Senator WILLIAMS. What is the average investment, would you say, in each of those plants, that is including the plant and the machinery represented? Mr. CONNOR. Plant and machinery? It is pretty hard to average something of that kind but I would say at least a half million dollars. Senator WILLIAMS. Is that plant or the machinery of any use whatever if the industry is not put in a position where it can resume operations? Can it be converted for any other purposes? Senator WILLIAMS. Yes. Mr. CONNOR. No, sir. None that I know of. Senator WILLIAMS. And it is of no use at all, unless it can be producing the production for which it was intended? Mr. CONNOR. I would say at least 90 percent of it is machinery that is especially made for the production of plywood and veneer. Senator WILLIAMS. That was my understanding. Mr. CONNOR. Yes. Senator WILLIAMS. There is no further question. Senator KERR. The committee will recess until 9: 45 in the morning. (By direction of the chairman, the following is made a part of the record :) Senator HARRY F. BYRD, THE RISDON MANUFACTURING CO., Chairman, Senate Finance Committee, United States Senate, Washington, D. C. DEAR SENATOR BYRD: For the future well-being of our country, and as an immediate check to growing unemployment, is is essential that our international trade policies be restored to the determination of the Congress. The present condition, in which the President and the State Department are making and administering trade agreements without the consent of those elected to protect our interests, is not a democratic procedure. Many of my friends in Connecticut industries hope that hearings now being conducted will result in a complete overhaul of our trade policies to restore their determination to Congress. They joint me in urging your support of measures which will protect our home enterprise and our economy from the onsulaught of importations which are practically unlimited and unchecked. Senator Strom Thurmond has introduced an amendment to H. R. 12591, the Mills bill, recently passed by the House. Senator Thurmond's amendment deserves the support of your committee to restore congressional control to our international trade negotiations, and to assure protection to American industry, not only in the present recession, but for the strength of our country at all times. MY DEAR SENATOR BYRD: Your honorable committee has before it at the moment, H. R. 12591, the so-called Mills bill which has passed the House and on which your committee is holding hearings. The Honorable Strom Thurmond has introduced an amendment to this bill which, in our opinion, corrects some of the faults of the bill as it passed the House. It is our belief that if the Mills bill is passed by the Senate in its present forin it will do great damage to the textile industry, South and North, as well as to many other industries which are vulnerable to competition from foreign lands where living and wage standards are far below ours and approach the level of slave labor as compared to our standards. Further, the Mills bill would continue present policies as regards international trade over into another Congress and another administration, thereby tying the hands of a Congress yet to be convened and a President yet to be elected. It would seem to us that continuation of the Trade Agreements Act for 2 years, as provided in Senator Thurmond's amendment, and the return to Congress of the right to determine whether or not the recommendations of the Tariff Commission should prevail, would be in the best interests of our great country and the recession-hit industries which furnish so many thousands of jobs to Americans. We are sending copies of this letter to Senators Green and Pastore and also to Senator Thurmond, the author of the amendment. Respectfully yours, Hon. HARRY F. BYRD, United States Senate, Washington, D. C. EMERSON M. BULLARD, President. MONSANTO CHEMICAL Co., Washington, D. C., June 27, 1958. DEAR SENATOR BYRD: I am a native as well as a resident of the State of Virginia and as one of your constituents am writing to urge that you give consideration to Senator Thurmond's amendment to H. R. 12591. This amendment would as you know, (1) cut down the 5-year period to 2 years, and (2) restore congressional authority which would mean a Tariff Commission recommendation would become effective unless the President obtained a majority of both Houses of Congress in support of his proposed veto. There are no arguments, in my opinion, that would justify an extension of the Trade Agreements Act for 5 years, together with a possible reduction of 25 percent in tariffs on any given product. With the unsettled conditions both at home and abroad, it seems to me it would be the part of wisdom to extend the act for only 2 years and at that time make the necessary decision for a possible further extension. The restoration of congressional authority would still permit the President to explain to both Houses of Congress the necessity for supporting his veto. This should take care of any situation in which the President felt there were overriding reasons for Congress to follow his leadership. Your consideration of Senator Thurmond's amendment would be appreciated. Respectfully yours, EDWARD W. GAMBLE, Jr. DETREX CHEMICAL INDUSTRIES, INC., Re: Our approval of Thurmond amendment to H. R. 12591. Hon. HARRY F. BYRD, Senate Finance Committee, Senate Office Building, Washington, D. C. DEAR SENATOR BYRD: It is our understanding the Finance Committee is conducting hearings on the above two proposals. We feel the adoption of the Thurmond amendment will apply some commonsense control to this whole foreign trade issue and will provide to a degree, some safeguard for both our domestic industry and labor. We are opposed to H. R. 12591 (House passed) Mills bill in its present form for this would continue to give the President authority, under which we have been unable to obtain necessary relief recently, and will further continue to injure segments of our industry already hurt by heavy low-cost imports. At present, we are being very adversely affected in the manufacture and sale of our chemical products, particularly, trichlorethylene. Low-cost imports into the United States of this product is rapidly increasing, shipments thereof in 1957 increased 65 percent over 1956-reaching an all-time high in 1957 of 36 million pounds imported. The inevitable results if the Mills bill is enacted, will lead to the rapid erosion of the manufacture of this chemical in the United States. This product is of vital importance to the United States industry and to the economic strength of the United States, for 100 percent of this product was on rigid Government allocation during World War II. We are unable to compete with these low-cost imports because of the many controls imposed upon our domestic industry which are the very essence of our economy, such as: Minimum wage laws; obligatory collective bargaining; Federal Trade Commission regulations; higher costs of raw materials, etc. We would appreciate whatever assistance you may be able to give for the adoption of the Thurmond amendment and the defeat of H. R. 12591 in its present form. Yours very truly, Hon. HARRY F. BYRD, Chairman, Senate Finance Committee, Senate Office Building, Washington, D. C. E. W. ALLISON, Secretary. ATLANTIC STEEL Co., Atlanta, Ga., June 26, 1958. DEAR SENATOR BYRD: I write as chairman of the board of Atlantic Steel Co. of Atlanta, Ga., and I appreciate very much the invitation to appear before your committee to testify on the reciprocal trades bill. In reading your telegram and in discussing the subject with Senator Talmadge, I realize that your committee is heavily pressed for time. After due consideration, I feel that the interest of our company and its employees will be adequately served by this letter. Hence, I will not appear in person, but do request you to consider this letter and make it part of these hearings. We are unalterably opposed to the bill as passed by the House. A major part of our business is in the manufacture and sale of wire and wire products, including items such as barbed wire, fence, nails, reinforcing bars, etc. Rapidly we are being forced out of all four of these large segments of our businessdue largely to the competition of similar foreign items in our markets. On March 12, 1958, I presented our case in a statement before the House Ways and Means Committee when this legislation was before it. I am enclosing a copy of that statement because conditions have not changed, and I sincerely believe that this will prove of interest to your committee. Will you please consider having it become part of your hearings? Most sincerely, R. S. LYNCH, Chairman. My name is Robert S. Lynch. I am chairman of the board of Atlantic Steel Co., Atlanta, Ga. We are seriously injured by foreign imports. Our stockholders are suffering the company having skipped its dividend for the first time since the depth of the depression. Our employees are suffering-one-third of them having been laid off from work. Our predicament, and that of many in steel and other industries, is caused by deliberate action of Congress through its trade agreements legislation. Hence, we must look to Congress for relief. Atlantic Steel makes a variety of small steel and wire products. We are comparatively small business. Our plant is located in the heart of an area of great growth, served by us since 1901. After World War II we analyzed regional prospects for steel and determined that, with major improvements, we could compete with American producers. So, we recently spent $15 million to modernize our plant and equipment, reasonably expecting to share in these markets. To our complete shock, however, we find ourselves rapidly being closed out of them, even though our prices fully meet American competition. They are now being taken, consistently and increasingly each year, by foreign producers. Foreign imports were no major problem to us until about 1954, but since then our experience, coupled with knowledge of what imports have done to industries stricken earlier than we, gives cause for much justifiable alarm. The extent is shown by the following examples: In 1957 our sales of fence were 72 percent below our fence sales in 1953, and sales of nails had dropped 30 percent. Our 1957 sales of barbed wire were 84 percent below those in 1953, and 1957 sales of reinforcing bars were 40 percent below 1953. However, during this period imports of these items into our area rose as fast as the speed of our losses. Thus, in 1957 imports of foreign fence were 966 percent higher than in 1953, and imported nails increased by 340 percent. Barbed wire imports were up 412 percent in 1957, and reinforcing bars were 153 percent more than 1953. These figures provide an accurate, not theoretical, comparison of an actual situation, showing our actual losses and the import figures showing who have benefited directly by our losses. Those who urge for free trade will argue that import tonnage of certain steels in 1957 was no higher than in 1956 and hence the spiraling trend has leveled off. This is far from the case. In 1957, and thus far in 1958, the entire American market for steel is down. Our plants now operate at only 53 percent of capacity. Sales of domestic steel are down tremendously, while steel imports have not diminished. On the contrary, many imported items have increased substantially, despite reduced American demand for steel. Atlantic Steel is not the only steel company in the foreign-import vise. In fact, almost the only companies free from it are those who markets have not yet been reached by the foreign producers, or because they make items which are not yet being sent over here in large quantities. But their time will come, too. Unless this trend of steel imports is sharply turned by Congress, it is only a matter of time before every American producer, regardless of where located, will suffer. The problem becomes more acute, and more permanent, each year. By paying their labor only 10 percent to 25 percent as much as we pay ours, and with lower cost raw materials, foreign producers make topquality steel at a fraction of our cost. Because of much lower costs they can always have lower prices. And, since the lowest price gets the order for similar steel, foreign competitors are sure to take the American markets, as long as they are permitted to do so. The situation deserves your close attention. Let us see how it is developing. Serious injury from steel imports was first felt in the Southeastern States. The foreign producers have been both intelligent and subtle in their approach, and in timing their entry into American markets. They have moved into carefully chosen areas, so as to create the least awareness and reaction from the steel industry. But wherever they have come, they have taken what they wanted. From the south Atlantic ports, foreign steel has spread until it is now a serious and growing problem in the areas served by the gulf ports, the north Atlantic ports and those up the Mississippi. Also imports of steel are up 88 percent in 4 years on the west coast. The problem will soon be nationwide, particularly when the St. Lawrence seaway is open. Then Pittsburgh, Cleveland, Chicago, Detroit, and other industrial centers affected by the seaway will feel what others of us feel now. Not only will this problem cover the entire Nation but it will also cover most of the products in most segments of the industry. In these first years, the foreign producers have used their vast cost advantage to send smaller steel products. The speed of growth and the trend are clearly shown by the percentages as to specific products referred to above. However, they are now increasing their shipments of large items; shapes, plates, pipe, etc. And by underpricing, they will take those markets, too. Thus, in 1957 the amount of plate imported was about 1,200 percent higher than in 1954; structural shapes were up 58 percent, pilings up 1,600 percent, and pipe and tubing were up 255 percent in 1957 as compared with imports in 1954. True, these imports do not yet amount to a vast part of the whole market for these large items, but the trend as to them is following the pattern of the smaller items. It is not a question of "if" but "when." Since a mill to make large items costs many times more than a mill for small items, limitation of capital has chiefly limited the scope and speed of imports of large steel items. However, the immense profits from sales of small items over here, when coupled with their government subsidies and with little or no income tax, will provide the foreign producers the capital for the large items. Before long, major phases of the steel industry, just as a growing number of other important industries, will be fighting for survival. In considering the motivation of these imports, note that many imported items do not come by chance, nor are they standard products distributed in the course of normal business. They have been designed and manufactured solely in order that they can enter and take our markets. For an example in our industry, barbed wire is an item scarcely used outside the United States-but foreign producers have recently begun to make it and send it here in growing quanti ties, so that about two-thirds of the American barbed wire market is already in their hands. Foreign competitors treat many items in many industries similarly. The general trend is bound to deter further expansion of American steel capacity. The immense capital for new capacity cannot be justified without 10-to-20year prospects of good demand and fair prices for domestic steel. Though the long-range outlook for American steel needs is bright, confidence in prices is lacking-largely because of import trends. Free trade proponents will argue expansion is continuing, based on the fact that the industry has plans to spend $1 billion this year. Do not be misled. The expansion in 1957 was almost twice this amount, and most of 1958 spending will be for repairs and replacements— little for new plant. Unless Congress turns the tide, there will be little more domestic expansion, and much of the steel for our future industrial growth will come from foreign sources. Others will argue that Congress should not yet concern itself with imported steel (1) because some large mills have made good profits in recent years, and (2) because our export tonnage is still much greater than import tonnage. They will provide statistics showing many man-hours of work and much dollarvolume of income which come to us from steel exports, concluding that by limiting imports in order to fairly protect domestic industries, the direct result will be to lay off the workers who produce exports and to cut off our income. Such arguments ignore the real point. It is of much national importance that our steel mills prosper, because when they cease to do so they will either retrench or liquidate. Or, maybe the mills will be moved overseas where great profits are virtually assured them. It is also of much national importance that we always have a sizable surplus of exported steel over imports. Our steel industry must at all times be unequally strong, and to be so the United States must be the steel suppliers for as much of the world as possible. The more of the world which needs our steel, the stronger our mills and our Nation will be. In this connection, let us realize that our steel exports are large now only because overseas buyers today have no choice other than to buy various items from us at prices determined largely by our high wages. And let us also face the certain fact that the minute that foreign mills can supply the items which we now export, American industry will lose those overseas buyers and will cease to export, because the foreign prices are sure to be much lower than ours. The more mills we help build for overseas competitors, the sooner we will be out of the export business. Stated simply, our exports will be large only so long as we are the necessary source of purchase. Statistics often are misleading, and all of them submitted to you must be well sifted before being used to support legislation as important as that here considered. I learned long ago that a skilled statistician can often clearly prove either side of any question. In the highly complicated matter of foreign imports, you cannot sustain a general proposal to give away certain American industries to foreign competitors purely on the basis of some general statistics which theoretically indicate that certain other American industries are currently prospering from exports. Remember that America must export in order to continue upward growth. But, to export, our businesses must excel in newness and quality of products because we cannot generally compete in price. However, to have newness and quality of products we must have constant research, and constant research cannot be carried on by dying businesses. Some will argue that Congress should not yet worry about steel imports because only part of the total industry is now seriously damaged, indicating that you should do nothing until mammoth injury to the vitals of the industry is proved. This is a complete and serious fallacy. If currentness of vital injury determines Congress' interest in the import problems of basic industries, this Nation is in for real trouble. None of us should for a moment forget our situation at the start of World War II, caused by our failure to have kept strong certain industries which were basic to military strength-aluminum, magnesium, synthetic rubber, chemicals, explosives, optical goods, drugs, etc. Those who were then our enemies took full advantage of our glaring lack of vigilance and, in one way and another, saw to it that many of these industries were kept inadequate for our needed wartime use. On that occasion, our weakness was brought about by the economic maneuverings of enemies—and we were highly blamable. But how much more blamable are we today when the jeopardy to our capaicty to produce steel, chemicals, textiles, oil, etc., is of our own making-and caused largely by the considered actions of our own Congress. We might do well to look realistically at what has been happening to our strength for fighting world war III. |