that there are these other agencies which are available to the smaller manufacturers.

Senator PASTORE. Dr. Miernyk?

Dr. MIERNYK. I have a question, Mr. Bullard. One of the outstanding characteristics of the last 10 years in the textile industry has been its cyclical nature. Whether we have a general recession or depression, we have had these brief cycles in textiles. In talking to some textile people I have gotten the impression-and I would like to ask if you think this is true that the individual textile mill can't really tell when one of these dips is coming, because he doesn't know enough about inventories, working process, and so on throughout the entire industry.

These individual research organizations that are concerned with product research and process research couldn't fulfill this function. Don't you feel that a Government agency of some sort could help the industry a great deal by providing more up-to-date information on these things I have mentioned, inventories, and so on?

There is quite a time lag and you don't get the complete picture until 2 or 3 years later when 1 of the census reports comes out, or the survey of manufacturers. The latest covers the year 1956, and that doesn't help you today.

Mr. BULLARD. If I understand it, you feel that a research organization might conceivably give up-to-date information on finished goods inventories, and perhaps act as a guide for the individual manufacturer in his production?

Dr. MIERNYK. No, I mean just provide you with information which would help you adjust your production, and so on, better than apparently the industry has been able to do in the past.

Mr. BULLARD. Does such an agency work to any success in any other industry? I frankly, Dr. Miernyk, don't see exactly how that would be effective.

Senator PASTORE. Now let me interrupt at this point.

Mr. BULLARD. Yes, sir.

Senator PASTORE. One of the greatest criticisms we have heard from the beginning of these hearings is the impact that importation of textiles has upon American manufacture. Well, it has always been a hard job to convince the administration and those who are responsible for negotiating these agreements, exactly what depressive force this 3 percent has upon the overall textile structure in our Nation. You have brought that out in your own manuscript today. Now, don't you think we ought to have some concerted effort on the part of the Federal Government that could maybe make a statistical study to keep us informed as to precisely what is happening?

As it stands today your only relief is to go before the Tariff Commission on the peril point or escape clause, and by the time you get that you are already out of business.

It strikes me there should be an agency in this Government of ours that will show that here all these other countries-because of the very character of the textile industry, and because the product in comparison to the initial investment and the kind of skills that are necessarythat most countries today the minute they rehabilitate in any fashion whatsoever they seem to get into the textile industry. Then they don't.

29350-59-pt. 22

seem to try to sell the goods to their own people, they sell it to the American market.

Next you meet the situation that they are buying their cotton 25 percent cheaper than the American domestic manufacturer can buy it because of our surplus crop of cotton, and you add to that the fact that by the very nature and structure of their own labor and economic situation they can manufacture at a cheaper labor cost than we can, and then you meet this situation that they export to America.

No one seems to understand exactly and precisely what harm is being done. Here we are in an industry that hasn't shown the increase comparable with the general increase of our manufacturing structure, and you add to that the fact that every country in the world, including the Philippines now, is going to be in textiles, and we are losing practically all of our export trade in textiles; it used to be 15 percent and now I understand is down to less than 5.

Don't you think we should have a Federal agency that will shock the consciousness of these negotiators to the effect that there is irreparable harm being done?

Mr. BULLARD. Might I just ask the question whether a Federal agency is the way to do it, or should they not have their own staff who would in any negotiation be able to give them that information?

Senator PASTORE. I don't know by what name you call it, but it strikes me we ought to have people who are proficient in exactly what is happening.

Mr. BULLARD. With that I agree entirely, Senator.

Senator PASTORE. These things always seem to turn on a political question, war and peace. Well, I subscribe to that, but sometimes I am afraid that is being overdone a little bit. I think that sometimes we ought to get into the economics that are involved. I think that we ought to stabilize and help these people to rehabilitate themselves, but if this whole approach is going to be directed at the American market and the American consumer, and as you have pointed out that even the 3 percent can have a very devastating effect upon our overall production and our whole price system, I think there ought to be someone who ought to know the facts.

That is the reason we are in this, to get the facts, but once we get these facts and present them to the Congress, unless we keep constantly watching this, sometime, somehow, somebody is going to forget it. I would like to see some kind of agency or individual that is going to keep this in mind and keep the American negotiators alerted to the facts involved. That is the only concern I have with this Federal

agency.

You know enough about my background to know that I don't believe in socialism or anything that smacks of it, and I am one of those who believes that the Government hadn't ought to be in anything that private industry can do. I firmly believe that, and I think my record shows that, and I think Senator Thurmond will agree with me on that.

But this thing has to be constantly watched, and it strikes me that apparently the men making these agreements do not know the facts. Mr. BULLARD. I think that you must be right, sir.

Senator PASTORE. Senator Thurmond, have you any questions? Senator THURMOND. I am just wondering what recommendation you had to make with regard to the importation of foreign goods.

For instance, would you favor and would you think it practical, to have a quota system, or just what do you recommend along that line? Mr. BULLARD. I would feel that tariffs, as such, would be the item which we need in order to have the goods when they get to this country at a price very nearly competitive with our own, the price at which we can produce similar goods in our own country.

I feel that the tariff angle would be better than quota, although it might be added in together, using both quota and tariff.

Senator PASTORE. Now, in your manuscript here, you have recited what I consider, on page 2, to be quite an important set of facts which I would prefer the staff to explore further. You say here that from September 8 issue of Women's Wear Daily there appears this item:

Apparently Japanese exporters have a worry of their own about exports of cotton apparel, particularly western-style shirts manufactured in Hong Kong of fabrics bought from Red China.

I do not believe that any Senator or Congressman that voted for the renewal of the Trade Agreements Act was aware it could be so administered to the detriment of the American textile industry in favor of Red China.

Mr. BULLARD. Yes, sir.

Senator PASTORE. I assure you no Senator knows that is going on consciously, but I want to ask you this: Do you have that Women's Wear Daily available?

Mr. BULLARD. Yes, sir; I have it here.

Senator PASTORE. May we have it? I want the staff to explore this a little further. I wonder if we haven't got another gimmick here. Thank you very much. Are there any further questions, Doctor? Dr. MIERNYK. No questions.

Senator PASTORE. Thank you very much, Mr. Bullard. It was a great pleasure to have you here today.

Mr. BULLARD. Thank you, indeed.

Senator PASTORE. I want to repeat for the benefit of those that came in after the hearing started we are not committed to any particular agenda, we are going to stay here as long as we have any witnesses to testify. We ask the indulgence and patience of all the witnesses, but if there is anyone who has any special reason to have an exception made in his behalf, I do hope that you will mention it to our staff, because we want to accommodate everyone was possibly

can.

Mr. Seabury Stanton. I need not say it is a pleasure always to have you. You may proceed in your own way.

STATEMENT OF SEABURY STANTON, PRESIDENT, BERKSHIRE HATHAWAY, INC.

Mr. STANTON. On Tuesday, July 8, at the initial hearing of this committee held in Washington, D. C., I was privileged to appear and outline the handicaps which have been imposed upon our industry by Government regulations and policies. These fall into three major categories as follows:

1. The Government policy of reducing tariffs on imports of textile products from foreign countries.

2. The Government policy of limiting the acreage which the farmer is permitted to plant in cotton and artificially fixing the prices which

American mills are required to pay for that cotton at a figure higher than the world price.

3. The Government policy of encouraging the production of textiles in foreign countries and the purchase of textile products, as part of our foreign aid program, from foreign countries rather than from our own mills.

Following this hearing the Congress considered and took action in each 1 of the 3 major areas in which Government policies have been detrimental to our industries. In spite of efforts by members of this committee and other Senators and Congressmen representing textile manufacturing areas to point out the impact of these policies on the textile industry, unfortunately their efforts were for the most part— unsuccessful, and the results were as follows:

1. A new Trade Agreements Act was passed which permits the reduction in tariffs on imports to the United States of 5 percent per year for the next 4 years, or a total of 20 percent over a 4-year period. The President is still permitted to refuse to carry out recommendations of the Tariff Commission for relief to certain industries, with the completely unrealistic proviso that he, in turn, may be overridden by a two-thirds vote of both Houses of Congress, which would be almost impossible to attain in my opinion. We are, therefore, faced by a continuing invitation to foreign countries to take over our textile markets in the United States, and will have to attempt to operate during the next 4 years with the threat of a 5 percent reduction in tariff per year over and above the tremendous reductions which have already taken place since the end of World War II.

Senator PASTORE. May I interrupt at this point, Mr. Stanton? Why do you feel it is more the responsibility of Congress to be conscious of the damage being done by some of these agreements than the President?

Mr. STANTON. I feel Congress is in a better position to represent all the people of the United States than the President, because of the greater knowledge of local conditions that are affecting local industry.

Senator PASTORE. I thank you for the compliment, but the President of the United States is the President of the United States, and he has the responsibility.

Let me ask you this question: Do you think he has the power under existing law to protect the textile industry if he so chose to do? Mr. STANTON. Yes; I believe that he has.

Senator PASTORE. Therefore, it boils itself down to a matter of administrative jurisdiction?

Mr. STANTON. I believe so.

Senator PASTORE. Let me ask this further question: In the overall picture of imports and exports, do you feel that particularly and specially textiles are being made the sacrificial lamb?

Mr. STANTON. I will have to answer that a little broadly.

Senator PASTORE. I wish you would, because we have heard so much testimony before our committee that it seems that all these nations: which are rehabilitating, and fortunately they are, but it seems that the first industry that they get themselves into is the textile industry.. Now, if we treat the textile industry as we do all other industries with reference to imports and exports, and you have this overemphasis in other countries on textiles, you find that the result is that the textiles.

in the United States of America, by consequence, are being damaged more than other industries as a whole.

Now, is that your impression?

Mr. STANTON. Yes; that is my impression.

Senator PASTORE. I would hope that you would elaborate upon that for the record, because that is the one point that I hope this subcommittee will make. It isn't so much that everything is wrong about the Reciprocal Trade Act, but it strikes me that in the negotiation of some of these agreements, you have to take into account that here we are dealing with an industry that hasn't shown any appreciable increase over the past 10 years.

It is an industry that other nations can get into without any great difficulty, it is an industry that other nations are in fact getting into without any great difficulty, and here we are met with the situation that not only has Japan overemphasized textiles, we have the Philippines emphasizing textiles. If this keeps on with the decline in the textile industry in the United States of America, we will reach the point of no return, with the entire industry possibly becoming extinct unless something is done about it. It is our responsibility as members of the committee to alert not only Congress but the administration and the people as a whole to precisely what is happening to the textile industry.

Now, do you agree with that general statement?

Mr. STANTON. I am very glad to hear you say that, sir, as chairman of this committee. The textile industry is a type of industry that can be easily built up in different countries. It requires comparatively a small amount of capital, it employs a comparatively large number of people, and while it does require certain special skills, they can be comparatively easily learned over a few months' period, and it supplies a need to almost every person who is in the population of that country. Our present foreign policy appears to be and is, I believe to build up the standard of living and industries, and so forth, in other countries by establishing industries in those countries.

Now, the textile industry being the type of industry which it is lends itself, I believe, to that foreign policy very easily and well. Here in the United States, we have a very large and what I might call spraddled-out industry. There are maybe 1,200 or 1,500, or maybe more mills scattered all over the country, most of which are run by different companies. They are an extremely competitive industry, and it means that if we are upset in any way by importation of cheaper foreign goods from other countries, the individual components of our industry trying to meet that competition have an effect on all the rest of the components of the industry, so that the whole overall structure is seriously affected.

Now, if I may go just a little further, it is true that the actual total number of imports in relation to our production is, percentagewise, comparatively small; on the other hand, from the point of view of categories of individual fabrics, it becomes very large, such as, for instance, velvet tones, where it reached 60 or 65 percent.

Berkshire Hathaway makes a very large number. We reach around 30 to 40 percent of the total production of the United States.

These mills are not in a position to shift products into other types of products, because there is a balance of production in practically all