954 census reports that the watch-bracelet business was about $31.7 million-some 7,000 employees. Imports constituted about 2 percent of the total watch-band market and about 6 percent of the lower price band market.

In 1957 domestic production dropped to $24 million and imports represented about 6 percent of the total market and 40 percent of the lower priced market.

Approximately 20 of the 40 lower priced band manufacturers are out of business. The remainder are suffering. Band imports cost 3,500 American jobs to 15-cent-an-hour Japanese workers in the pas 4 years.

In 1953 domestic production of stainless steel and silver plated flatware was about 23 million dozen pieces; imports represented 8 percent of the domestic market; in 1956, 36 percent, in the first 4 months of 1957, 40 percent. By the third quarter of 1957 imports rose to 85 percent of the United States industry's sales. Another 2,000 American jobs lost to 15-cent-per-hour Japanese workers.

During this period representatives of my association, as well as individual product groups within the industry, have availed themselves of every opportunity to present their cause to the Government.

We presented our arguments before this committee and the committee on Ways and Means in 1955. We are no strangers to the perilpoint hearings, the Tariff Commission and Committee for Reciprocity Information.

Several industry segments have petitioned for relief under the escape-clause proceedings. Others have watched these proceedings. carefully and after seeing the results obtained and on the advice of our own Congressmen, determined that they were little more than a costly waste of time; we became convinced that there was really no serious thought on the part of Government that our free-trade goals should be modified; in spite of Secretary Weeks' statement.