5. The Nation has historically called upon the horological industry as its sole source of precision timepieces, its immediate and primary source for military precision-timing devices and for the development and production of other miniature and subminiature instruments.

6. Since the horological industry is uniquely capable of producing precision items to the most minute possible tolerances, the Nation will, in another emergency, again call upon the industry as it has in the past.

7. In a period of emergency, there is a military and civilian demand for the products of watch and clock makers which is greater than the supply which existing domestic capacity is able to satisfy.

8. There is a critical shortage of domestic jewel bearing productive capacity.

9. The jeweled-watch industry is uniquely equipped to massproduce jewel bearings.

10 The jeweled-watch production of the jeweled-watch segment of the American horological industry is presently below a safe mobilization base level.

11. The trend of watch and clock production in the other segments of the industry indicates that it will soon be below a safe mobilization base level.

CONCLUSION

It is axiomatic that in time of national emergency, all components of our industrial machine are essential to the country's defense. American watch and clock makers, however, are peculiarly essential, not only in periods of crisis but, in the considered judgment of the subcommittee, in peacetime as well. Their availability in wartime depends upon a continuous peacetime existence at an operating level which utilizes, to the fullest extent possible, the unique, indispensable skills which the horological industry possesses.

RECOMMENDATION

The subcommittee recommends that the chairman of the Senate Committee on Armed Services transmit this report to the President of the United States and to appropriate officials of the executive branch of the Government for their immediate consideration, in order that the Executive may determine and prescribe effective means for the preservation of the critical skills of the watch- and clock-maker's

art.

2d Session

PART 2

DEFENSE ESSENTIALITY AND
FOREIGN ECONOMIC POLICY

CASE STUDY: WATCH INDUSTRY AND
PRECISION SKILLS

ADDITIONAL VIEWS OF SENATOR GOLDWATER AND REPRESENTATIVES WOLCOTT AND CURTIS

OF THE

JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES

71000

JULY 25 (legislative day, JULY 16), 1956.—Ordered to be printed

UNITED STATES

GOVERNMENT PRINTING OFFICE

WASHINGTON: 1956

JULY 25 (legislative day, JULY 16), 1956.-Ordered to be printed

Mr. GOLDWATER, from the Joint Economic Committee, submitted the following

ADDITIONAL VIEWS OF SENATOR GOLDWATER AND REPRESENTATIVES WOLCOTT AND CURTIS

It should first be emphasized that part 1 of this report is not a report of the full Joint Economic Committee. Instead, as is indicated on page 1, it is a report of a subcommittee, with additional comments, which was simply approved for transmission to the Congress by the full committee. It is specifically understood that approval for transmittal is not to be construed as adoption of the subcommittee's report by the full committec.

Certain of the conclusions and recommendations in the report are subject to the following criticism:

1. They go beyond the study of the subcommittee.

2. They are contrary to the arguments and observations contained in the body of the report.

3. They are inconsistent with each other.

On other conclusions and recommendations, though within the scope of the study and having a basis set forth in the report, in our judgment, the better logic points to different conclusions.

With this preamble the following observations are made:

1. Comment. It is agreed that "a community of economically healthy nations devoted to living in harmony and tied by mutually beneficial trade" is "not the least factor of our national security. But in light of the subject matter of the report, it should be affirmatively stated, and it is not, that the greatest factor of national security depends upon the economic health of the United States.

2. Comment. It is axiomatic that mobilization thinking must go far beyond outmoded ideas of continental defense, but how far must mobilization thinking go beyond up-to-date ideas of continental defense?

4. Comment. The entire testimony about the possible types of future wars which the subcommittee itself found in its studies contradicts conclusion No. 4. The real conclusion is that it is not safe to make any firm assumption as to which type of war we might have to fight. Certainly, it is highly probable that we will fight a war where there will be time to convert our industry from war to peace. The time lag probably will have to be improved over the "period of years,” the subcommittee assumes.

5. Comment.-The subcommittee made no study which justifies such a statement that "Thermonuclear war would destroy civilization and mankind everywhere." Certainly there is a school of thought which advances this idea, but there are many other schools of thought which take sharp issue with this bit of human conceit.

6. Comment. It is hard to understand how the conclusion is reached that "economic support of this effort implies current production and stockpiling of material needed rather than massive conversion of industry." "Of course, through the use of the adjective "massive," the statement is not so easily refutable. However, the very burden of the study is the question of how much industrial conversion might be feasibly planned for the various types of potential wars. - The use of the adjective "massive" in a positive statement on another matter takes away the very point at issue and under discussion.

12. Comment. This subcommittee made no study of tariffs versus other methods of trade regulation and is hardly in a position to comment upon the feasibility of one method of regulating trade over another without such a study.

13. Comment.-Just what does the term "like-minded nations" refer to? Like-minded on judgments of economic-political philosophy?

WATCHES

2. Comment. This is directly contrary to what evidence the subcommittee adduced about possible wars in the future. One of the most likely of all wars is nonthermonuclear where Russian moves over the face of Western Europe with its land armies. Such a movement would amount to a war in which Switzerland is cut off from us and our own factories would still be intact. The decision as to whether a peripheral war is to become thermonuclear is largely one that the United States will make. In Korea, we decided against it. In Indochina, we decided against it. In the taking over of Czechoslovakia, not only did we decide against it, we decided to do nothing. In Greece we decided against it. Now on what basis does the subcommittee make such an assumption in recommendation 2 on watches? 3. Comment. If conclusion 2 is unsupported, conclusion 3 falls also. 5. Comment.-It is hard to understand the data from whence it is concluded that trade restrictions will not preserve the domestic industry. The entire reason for the position of the Swiss importers is that they want the business; the position of the domestic producer is that they want the business. The trade restriction as presently drawn gives the business to the domestic producer. It isn't a question of "preservation" as such as much as it is a question of "growth" with the growing economy.

The argument that trade restriction is a burden on other industries and consumers can be applied to any restriction on anything. The