to go into full operation. For some time to come we must make an effort to gain the confidence of the Californians and prepare for developments in the future. 1 Remarks: F. E. Booth, 400 tons; Washington Fish & Oyster, 345 tons; Pan Pacific, 210 tons. 1. Figures have been taken from the ones having been completed and reported to the Frozen Tuna Export Fisheries Association. 2. B. C. Packers has a contract for 800 tons separately, but destination is not made clear. 3. Loin disks are computed quantities based on rounds. 4. 180 tons sold to CRPA by Tokyo Shosha contracted for by Wilbur Ellis. APPENDIX 3 LEONARD R. LINSEN MAYER, CANNERY WORKERS & FISHERMEN'S UNION, Associate Director, Office of International Labor Affairs, DEAR SIR: In the course of our conversation while I was in Washington a few weeks ago, I promised to give you a brief history of the tuna-fishing industry in the postwar years, an analysis of the economic difficulties of the industry, their origins, and what I feel might be done in a practical manner to arrest the decline of this industry and direct it toward a normal, healthy growth consistent with the progress of the general economy of the Nation. This follows: World War II was a disruptive force of major importance to our industry, as well as to others. Most of our long-range tuna clippers were enlisted by the Navy for service in the South Pacific theater. In many instances, the crews went with the vessels because of the nature of the emergency, and were enlisted later. This class of vessel proved to be so useful to the Navy in the far reaches of the Pacific that it built 28 for its own use during the war (they were called YP's) besides those of our own that had been conscripted. At the end of the Pacific war, the vessels taken by the Navy, except those lost in action, were returned to their owners, and the YP's were soon declared surplus and made their way into our fleet. The skilled personnel returned with the vessels, and the productive capabilities of this fleet grew rapidly between 1945 and 1949 from these causes. The market for canned tuna in the United States grew more rapidly during these years than did the productive capabilities of the fleet. You will remember that there was a general shortage of protein food in the world during the immediate postwar years and that this was also true in the United States. With the release of the economy from price-control restrictions, prices of scarcer commodities increased substantially and generally. This was true of tuna at the ex vessel frozen-tuna level, the wholesale canned-tuna level, and at the retail canned-tuna level. This created general prosperity among the canners, boatowners, and fishermen, as it did in the general economy. The fishermen plowed back the earnings of these prosperous years, formed partnerships, and became boatowners, this creating more jobs for fishermen. The long-range tuna clippers have always been substantially owned by the men who operate them, rather than by the canners who buy their catches, for the simple economic reason that owner-operated vessels produce tuna at a cheaper cost per ton of production than do clippers manned by hired crews. The prosperous condition of the fishery continued through 1949, 1950, and into early 1951. The fishermen kept plowing their earnings back into new vessels, and the fleet grew as it tried to keep pace with the growing market. As a matter of fact, the fleet continued to grow through 1951 and into early 1952, even after the economy of the fleet received a severe setback in 1951, for the reason that it takes from 9 to 18 months to complete a tuna clipper from the time that a building contract is let. A tabulation of the number of vessels in the fleet and their combined carrying capacity for each year from 1947 to date is given in appendix 1. The estimated consumption of canned tuna in the United States from 1947 to date is given in appendix 2. One of the reasons for this postwar prosperity in the industry was that the tuna fleet of Japan had been substantially destroyed in the last months of the Pacific war and there was little or no competition in this market. This situation was altered as rapidly as possible by the United States Government in the postwar years in the first instance to provide food for a hungry Japan, and in the second instance to earn dollar exchange for an economically exhausted Japan which was turning from being a vigorous enemy to being a badly needed ally. Until 1948, all of the product of the rapidly expanding Japanese tuna fleet was needed to feed Japan. In that year, SCAP permitted a small export of tuna to the United States, and in 1949 a larger amount. By 1950, the Japanese tuna industry had recovered its prewar productive capabilities and was prepared to reestablish its position in the United States canned-tuna market. The tariff situation in which it found itself in 1950 was much better than it had been in 1941. In 1943, the 45 percent tariff on tuna canned in oil-then the only tuna commodity in world trade in a substantial volume was cut to 221⁄2 percent ad valorem in a trade agreement concluded with Mexico, although Mexico had never been a substantial supplier of tuna to this market nor did it become so by reason of the concession thus made to it. The American industry was keeping close watch on the growing industry in Japan. In late 1948, during 1949 and early 1950, we, along with other parts of the industry, made numerous representations to the Department of State, the Committee for Reciprocity Information, and other instrumentalities of the tradeagreement machinery of the Government to return to us some part of the protection we required to compete with the cheap labor of the Japanese. In mid-1950, the tuna-fishing industry received the most vicious and crue! blow it has yet had from the Executive. In the late spring, Mexico gave notice that it was abrogating its trade agreement with the United States. The causes of abrogation were not related to tuna, because Mexico has never been interested in its inconsequential trade in tuna. But the effects were momentous to the tuna trade. At the date which abrogation took effect, the tariff on tuna canned in oil would revert automatically from 221⁄2 to 45 percent ad valorem. Our Government had the choice, within a range of months, of when the new duties would come into effect as a result of the abrogation. The tuna industry made most desperate representations to the Department of State to make the duty changes effective at the same date as the abrogation was announced, for the simple reason that the Japanese would dump all of the tuna on this market they could get into the can as soon as they learned of the new duty rate so as to get there in advance of the new duty. The result of our representations was that the Department of State completely and deliberately ignored our pleas and chose dates which brought a maximum amount of damage to the United States tuna industry. Mexico abrogated the trade agreement in June 1950 and the Department of State announced that the new duty rates brought about by this action would be effective on January 1, 1951. The consequences of this action were even greater than the industry had anticipated. The Japanese dumped about 1,500,000 cases of tuna on this market during the 6-month period. In terms of processed weight the size of this shock can be measured by the following statistics. The average annual importation of canned tuna in the years 1931-40 was 8,060,800 pounds. The highest for a prewar year (1933) was 14,382,100 pounds. In 1948 it was 8,289,400 pounds and in 1949, 4,504,900 pounds. But in 1950 it was 36,409,500 pounds. Almost all of this came in during the last 6 months of 1950. It came in a pellmell dash to beat the January 1 dateline. Not only was it dumped in an indiscriminate manner but most came in through brokers and importers inexperienced in the tuna trade who dumped it into the wholesale channels as rapidly as they could. The effect of this dumping hit the market with full impact in mid-1951 and by the early fall our canneries were closing, our fleet was being tied up with its frozen tuna on board with no market in which it could be sold, and the United States tuna industry was grinding to an abrupt halt which ran on for the rest of 1951 and into 1952. The full effect of this act by the Department of State in mid-1950 has still not left this industry. But from that date to this the Department of State has used every weapon in its arsenal to prevent us from recovering from the blow. It has opposed every proposal we have made to the Congress or to the Executive. Its counterproposals have been designed to be of no benefit to the domestic industry whatsoever. It has, on the other hand, we believe, used every office it could to encourage the Japanese in increasing their tuna shipments to this country. It is opposing us at this moment of writing and is, by doing so, aiding the Japanese. The crisis was so acute in this west-coast industry in 1951 that a number of west-coast Congressmen submitted a variety of bills aimed at correcting the situation. The House Ways and Means Committee established a special Tuna Subcommittee which held hearings. The Department of State opposed all of the permanent corrective legislation before the committee. It had to admit that there was a serious crisis in the domestic industry. But it took the view that this was transitory and that the industry would adjust to the new situation wihout serious injury. In spite of this the Ways and Means Committee reported out a bill which would have done two things: (1) Establish a 3-cent-per-pound tariff on frozen tuna until March 31, 1953, and (2) direct the United States Tariff Commission and the Secretary of the Interior to make comprehensive studies of the competitive status of the domestic tuna industry and report their findings to the Congress before that date so that the Congress could properly formulate permanent legislation. This bill was passed by the House in the closing days of the 1951 session to the considerable surprise of the opposition. I believe it was the first legislation in nearly 30 years imposing a tariff increase which had been reported by the Ways and Means Committee and passed by the House. Had it gotten to the Senate floor during that session, it no doubt would have been enacted. The days were so few to recess time that the opposition was able to block this by getting the Senate Finance Committee to insist upon hearings, for which there was not time before the recess. The upshot was that the bill held over to the second session, but Senator George, chairman of the Senate Finance Committee, promised us early hearings. At the beginning of the new session the opponents of the bill attempted to postpone hearings before Finance. They were successful for a time, but in late March, Senator George fulfilled his commitment and held hearings. At the hearings and afterward the opponents at first worked for an unfavorable report and then shifted to recommending import-quota legislation which at that time was anathema to it and the majority of the Ways and Means Committee. Obviously, the tactics were to get a bill reported out of the Senate Finance Committee which would have to go back to the House for its reconsideration in the hopes that the session would end before passage. We were at last able to prevail upon the Senate Finance Committee to report out unchanged the bill which the House had passed. The Department then attempted to prevent the bill being brought to the floor of the Senate but we were able to convince the leadership to bring it up late in the session. The Department turned the full force of its lobbying activity, which is formidable, loose against the bill. After full debate in the Senate a voice vote was taken. The issue was so close that yeas and nays were called for. This favored the Department because we had been told by a few Senators that on a voice vote they would be with us but on a record vote they would have to oppose because of administration (then Democratic) request. The upshot was the loss of the bill in the Senate by a few votes. However, Senator George and the Finance Committee did pass a resolution instructing the United States Tariff Commission to make a full study of the competitive status of the domestic tuna industry. The six west coast Senators jointly requested the Secretary of the Interior to make the study the bill requested. In both cases competent investigations were made and reports made to the Congress. As a matter of fact, I have been told that the report made by the Department of the Interior was felt to be so competent that its authors were awarded a prize. However, nothing ever came from the reports. None of the recommendations made were put into effect or further considered after being made. From the dumping of canned tuna in the last half of 1950 and the legislative efforts of 1951 and 1952 arose a number of lines of activity in the tuna trade which have importantly affected it and which may best be considered under separate headings. 1. Voluntary quotas The Japanese during 1952 became so disturbed by the sucessful trend of the tuna producers legislative efforts that the Japanese Government imposed voluntary quotas and check prices on tuna exports to the United States. The purpose was quite frankly to effect the defeat of the legislation, which it successfully did. This action had residual effects, however, which were beneficial to the tuna trade in the United States during the latter half of 1952 and 1953 in that they brought a degree of stability to the market here and temporarily eased the distress of the American tuna producer and permitted the ex-vessel price to increase here. These results were only temporary, however, because they set up stresses within the Japanese tuna industry which resulted in the eventual disintegration of the controls during 1954, 1955, and 1956. Japanese canners and the Japanese frozen tuna exporters bidding against each other for tuna in Japan to send here alternately caused high and then low prices to the Japanese fishermen, then alternately created high and low prices for the frozen tuna being sent here, then high profits followed by gluts and losses were experienced first by the frozen tuna exporter and then by the Japanese exporters of canned tuna. The consequences of these stresses and strains in Japan were that the voluntary, unilateral controls broke down by late 1953 and during 1954, 1955, and 1956 the voluntary quotas became more like achievement goals, which were changed as the occasion required, then restrictive machinery on trade, and the voluntary price controls were more noted by their breach than by their performance. The consequence of these movements on this market, however, has been to keep it continually upset both as to price and volume and to continually increase the volume of frozen tuna sent here during this period. Our Government has quite consistently refused to take cognizance of this situation or make representations to the Japanese Government with respect thereto, although the mechanisms which the Japanese have used to restrain and control the trade in tuna in this country clearly come within the purview of article 18 of the Treaty of Friendship, Commerce, and Navigation between the United States and Japan. 2. Tuna in brine During 1951 the Japanese learned that if the oil were left out of canned tuna and plain water added to the can in its stead the product came within the tariff category "fish, canned, other than in oil." Prior to this time this basket category had contained antipasto, smoked pollock, and other oddities of the fish trade which were of nominal volume in the import trade. However, during 1943 the tariff on this basket category had been decreased to 122 percent ad valorem under the trade agreement with Iceland. Iceland does not produce tuna. They do not occur in those cold northern waters. Iceland had not considered that tuna had been included in its trade agreement, nor had the Department of State-which had been at the same time negotiating the tariff on canned tuna downward in the trade agreement with Mexico. Nevertheless, the Department of State allowed that this basket category did contain tuna. Therefore the Japanese could and do export canned tuna to the United States at 121⁄2 percent instead of 45 percent by the simple expedient of adding water instead of oil to the can before retorting. Thus a new commodity was created in trade by an administrative decision under the Tariff Act of 1930, as amended. It was a poor product, but so long as it sells on the retail shelf at 5 to 6 cents per can less than tuna canned in oil, it will sell against it. Since the duty is so much lower, and since the water in the case is about $1 per case cheaper than the salad oil would be in Japan, it can and does sell profitable. That it is a poor product is signified not only by the fact that it has to sell so much cheaper than tuna in oil to move off the shelf, but that Japan sends tuna in brine only to the United States. To the twenty-odd other countries to which she exports canned tuna she sends only tuna canned in oil. Japan will not risk damaging its canned tuna market in these other countries by exporting such a poor product. This cheap product has tended consistently since its entry on the market in 1951 to drag down and fluctuate the price of canned tuna in the United States. The industry sought aid from Treasury and State as this newly created commodity increasingly disturbed the market. State at first said that it could not take the matter up with Iceland for fear of offending that ally. Private inquiry by the industry, I am told, showed that Iceland would be quite willing to have the United States invoke the escape clause in their trade agreement with respect to this commodity. Finally, the Department of State made the same inquiry through diplomatic channels and got the same answer. However, the Department of State even then for more than a year would not invoke the escape clause in the Icelandic trade agreement and remove tuna in brine from its effects. It did so only after tuna in brine had been bound at 122 percent ad valorem in 1955 under the newly negotiated trade agreement with Japan. At the same time the Department of State announced, in one of its many press releases, that it not only had removed tuna in brine from the Icelandic trade agreement for the aid of the domestic industry, but has established a quota for it of 20 percent of apparent annual consumption of canned tuna in the United States. Any tuna in brine imported above that amount in any year would bear a duty of 25 percent ad valorem. The complete ineffectiveness of this action is reflected by the fact that tuna in brine has never reached a level of 20 percent of apparent annual consumption of canned tuna in the United States nor is such a product ever likely so to do. Furthermore, if the tariff on tuna in brine were 25 percent ad valorem as against 35 percent for tuna in oil, it is our opinion that tuna in brine would disappear as a commodity from world commerce. 3. Growth of the Japanese long-range tuna fleet In 1952 the Japanese decided to increase their long-range tuna fleet. Accordingly, the special balance law was passed by the Diet which subsidized the construction of large-sized long-range tuna vessels. It was a temporary law, expiring in 1956. It was a law which substantially altered the balances of the tuna trade between Japan and the United States, affected the whole world trade in tuna, and in fact created a world tuna trade, world tuna market, and world tuna prices. Under the stimulus of this temporary subsidy law the Japanese built a new long-range tuna fleet which increased the number of vessels in the category of |