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a degree on small industries, of which I use the spring clothes pin a the type.

It is the big industries, with widely varied products which best adapt themselves to changes in the tariffs and increases in cos petition.

I do not like to see that added to the present handicaps of snu business, I do not like to see that added to it, because I have a m strong sympathetic feeling for the small town and the small busiws as a way or life.

I do not like to see that way of life disappear, and I very much itt that it will tend to disappear more rapidly than big business distf pears, as we reduce these tariffs on the products of small industri*

I am glad of the peril point and I am glad of the escape clau? It preserves something that is a way of life which I would not w« to see disappear.

Mr. Cortney. Senator, I am not aware of any industry wlik matters to this country, which has disappeared because of the K» ciprocal Trade Agreements Act.

I am not aware of any.

And, secondly, Senator, may I also respectfully draw your attei tion to the following fact: When we talk about these matters, we * the obvious thing, but we do not see the facts which are not apparen

We see whoever claims that he has been injured by imports. b» we do not see those who have been hurt because we do not export. 1 fact, it strikes me that there are so many more people involved u interested in exports than there are in imports, and yet those *i make the biggest noise are those who claim to be injured by import and not those who are engaged in exports.

It is a great puzzle to me. There are certainly 4^ million Aroa can people involved in the export trade one way or the other and tin should really clamor for the reciprocal trade agreement.

Instead of that, we hear chiefly noise from people who are hui who are supposed to be hurt by imports.

Be what may, the United States council has accepted the poati that in certain cases the escape clause is good so that I am not {Ton to defend my own convictions against those whom I am representii namely, the trustees of the United States council. I have to abide I their position.

Senator Flanders. Well, Mr. Chairman, I will be very brief ft the remainder.

I just want to say that I have some intimate knowledge of 1 ai» which is my own State, and of 1 industry, which is the industry i which I made my living for 50 years, lacking 2 months, when I can here to the Senate.

The State is Vermont. The industry

Mr. Cortney. I know.

Senator Flanders. Is the machine-tool industry.

Now the machine-tool industry has been an exporting industry.

The company with which I was connected before I came here, h* agencies and branch offices in Europe and sold machinery as fars as what we now call Indonesia, before the turn of the century.

I see that industry less and less able to export. It is compellfland I do not think it is necessarily a bad tiling—more and toon t 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 tlie 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 savings 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.

Ave 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 sal and very detrimental to the rest of the world, that one year we shod be producing fi/z million automobiles and the next year we should n< know whether we can produce 4 million automobiles.

It is simply due to a lack of restraint and unless we put some wisdoi in the management of our domestic affairs we shall be in trouble an the rest of the world will be in trouble together with us, Senator.

Senator Flanders. On the automobile, let me say that I believe ti industry has made its own difficulties.

Mr. Cortney. That is right.

Senator Flanders. You and I agree on that, don't we?

Mr. Cortnet. That is right, Senator, that is exactly what I want* to say.

Senator Flanders. The fact is however that it is going to be diffica to compete under sensible conditions with our wage rates and with tl extension of our productive methods abroad by the same compani who are making automobiles here. Ford, General Motors, and otbe have their factories abroad and that is the tendency. Just what t] end will be, I don't know.

But, I still am grateful for the escape clause and the peril pott You and I will agree to disagree on that.

Mr. Cortney. May I tell you, Senator, I began my business care by importing into this country steel back in 1924?

Senator Flanders. In what?

Mr. Cortney. In the United States, to import into the Unit< States, steel.

Senator Flanders. Yes.

Mr. Cortney. Now it took me about a year of investigation of ti market and I spent lots of money for—or what was lots of money i me at that time—to know how to import here, to whom should I se and how should I sell.

If there had been any escape clause at that time I would not ha done it, and I know many people who have benefited from the impoi I have brought into the Lnited States. I could deliver a speech f 1 hour on this subject.

Senator Frear. Let's limit that a little bit this morning, a [Laughter.]

Senator Carlson?

Senator Carlson. I have no questions.

Senator Frear. As you recognize, we do not like to limit the tin of our witnesses, Mr. Cortney, but we do have a long list and we fc to be courteous to all of them and I want to say to you

Mr. Cortney. Yes, sir.

Senator Frear. To you a personal message, that the company which you are president has an establishment in my hometown and * are very proud of it.

Mr. Cortney. Thank you, Mr. Chairman.

Senator Flanders. May I apologize to the succeeding witnesses f the length of time that I have taken?

Senator Frear. I am sure they will accept it, Senator.

Mr. Cortney. Thank you, Mr. Chairman.

Senator Frear. You are welcome.

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.


Mr. Pebcy. 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 suggest the witness have a seat there?

Mr. Percy. Yes. Thank you.

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 Kockefeller, 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 G 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.

Senator Long. May I just ask one question there?

Mr. Percy. Yes.

Senator Long. I do not mean to be critical but I keep seeing so of the same names appearing time and again.

Is there any limit to how many of these corporations can belon

Some companies appear to belong to all of them. Do you exdn anyone or do you accept everybody who wants to be on your cr mittee?

Mr. Percy. No, sir; these directors are elected by the committee invitation of the board and they have agreed to serve for a pen of a year or longer in their individual capacities.

These are representatives—they are perhaps not representing I point of view of their company but they are there as individuals.

Senator Long. Yes.

Mr. Percy. And the membership of the board changes as it di in the board of a company from time to time.

The first examples I would like to present come from my o experience in the photographic industry. This is my 20th year that industry which is traditionally a highly protected industry.

We have had high tariffs, and the industry point of view has fi ored high tariffs for the products coming into this country.

I have seen and been in most of the photographic plants of' world. I have been in photographic plants several times in Jap and seen people making products comparable to ours and earai 30 cents an hour; in Germany, 45 cents an hour; in Switzerland cents an hour. It is very hard to name a country that does not tor manufacture photographic products.

This year I was in a Swiss plant that is our largest competitor fn abroad. They extended the courtesy to me in an exchange visit. T visited our plants and I visited theirs. It was very interesting w your committee talked about inflation earlier this morning to see d of the ways that Switzerland has been able to maintain a fairly we Swiss franc.

In visiting this plant, which was 144 years old and pur largest oc petitor abroad, I was quite surprised to see that of their three-quart of a million square feet of manufacturing space no plant was ol than 8 years, and that the machine tools within that plant were most modern of any plants I have visited.

I asked them how a company of that size could possibly afford t type of equipment and all new plants. They said "We cannot affd not to. The Government encourages us to keep our eqiiipment 4 our plants up to date through tax incentives. We are allowed write off our plants at 15 percent a year and our machine tools percent in the first year of their purchase. This is in contrast vr tax laws in the United States that allow only a 2yz percent aim zation on buildings and 16 to 17 years for machine tools.

I think this is an important way to fight inflation. We can n fight inflation and increasing costs by capital investment and I th it is a sad commentary on this country and its tax system thai tax capital investment at a much higher rate than most other cor tries do.

As to how a company can meet such competition from abroad would like to turn to Bell & Howell's experience.

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