Mr. JACOBS. Now, this reflects a dangerously rapid decrease in trade barriers. Since 1934 when the Trade Agreement Act became law most of the years since then have been war years when most of our industries, including textiles, were hard pressed to supply sufficient cloth for our allies as well as for our domestic consumption.

The question of the rate of the tariff, of course, had little or no effect, therefore, upon the exporting or importing of textiles. We were operating under emergency conditions which were entirely abnormal and tariffs had little effect upon the increase or decrease of foreign trade.

As we return to more normal conditions, however, it seems quite clear that the intent of our reciprocity in trade agreements supported by the proposed international trade organization and apparently sponsored by our own Department of State is to so adjust trade barriers as to encourage the rehabilitation of foreign textile industries by enabling them to make use of American capital in the manufacture of increasing quantities of textiles which they can sell in the United States over lowered tariff walls to obtain the dollars with which to buy other American products which they cannot themselves make.

Now it is granted that international trade agreements must be based upon the good of the whole and if ultimately the United States increases its exports of other heavier products we must not be too critical if the step happens to work against the interests of the American textile industry; and we are not.

We recognize the inescapable facts that :

1. We in the United States have most of the dollars.

2. That other nations need our type of manufactured and raw products which they do not themselves produce.

3. That textiles happen to be the one type of product in which the United States leads but which can be made by all people everywhere. 4. That unless foreign countries can sell us something they cannot find the dollars with which to buy from us.

Furthermore, we recognize the inescapable conclusion that in the future we cannot under new world conditions expect to permanently hold a position of world leadership in any product in which we are dependent upon the protection of high tariff barriers alone.

Hence we do not insist upon a law which will afford higher tariffs on the imports of textiles into the United States.

Furthermore we do not depend entirely on tariff walls to build and hold a position of world supremacy in textiles. This in spite of the fact that there is, due to foreign currency collapse and other effects of a world war, a greater disparity between the high American textile wage and the low textile wages in foreign countries than ever before. Our position is rather one of sympathetic understanding of the problems of our international competitors, combined with a desire to be helpful and constructive.

We do not know whether a continued lowering of barriers against world trade is necessary or inevitable as some of our leaders seem to think it is. However, if that be true we do maintain that the process of lowering should be subject to such limitations in speed and in amounts as will give our domestic industries which are to be most affected the time to adjust themselves to the new circumstances and thus minimize the injury.

Senator HAWKES. I want to interrupt you right there to say that is one of the best and most intelligent statements that I have heard anywhere.

Mr. JACOBS. Thank you, Senator.

Senator HAWKES. In other words, if you try to preserve this country, you are called an isolationist or any kind of a name that indicates you are not willing to be cooperative. But I know, because I have been in the manufacturing business, that the difference between a top pressure load, a complete operation, in meeting a situation created by a lower tariff is one thing, and when that top goes off and you go down to 80 or 85 percent, you have got an entirely different picture, and you can turn from a profit situation into a red situation.

All I have ever said is just what you stated right there: that we want to do the right thing but let us not make haste too rapidly.

Mr. JACOBS. I think that is very sound.

Senator HAWKES. In other words, let us make haste slowly and know that we are right because we cannot ruin this great economy and industry of this country and then get it back by waving a magic wand. And people do not understand that. People by the thousands have been urged to write letters to their Congressmen and Senators.

I have talked to them all over the country: "We want the reciprocal trade agreements without any amendments."

I have gone and asked what they knew about the Reciprocal Trade Agreements Act. You would be dumfounded to get the answer. They do not know anythng about it.

Some one person has asked three or four hundred people to write letters, and the lack of knowledge on what this thing can do to the economy of the United States is a sad thing, and that is what you are talking about, and I want to compliment you on the statement in that particular paragraph.

Mr. JACOBS. Thank you very much. I feel very highly complimented that you agree with that thought.

This is particularly advisable in the case of American textiles.

As stated, we shall not depend upon tariff walls alone. We must and shall produce a better fabric at a lower unit cost to meet the severe competition of the world market in which low foreign wages play an active part. In short we must and will, with the cooperation of farsighted American workers and automatic machinery through massproduction methods, produce yarn and cloth at lower unit costs and with higher individual productive capacity and larger individual earnings, so that our yarn and cloth may be sold at lower prices that more may afford to consume them and more may be developed in their manufacture.

The development of this process under this modern conception of the American way has been under operation for years. That is why we will lead tomorrow even if tariff barriers are lowered.

However, the development of such a process takes time and money and much new equipment which we do not now have.

It will come in time. Meanwhile we must not forget that American textiles are particularly vulnerable today against world competition. We have not yet successfully completed the change. We still use more manual labor in the manufacture of a unit of cloth in proportion than is true of any other major industry in America.

Compare the manufacture of a unit of cotton cloth with its nearest cousin, a unit of paper. I believe it takes about five sets of human hands to guide a log into the hopper, grind it into pulp, test the chemical content, and operate the hoist to lift a roll of craft paper from the paper machine. In the case of cotton cloth it takes from 16 to 25 pairs of human hands. As long as there is that high percentage of manual labor involved in the production of a unit of cotton cloth, our industry is necessarily and unusually vulnerable to low-wage world competition and particularly so if tariff walls are lowered more rapidly than the speed of adoption of new processes by the industry.

Hence our position on reciprocal trade agreements is that the values of the entire system should be reappraised in the light of the long-pull world readjustments under conditions more nearly approximating normal than in the case of war years.

There is clearly not time left to this Congress before adjournment to carefully analyze the full effect of tariff changes under modern conditions.

We believe therefore that it is smart and sound to continue the present system for a year, and only 1 year, to give Congress time to fully inform itself on such an intricate subject which means so much to hundreds of thousands of American workers and to millions of Americans who directly or indirectly depend upon the American textile industry for a livelihood.

We have within recent months noted a decided tendency of some foreign countries to undertake to make their own domestic textile industries self-sufficient by raising tariff walls or setting embargoes against the importation of foreign textiles; this while our Government is endeavoring directly or indirectly to aid them.

We should carefully watch this tendency for a year and be prepared to adjust our own tariff policies more practically in the light of the extreme nationalistic spirit of some of our fellow nations before we go into a one-world philosophy of reduction of trade

barriers.

Furthermore it is our firm conviction that this entire matter will be more soundly adjusted at the hands of Congress and our Tariff Commission than when left to the world beneficence of the United States Department of State which seems at times to be more concerned with the plight of our foreign competitors than with the welfare of the American workers.

And so, Mr. Chairman, we recommend the adoption of H. R. 6556, not because we believe in reciprocal trade agreements, or in the Charter of the International Trade Organization, but because we believe that Congress should give a much more intensive study to this intricate subject before conclusions are reached.

Senator BUTLER. Dr. Jacobs, it is a very splendid statement from one representing and well able to speak for the manufacturers and the processors, but I wonder if you could not add a paragraph now in behalf of the cotton producer.

He is in the picture. What will be the effect of the adoption of this law or its rejection on the producer?

Mr. JACOBS. Mr. Chairman, I have, of course, no authority to speak for the cotton farmer.

Senator BUTLER. Just give your opinion.