Senator DOUGLAS. Yes.

Mr. MACK. It would be a higher price.
Senator DOUGLAS. It would be a higher price.

Don't you want the tariff raised?

Mr. MACK. You might provide for certain suspension of tariffs. Senator DOUGLAS. But the higher tariff, raise in tariff would be a higher price, the next question is don't you want a higher tariff? Mr. MACK. Yes, sir.

Senator DOUGLAS. Then, since you want a higher tariff, and since a higher tariff means a higher price, you want a higher price. Mr. MACK. We want to

Senator DOUGLAS. The chain is complete.

Mr. MACK. We want to continue to be able to pay 52 percent of our earnings into the Treasury to make possible

Senator DOUGLAS. I see. In other words, the joy of paying taxes is what you want.

You want a higher price in order that you may have the pleasure of paying taxes. You are an extremely unselfish man.

Mr. MACK. These various programs cost money, and

Senator DOUGLAS. I see.

Mr. MACK (continuing). And when the product is made here in this country, 52 percent of the profits go into the Treasury.

Senator DOUGLAS. In other words, you want-you are not interested in the 48 percent that you will keep; you are merely interested in the 52

Mr. MACK. Oh, yes; we are very much interested in our minority share, the 48 percent we keep.

Senator DOUGLAS. I see.

Now we are getting down to cases, and it is nothing against you either, I may say, but you do want a higher price.

Mr. MACK. We believe strongly in the profit motive.

Senator DOUGLAS. If you have a higher price, who is going to pay for it?

Mr. MACK. We feel that an industry

Senator DOUGLAS. Just answer, please. If you get a higher price because of a higher tariff, who is going to pay the higher price? Mr. MACK. Whoever buys the article.

Senator DOUGLAS. Exactly.

Mr. MACK. I would like to say

Senator DOUGLAS. No; I want to finish that.

Mr. MACK. Any time you are interested only in the price, if you would reduce the price of any article, the person who buys it would get it cheaper.

Senator DOUGLAS. If you increase the price, then the consumer pays, the purchaser pays.

In other words, you think it is all right for the industry to be subsidized by the consumer, but not right for the industry to be subsidized by the taxpayer?

Mr. MACK. It would not be subsidized by the consumer because he would be paying only for the cost of production.

Senator DOUGLAS. Yes he would because of the higher price of the tariff.

Mr. MACK. But that reflects the cost of the production in the United States. That is, it would if the tariff were adequate.

Senator DOUGLAS. That is all, Mr. Chairman.

I want to thank my colleague, to say that he is always most courteous. Senator LONG. Have you noticed in your experience under subsidy programs that it is always a very determined, very conscientious group of Senators and Congressmen who are ready at all times to oppose any appropriations to carry forward a subsidy program on an annual basis?

Mr. MACK. I think I understood your question.

You mean so far as appropriations

Senator LONG. A subsidy requires an annual appropriation.
Mr. MACK. Yes.

Senator LONG. Have you ever noticed there is a unvarying number of Senators and Congressmen who oppose a subsidy appropriation when it is authorized?

Mr. MACK. Yes, sir.

Senator LONG. You realize then the industry can never be sure when it has a subsidy that the appropriation is going to make it good on an annual basis?

Mr. MACK. That is correct, sir.

Senator LONG. Each year you boys have a sword of Damocles hanging over your head. You don't know what will happen until Congress is going to act.

Senator KERR. You believe in the American system of free private enterprise?

Mr. MACK. Strongly, sir.

Senator KERR. Can it either operate or pay taxes without their making a profit?

Mr. MACK. No, sir.

Senator KERR. You don't know anybody trying to furnish the consumer with any product with their requirements on the basis that would eliminate profit for the one who provides them, do you? Mr. MACK. No, sir.

Senator KERR. You know

Mr. MACK. That was the point I was trying to develop with Senator Douglas.

Senator KERR. I know a lot of men that talk about their devotion to the consumers and I recognize it as being valid, and it has often occurred to me to wonder why they did not provide the consumers some of their requirements on a more fortuitous or economic basis and get into the posture of trying to implement their objectives of anybody being able to acquire something on which no profit was made by their own efforts rather than by their seeking to persuade or compel others to do that.

Did that thought ever occur to you?

Mr. MACK. Yes, sir.

Senator KERR. Ponder over it a little and someday when you have a little more time you and I can talk about it.

Mr. MACK. Well, we are convinced that no industry or even the United States Government can, for that matter, succeed indefinitely on any basis that is not economically sound.

Although we have almost $300 billion of debt, we do have good resources, however, when we get into this situation that other countries have been in that have tried these various socialistic governments there is not going to be anybody to bail us out.

Senator KERR. You mean if we weaken ourselves enough in our effort to bail others out we will be like the sympathetic fellow was about the drunk who said "If I can't get you out of the gutter I will get în it with you." [Laughter.]

The CHAIRMAN. Are there any further questions?

Senator MARTIN. Mr. Chairman.

The CHAIRMAN. Senator Martin.

Senator MARTIN. You are an expert on the tariff because you represent a very important industry and you are coming here desiring aid of the tariff.

At the turn of the century our country was pretty largely governed by a combination of individuals and corporations getting tariff advantage.

That is correct, is it not?

Mr. MACK. Yes, sir.

Senator MARTIN. From what you said I fel you are now afraid that we will come to a place where there will be a combination of those individuals and corporations and so forth that get subsidies from government, there will be a combination of those people and that will control our country.

Mr. MACK. Well, that is one of our very important concerns.

Another one is, we have not felt that there has been an impartial administration of the trade agreements program.

We felt that there has been a one-sided administration of it, and that if there had been an objective administration of the program this bill would have gone through without any throuble, because everyone is in favor of trade.

The nations that you trade with, you don't fight with.

Senator MARTIN. The ideal situation would be if we did not have any tariffs or subsidies of any kind, and then an industry that could not rest on its own feet would go out of business; that would really be the ideal thing so far as the consumer is concerned.

Mr. MACK. Well, if the consumer wanted a job I do not know whether it would be ideal.

Senator KERR. Don't you think that the consumers could find somebody here to hire them and then give them the opportunity to buy their production from other countries where labor is one-tenth of what they get, you don't think they would have any trouble finding anybody here to keep on hiring them?

Mr. MACK. You are getting into a rather involved situation, Senator. I would rather you answered that question. [Laughter.]

Senator MARTIN. After you had made the statement of the greatness of our country and then you admit that we are $300 billion in debt

Mr. MACK. I do not know the exact figure.

Senator Byrd, I am sure, can give it to you.

Senator MARTIN. If we took what Uncle Sam has bailed, as we call it, out in the country, it would be probably a way over because how many of these things he has guaranteed he is going to pay one of these days we cannot answer.

These things are all speculative.

Mr. MACK. There are so many interesting things about this that I think are not brought to light.

For instance in discussions of the balance of trade when it is stated that we export more than we import, you do not ever see tourist dollars in there.

American tourist dollars represent a tremendous amount of money. A lot of Americans go to Europe, even Japan, but there are not very many Japanese tourists over here and that has a great deal of effect, in my opinion, or should have on the balance of trade. Now back to the administration of the escape clause, and the program generally, we feel if there had been an objective administration there would not be need to ask Congress for the right to affirm a Tariff Commission recommendation over the objection of the President.

It would not be necessary, but unfortunately we think it is necessary. The CHAIRMAN. Thank you, Mr. Mack.

Senator CARLSON. Right on that point, is it not a face that the Tariff Commission divided three and three on their recommendations to the President and therefore he suspended any action on it?

Mr. MACK. All six commissioners, Senator, recommended an increase in the import duty on both lead and zinc.

Three commissioners recommended a higher duty than the other three, and three commissioners recommended the imposition of quotas. So there was a unanimous finding of injury by all six members of the Commission. The only disagreement was the amount.

Now, of course, the President could have resolved that and that would seem to be his function.

But to date the Administration, in lieu of taking action on that, has proposed a subsidy program.

Senator CARLSON. I just happen to have the hearings and Senator Anderson went into this very thoroughly with Secretary Dulles and I just happen to have it here.

You stated it correctly, the Commissioners all agreed there was injury in the industry but they did not agree as to how it should be corrected.

They divided three and three and I have a copy of the letter here that the President sent, and he said:

I am suspending my consideration of these recommendations at this time. That is the concluding sentence in the President's statement here and of course Senator Anderson stated that is quite often the situation, they divide three and three, which is a very frequent situation.

Mr. MACK. They all recommended an increase in import duty. Senator CARLSON. That is correct. There was a question as to how it should be divided.

Senator KERR. He said there was a recommendation for an increase in the import duty unanimously.

The CHAIRMAN. The division came on the question of the amount. Senator KERR. The division was on how much it should be raised. Mr. MACK. And there was the question also on quotas but they all agreed that there should be some increase in the import duty. Senator CARLSON. But they did not agree on amounts.

The CHAIRMAN. And the President has the authority to decide how much the increase should be.

Senator KERR. But he did not raise it any.

The CHAIRMAN. I understand that.

27629-58-pt. 2—31

Mr. MACK. Mr. Chairman, although I am happy to discuss this subject, I came in here primarily to talk about rolled zinc which are the products manufactured from the base metal, and our interest is that if the duties are raised on the base metal that ours be raised correspondingly.

The CHAIRMAN. Thank you, Mr. Mack.

The next witness is Mr. Gordon R. Connor.

I want to say, sir, you have made a clear and able statement.
Mr. MACK. Thank you, sir.

The CHAIRMAN. Mr. Gordon R. Connor is the next witness.

STATEMENT OF GORDON R. CONNOR, REPRESENTING AMERICAN HARDWOOD PLYWOOD MANUFACTURERS

The CHAIRMAN. The Chair has an extremely important engagement and has to leave and Senator Kerr will preside during my absence. I will read your statement carefully, but it is imperative that I keep this appointment.

Mr. CONNOR. Mr. Chairman and members of the committee, my name is Gordon R. Connor. I am vice president of the Connor Lumber and Land Co. of Wausau, Wis., and president of the Northern Hemlock and Hardwood Association.

I am a former president of the Timber Producers Association of Wisconsin and upper Michigan. I am appearing on behalf of myself and the Hardwood Plywood Manufacturers Committee, which represents the American hardwood plywood and veneer producers and their suppliers.

In the June 23, 1958, issue of Time magazine, there is an article praising the House of Representatives for its passage of H. R. 12591. In the business section of the same issue (p. 83) there is a paragraph entitled "Successful Invasion" which reports that in April foreign automobiles took a record 7 percent of the United States market.

West Germany's Volkswagens alone outsold Chrysler and Desoto and were more than double the sales of Edsel, Lincoln, and Studebaker.

Time's praise for the successful invasion of American markets made no mention of the unemployed in the Chrysler, Ford, and Studebaker plants throughout the United States.

The American hardwood-plywood industry is also the victim of what Time terms a successful invasion.

In 1951, at the request of Canada and the Benelux countries, the duty on plywood was reduced under GATT the maximum permitted by law. Under the most favored nations clause Japan was the principal beneficiary of the duty reduction.

Imports of hardwood plywood have increased 1,200 percent since 1951. The share of the American market supplied by American producers has dropped from 93 percent to 48 percent.

Imports now control the American hardwood-plywood market. Shipments of American producers declined 16 percent between 1955 and 1957 and the Department of Commerce reports that the first quarter of 1958 shows a decline over 1957 of another 16 percent, and I would just like to add that during this period of 1951-57 when the domestic production was decreasing, the consumption in the United States of hardwood plywood increased 700 million square feet or 89 percent.