tures get into that keeps the wheels going in manufacturing and keeps the men at work. So it is part of the scheme.

But trade for the sake of commerce alone isn't the real strength of trade. Trade for the essential requirements of nations and people ought to be and was originally conceived to be its only purpose for trade, the only reason for it. But now we are trading with ships crossing paths in the dead of the night carrying the same corgo, one east, one west, one north, one south.

We unload automobiles in California and we load automobiles, to fuel, of course. in New York. We buy glass when our glass plants fires are out and the chimneys are cold.

We have for some reason or another in 1929. up until 1932, imbedded into the American mind that it was the fault of trade based upon high tariffs that created the disaster of the great crash. Historians, when all of us are dead, in looking in cold retrospect upon what happened prior to 1929 will find out that that isn't so at all. It is another one of the myths that has been fed to Congress particularly through the bureaucratic Government in Democratic and Republican administrations because the only thing that changes in trade is the intensity of the drive for freer trade as each new administration comes. For 12 years I have predicted certain things and the reason I am scared and agitated today for the future of my country, my fellow colleagues, is that everything I predicted has come true.

I said that certain industries would not be in existence 10 years from 1962 and certain industries are not in existence.

How can any nation hope to survive when it is losing the most valuable ingredient that made this country what it is, the opportunity to work, and to work in a sustaining industry that could pay the necessary wage in a high cost economy, and because we are a high cost economy, we cannot survive in this kind of a trade deal. It is impossible, no matter what the theory is and no matter what the departments tell you. Two weeks before the President of the United States announced his emergency 10 percent surcharge, which of course was not a 10 percent surcharge, but anyway the people believed it, I happened to be in Ethiopia and we were on a tour at that time studying both industry potential and American runaway industry, as we call it, and schools, and we were briefed the morning after the President made his talk. The agitation in our Embassy was something to behold. You would have thought the whole world had crashed down on the heads of the American people.

But 2 weeks before that-I wasn't there then, that was the day of the announcement-2 weeks before that I received a letter in response to a suggestion to the President of the United States that we were heading pretty much down the primrose path of eternity in this country of ours alone and single-handed if we didn't do something about trade.

I was very pleased with his speech, but Mr. Peterson, who represented the President, sent me a letter and he stated again the same type of a story that is told day in and day out. You will hear it today unless they change their testimony. You will hear it that we create more jobs from exports than we do from imports.

I want every person in this room someday to take item by item and item by item-gentlemen, you will have some items, you will have

the fact that Japan is a $2 billion a year economy for our agriculture products. Well, I don't know how many of you had any experience on a farm but I grew up in a coal mine patch on a farm and I found out that you can take a grain of corn and put it in the ground and some 120 days, 119 days later you pick off an ear of corn and have enough product on that ear for 700 more kernels of corn.

So agriculture as such, although essential to the human race for its survival in the matter of feeding the body, can't now nor has it ever been able to provide that essential ingredient that created this country after the years of its beginnings, and that is, I repeat, and will leave it at this point because I have a statement that can be read if anybody has the time to do it, and the inclination, that ingredient is steel, a job for every person who wants to work and the willingness to do so.

So, forgetting all about the fact that you cannot survive in peace and you cannot properly execute a war without specialty steels, without selected alloys, without tool steels, stainless steel, all of the specialities that go into the group Mr. Chairman, and my colleague from Pennsylvania, I congratulate you on bringing this into the area where it really belongs because this area of national defense somehow or other has a way of awakening an interest in a subject matter that all other areas seem to lack. Perhaps you in your position, and I know how you feel about this country and its survival, may be able to create the spark that some of us have tried to light for at least a dozen years or more, and awaken the American people to the very serious danger we are in.

I am going to leave by just saying this, that I attended a meeting of four States, just as a speaker, and I didn't know anything about what the meeting was all about. But I was later taken into the room with the leaders of this four-State group and I want to warn for the record that I told them, that I advised them against the move that they were starting, but they have started development on a program that unless we in Congress recognize the danger. you may see within not too many months a nationwide movement of boycott on imported products because people only desperate when they haven't the means or the availability of the means to provide for their families some of the things that they had and some of the things that they need.

And so this is a desperation move and I should hope, Mr. Chairman, that the Senate in its wisdom will move toward the direction of deescalating, not voluntary agreement because they have never been lived up to and my history shows that every voluntary agreement ever made has been violated and only honored by its breach. Stainless steel the record is here and it is contained in my report and probably elsewhere-but just to say this, that since the voluntary agreement effected in 1969, stainless steels have increased 52 percent over the voluntary agreement, sheet and strip stainless has increased 76 percent over the voluntary agreement, and specialty stainless and-tool steel, rather, 68,193 increase over 100,000 base, or 56-percent increase.

They do not abide by them and I should hope that this country will have the strength of character to do whatever other countries in the world do without any hesitation. Every nation in the world protects

its jobs and its industry. We are the only one left in the world that considers this is so little of our own future and our own welfare that we have taken on the job of being the godfather to the world.

Thank you very kindly.

Senator BYRD. Thank you very much, Congressman Dent. I was impressed with your presentation and I certainly share your concerns about the need to have adequate job opportunities for the people of our Nation. We want to-we must maintain this high standard of living that we have for our working men and women. In order to do that we must have adequate jobs.

Thank you, Congressman.

Representative DENT. Thank you, sir.

(The documents follow :)

Mr. Chairman, I appreciate the opportunity to appear before this august committee and to present my views on the most important subject of the essentiality of the specialty steel industry to our national security. I congratulate the Chairman, the distinguished Senator from Virginia, and his Colleagues for opening up the dialogue and consideration of an issue so basic in the area of national concern.

In the way of background, I come here today after more than 20 years of study of our international trade policies. During the past 12 years, I have served as chairman of the House committee with jurisdiction in the subject matter of the impact of imports on U.S. employment. I think my statements in the past might qualify me as a witness friendly to the curtailment of excessive imports of any kind, and certainly so in the area of strategic production, such as specialty steel.

This type of essential production is necessarily one of low volume productivity as compared to basic steel. Basic steel is yet another problem area, and must be considered in a different setting.

We are concerned today with the future of specialty steel, its role in the past in the past growth and struggles of our Nation in peace and war, and the present crisis as it affects our future ability to survive in a time of national emergency.

Specialty steels occupy a peculiar position in our military posture. Without these steels, our defensive and offensive capabilities would necessarily depend upon the crudest of weapons. Virtually all aspects are affected: the transportation of men and material, the cultivation and processing of full rations, and even the clothing and covers for modern mobile military units.

It has been said that in the beginning our Navy was made up of wooden ships and iron men. Today we have iron ships, but without tool steel we would soon return to wooden ships. Some might find this acceptable, but other nations would still have the iron ships.

No other nation has decreased its specialty steel capability. No other nation allows its defense posture to be so dependent upon imports and the friendship and good will of other nations. And I am speaking of other nations as those that were old when we were born. In spite of all the centuries of time they have somehow endured. Will our future hold the same promise?

The tool steel industry was in a reasonably healthy condition insofar as its share of the American market was concerned until 1967-68. What caused the turnaround? The answer is easy: the Voluntary Steel Agreement between the United States steel producers and the foreign steel exporters.

This agreement, like all voluntary agreements ever made in international trade, has been honored by its breach. The smart exporters never honored the most vital part of the agreement, the maintenance of the product mix of types of steel by percentages of the base year shipments to the United States.

It does not require genius to realize that low priced basic steel displaced by high priced special steel will add greater volume to a fixed volume of shipments. It does not take too much of a tonnage change in specialty steel to produce a depressed market since one steel sells by the pound while the other sells by the ton. The price of a ton of reinforcing rods for road building would only buy limited pounds of special alloy drill rods. Our competitors therefore

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shifted their product mix and our deterioration in jobs and production started immediately.

Mr. Chairman, the situation is grave for the near future.

Without this important segment of the steel industry in its healthiest condition, we will not have the training programs on the job to provide for the inevitable day when we are forced to produce our own arms and materials.

Our plants will be gone, or even worse, they will be warehouses for foreign made steels, with warehousemen instead of skilled technicians. This may sound like a gloom and doom statement; it is intended as such.

My committee has predicted the demise of certain facilities for a dozen years. I can show you an empty specialty steel plant in my district and the modern relics of bygone facilities in every nook and corner of my State.

If it is true in glass, tile, sporting goods, electronics, lamps, watches, automobiles, and hundreds of other products, what makes any of us think it can't happen in specialty steel.

Mr. Chairman, it is not only the direct shipments of these steels that threaten the future of this industry and our country, it is the billions of dollars worth of production imported in all the above listed items. I say this because not a single product in the entire world of trade can be produced without specialty steel in one form or another.

There is one single but irrefutable fact of life in the world of international trade. Trade anywhere, internally or externally, is a commercial venture. Its purpose in being is profit in one form or another; first, last, and always (this is only questionable when the trade policies of the U.S. in international markets is studied and judged).

To attribute any other purposes to trade in our modern world is to deal in theory, philosophy, and dreams. Dreams, I might add, that have turned to nightmares to harassed company executives and millions of unemployed families in our Nation.

No nation can indulge in free trade without recognizing the fact that the high cost nation must necessarily suffer if it does not protect itself against well made, cheaper priced materials and products.

Time will not permit the relating of our sorry history in this field of endeavor since the day of the Armistice, November 11, 1918, until this date. April 7, 1972. Enough to say that contrary to free traders, the crash in 1929 did not come from high tariffs. From 1919 until 1930 we operated under the Fordny McComb Act-during these years (1919-1930-11 years) we imported $43 billion worth of foreign products mainly from our Allies-Great Britain, France, Holland, and Italy. The payment plan for these goods is another story.

Suffice it to say that the crash came in 1929, one year before the scape-goat Smoot-Hawley Tariff Act, which never got off the ground after President Roosevelt's election.

The $43 billion of imports incidentally actually displaced about $100 billion worth of U.S. production.

A study made in 1951 by Lloyd Lewis ("Tariffs A Case For Protection") shows an astonishing similarity between 1920, the highest year of imports in our history ($5,278,000,000 with an average tariff of 5.3% on all goods dutiable and free), and 1948, the first year of the Geneva agreements, when we imported the highest volume of imports from the beginning of the Republic-a total of $7,124.000,000, with the average tariff being 5.6% of all goods.

The significant point is that 1920 had the highest import and the lowest tariff in history to that point. The average tariff from 1920 to 1940 was between 14– 15% on all goods up to 1944, when the tariff again dropped to 5.6% and the imports reached their highest peak. There is no need to tell you the story of the steady growth of imports and the disastrous drop in tariff from 1944 on.

Let the record of this hearing show that we have had a balance of payments deficit from 1961 to 1972-with more than $9 billion in 1971 alone. In spite of free trade, or maybe because of it, the imports of high cost products (such as specialty steel) have created a balance of payments liability. And because of low cost product imports (such as textiles and footwear), our unemployment is greater than anytime since the great depression. (Some labor economists tend to prove this is the greatest unemployment in history.)

Mr. Chairman, I have tried to make the point that the specialty steel industry is essential to our safety and well being. To save the specialty steel industry

alone, however, would be of no avail. Our Nation cannot survive with only a sound heart, while the rest of the body suffers from a spreading cancer.

The cancer in this case is "free trade". In his, "The Breakdown of Money", Christopher Hollis neatly stacked the chips for counting when he detailed the premises of free trade and the resultant conclusions. The essence of his work was to the effect that free trade and its many manipulations caused debts to be created; debts that could be neither serviced nor paid.

How true! The international balance sheet shows that as of 1970, we owe our trading partners $63 billion, all but $3 billion to be paid on demand, and only about $11 billion in gold reserve left to our name. We do have a huge credit of many billions, none of which, however, is collectible on demand since it represents cold war debts, soft loans, and plain and fancy giveaways under various titles.

While this committee is primarily interested in how imports of specialty steel affect our defense and military posture, it is imperative that we show cause why this industry cannot compete in a free trade world :

(1) We have high wages-from five to ten times as much as wages paid elsewhere;

(2) We have a high tax structure;

(3) We have organized labor with work rules;

(4) We have federal and state fair labor standards laws; and (5) We have antitrust, antimonopoly, anticartel laws.

In most of our exporting industries, we also have fixed freight, utility, social security, pension, welfare, unemployment compensation, and workmens compensation costs that no other nation has all of. These charges add more cost to our products than all foreign production costs-including labor, shipping, and profit. That is one reason we cannot compete.

The tool steel industry has no subsidies, and its foreign counterparts enjoy subsidies in one form or another. That is another reason it cannot compete. We have free labor as opposed to controlled labor, and that is another reason we cannot compete.

Our trade agreements are based on theory, while those of our competitors are based upon dollars and sense (spelled SENSE). That is another reason we cannot compete.

Because we pay a bonus by way of investment incentives, tax considerations, and import concessions, billions of dollars have been invested in foreign production to be sent to the U.S. for consumption. And because American corporations have therefore become international in character-dressed in striped pants and cutaway coats instead of business suits and coveralls—is another and the latest reason we cannot compete.

We finance development banks, world banks, and other loan and grants agencies. We encourage overseas production to further stifle our expanison and flood our markets. That is another reason we cannot compete.

Because money is the name of the game and the bankers control it, and because politics has gone beyond the traditional type of candidate, and big names plus big money control the purse strings of the political arena, and because foreign trade offers the most for the least-well, help is available for many causes, not excluding political aspirations. And maybe that is another reason we cannot compete.

Maybe the Congress has had its head in the sand. Maybe labor has closed its eyes to one true fact-there can be no free labor in a free trade world. Maybe the news media hasn't the time or inclination to inform our Nation of the impending crisis in imports. And, finally, maybe the President and the State Department should heed the advice of President Fraknlin Roosevelt when he said, "Never tie our international trade to the will of the wisp of international diplomacy".

Perhaps, Mr. Chairman, this is the real reason we cannot compete.

Mr. Chairman, I would like the following items to accompany my remarks for the record:

(1) Correspondence regarding the closure of specialty metals activities at the Blairsville Westinghouse plant in my district;

(2) The most recent financial data of the Latrobe Steel Company, a specialty steel producer in my district;

(3) My letter to my Colleagues regarding the plight of the U.S. steel industry:

and

(4) Relevant excerpts from statements I made in the Congressional Record.