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BOSTON PUBLIC LIBRARY 



3 9999 06317 361 9 



OFFICE OF NATIONAL RECOVERY ADMINISTRATION 
DIVISION OF REVIEW 



FOREIGN TRADE UNDER THE NATIONAL INDUSTRIAL RECOVERY ACT 

By 

H. D. Gresham 

Assisted by 

J. G. Burke D. S. Green 

M. E. Gross J. W. McBride 

WORK MATERIALS NO. 37 

IN TWO VOLUMES 

VOLUME I 



FOREIGN TRADE STUDIES SECTION 
MARCH, 1936 



OFFICE OF NATIONAL RECOVERY ADMINISTRATION 
DIVISION OF REVIEW 



FOREIGN TR^DE UNDER THE NATIONAL INDUSTRIAL RECOVERY ACT 

By 

H.D. Gr sham 

Assisted "by 

J.C. Burkr D.S. Green 
M.E. Gross J.W. McBride 



FOREIGN TRADE STUDIES SECTION 
MARCH, 1936 - 



LL.S. cZX^yLt /to zrytAsyv-^LcAs 



y*yff 






foreword 

This study of "Foreign Trade under the Rational Industrial Recovery 
Act", divided into four Darts, was prepared by H. D. Gresham with the as- 
sistance of J. Go Burke, I). S. Green, J. W. McBride, and M. U. Gross. 
Material aid also was rendered "by M. Richardson, "3. ID. Gerry, F. W. Robertson, 
W. D. Bu-szerd, L. H. Brin, and F, Rheingold. 

The study represents, an attempt: (a) to indicate the relative im- 
portance of Foreign trade in the commerce of the T T nited States, the ex~ 
tent to which it has declined, rnd the effect of that decline on the 
-oroblem of recovery to which the National Industrial Recovery Act was 
addressed; (b) to analyze the provisions of the Act relating to foreign 
trade; (c) to -orovide a review of the administration cf Section 3 (e) of 
the Act and to evaluate that section as a method of dealing with the 
-oroblem of import competition in connection with the program of industrial 
recovery; (&) to survey NRA experience in the regulation of imports and 
export trade by means of code provisions, and (e) to study the problems 
of industrial regulation to which foreign trade gave rise, particularly 
the changing comoetitive relationshiDS between domestic and foreign 
commerce. 

The bulk of the material examined was drawn from the files of the 
National Recovery Administration. Other important materials were made 
available by the United States Tariff Commission, particularly from the 
record o£ its investigations of complaints under Section 3 (e). Other 
sources drawn upon are indicated in the footnotes and in the biblio- 
graphies. 

The study is not exhaustive, particularly those parts which relate 
to the effects of the ooeration of specific codes or code orovisions on 
foreign trade. The limits of time and personnel made impossible either 
a complete examination of all of the materials in NRA files and elsewhere 
or a detailed analysis of all of the imolications of particular aspects 
of the area of experience explored. Accordingly, it must be left for 
future research to develop the full details and significance of those 
parts which necessarily could be covered only in a general way in this 
report. 

The results of the study are briefly indicated in the g-eneral 
summary which appears after the table of contents. 

At the back of this report will be found a brief statement of the 
studies undertaken by the Division of Review. 



L. G. Marshall, 
Director, Division of Review 



March 23, 1936 



9829 



FOREIGN TRADE UNDER THE 



National industrial recovery act 



Table; of Contents 
SUMMARY 



FART A: THE COMPETITIVE F0 5ITI0N OF THE UNITED STATES IN INTER - 
' 'NATIONAL TRADE. 1937-20 THROUGH 1934 



CHARTER I . THE DECLINE OF THE FOREIGN TRADE OF THE UNITED 
STATES, 1927-29 TO 1934 

.... Page 

Number 

I . Summary of the main developments of the war and 

po st-v/ar veer s 

A. Fro olems of Po st~War Readjustment 29 

3. Economic Aspects of Post-War -Expansion-"..'; .-. 29 

C . Extent of Recovery by 1925 30 

D. Europe Leads in the Rapid Expansion of 1925-29 30 

E. Restoration of the International Gold Standard 31 

F. Conflicting Commercial Folicies 31 

G. Results of the Policy of Restriction 31 

H. Adverse effect of Foreign Commercial Agreements 

on United States Export Trade 34 

II. Cumulative Effects of Foreign Commercial and 

Financial Policies on United States Trade 34 

A. Relative Decline in the Export Trade Position of 

the United States 34 

B. Relative Shares of Principal Trading Countries in the 
United States Market 40 

C. Reciprocal Losses of the United States and the 

Other Principal Trading Countries 42 

CHAPTER II. CHANGES IN THE COMPETITIVE POSITION OF THE 
UNITED STATES IK INTERNATIONAL TRADE, 
1927-29 TO 1934 



I . Shifting 'Distribution of World Trade 44 

II. Fluctuating Exchange Values of Currencies 47 

III . Changing Price Levels 50 

A. The Role of Prices 50 

3. Interaction of Fluctuating Price Levels 52 

C. Shifting Terms of Trade 52 

9829 _!_ 



Fage 

Number 

IV. Changing Competitive Relationships 58 

A. Comparison of National Price Levels in 

Terms of Gold 58 

3. Comparison of the Price Levels of United 

States and Foreign Industrial Products 60 

CHAPTER III. FOREIGN TRADE AND INDUSTRIAL RECOVERY 

I. Comparison of Foreign Trade and Industrial Activity/- 64 

II. Importance of Total Exports and Imports in the 

Commerce of the United States 64 

III. The Importance of United States Exports of Manufactures, 
the Amount of their Decline, and Loss of Industrial 
Employment 6S 

IV. The Relation of Declining Imports of Manufactured 

Goods to Domestic Froduction of Manufactures.. 67 

' . -oOo- 



LIST OF TABLES 



Table 

Sumter 



1 World Trade, 1926-1934 33 

2 Comparative Indexes of Value (gold) and quant ity of 
Total Exports and Imports of Seven Principal Trading 
Countries 38 

3 Comparative Changes in the United States Share of Total 
Merchandise Imports into Six Other Principal Trading 

Countr ies .................. • • • 39 

4 Comparative Changes in Proportion of Total United States 
Imports Supplied by Six Other Principal Trading 

Countries 41 

5 Decline in the Level of the Dollar Value of United 
States Exports to Six Principal Trading Countries, 
and of Their Exports to the United. States as indi- 
cated log the Difference Betveen the Trade of 1933 

and the Average of 1927-29 42 

6 Distribution of World Trade Among the Principal Trading 
Countries ,♦. * 45 

7 Comparison of Annual Merchandise Trade as Measured "by 
Reciprocal Imports Between the United States and each 
of the Other Leading Trading Coun.trie.s. from 1927-29 to 
1934........ ' 46 

8 Indexes of Trend in Dollar Exchange Values of Foreign 
Currencies 53 



9829 



-li- 



Table Page 

rJuraber Kumber 

9 Comparative Changes in the Indexes of Quantity, Price, 
end Value of United States and Total World Exports 
and Impor t s .«. 54 

10 Comparative Changes in the Indexes of Export, Import 
and Internal Wholesale Price Levels in Seven Important 
Commercial Countries 57 

11 Comparative Changes in the Indexes of Wholesale Price 

Levels in Seven Principal Trading Countries 59 

12 Trends in Price Competition of Foreign Industrial 

Froducts in the United States Market 62 

13 Comparison of the Trend of Exports and Imports with 
Industrial Activity in Seven Principal Trading Countries.... 65 



CHA3TS 

I. Comparative changes in the Quantities and Values (gold) 

of World Exports and of the Exports of the Seven Principal 
Trading Countries 1926-1934 35 

II. Comparative Changes in the Quantities and Values (gold) 
of World Imports and of the Imports of the Seven 
Frincipal Trading Countries, 1926-1934 37 

III. Indexes of Trend in Dollar Exchange Value of Foreign 

Currencies 1930-1935 48 

IV. Comparative Changes in the Indexes of Wholesale Price 

Levels in Seven Frincipal Trading Countries, 1927-1^29, 
Quarterly, Adjusted to Gold 51 

V. Divergence of Indexes of Industrial Prices in Great 

Britain, France, and Germany, from the United States 61 



9829 



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91 
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Page 
numb.?: 

3. Review and Checking of Information Submitted 

in Support of Complaints 92 

4. Supplementary Investigation 92 

5. Preparation of Surveys of Information 92 

5. Special Procedure in Handling Ccnrolaints 

~ Relating to Joint KRA-AAA Codes 93 

7. Preparation of Reports and Recommendations to 

the President 93 

B. Investigation by the Tariff Commission 93 

C. Tariff Commission Repdrts and Recommendations to 

the President 94 

IV. Coordination of Commercial Policy 94 

CHAPTER V. IJULIB3R, &EK3RAL CHARACTER, SCOPE, AiID 
DISPOSITIOi: OP COi.iPLAINTS 

I. Informal Complaints 96 

A. lumber and General Character 95 

II. Formal Complaints 102 

A. Fumber o.nd General Character 102 

1. Import Restrictions Sought * 103 

2. Tariff and Code Status of Complainant Industries 104 

3. Formal Complaints by Industry Groups. . * • . Ill 

4. Formal Complaints by Economic Classes Ill 

. 5. Principal Competing Countries Ill 

B. Comparison of the Trend of Imports and Production... 112 

C. Volume of Production, Employment, and Payroll 

Involved in Formal Complaints 125 

D. Disposition of Investigated Cases 131 

III. Restriction or Regulation of Imports by Leans of "Fees" 

and Informal Agreements 132 

A. Import Fees 132 

1. Cotton Rugs 132 

2. Latches 135 

B. Quantitative Limitation b T ' Informal Agreement 135 

1. Cotton Rugs 135 

2. ITbod— cased Lead Pencils 135 

3. Red Cedsr Shingles 136 

4. Operation of Informal Agreements 137 

CIAPTER VI. ANALYSIS OF CHANGES IK THE COMPETITIVE POSITION 
OF CODED INDUSTRIES INVOLVED III C0MPLAI1ITS INVESTIGATED 
UNDER SECTI01T 3 (e), II: RELATION TO IMPORTS 

I. Tariff Status of Complaint Commodities 138 

II. Sources and Nature of Available Statistics 133 

III. Changes in Production, Employment, and Wages, Following 

Adoption of ERA Codes 139 

A. Production 139 

3. Emplo2 r ment 143 

C. Images 144 

D. Comparison of Changes in Production, Employment, 

and TJage s 145 

IV. Changes in Costs of Production Following Adoption 

of ERA Codes 146 

9829 _ v _ 



A. Changes, in th.e. General Level of Industrial Costs.. 

B. • -Changes, in Costs of Production of Specific 

• Commodities 

1. .Changes in Total Costs 

2. Changes in the Cost of Labor, Materials, ; nd 

. . .in Expense of "Overhead" 

3. Range of Cost Changes oy Commodities and 

Convoahies 



Page 

number 

146 

146 
146 

147 

150 



V. 
VI. 



Changes in. Selling Prices Following "ERA Codes or 

Agreements '. ' 

Changes in the Costs of Importation 



CHAPTER VII. PROBLEMS INVOLVED II" THE ADMINISTRATION 
.... . _ _ OF SECTION 3 (e) 

I. Difficulties in Obtaining Adequate and Accurate 

Information 

II. Problems Involved in Determining the Nature and Extent 

Of. Competition 

A. ..What Part of Imports and ".."hat part of Domestic 

. . Production are Competitive . . . 

B.. .What is a. "Substantial" Importation:' 

III. Problems Involved in Determining the Ratio of Imports 

.to Production 



156 
156 



158 



160 

160 
160 

161 



IV. Problems Involved in Measuring the Effect of Codes or 

Agreements upon Competitive Relationships 

A. Problems Involved in Determining Costs or Cost 

Change s . .' 

V. The Problems of Determining the. Effect of such Factors as 
Those Involved in the Trade practice provisions of Codes. 

A. Provisions Affecting Price Relationships 

B. Other Unfair methods of Conroetition 



Table 
number ; 



LIST OP TABLES 



1 .formal Complaints under Section 3 (e): Tariff and Code 

Status 

2 Formal Compla.ints under Section 3 (e): Production, 

Imports, Ratios of Imports to Production, and 
' Principal Sources of Imports 

3 Value of Production, Number of Establishments, 

Employees, and Payroll involved in Formal Complaints 
under Section 3 (e)...' 

4 Imports for Consumption of Cotton Rugs, by months, 

January 1933 - April 1935.'.'. , . . • .'.'..' 

5 Imports for Consumption Of Lead P'r'n'c'il's, not metal- 

cased, from Japan, by months, January 1933 to 

June 1935. ..::...-. 

6 Imports of Shingles, monthly, January 1933 - June 1935.. 

7 Percentage Changes in production, Employment, and ".'."ages, 

Following Adoption : of NBA •Code's.'.'.'.'.'.'.'.'. .' 

8 Percentage of Changes in Costs Following Adoption of 

NRA Codes, by Commodities 

9829 -vi- 



162 

162 

164 
165 
165 

Page 
number 

105 

113 

127 
134 



136 
137 

140 
149 



. 



LIST OF TABLES (Cont'd) 
Table Page 

ntunber number 

9 Percentage Increases in Costs Following Adoption 

of UFA Codes, "by Commodities and Companies 151 

10 Percentage Changes in Cost of Production, Selling 
Prices, and Unit Value of Imports, Following 
Adoption of UFA Codes (Selected periods before 
and tinder code) 153 



APPSUDIX TO PAUT 3(*) 



(*) The Appendix to Part B, containing separate studies of Section 
3 (e) cormlaint problems, is bound separately. 



9829 _ vii . 



PA3T C: L.P03TS AaD LUPO. 



CHAPTER I. PROVISIONS 0" 2133 ACT RELATING TO 
I1.IP0RT REGULATIOIT 

ciapter ii. ihPGRTABCE a a colpositio:: or lports 



Pace 

number 



I. Importance of Imports in United States Commerce 171 

A. Imports in Relation to Domestic Production an<? 

TJIiolesale Trade 171 

3, Imports as a Source of Pj ■ • u terials and of 

Cons jner Goods , . . . 171 

C. Imports as a Source of Federal Revenue 172 

3. Comparison 0" Imports and Urroorts 172 

E. Course of Imports. , . . . 173 

II. Foreign Control Over Imports. . . , . 173 

III. Composition of Imports. 173 

A. Economic Classes and Principal Commodities 173 

3. Sources of Imports: 175 

C. Seasonalit; - in Imports 179 

3. Port Activit" in Inroorts , , . . , . . 1S1 



CHAPTER III. THE IaPOlEIJSC BUSINESS 



o 



I. Definitions. Ig2. 

A. The Object ant. Act of Importation; imports 1S2 

3. Identity of the Importer loU 

II. Structure of the Importin - Business 1S7 

A. Procedure Involved in Importation 1S7 

3. Types of Importers 1SS> 

C. Optional Channels for Acquiring Foreign Llerchan&Ise. . 1S>9 

1. Import Channels for Industrial Ravr materials.. . . ISO 

2. Import Channels for Consumer Goods... 193 

3. Distribution Channels for Imports 193 

E, Instability in the Dusiness Arran ;ements of importers 195 

?. Office Set-up of Import Fizms According to Type 197 

G. Basic Teed for Junctional Analysis of Import Trades.. 138 

III. Commodity Specialization in the Importing Business....*.... 200 

IV. Labor Aspects 0:" the Importing Business. 203 

A. Number of Employees 203 

1. Iluaber of Enployees Per Co - roa^ 203 

3. Hours, Uages, and Duties of Employees 205 

C. Import Labor Analysis by Trades. 20o 

V. Geographic Distribution of Import Firms 202 

VI. Capital Requirements of Import fir s. 209 

VII. Organization of Importers in Trade Associations 209 



9 823 



-Till- 



CHAPTER IV. ILiPORTEES III TEE IT. 5.. A. CODE SET-UP 

Pace 

number 

I. Evolution of Polic" to Govern Code Coverage of Inporters... 212 
A. The- Emphasis on "Product" in Early Code Organization.. 212 

Function Recognized in Horizontal Codes for 

Distribution Trrdes 213 

C. Consideration of Special Code's for Inporters 213 

II. Inclusion of Inporters Within Industry Codes 213 

A. Industry Codes in Which Inporters' rrere Embraced 

Specifically by Definition 213 

1. Motives for Specific Inclusion of Inporters 215 

E. Inporters in I n &ustry Cod.es b; r 3ro'ad Construction of 

Definition. . ; ; 21b 

C. Industry Codes in which Inporters were Excluded "by 

Implication. ...;......". 2l6 

D. Code Coverage of Incidental Inporters 21c 

E. Representation of Inporters iri 'Formulation of 

• Industry Codes 217 

III. The General Importing Trade Code 218 

A. Bachgrc-und -of Code Formulation 21S 

3. The Public Hearing 219 

1. Analysis of Sponsorship. 220 

2. Ihe Code' Area of Jurisdiction 221 

C. The Code, as Approved or. July 20, 193b 221 

D. Extent- of Code Allegiance. 223 

E. Administration of the General Importing Trade Code.... 227 

1. Adjustment of Conflicts' in Code Jurisdiction 22S 

2. Other Code Administration Problems 235 

3. Compliance Under the Importing Trade Code 236 

4. Public Herring on Proposed Amendments, March 

11, 1535 '• 2 37 

Summary of Code Operation 239 



CHAPTER V. IIPA EXPERIENCE IK DEALIITG WITH II.POET 
PROELEIIS III C0KKSCTI0I7 WITH CODES 

Page 
• number 

I. Background of Other Import Control Legislation 242 

II. Provisions of the Act Relating to the Regulr tion of Imports 243 

III. Import Regulation sought by Industry Groups 244 

A. Regulation Sought Under '"the Importing Trade Code 244 

3. Import Regulation Sought Under Section j (e) of the Act245 

1. Code Provisions for Piling Complaints 245 

2. Types of Action Suggested by Section 

3 (e) Petitioners ' 24S 

IV. Import Regulation Provided in 'Industry 'Codes 247 

A. Cross-Section Analysis of Provisions Affecting 

Importers in 37 Industry Codes which Embraced 
Importers 247 



v. 



S329 



-1 ->'_ 



Page 
number 

1. Scope of Code Provisions Affecting Inports.... 2*+7 

2. IvRA. Policy "Jith H e spect to Code Provisions . 

Affecting Inports 2^3 

' 3« Control of Production and Importation 2Ug 

k. Design Piracy 2US 

5. Standards. 2ky. 

0. ' Consignment Spies 25O 

7. Price Provisions 25O 

S. Terns of Sale 252 

9« Exceptions from Industry Code Provisions to 

lieet Import Competition 252 

3. Miscellaneous Industry Code Provisions which 

Affected Importers 252 

C. Provisions and Proposals for Uniformity in 

Trade Practices 253 

V. Outstanding Examples of Code Regulation of Imports 25^- 

A. The Petroleun Code. 255 

3. Tlie Alcoholic Beverage Importing Code 256 

C. The Lumber and Timber Products Code 256 

1. General Provisions Affecting Inports 256 

2. Divisions which Specifically Included Inporters25S 

3. Quota Regulation of Inports in the Philippine 

Mahogany Subdivision 253 

VI. Control of Inports in Connection with but not Under 

KRA Codes. . .' 263 

A. The Northwest Logging Agreement 26U 

3. The Newsprint Agreement 269 

Appendix to Part C 271 



LIST 03 TA3L3S 

Table Page 

number number 

1 Trend in United States Imports (Value) ; 
Indices of Quantity, Value and Unit Value, 
and of "Thole sale Prices, for Selected Periods 
since 1731 ancl - i° r Years Since 1923 17*+ 

2 Trend in Imports (Value) "oy Economic Classes, 
and Trend in Percentage Patio of Each C-roxip 
to Total, for Selected Periods from 1313 to 

1S2U, and for Years Since I32S 175 

3 ' Indices of Trend in Quantity and Unit Value of 

Imports, by Economic Classes, 1313 anc "- 132 3- 
-1334 ' 177 

h- Bating of Chief Import Commodities Uithin 
Each Economic Class, on the Basis of 153*+ 
Import Value 17S 

5 Trends in Per cent Each Continent has Tur- 
ni shed. of Total United States Imports in 
each Economic Class; Selected periods Since 
lgo^; ISO 



9223 ~r-- 



Table 
number 



race 

number 



7 
g 

o 
J 



Comparative Use of Different Distribution 
Channels by Commodity Groups of Importers 
and Import Agents 

Comparative Aspects of Principal Import Trade: 
Labor Aspects of Principal Imroort Trades. 



• • • • • 



196 
202 
207 



Coverage of Selected Inporting Trades by the 
Importing Trade Code (and supplements), as 
Indicated by. Records of Code Assessment pay- 
ments, for First Half of 1935 22^ 



Diagram I -j^i 

Diagram II ]_ol4 



Chart 1 20U 



S829 



-XI- 



PA RT D. EXPORTS AND EXPORTING UNDER NRA CODES 



I 

II 



III. 



IV, 



CHAPTER I. PROVISIONS OF THE ACT Al'TD OTHER LAWS RELATING 

TO EXPORTS 



The Authority to Regulate Exaorts 

The Anti-trust Lena 

A. The Sherman Act 

3. The Federal Trade Commission Act 

C . The Clayton Act 

The Export Trade Act 

A. Scope and Intent 

3. Its Relation to the Anti-trust Lavs 

Relation of the Exoort Trade Act to the NIRA. 



Page 
Number 

283 

283 
283 
284 
284 
284 
284 
284 
285 



CHAPTER II. IMPORTANCE AND COMPOSITION OF SXF0RT3 



I. The Importance of Exports to. United States Commerce..... 

II. The Trend of Exports 

Ill . Exports toy Economic Classes 

IV. Exports toy Frincipal Countries and Trading Areas 

V. Exports toy Economic Classes and Trading Areas 

VI. Exports oy Groups of Manufactures and Semi-manufactures. 

VII. Exports of Duratole and Non-duratole Manufactures 

VIII. Water-borne Export Tonnage 

IX. Operations under the Export Trade Act 



288 
289 
291 
293 
295 
297 
303 
306 
306 



CHAPTER III. EXPORT ORGANIZATION AMD TECHNIQUE 



I . The Meaning of "Export Trade" 

A. Definition of "Exports" 

3. The Status of Territories and Possessions with 

reference to Exports 

II. The General Character of Export Operations 

A. Export Frotolems not present in Domestic Trade.. 
3. The Decline in Indirect Export Merchandising... 

Ill . Export Organization 

A. Types of Exporters 

3. Exporters in the Census of American Business... 



308 
308 

308 
309 
309 
311 
312 
312 
313 



CHAPTER IV. EXPORTS UNDER THE CODES 



I 

II 



III. 
IV. 

9829 



The General Treatment of Imports and Exports under 
the Codes 

Export Provisions of the Codes 

A. Model Provision , 

3. Scope of Export Provisions , 

C. Sales, Prices, Trade Practices - General 

D. Standards, Quality, Marking, etc.. , 

E. Production Allocation and Control 

Confusion in the Geographical Definition of Exports, 
Export Representation in Code Making 



317 
318 
318 
318 
319 
320 
320 
322 
323 



-XI 1- 



LIST OF TABLES 

Table Fage 

Humber iuirber 

1 Production of Exportable Goods and the Proportion 

Exported, 1899-1933, inclusive 289 

2 Exports of Domestic Merchandise (Value) ; Indices of 

Quantity, Value, and Unit Values, and of Whole- 
sale Prices, for Selected Feriods since 1791 and 

for Years since 192? 290 

5 Trend in Exports of Domestic Merchandise by 

Economic Classes and Trend, in Percentage Ratio 

of Each Group to Total, for Selected Periods 

from 1913 to 1924, and for Years since 1925 292 

4 Trend of the United States Exports by Great Trade 

Areas and Principal Countries, Average 1927-1929 

and Yearly, 1930-1934 294 

5 Percentage Each Content has Taken of Total Exports 

in Each Economic Class 296 

6 Hating of Chief Industrial Export Commodities, Semi- 

manufactures and Manufactures , 1933-1934 298 

7 Trend in Patios of United States Exports of Certain 

Commodities to their Production, Census years 

1927-1933 300 

8 Durable and Non-durable Manufactured Goods - Domestic 

Production, Employment and Payrolls and Exports, 

1927-29 - 1935 305 

9 United States Water-borne Export Tonnage by 

Nationality of Ship, 1927-1934 306 

10 Ratio of Exports under the Export Trade Act to 

Total Goods Exported from the United States, 

1926-1934 307 

11 Comparative use of Distribution Channels by Groups 

of Exporters and Export Agents (sample) 1933 315 

12 General data-— Principal Export Trades, Taken 

from Census of Wholesale Distribution, Vol. 1, 1933 316 



oOo 

BIBLIOGRAPHY (Parts A, 3, C and D) 325 



9829 



-XI 11- 



_1_ 



FART A. THE COiytPETITIVS POSITION Oj THE UNITED STa T£S IN 
INTEPJATI ONAL TRA DE, 1927-29 T HROUGH 1934 . 

SUMiC&iLY 

Discussion of the recent economic depression in the United St-tes 
and of the forces that led to it must give consideration to foreign trade, 
since practically every phase of the domestic economy is affected in some 
manner by its variations. A "brief review of the ^orld economic con- 
ditions following the war will give some idea why during the depression 
the foreign trade of this country declined more than domestic production, 
and relatively more than did total world trade, or the foreign commerce 
of any of the six other .principal trading countries. 

The demands of the world war caused overproduction in agriculture 
and industry in the United States and shifted its position from a debtor 
to a creditor nation. luring the first post-war decade the United States 
exported goods in large volume, made heavy foreign investments, and con- 
structed many branch factories abroad. luring this period foreign 
countries rapidly restored and expanded agricultural and industrial pro- 
duction, and made strong efforts to improve their fiscal positions. 
Practically all countries raised barriers against imports. There were 
widespread and successful efforts to return to the gold standard, and 
during 1927-3P9 world currency relations generally had assumed a rela- 
tive measure of stability. After this interval of comparative 
equilibrium numerous important countries found it expedient to take 
further and in .:\piay cases drastic steps to curtail imports and to 
force exports, primarily for purposes of securing their currencies. 
These trade restrictions operated to accellerate the fall of prices in 
export countries, to suspend foreign investments, to hamper debtor 
countries in meeting ooligations, and eventually to oring on financial 
panic. Between September 1931, and the spring of 1933, tariff in- 
creases, general or partial, were imposed bv 70 countries, and quantita- 
tive restriction of imports instituted by 39 countries. A great number 
of new tariff or trade agreements were negotiated granting bilateral 
concessions largely at the expense of third countries, and the Ottawa 
Agreements (193?) granted intra-British Empire concessions. The United 
States was party to none of these and her export trade was adversely 
affected by them. 

Trade restrictions were followed by a continued decline in prices, 
rendering it impossible to maintain the existing credit structure which 
reouired an expanded volume of world trade at higher prices. Foreshadow- 
ed by the currency trouble of Urugua/, Argentina, and. Brazil, in 19C9, 
financial difficulties increased, and py April 1933, some 35 countries 
had suspended the gold standard, 27 were 'exercising official exchange 
controls, and many others had established controls over commodity imports. 

.<;Orld export trade declined 64 percent from the 1927-29 average 
to 1933, although the index of Quantity was only 23 percent less. Dur- 
ing this period, United States exports declined 74 percent in value 
(gold) and 46 percent in quantity. This was a greater decline than was 
suffered by any of the other principal trading countries, either in 

9829 



-?_ 



quantity or value. 

The United States, United Kingdom, Canada, Germany, France, Japan 
and Italy account for about half of the world's exports and imports. The 
six other countries take aoout bG percent of the United States exports, 
and from them comes about 40 percent of its imports. In five of these 
(excepting Japan,) the United States share of total imports diminished 
to a greater extent from the average in 1927-29 to 1933 than did their 
shares in the United States market. The reciprocal trade losses of the 
United States and these five countries indicate that the "losses" for 
the United States were greater in absolute amount in their markets than 
were any of their losses in the United States market. United States 
exports to Japan declined to a less extent in absolute amount than 
Japanese exports to the United States. 

The total volume of world trade and of the trade of ea oh country 
(except Japan) has declined sharply in quantity and value since 1927-29. 
But France and the United Kingdom have taken larger shares of world im- 
ports, Italy and Germany increasing shares of world exports, while Canada 
has about maintained her relative export position, but has taken a small- 
er share of world imports; Japan has made relative gains in both exports 
and imports. The share of the United States in world exports has declined 
steadily from an average of 15.5 percent in 1927-29 to 10.9 percent 
in 1933, and in world imports, from 12.1 7:ercent to 8.9 percent. 

The United States has consistently had an active merchandise 
trade balance with five of these countries, and with the sixth, Japan, 
since ls30. The decline of United States exports to these countries 
from the 1927-29 level to 1933 ranged from 44 percent in the exports 
to France to 73 percent in exports to Italy. 

The disastrous consequence oi the wholesale collapse of world 
currencies in the period 1931-33 can hardly be adequately described, 
but the' unprecedented price decline and the consequent collapse of 
credit structures resulted in widespread financial failures, the flight 
of funds, and in the progressive shrink? -e of world trade by roughly $22 
billion (64 percent) in the short period of four years. 

Based on an index of Quarterly averages, the value of the pound 
sterling in terms of dollars declined more than 30 percent in a period 
of roughly 12 months ending in the fourth cuarter of 1932, almost reach- 
ing the low level of the currencies of Argentina and Brazil which began 
their downward course in 1929. During the same period the Canadian 
dollar decline about 12 percent, ' Probably the most disturbing develop- 
ment of the period 'was the decline of more than 50 percent in the ex- 
change \ralue (gold) of the Japanese yen, which considerably increased 
the competitive impact thrujgh the 'world of expanding low-cost pro- 
duction in Japan. 

The depreciation of the United States dollar in 1933 approximately 
restored the competitive relationships between the United States, the 
United Kingdom, and Canada. It established a favorable competitive 

9829 



.re- 



position for United States products in the markets ol Continental Europe, 
while it operated as an additional handicap for products of those coun- 
tries in the American market. Japanese producers, however, have con- 
tinued to benefit iron an exchange advantage in the United States market 
and in relation to United States products in foreign markets. 

The nrice level (gold) of internationally traced commodities in 
1933 was 46 percent of the 1927-29 average. The index of (gold) prices 
of United States exnorts has been higher than the v.orld average, although 
lo^er than the general level of internal prices. luring the depression, 
the price index of United States imports has been lo"er than for the 
'•'or 1 d, indicating that the United States has been able to Duy its imports 
(largely raw materials) more cheaply than it was willing to sell its exports 
(principally manufactured goods). Since the devaluation of the dollar, 
however, the disparity between United States and world export prices 
has practically disappeared, and export prices have continued at a level 
somewhat below internal prices. 

The "gold bloc" countries have been able to purchase imports (large- 
ly raw materials) on favorable terms, but the growing disparity between 
their internal and world prices has weakened their trading positions. 
Canada has had an adverse trading position because her exports are largely 
raw materials and her imports manufactured goods. The United Kingdom has 
enjoyed relatively favorable trading ratios since 1929 ana has had a 
marked recovery in industrial activity and employment. 

The decline in tne exchange value of the yen gave Japan an advantage 
for her exports in world markets. However, on the basis of 1927-29 rela- 
tionships, Japanese import prices were higher than internal prices in 1933 
and 1934; in iact, in 1934 imports into Japan were bought at prices (gold) 
about 40 percent higher thai the level at which exports were sold, as 
compared with 1927-29 relationships. 

The index of the general level of wholesale prices, corrected to 
the gold equivalent, and based on 1927-29 relationships, in 1933 was 68 
for Germany, 6 2 for France, £6 lor Italy, 54 for the United States, 50 
for Canada, 45 for the United Kingdom ana 34 for Italy, Fivergence of 
foreign r,rice levels (gold) from that of the United States indicates a 
competitive advantage or disadvantage ior the products of other countries 
not onlv in the American market, but also in rivalry with American products 
in other toreign markets. In 1932, the divergence for the United Kingdom 
was -16, for Canada -6, for Japan -24, and for r -ermany /4. Since tne re- 
valuation of the dollar the advantages have been materially reduced for 
the United Kingdom and Canada, and somewhat for Japan, but the "gold bloc" 
countries have been placed in increasingly adverse positions, e.g. the 
disadvantage increased to / 25 for Germany and- / 13 for France in 1934. 

As compared with relationships prevailing in 1927-29, the indexes 
of national price levels of industrial products, corrected to gold equiva- 
lents, in France, Germany and the United Kingdom, diverged sharnly from 
the United States index during subsequent years. The British index fell 

9629 



sharply from lb30 to 1932 but regrined its former relationship after the 
depreciation of the dollar. The German index did not diverge far from 
the American index until after the first ryuar'ter of 1932, out sobseouently 
rose cO percent aoove it. ly 1932 tin u'rench index ras 20 percent below 
its 1927-29 relation to the United States level, but by 1934 it had risen 
40 percent above. 

Comparison of the trend oi exPQX'ts and imports with industrial 
activity in seven principal trading countries indicates that in 1932 and 
1933 industrial activity in the United States had declined to a greater 
extent that that of any other important commercial country; that its 
export trade had fallen to a greater extent than its industrial activity, 
and relatively more than had the export trade of any of the other 
principal trading countries. The index of industrial employment in the 
United States in 193? was also lover than those for the other countries. 

These comparisons lead to the conclusion that foreign trade has 
been the most vulnerable aspect of the national economy and, therefore, 
inevitaoly contributed in. large part to the general collapse of economic 
activity,, 

The ratio oi the total value of United States exports to the 
value of domestic production of movable goods (including transportation 
costs) "ras 9.9 in 1927-29 and 6.6 in 1933. The corresponding ratios of 
the value of imports (not including customs duties) to the value of 
domestic production (excluding transportation costs) were 9 percent and 
6 percent, respectively. 

Manufactured goods accounted for 73 percent oi total exports in 
1929 and Gl percent in 1933. Their value in 1929 represented about 6 
percent of the net value of domestic production of manufactures, and 5 
percent in 1933. 

The absolute decline in the value of manufactures exported (1933 
compared with 1929) was equivalent to 5.9 percent of the net value of 
products manufactured in 1929. It is impossible to make adjustment for 
changes in the volume of exports, "'age rates, and production methods, 
but applying this 3.9 percent to the average total number of wage 
earners in manufacturing in 1929, indicates that the decline in the 
export trade Qf the United States would represent a loss in employment 
to more than 500,000 wage earners in manufacturing. It has been esti- 
mated that the loss in export trade between 1929 and 1931 caused a loss 
of employment to roughly 100,000 '"p?e earners in forestry, fishing, 
mining -xnd transportation, and to 50,000 salaried employees. Sample data 
from, the Census of American Business, 1933, indicates a loss of employment 
to about 100,000 persons since 1929 in the field of distribution as a re- 
sult of the decline of foreign trade. These estimates indicate an aggre- 
gate loss in emnlovment to more than 750,000 persons resulting from the 
decrease in United States foreign trade. 



9829 



PART B. _ \SECT I01T 3 (e) OF THE ITAIIOl'AL IITTOSTRlAIi 
~ RECOO JY ACT. AID ITS AD?.[IHISI.R A.TIC:: 



SUiJUARY 



Prior to the National Industrial Recovery Act the importation of 
foreign goods into the United States was subject to the anti-trust laws, 
including the provisions of the Wilson Tariff Act (1394), prohibiting 
any importing combination having as ics object an increase in the 
prices of imported articles or of any domestic manufactured article 
into which such imports .night enter; the Federal Trade Commission and 
Clayton Acts (1914), among other things, prohibited unfair methods of 
competition, price discrimination, and monopolies. In contrast, the 
Export Trade Act, enacted in 1918, had exempted from the anti-trust 
laws associations engage:! solely in the business of exporting, with, 
however, a provise against restraint of trade within the United States 
or the export trade of any domestic competitor. Section 5 of the 1TIRA 
not only exempted importing, when properly codified, from the Sherman 
Act and the Federal Trade Commission and Clayton Acts, "out also from 
the anti-trust provisions of the Wilson Trriff Act, which applied ex- 
clusively to imports. 

Other laws relating to imports end importing which were not 
affected by the 1"IRA, included the Anti-dumping Act (1921 ) and the 
Tariff Act (1930). The provisions of the Anti-dumping Act are applicable 
to all imported merchandise, whether dutiable or free, and provide fcr 
the imposition of a special dumping duty when the purchase price of an 
imported article is less than the foreign market value, if it is found 
that a domestic industry is being or is likely to be injured or is pre- 
vented from being established. 

The provisions of the Tariff Act of 1950 which are of most interest 
in connection with an account of the administration of Section 3 (e) of 
the "/IRA, are as follows: Section 1 provides for the imposition of 
customs duties upon all articles listed in Schedules 1 to 15, in- 
clusive, roughly one-third of total imports in recent years, by value, 
Section 20 1 provides that the articles listed in Schedule 16, covering 
approximately two-thirds of total imports by value, shall "be exempt from 
duty. S ection 301 on certain reciprocal conditions, provides for the 
free entry from the Philippine Islands of articles, the growth or product 
of the Philip nine Islands or of the United States, or of both, which do 
not contain foreign materials' to the value of more than 20 per cent of 
their total value. Section 303 provides, with respect to articles on the 
dutiable list, for the imposition of additional duties to countervail any 
bounty or grant bestowed by the country of origin. Section 555 pro- 
vides, with respect to articles. on the dutiable list, for such in- 
creases or decreases in the existing rates of duty as are necessary to 
equalize the difference in costs of production of domestic articles and 
like or similar foreign articles, provided that in no case shall the 
total increase or decrease exceed 50 per centum. Section 557 declares 
unlawful any unfair methods of competition in import trade, the effect 

9829 



-6- ■ • 

or tendency of which is to destroy or substantially injure an industry 
efficiently or economi-cally operated, or to ->revont the establishment 
of such an industry or to restrtviv or monopolize trade. 

The section of the Tariff Act of 1930 which provided for changes 
in existing rates of duty by executive authority was not considered 
adequate to meet the emergency conditions expected to prevail in 
connection v;ith the program of recovery provided ir the rational 
Industrial Recovery Act for the reason that only such changes could bo 
made as night be found by investigation of the Tariff Commission to be 
necessary to equalize differences in the costs of production of 
domestic articles and of like or similar doreign articles produced 
in the "principal competing country. This view was based primarily upon' 
the extreme difficulty of ascertaining foreign and domestic costs during, 
a period of rapid changes in costs, prices, and the exchange value of.' . 
currencies. Other sections of the Tariff Act were considered inadequate 
because of the relatively narrow limits of their application. 

During consideration of the Recovery Act in Congress the view was 
expressed by both government officials and representatives of industry 
that the effectiveness of the program projected under the Act, in- 
volving increased prices and costs of production, would be greatly 
restricted, . if not destroyed, unless there were some provision giving 
the President authority to restrict imports which would be in com- 
petition with domestic producers obliged to comply with codes fixing 
maximum hours of labor, minimum wages, etc. 

Since one objective of the Recovery Program was to raise the 
domestic price level and establish certain standards throughout the 
whole cf industry, the possible insufficiency of existing tariff 
measures was considered by Congress, and the following views, among 
others, were expressed: 

1. The question of Tariff regulation was entirely foreign 
to legislation designed primarily to solve a domestic problem. 

2. The President should be given authority to embargo im- 
ports, in order to preserve the American market for the American pro- 
ducer. 

3. The objective of the Recovery Program could not be 
attained unless the President had authority to deal with imports not 
produced under code "standards". 

4. Such authority was provided in Section 3 (a) in con- 
junction with Section 5 (b). 

Section 3 (e) was not included in the Act as passed by the Plouse, 
but the Senate Finance Committee proposed an amendment giving the 
Executive authority to embargo imports. Subsequently, the Senate 
approved a substitute amendment, omitting the embargo feature, but 
providing broad authority to impose additional- fees, quantitative 
limitations, or other terms and conditions. ■ 



9829 



-7- 

Section 3 (e) was broader both in the scope of its application and 

the basis upon which action was authorized, than any other provision 
of existing law relati:i t ;, to the import trade, viz. (l) it applied to 
articles on the free list,' as well as those which were dutiable; (?.) 
it incorporated the bread concent of articles comp etitive with domestic 
industry as contrasted with lihe or similar articles , thereby in- 
dicating a willingness or intent to base restrictions on both direct 
and indirect factors of competition; and (o) the action authorized in- 
cluded additional fees, quotas, or other terms and conditions, in what- 
ever amount or character the Executive should find necessary in order 
that imports might not endanger domestic standards, as contrasted with 
Section 356 of the Tariff Act, which contemplated merely the equaliza- 
tion of production costs. 

TJith reference to the status of territories and possessions, the 
Attorney General ruled that the code provisions of the "/IRA were not 
applicable in the Philipnine Islands, and that Section 3 (e) could be 
used to restrict or regulate fl imports" therefrom. 

There were certain conditions precedent to an action under Section 
3 (e). Apart from the fact that the President might act on bis own 
motion, the Section wa,s available only to organizations which had com- 
plied with Title I, by subscribing to an approved code or agreement. 
However, the Section was not applicable unless articles were being 
imported (l) in substantial quantities or increasing ratio to- domestic 
production, "and (2) on terms and under conditions endangering the 
maintenance of a code standard;' mere threat of importation or possible 
danger not being sufficient. 

When a. complaint complied with these conditions, the Section 
further required, (l) an investigation, and (2) findings of fact "oy the 
President, after which he was . authorized to specify the use of any one 
or more of the prescribed restrictions in such degree end combination 
as to him appeared necessary. 

Consideration of the views expressed during Congressional debate 
by members of the committees which sponsored .the Recovery Act, and of 
the proposal for the continuation of the Tariff Truce made ^oy the 
American delegation at the World Economic Conference in 1933, indicated 
that Section 3 (c) was intended exclusively as a means of protecting 
code standards. Stated negatively, it wa.s not intended to provide 
general protection, apart from the maintenance of 1TRA. codes, or as a 
means of directly extending employment or of correcting conditions 
which came into existence prior to the codification of domestic industry. 

An Imports Division was established in KRA by Office Order ho. 33 
to handle all requests under Section 3 (e), and to formulate reports 
and recommendations to the President with respect thereto. In the 
performance of its duties, the Imports Division received the active 
cooperation of the United States Tariff Commission. It also received 
valuable assistance from the Bureau of Foreign and Domestic Commerce, 
the Bureau, of Customs, the Exports-Import Section of the Agricultural 
Adjustment Administration, and other departments and agencies. 



9829 



The practical problem of administration made it necessary to re- 
quire that requests for investigations be supported "by specific facts. 
Accordingly, Office Order No. 37 was issued containing a schedule of 
information designed to assist in the presentation of concrete statis- 
tical evidence in support of complaints, including: (a) a statement of 
evidence of compliance with Title I; (b) description find tariff treat- 
ment of the commodity; (c) course of -oroduction, exports and imports 
during recent years; (d) employment and payroll data for the entire 
industry and the section competitive with imports; (e) the trend of 
prices; and (f) costs of production prior to and following the adoption 
of NRA codes. 

In general, the procedure following in handling complaints under 
Section 3 (e) included; (a) preliminary conversations or correspondence 
with complainants for the purpose of assisting in the preparation and 
presentation of an adequate body of essential information; (b) the de- 
termination of compliance by checking the status of complainants under 
codes or agreements; (c) the review and checking of information sub- 
mitted in support of complaints; (d) supplementary research and investi- 
gation including principally the assembly of information from other govern- 
mental agencies, from importers, and from such published or other sources 
as might be available; and (e) the formulation of draft-reports to the 
President, summarizing the available information aid recommending that 
either the complaints be dismissed, or that they be referred to the 
Tariff Commission for further investigation. 

Executive Order No. 6353 of October 23, 1933 specified that when 
directed by the President, the United States Tariff Commission should 
make an immediate investigation giving precedence over all other matters, 
to give public notice and hold a public hearing, to make its findings of 
facts and recommendations to the President, and to transmit a co-oy of its 
report to the Administrator for Industrial Recovery. Section 5 of that 
Order directed that the Administrator recommend to the President, on the 
basis of finding and recommendations of the Tariff Commission, such '. 
action as he might deem best devised to effectuate the policy of Title I 
of the National Industrial Recovery Act, 

The scope of the problems of import competition involved in the 
administration of Section 3 (e) is indicated by (a) the fact that 
"informal" complaints were received with respect to roughly 200 imported 
articles, and "formal" complaints against imports of 56 additional com- 
modities, and (b) the fact that the formal complaints involved 3,500 
establishments in industry groups having a total output in 1933 amounting 
to over one billion dollars; the portion of these same groups alleged to 
be in direct aompetition with imports included 1800 establishments having 
an annual output in 1333 valued (roughly) at over one-third of a billion 
dollars. 

Broadly speaking, the formal complaints were those submitted in 
accordance with the prescribed procedure and supported by sufficient 
information to indicate the existence of problems of competition which 
appeared to justify preliminary investigation. The informal cases were 
those with respect to which the limited data available either indicated 
clearly that no basis for action existed or were entirely insufficient 
to establish a prima facie case; the problems varied in character and 

9820 



decree of severity but necessitated considerable investigation of a pre- 
liminary character, particularly in connection with obtaining and 
analysing statistical information with reference to each problem. 

Reasonably accurate information regarding the number of employees 
is available for 46, and payrolls for 41, formal complaints. These 
included industries employing about 550,000 persons and payrolls of 
over $33C f ,00Q,000 in 1933, and of these, roughly 128,000 wage earners 
and payrolls of more than $75,000,000 were alleged to be in direct 
competition with imports. 

These 56 formal complaints involved 62 separate paragraphs of the 
Tariff Act of 1950. The height of duties (ad valorem or equivalent) 
for 1933 provided for the commodities which were the subject of these 
complaints may be summarized as' follows: free of duty, 14; under 25 
per cent, 9,; 25 to 50 per cent, 23; 51 to 75 per cent, 14; 76 to 100 
per cent, 5; and over 100 per cent, 5. 

At the time of f iling, . 24 formal complaints were based upon ad- 
■herence to the President's Reemployment Agreement, the remaining 32 
were based upon adherence to ERA codes. 

The 56 investigated. complaints under Section 3 (e) wore classified 
as follows by industry groups: textiles and their products, 17; miscel- 
laneous .manufacturers, 8; chemicals and allied products, 7; nonferrous 
metals, and" food products, 5 each; rubber products, forest products, 
and paper and allied products, 3 each; iron and steel, 2; leather, 1; 
products of petroleum and coal, 1; and stone, clay and glass products, 1. 

3y economic classes, these complaints were classified as follows: 
crude materials, 1; crude foodstuffs, 1; manufactured foodstuffs, 4; 
semi-manufactures, 18; and finished manufactures, 31. 

Twenty-six different countries wore suppliers of the commodities 
named in the formal petitions for relief. Japan was the source of im- 
ports in 22 cases, the United Kingdom and Germany, in 10 cases each, 
and Canada, in 9 causes. 

Of the 56 complaints which were made subject Of preliminary in- 
vestigation by the ERA, 17 were recommended for further action; 7 were 
dismissed; and 8 were withdrawn by complainants after preliminary in- 
vestigation. Twenty-three cases were pending at- the time of the 
Supreme Court's decision in the Schechter Case, May 27, 1935, and several 
of these ha,d only recently been received. 

Of the 17 cases recommended for further action, relief was granted 
with respect to 4, and approved with respect to 1; 5 were dismissed 
after investigation by the Tariff Commission, and 7 were pending be- 
fore the Tariff Commission. 

Of the 39 industry -groups involved in Section 3 (e) complaints 
for which production data were available for the periods before and 
following adherence to codes or agreements, 15 showed a decline in 
production ranging from 1 to 69 per cent. : Of these, 4 had declined 
10 per cent or less; 6, from 11 to 25 per cent; 4, from 26 to 50 per 

9829 



-10- 

cent, and 1 over 50 per cent. Twenty-four groups showed increases 
ranging as follows: 10 per cent or less, S; 11 to 35 per cent, 8; 
from 36 to 70 per cent, 7; 116 per cent, 1; 131 per cent, 1; and 237 
per cent, 1. 

Of the 33 industry groups for v.'hich employment data were available, 
7 declined as follows; 5, under 35 per cent; one, 27 per cent, and one, 
35 per cent. The remaining 36 groups increased as follows: 5, 10 per 
cent or less; 8, 11 to 25 per cent; 10, 26 to 50 per cent; 3, 51 to CO 
per cent. 

Of tbe 33 industry groups for which wage data were available, 
hourly wage rates declined in 3 cases, and weekly wages in 7 cases. 
Tlie declines in hourly wage.rates were 1.5 per cent, 18.3 per cent, 
and 34 per cent, respectively. The declines in weekly wages were less 
than 10 per cent in 5 cases; 11.7 per cent in 1 case; and 35.5- per cent 
in another. The 51 increases in hourly wage rates were as follows: 5 
cases, 10 per cent or less; 16 cases, 11 to 35 per cent; 4 cases, from 
3S to 50 per cent; 5, from 51 to 75 per cent, and 1 case, 112.6 per cent. 
The 24 increases in weekly wages were as follows: 8, 10 per cent or less; 
12, 11 to 35 per cent, and 4, 26 to 40 per cent. 

Data with respect to changes in the cost of production were avail- 
able for 31 of the industry groups, of which only two showed declines, 
one, 1.9 per cent, 'and the other a range. of 6.6 to 11.5 per cent. Costs 
increased for 29 industry groups as follows: 5, 10 per cent or less, 10, 
11 to 25 per cent; 13, 36 to 50 per cent; 1, 77.2 per cent, and 1, 
82.9 per cent. 

Cost data with respect to labor, materials and overhead ?;ere avail- 
able for only 8 complaints, representing 1G separate .commodity items. 
These are summarized as follows: M aterial costs increased an average of 
30 per cent for 17 items (ranging from 0.7 per cent to 102 per cent), 
and decreased 0.9 per cent for one. labor costs increased an average 
of 30 per cent for 16 items (ranging from l.C per cent to. 105 per cent); 
only two showed declines,' averaging 2.5 per cent. Expenses or overhead 
increased for 8 items, averaging 19.5 per cent; decreased for 6, aver- 
aging 18 per cent; and 4 showed no change. 

The substantial increase in costiij of production during the Re- 
covery Program, generally speaking, was more than offset by the. de- 
preciation of the dollar. In most of the cases devaluation increased 
the dollar cost of imports more than enough to compensate the effects 
of the Recovery Program. Exception should be made of those cases in- 
volving Japan as the source of imports for the reason that the exchange 
value of the yen declined to an even greater extent than that of the 
dollar. 

Data were assembled indicating changes in the selling prices of 
40 of the industry groups involved in Section 3 (e) complaints. For 
two groups, the selling prices remained unchanged; for 5 groups the 
average decline was 12.3 per cent (ranging from 1.5 to 31.5 per cent). 
Thirty-four groups showed increases, ranging from 2.6 to 79.2 per cent. 
They are summarized as follows: 10 per cent or under, 8; 11 to 25 per 
cent, 11; 26 to 53 per cent, 11; and 69 to 79 per cent, 4. 

9829 



-11- 



industry groups for jpjiich changes in the unit values 
nputed, three showed no change; 11 showed decreases 



For 40 <"f the 
of imports were compute 
ranging f-rom 0.2 to 5c, 6 per cent, as* follows! 5, 10 per cent or 
under; 4, 11 to 30 per cent; 1, 56 per cent; and 1, 56.6 per cent. 
Twenty-six 'showed- increases ranging from 0.3 to 67.8 per cent, dis- 
tributed as follows: 10 per cent or under, 7;- 11 to 25.5 per cent, 7; 
26 to 50 per cent, 8; and 51 to 70 per cent, 4, 

The principal problems encountered in connection with the admin- 
i-str'at'ion of Section 3 (e) may be summarized under four headings: (a) 
difficulties in obtaining adequate and accurate information, (b) 
difficulties in determining the nature and extent of competition; (c) 
difficulties in determining the ratio of imports to production, and 
(d) difficulties in measuring the effect of codes or agreements upon 
competitive relationships; & 

'g The practical problem of handling the large number of complaints 
together with the necessity of limiting the use of -Section 3 (e) to 
the maintenance of code standards made it necessary that complaints be 
supported by a reasonable minimum of factual information. • In an 
effort to obtain such information a schedule was prepared which out- 
lined the type Of' information necessary as a basis for decision on the 
question whether a Tariff Commission investigation v/as warranted in 
accordance with the terms cf Section 3 (e). In addition, complainants 
were assisted in obtaining information available from official sources, 
and in some -cases where industrial statistics were Clearly unobtainable, 
preliminary field investigations were conducted. 

Despite the urgency of particular problems with respect to which 
strong protests of actual or ^mminent injury were made, and of the 
obvious necessity of an adequate supporting information, efforts were 
made by complainants in some cases tc avoid the preparation of either 
part or all of the information requested. Occasionally it developed 
that only partial information had been submitted, either for the 
purpose of avoiding statistical or clerical expense, or for the reason 
that other or more complete data would have tended to weaken the case. 

The absence of adequate industrial statistics occasioned delay in 
almost all cases. However, the efforts to obtain information were 
reasonably successful in most ca„ses. 

The second problem arose in connection with the necessity of 
delimiting areas of competition in those cases which involved con- 
siderable overlapping in the ''qualities,' uses, and prices of the im- 
ported and domestic products concerned. The problem of reaching an 
administrative conclusion was often complicated by sharply opposing 
conditions on the part of importers and representatives of domestic 
industry. 

h 

The third major problem was that of determining to what extent 
the ratio of imports to domestic production should increase in order 
to justify a formal investigation, and possibly restrictive action. 
The rule of reason obviously required a significant increase in the 
relative importance of imports, but decision in particular cases eeuld 



9829 



-13- 

be reached only after a careful study of the extent to which the re- 
flationshiip had fluctuated during a representative past period. In 
making such a study it was necessary, among other things, to take 
account of the factor of seasonality, the extent to which increasing 
import's was the result of temporary developments, fluctuating values 
of foreign exchange, and the relation of current production to stocks 
on hand and domestic sales. 

The fourth problem or series of problems had to do with measuring 
the effect of codes or agreements upon competitive relationships. This 
obviously required a study of costs of production and prices, since the 
effects of numerous competitive influences were reflected in them. The 
chief difficulties were inherent in the problem of computing costs, in 
connection with ?;hich it was necessary, in every case, to take account, 
among other things, of high cost and low? cost business units, and 
variation in their size or financial strength, wide variations in the 
inventories of raw materials or stocks on hand, purchased at widely 
varyin L . prices, and the extent to which the problem of competition was 
limited, geographically, as a result of transportation costs and other 
factors. 

Efforts to determine the effect of other factors, such as those 
involved in the trade practice provisions o'f codes, were largely un- 
successful because of the lack of information regarding the trade 
practice provisions which prevailed prior to the codes, and because of 
the varying degree of compliance with such provisions. 



9829 



-13- 



PART C. Ii POETS AID Ii PORTING UTDIfr 1I3A 0QIT5 

SUI 1 A3Y 

The regulation of importing by means of codes was clearly pro- 
vided in those rovisions of Title I of the National Industrial Re- 
covery Act which delegated to the president authority to approve and 
make effective codes of fair. competition for any trade or industry or 
subdivision thereof. The necessity for establishing effective control 
of imports was the subject of considerable debate during the discussion 
of the Act in Congress. Attention was largely focused on the problem 
of competition from low-cost imports and as a result of disagreement 
regarding the adequacy of import control by means of codes or code pro- 
visions, a special section '"'as incorporated in the Act (Section 3 (e)) 
authorizing -the President to impose fees, quantitative limitations, or 
other terms and conditions in order to prevent imports from rendering 
ineffective or seriously endangering the maintenance of industry codes. 

Independent of the instrumentality provided in Section 3 (e) for 
the control of import competition, a rather complicated system of im- 
port regulation was set up Tind:r the general code-making authority of 
the Act. This included a general code for importing trades, and a va- 
ried assortment of code provisions for the regulation of imports and 
importing "*in a. considerable number of codes. As a result of this scat- 
tered coverage of importe. s and of the absence of any clear understand- 
ing of the functional cnej-acteristics of importing, or of any planned 
effort to delimit the areas of importing from the general field of in- 
dustrial and commercial operations, inevitably there was considerable 
confusion in administration and in the effects of the code program upon 
imports and importing operations. 

By way of introduction to an account of imports and importing 
under ERA codes, it is appropriate, first of all, to indicate briefly 
the importance of imports in the commerce of the United States, and 
their part in the problem to which the NIBA was directed. Approxi- 
mately one-fifth of the raw materials going into domestic industry are 
secured from foreign sources, and a number of important foodstuffs, 
such as coffee, bananas, cocoa, tea, and most spices, come exclusively 
from abroad. The balance of imports, i. e., products of foreign manu- 
facture, are about one-thirtieth of the aggregate value of the domestic 
output of finished products. Customs receipts derived from imports 
have represented about 15 per cent of total Federal revenues during 
recent years. 

The aggregate value of annual imports exceeded $4 billion from 
1925 through 1929, dropped thereafter to below $1.5 billion in 1933, 
and the i rose to $1.64 billion in 1934, after revaluation of the dol- 
lar. Crude foodstuffs represented 15 p-r cent of total 1934 imports 
(value) and otner crude materials accounted for 30 per cent; prepared 



-14- 



foods tuffs were roughly 15 per cent; the remaining 40 per cent of im- 
ports was split 'between semi-manufactures and finished manufactures. 
Coffee led the list of individual items of import in 1934 (8^ of the 
general aggregate), followed "by cane sugar (7'j), crude rubber (6^), 
newsprint (4.7;*), and raw silk (4.4$), Other important items of im- 
port included tin semi-manufactures, woodpulp, undressed furs, distilled 
liquors, hides and skins, copper semi-manufactures, burlap, inedible 
vegetable oils and fats, crude petroleum, unmanufactured tobacco, bananas, 
fish and fish products, and cotton cloth. 

The market supply of a number of commodities on which domestic 
industries are considerably dependent, is suoject to control either by 
the foreign producers working in combination or by the governments of 
the dominating country of source. This is true with respect to cof- 
fee, rubber, tin, potash, sisal, and quinine, among others. 

Compared to 83 per cent in the period 1891-1- 00, ports along the 
Atlantic Coast handled in 1931-33 hardly 70 per cent of the total na- 
tional import clearance. The prevailing ratio of inpo">-ts through the 
Gulf ports to total imports is about 7 per cent; that for Pacific ports 
9 per cent; and that for imports across the Canadian Eorder is over 12 
per cent. The port of New York now handles aoout 51 per cent of all 
imports (value), Boston and Philadelphia each about 6 per cent. 

Importing is a subdivision of the broader field of distribution, 
but it has additional distinctive functional aspects. Importers must 
frequently make commitments far ahead, necessitating longer credit terms; 
they must resort to cables in keeping oosted on the supply and. price 
situation and in transmitting rush orders. Their problems of trans- 
portation and insurance are more conrnlew. They must be informed on cur- 
rency exchange vaUies and tariff regulations. They have more difficulty 
in securing redress on claims, and thev must attend to customs formali- 
ties incident to clearance at ports of origin and destination. 

The treatment of importing in "J3A code administration was charac- 
terized ~uy considerable confusion on account of the absence of a clear 
conception of the distinctive functional aspects of importing operations, 
and of variations in the formal integration of importing functions with 
other functions in various commodity lines. 

In view of the rather loose use of the term "importer" in every- 
day trade parlance, and of the varied interpretations of the term by 
administ' ative agencies, it is not possible to delimit the exact area 
properly covered "oy that term. A narrow definition would embrace: 
persons who bring in foreign goods, clea.r them through customs, and 
either use them in further manufacture, or offer them for sale in their 
original packages. A broader concept embraces all parties figuring in 
'the act of importation and/or in the disposal of imported goods. 



9829 



-15- 



The character cf the import transaction varies with the degree 
to which the domestic consumer handles the separate operations himself, 
entrusts them to intermediaries of .his selection, or le<aves them to the 
foreign producer or shipper. Imported goods may "be acquired directly 
by the consumer in foreign markets, or they may be secured indirectly 
through local branch sales offices or agents for foreign producers or 
merchants; or they can he purchased in this market through merchants who 
are wholesalers or jobbers; or the acquisition can be entrusted to brok- 
ers . 

Distinct from the direct importation performed ''oy domestic manu- 
facturers or retailers, professional importers are those -wholesalers, 
dealers, commission houses, and brokers who are organized especially to 
purchase and to import foreign goods for sale or for the account of 
others, or who specialize in the technical services of importing. The 
principal types of professional importers comprise (1) import dealers 
who purchase and import foreign goods for resale; (2) import commission 
agents who book domestic orders and handle importation procedure for 
the account of foreign producers or exporters, on a commission basis; 
(3) branch sales offices maintained in a United States market by for- 
eign producers or merchants; (4) import brokers who handle the acaui- 
sition of foreign commodities for the account of domestic industrial 
consumers, and who do not participate normally in payment or in the 
formalities" of importation; and (-5) . auxiliary importing agencies, such 
as, for example, customs house brokers and freight forwarders who are 
entrusted frequently with the technical formalities of clearing mer- 
chandise through customs and forwarding it to domestic destination. 
The difficulty in classifying. individual firms on the basis of the func- 
tional character of their import operations, axises from the fact that . 
numerous import firms handle several comnodities and several foreign ac- 
counts, each on a different basis. 

The ls33 Census of American Eusiness, which embraces a large 
sampling of professional importers, indicates that 56 per cent of the 
aggregate value of their sales in that year were made to manufacturers,- 
12 per cent to wholesalers, 31 per cent to retailers, and 1 per cent ■ 
to ultimate consumers. Raw material sales in most cases were made di- 
rect to manufacturers. Wholesalers were' utilized to a greater extent 
in foodstuffs, drugs and hardware. Importers dealt directly with re- 
tailers more generally in house furnishings, jewelry, electrical goods, 
and toys. Sales of import agents were predominately in the group of 
agricultural raw materials. 

Import firms extend over a wide range, from the standpoint of 
organization size. At one extreme are the large br f ?nch sales offices 
maintained in Eew York by Am t org Trading Corporation and by Mitsui and 
Company, which on the average employ approximately 150 persons each in 
their importing departments; at the other extreme are the hundreds of 
commission sales agencies conducted by individuals, with the assist- 
ance of from one to three employees and with insignificant capital. 



)829 



-16- 



For the reason that importers must be keen students of markets, 
and judges of quality, importing is organized on a basis of commodity 
specialization. There are numerous importers dealing exclusively in 
chinaware, linen piece goods, woolens, toys, and cutlery. Some im- 
porters of foodstuffs specialize, for example, in coffee, spices, or 
sugar, but it is more common for them to handle a number of related 
lines in the foodstuffs group. 'Jhile many of the large importing houses 
handle a number of commodities, separate departments are set up usually 
to look after each line. 

Census returns indicate that professional importers number up- 
wards of- 2,000, and that they gave employment to somewhat over 23,000 
persons in 1929, and 18,000 in 1333. About 72 per cent of the employ- 
ees are male, occupied mostly in such duties as accounting, selling, 
and general clerical. Female workers are mostly stenographers and 
clerks. The more common types of employees in the importing trade in- 
clude foreign exchange clerks, cable clerks, shipping clerks, language 
specialists, stenographers, warehouse employees, and delivery boys. 
Wages were reduced considerably after 1329, but rarely to such degree 
as to fall below the minimum prescribed in the PPJL and in the Importing 
Trade Code. 

In a sampling of 335 import firms subscribing to the Importing 
Trade Code, 243 firms maintained staffs of from one to 5 persons; 197 
firms from 4 to 6 persons; 148 firms from 7 to 10; 177 firms from 11 
to 20; 72 firms from 21 to 50, and 13 employed over 50 persons. In the 
1933 wholesale census sampling, the import trades showing the highest 
average number of employees per firm, were leaf tobacco (28), dry goods 
(19), raw silk (16), grocery specialties (15), and notions (12); and the 
trades showing the lowest average were books and periodicals (1.3), coal 
(2), brick and tile (2.1), bags and bagging (2.3), m& cordage and twine 
(2.3). 

Returns in the 193? Census of American Business indicate that 
New York City accounted for 67 per cent of the total number of import 
firms in that sampling, 75 per cent of total sales, and 72 per cent of 
the total number of employees. Concentration of import firms in Hew 
York City is due to its central location in the populous and industrial- 
ly important northeastern region, to the constant inflow of buvers, to 
the headquarters maintained there by prominent industrial corporations, 
transportation companies, and financial institutions. 

Capital requirements in the importing business extend over a 
wide range, and depend upon the functions asstimed. Firms operating on 
a commission agency or broker basis reauire comparatively little capital, 
but import dealers require credit to carry them for a matter of months, 
and funds anrale to absorb losses due to fluctuating prices and exchange, 
and claims arising from def iciencie's in quality^ 



9829 



-17- 



Three associations of general character and of national scope 
have a considerable following among importers. The 3>Tational Council 
of American Importers and Exoorters has a membership of 359 firms, 
most of which deal in products of foreign manufacture. The other two, 
namely, the National Foreign Trade Council and the American Exporters 
and Importers Association, devote their attention to matters of export 
as well as import. The national Foreign Trade Council has a large mem- 
bership, including prominent industrial concerns, and it serves pri- 
marily to educate public opinion on the importance of foreign trade in 
the national economy. The American Exporters .and Importers Association 
groups 45 firms composed primarily of commission houses dealing in crude 
or semi-finished materials. It undertakes to arbitrate disputes and to 
safeguard importers '.interests in tariff legislation ar.d customs court 
action. There are also a considerable number of associations grouping 
importers of specific commodities, to facilitate adjustments and the 
standardization of contracts. They vary widely in practical force and 
in trade coverage. Importers in some lines, including wool, coffee, and 
spices, play a prominent part in national trade associations devoted to 
these commodities. 

Before NBA policy had been developed with respect to the problem 
of integrating functional relationships between code groups, codes of 
distinctly- vertical character had been approved for a number of major 
industries, and the scope of these codes usually corresponded to the 
industry or product areas, covered by the activities of the sponsoring 
trade association. Gradually, however, it became apparent that function 
would have to be a primary consideration in fixing code areas, and a 
horizontal code was recognized for the general Wholesale Trade. A group 
of importers, organized loosely as the Central 1TEA Committee for Import 
Trades, prevailed upon the Administration in early 1334 to sanction a 
general code for professional importers, altho at that time official 
opinion was divided over the practicability of a horizontal code for im- 
porters in preference to the alternatives of (1) arranging for importers 
of a given product to avail themselves of the industry code for that 
product, and (2) embracing importers under the general Wholesaling Code. 

: Importers were specifically included in the definitions of 21 
industry codes and in certain divisions or supplements of 4 other in- 
dustry codes. Outstanding among these were codes for Lumber and Timber 
Products, Fertilizer, Printing Equipment, Industrial Safety Equipment, 
Coffee, and surgical Manufacturing. The specifying of importers in the 
definitions of these particular codes appears to have been due in some 
cases, for example, coffee, packaging machinery, and machine tool eauip- 
ment, to the fact that importers were of some prominence in the sponsor- 
ing association; in other cases, including artificial flower and feather, 
precious jewelry, art needlework, perfume, and. bleached shellac indus- 
tries, it was due presumably to the fact that the manufacturer's in these 
lines made a practice of importing materials on which they were con- 
siderably dependent; and in other crises, notably, lumber and timber prod- 
ucts, fertilizer, athletic goods, and surgical industries, the code spon- 
sors appear to have been impressec 1 "oy the need of including importers in 
order to be in a position to effectively regulate selling practices. 



9829 



-18- 



There does not appear to have been any standard functional 
basis for including importers in these 25 codes. In 8 instances 
they were grouped with Manufacturers and other sellers, while they 
?/ere grouped with manufacturers and processors in numerous codes 
which did not cover wholesalers. 

In addition, the broad interpretation of the definitions of the 
many coues which covered the functions of "manufacture and sale", and ' 
"wholesale" made it possible, theoretically, and in many cases actually, 
for 76 code authorities of the first type, and 31 of the second type to 
claim jurisdiction over importers. On the other hand, several codes of 
broadly constructed definition contained some provision or wording which 
inferred that the sponsors had no intention of including importers. 

Quite independent of specific definition snd of administrative 
interpretation of 'broad definitions, the problem of uniform treatment 
of all importers was further confused through the fact that manufacturers, 
processors, and wholesalers frequently engage in direct importing. This 
is particularly true in petroleum, copper, paper, and steel. Separate 
codes were set up for certain groups of processors or assemblers who de- 
pended upon imported materials which they purchased and brought in quite 
independent of professional importers. Examples include the codes for 
Natural Organic products, Spice Grinding, Imported Green Olive,. Imported 
Date Packing, and Assembled Watch.. Occasional importing by wholesalers ■ '. 
who dealt primarily in domestic products, and by department stores and 
other retail establishments, was treated in the light of its incidental 
character, and the firms so engaged gave principal allegiance to whole- 
sale or retail codes. 

Apart from those importers who belonged to sponsoring associations, 
and from those who' processed imported materials, practically all of the 
professional importers who went on record in IJHA hearings or in subse- 
quent correspondence, were adverse to operating under industry codes. 
The basis for this attitude appears to have been a fear that they might 
be submerged as a minority group and subjected by officially sanctioned 
authority, to undesirable control or ineauitable treatment. In most 
cases, they expressed preference for being grouped with other importers, 
to whom labor and trade practices could have uniform application. 

The committee which sponsored the General Importing Trade Code 
included a varying degree of representation of the many import trades. 
The code was endorsed by 9 commodity associations of importers, as well 
as by the National Council of .American Importers and Traders and the 
National Foreign Trade Council. In the form approved on July 20, 1934, 
its scope excluded importation performed by industrial consumers and by 
retailers. Furthermore, it provided that any import trade, by majority 
vote of its members, could apply to the Administrator to operate under 
any other code which related to that commodity, 



9829 



-19- 



Active allegiance to the Importing Trade Code was high relative 
to the known membership in the trades devoted to linen, oriental rags, 
china and glass ware, chemicals, burlap, cotton fabrics, miscellaneous 
fibers, paper products, and "oodpulp. Assessment collections (on the 
basis of $1.00 per capita for employees and employers) indicated active 
participation by firms having a total of 9,293 employees and employers. 
Code authority election ballots were cast by 440 firms. 

Considering all imports during the period. of code operation, it 
is estimated that rourhly 35 per cent was handled by firms within the 
prescribed field of the Importing Trade Code, about one-half of which 
was imported by these firms on a merchant basis, and about one-half on 
a commission agent or broker basis. Another 40 per cent, approximately, 
was handled by firms functioning under other codes, including those for 
Coffee, newspaper Publishing, Newsprint, Alcoholic Beverage, Natural 
Organic Products, Assembled Uatch, Imported Date Packing, Imported Green 
Olive; and the balance of 25 per cent was imported by special departments 
or branch purchasing offices of mo.nuf acturers and retailers. 

To satisfy the desire of numerous individual import trades for 
representation on the Code Authority, requirements for representation 
were set comparatively low, and as a result, membership of Code Authority 
numbered almost 3). This large group was found to be unwieldy in ad- 
ministration, and a move was made to set up an executive committee of 
7 to function between code authority meetings. 

Host of the time of the Code Authority Executive Officer was de- 
voted to efforts to adjust conflicts with other code authorities over 
matters of jurisdiction. NRA files reveal 33 controversies of this 
type in which the Deputy Administrator wa.s reqixested to intercede. For 
example, the Importing Trade Code Authority renounced claims in 4 con- 
flicts, after evidence had been submitted that the majority of importers 
gave allegiance to the other code; it was ruled against in 2 controver- 
sies referred to the Administrative Officer, on the basis of interpreta- 
tion of definitions. On the other hand, the Impoiting Trade Code Au- 
thority won out in 2 controversies on failure to show that importers 
had been represented in formulation of the industry codes. Four con- 
flicts were settled on the basis of compromise, assigning processors of 
imported materials to processing codes and nonprocessing importers to the 
Importing Trade Code. The Importing Trade Code Authority contended that 
the domestic code authorities should be required, in cases of conflict, 
to submit evidence showing that the majority of importers did participate 
directly in the formulation of the domestic code. It suggested also that 
conflicts be settled by referendum and that uniform trade practices be 
established in cases of jurisdictional overlapping. There were 14 con- 
troversies awaiting settlement when the 1I3A was invalidated. 

In an effort .to meet the arguments of various domestic code au- 
thorities that trade practice compliance would break down unless importers 
were under the jurisdiction o^ those codes, the Importing Trade Code- Au- 
thority set up a number of divisional trade practice committees for indi- 
vidual import trades. These committees were to confer with domestic code 
authorities and devise means of establishing uniform provisions to apply 
in the separate code jurisdictions. 
9829 



20- 



A public hearing was held on I "arch 11, 1935, to consider amend- 
ments designed to clarify the jurisdiction of the importing Trade Code. 
The proposed amendments i y ould hove extended the scope of the code to 
cover the import operations of all importers, including incidental im- 
porters. No official a.ction had been taken on this matter up to the 
time of invalidation of the NBA. 

It appears that a situation of widely scattered code jurisdiction 
for importers and of overlapping with other codes was inevitable until 
such time as the Administration might reorganize the general code struc- 
ture in such manner as to eliminate conflicting functional and product 
areas of jurisdiction under the same codes. If the suggestion that vari- 
ous import trades be placed generally -under related industry or wholesale 
codes ?iad been adopted, it seems clear that the peculiar functional charac- 
teristics of importing operations and the conflicting interests of im- 
porters would have necessitated setting up a special Administrative Office 
thoroughly conversant with the business of importing, to safeguard their 
interests and protect them as minority groups from being subjected to in- 
equitable treatment by dominant domestic interests. 

Prior to the NBA, antecedent lirislation designed to regulate im- 
ports had constructed framework into which any regulation set up by code 
procedure had necessarily to fit. Pertinent legislation included pro- 
visions of the Tariff Act of 1930 relating to (l) unfair trade practices 
in import trade, (2) authorization for the president to proclaim a change 
in any import duty rates if investigation by the Tariff Commission re- 
vealed that such change' was necessary- to eoualize differences in produc- 
tion costs, (3) a provision for forfeiture of merchandise imported con- 
trary to law, and (4) authorization for the President to enter into 
reciprocal trade agreements' with foreign governments and to proclaim 
modifications in existing duties and other import restrictions. 

The exception from the provisions of the anti-trust laws provided 
in Section 5 of the Recovery a.ct, had the effect of exempting imports 
and importing, when officially codified, from the provisions of the 
Tariff Act of 1894, amended in 1913, which prohibited any importing com- 
bination having as its object an increase in the prices of imported ar- 
ticles. 

Independent of the numerous moves to restrict imports by the 
procedure outlined in Section 3 (e) of the Recovery Act, there were 
numerous attempts' to set up one or another form of import regulation 
under broad construction of the authority prescribed in Section 3 (a) . 
A number of code authorities suggested provisions for this purpose to 
be incorporated in the- Importing Trade Code, for example, that "imported 
merchandise shoulu not be sola at more faborable terms or under more 
favorable conditions than those of the manufacturers of that particular 
product", and that "importers shall' comply with the trade practice pro- 
visions of the industry code already covering similar domestic products." 



9829 



-sa- 



in 56 codes the code authorities were directec to collect and 
maintain current information regarding competition from imports, and 
to file complaints under Section 3 (e) should appropriate conditions 
arise. Five of these codes embraced importers within their own juris- 
diction. In appealing for relief under Section 3 (e), 7 complainant 
groups indioated that the import problems confronting them could "best 
be met by ?n increase in duty rates. In two instances, complainants 
suggested the extreme measure of licensing importers.' Quantitative re- 
strictions were proposed by 12 complainants and the imposition of a fee 
was suggested "by 3 others. 

A cross-section analysis of the provisions affecting importers 
in 37 codes which are ^o^'n to have embraced importers, reveals that 
2 codes provided for quantitative control of production and importation; 
6 codes provided for registration of designs with a central agency and 
for the treating of piracy of these registered designs or styles as an 
unfair trade practice; 4 codes set up standarus of quality or measure, and 
6 established standards of identity in marking, labelling or grading; con- 
signment sales were definitely prohibited by provisions in 4 codes; pro- 
visions against destructive price cutting appeared in 7 codes, and the pro- 
hibition of selling below cost was contained in 11 codes; 15 codes contained 
provision for open price filing, and 16 codes made provision for the estab- 
lishment of a uniform system of cost accounting; 13 specified discounts 
and credit terms . 

In these trade practice provisions incorporated in codes embracing 
importers, inevitably there were instances of provisions which operated 
in a manner to require modifications in the existing practices of the af- 
fected importers. In an office memorandum dated November 17, 1933, a 
general USA policy was established that code provisions, the purposes of 
which were directly or indirectly to restrict or handicap importations 
should be avoided, but that a provision would not be condemned arbitra- 
rily for that reason if it were otherwise justifiable; ho -ever, that it 
should not be incorporated in a code unless importers and been notified 
and given an opportunity to present their views. 

Considering ell codes, the most complete regulation of imports Tvas 
afforded by the provisions of the Codes covering Petroleum, Alcoholic 
Beverage Importin-, and Lumber end Timber Products, In view of the fact 
that administration of the Petroleum Code was entrusted largely to the 
Secretary of the Interior, and administration of Alcoholic Beverage Im- 
porting to the Federal Alcohol Control Administration, the contrcl under 
the Lumber and Timber products Code is particularly significant for the 
reason that it was exercised entirely by a code authority. The Lumber 
Code specified that, in the case of divisions utilizing foreign raw mate- 
rials, quotas and allotments set up in connection with production control 
could be extended to cover imports* Under that Code a detailed procedure 



$829 



.oo„ 



for the regulation of imports of Philippine Mahogany by means of 
quotas was established and functioned successfully during a consider- 
able part of the code period. 

Among other schemes proposed or set up for the control of the 
price and volume of imports of particular commodities in connection 
with codes, were (l) the northwest Logging Agreement, which provided 
for the organization of a domestic corporation to receive a production 
(import) quota along with all other domestic members, and to allocate 
this quota among the several Canadian exporters to this market; (2) a 
proposal for control of imports of shingles from Canada involving the 
organization of a domestic corporation to be assigned a domestic quota 
and to be given power to parcel out this quota to Canadian exporters of 
shingles to this market, and (3) a proposal for stabilization of the 
newsprint industry, including a series of recommendations to cover mini- 
mum prices and trade practices, and a proposed agreement between the 
Association of Newsprint Manufacturers of the United States and the Ex- 
port Manufacturers Association of Canada, providing and setting up ma- 
chinery for the uniform administration and/or enforcement of the proposed 
trade practices in both countries. 



9829 



-23* 

PAST D. EXPORTS AITS SCTORTIiTC- UPPER IT5A C03ES 

SU1I ARY 

The authority to regulate er.norts nas implied in Title I, 
Section 1, of the national Industrial Recovery Act, which declared it 
to "be the policy of Congress to remove obstructions to the free flow of 
interstate and foreign commerce which tended towards eunemployment and 
disorganization in industry. The means by which the regulation of 
exports was to be achieved was provided in Section 3 (a), empowering 
the President to approve codes of fair competition and to grant what- 
ever exemptions and exceptions he deemed necessary in order to effectu- 
ate the declared policy of the Act. 

Prior to the Export Trade Act ■(Webb-Ponerene Law) (1918), the Anti- 
trust Laws were applicable to "both interstate and foreign commerce. The 
Export Trade Act exempted associations engaged solely in export trade 
from the anti-trust laws, but provided that no exemption would be grant- 
ed with respect to either restraint of the export trade of any domestic 
competitor of such association, or to operations substantially lessen- 
ing competition within the United States. In contrast, the NIRA. con- 
tained no such limitation expressly connected with exports. Section S 
(e) did provide, however', that the codes should not be designee to pro- 
mote monopolies or to eliminate, oppress or discriminate against small 
enterprises .' This limitation was sufficient, nevertheless, to lead to 
applications for and approval of specific exemptions for exports, in 
order that trades and industries might compete on more equal terms in 
foreign markets with the traders of other nationalities who were not 
operating under such restrictions as rrere provided in the codes in the 
United States. 

The extent of the coverage of industries and services in the 
Export Trade Act was limited by a provision to the effect that "export 
trade" should not be deemed to include the production, manufacture, or 
selling for consumption or resale, within the United States or any of 
its territories, of goods, wares, or merchandise, nor to include any 
act in the course of such production, manufacture, or selling for con- 
sumption or resale. The 1JIPA contained no provision specifically 
delimiting its scope, and consequently the codes included in their 
coverage both a wide range of industries and services, and an extensive 
field of trade practices. 

The Export Trade Act and the IT IRA. both defined "export trade", by 
implication, as meaning trade between the United States or any of its 
territories, ao&JposssSsions and foreign nations. The statutory laws 
of the United States ordinarily apply to the territories, insular and 
other possessions unless they have been specifically incorporated 
under the laws relating to their acquisition, basic charter, or other 
legislation relating to their status. 

The rapid, decline in .^American export trade was, in a large mea- 
sure, due to (a) the shift in the United States from a debtor to a 
creditor position in its balance of international accounts; (b) the 
establishment of trade barriers and exchange control regulations by 
which many nations sought to correct economic and fiscal instability 
brought about by the disturbance of competitive relationships 

9829 



-24- 

re suiting fron war- stimulated overproduction, in agriculture and indus- 
try; and (c) the practical cessation in the relatively large movement 
of capital goods, which during the post-war period had "been to foreign 
countries engaged in rehabilitation and in further and new industrial 
expansion. 

The composition of exports and their importance to domestic 
industry were closely related to the problem of industrial recovery. 
Altho normally from 9 to 16 per cent of the total value of production 
of exportable goods was exported annually between 1900 and 1929, the 
importance of this proportion was vital to many industries in that it 
oftentimes represented the profit margin. The value of exportable 
goods declined from approximately 52. S billion dollars in 1929, to 32.3 
billion in 1931, and to 25 billion in 1933; the value of exports during 
the sane interval declined fron about 5.2 billion in 1929 to 2.4 billion 
in 1931, and to only 1.7 billion in 1933. The percentage of the total 
destined for export therefore declined from 9.8 in 1929 to 7.4 in 1931, 
and to 6.6 in 1933. 

An analysis of the trend of both the quantity and value of exports 
indicated that, based on 1927-29 as 100, the quantity index for 1932 
was 54, whereas the value index was only 31. In 1934, the quantity 
index was 58, - a gain of only 4 points; the value index for, that year, 
however, had recovered to 42, or a gain of 11 points. The index of 
export unit values, on the same base, stood at 59 in 1932, as compared 
with C7 for a similar index of wholesale prices; in 1934 it rose to 72, 
and wholesale prices to 79. 

Countries which increased their share in the total dollar value of 
exports from 1929-29 through 1934 were Japan, the United Kingdom, 
France, and Italy. Hot only was the level of exports 'to Japan well 
maintained throughout the period, but its share of the -total increased 
from 5.3 to 9.9 per cent. 

An analysis of the distribution of the value of total exports by 
econonic classes indicated that finished manufacture, the most import- 
ant class, accounted for 36 per cent in 1921-25, 50 per cent in 1930, 
aid 42 per cent in 1934; crude materials represented 28 per cent in 
1921-25, 22 per cent in 1930, and 31 per cent in 1934; semi-manufac- 
tures were only 12 per cent of the total in 1921-25, 13 per cent in 
1930, and 16 per cent, in 1934. C£"-.io and manufactured foodstuffs 
accounted for 24 per cent of the total in 1921-25, 15 per cent in 1930, 
and 11 per cent in 1934. 

Europe was the principal market area for finished manufactures, 
tailing 28.5 per cent in 1921-25, and 31.1 per cent in 1934. North 
America (principally Canada) took 32 per cent in 1321-25, and only 
26.4 per cent in 1934. Asia and Oceania took 22.7 per cent in 1921-25, 
and 21.2 per cent in 1934. South America's share increased from 13.7 
'per cent in 1921-25, to 14.1 per cent in 1934. The share going to 
Africa increased during this period from 3.1 to 7.3 per cent. 



9829 



-25- 

Europe continued to be the leading export market for semi-manu- 
factures and crude materials, but its share of the total exports of the 
tro groups declined from 1921-25 through 1934. Asia and Oceania sur- 
passed ITorth America in its share of the exports in "both classes during 
the same period, rgaining from 18.0 per cent to 23.8 per cent in semi- 
manufactures, and .from 11.4 per cent to 25.5 per cent in crude 
materials. 

Limited data with respect to the relation of exports to the 
domestic production of certain commodities indicated that the following 
percentages (inter alia) had been shipped to foreign countries in the 
period 1927-1S33 (in terms of values): power-driven metal working 
machinery, 14-39 per cent; sewing machines, 28-35 per cent; tractors, 
21 to 54 per cent; refined mineral oils from 12 to 21 per cent; air- 
craft engines and parts, 9-37 per cent; office appliances, 26-50 per 
cent; and agricultural implements and machinery, 25-30 per cent. 

The values of production and exports and the indices of employment 
and payrolls in durable and non-durable goods industries reached their 
low points in 1952. _ In that year, compared rath the average of 1927-29 
as a ba.se, the production of durables had declined 70 per cent, and 
exports 75 per cent. Employment, during the sane interval, had declined 
47 per cent and annual payrolls 67 per cent. In contrast, the produc- 
tion of non-durables important in export trade in 1932 was 22 per cent 
less than In 1327-29 average; exports were 66 per cent less; and employ- 
ment and payrolls had failed 25 and 47 percent, respectively. 

From 19S2 through 1935, the index of production increased from 
30 to 69 per cent for durables, and from 78 to 91 for non-durables. In 
1935 employment and payrolls in the durable goods industries recovered 
to 74 and 59 per cent, respectively. In non-durables, employment 
recovered to 91, and payrolls to 77. 

Erom 1901 through 1925, the Atlantic Seaboard handled between 50 
and 65 per cent of the total value • of the United States export tonnage; 
in 1934, 48 per cent. The share of Pacific Coast ports increased from 
less than 10 per cent prior to 1925 to 14 per cent in 1934. 

The percentage of total exports shipped from the United States in 
vessels sailing under the American flag declined from 33 per cent in 
1928 to 25 per cent in 1934. There was also a decline in the export 
tonnage values shipped in government owned and operated vessels. 

In 1920 there were 43 export associations operating under the 
Export Trade Act which exempted -them from certain provisions of the 
anti-trust laws. Fifty-seven associations were operating under that 
Act in 1929, and 44 in 1935. Export Trade Act associations handled 17 
per cent of all exports in 1930, but only 7 per cent in 1934. While the 
value of the total exports rose 23 per cent from 1932 through 1934, 
Export Trade Act exports increased less than 1 per cent. 



)829 



Among the factors which distinguish exporting from domestic mer- 
chandising are the vide variations in customs, habits, and standards of 
living in many countries. The lack of direct contact between the ex- 
porter and his foreign client usually occasions considerable expense 
and delay. Ocean freight, marine insurance, customs duties, special 
taxes, and landing charges are added burdens. Excessive duties, import 
quotas, and exchange controls have effected a virtual cenfbargo against 
shipments of goods to many countries in recent years. 

Increasing difficulties in clearing export merchandise through 
foreign ports, and in obtaining permission to purchase foreign exchange 
in order to remit the funds resulting from a sale have led merchants 
and manufacturers to handle their foreign sales directly instead of 
through professional exporters or export agents. This trend has been 
largely responsible for the establishment of branch offices and fac- 
tories in foreign countries by means of which considerable savings 
might be effected and better service in distribution obtained. All 
operations incident to exporting have become highly coordinated on ac- 
count of the well organized services placed at the disposal of .-Manufac- 
turers and shippers by banks, credit reporting and advertising agencies, 
and freight forwarders, maintaining branches and correspondents in many 
foreign countries. The result of these changes has been a distinct in- 
crease in direct exporting and a decline in export merchandising through 
exporters and export agents. 

In 1329 and 1933, the Bureau of the Census obtained reports from 
exporters in its census of wholesale distribution. In 1929, combined 
net sales of export middlemen totaled 1.9 billion dollars or 36.4 per 
cent of the total value of the exports and re-exports from the United 
States; in 1933, the group handled 41.4 per cent. Exporters and export 
agents handled 2.8 per cent of the total net sales of all the wholesale 
distributing trades in 1929, and 2.2 per cent in 1933. In 1933, ex- 
porters and export agents employed 5,380 full-time workers, as against 
17,107 for 1929. The payrolls in 1933 amounted to about $11,400,000, 
as compared with $34,507,000 in 1929. In point of number of establish- 
ments and net sales, export middlemen were most active in agricultural 
products, foodstuffs and raw materials. In industrial products, lumber, 
machinery, automotives, dry goods, and electrical apparatus, were also 
handled in substantial volume. 

Numerous provisions of existing laws indicate that the chief mo- 
tives underlying Congressional legislation have been to protect domestic 
producers from competition from imports, on one hand, and on the other, 
to encourage, aid, and even subsidize them in developing foreign market 
outlets for their products. The framework of LTPA code provisions mani- 
fested the same pattern of approach. Many authorized or instructed 
code authorities to initiate action against imports under Section 3 (e), 
when appropriate conditions arose and a large number also contained 
provisions exempting exports from minimum prices and trade practices in 
order to enable exporting industries to compete successfully in foreign 
markets. 



) 829 



-27- 

Code exemptions from minimum prices, sales below cost, and unfair 
nethods of competition tended to place export trade and industries in a 
position of provoking action by foreign governments under ant i -dorr pi ng 
regulations and laws prohibiting unfair methods of competition in their 
own import trade. Such a case did, in fact, occur with respect to 
douglas fir doors. Llinimum prices had been established for that com- 
modity in the domestic market but not for export, and when keen compe- 
tition for business in a certain country resulted in prices below the 
established domestic minimum, the foreign government concerned applied 
dumping duties. 

Analysis of 557 approved codes and their amendments and supplements 

indicated that there were 247 approved provisions affecting exports and 
the export trade. All except one contained exemptions for exports from 
regulations applicable in domestic operations with regard to prices, 
sales, and merchandising. TJhile a number of these provisions did not 
exempt export sales ac prices below the cost of production, a substan- 
tial number contained blanket exemptions to the effect that no provision 
of the code (labor provisions usually excepted), should apply to "export 
trade," 

Tyoical code provisions affecting sales,' prices, trade practices, 
and production allocation and control are discussed in detail in the 
chapter entitled "Exports under the Codes." 

Exports were not defined in 81 of 247 export provisions contained 
in codes, supplements, and amendments. Fifty-three provisions defined 
"export trade" in accordance with the terns of the Export Trade Act. 
iuany provisions containe such general definitions as "overseas", "to 
foreign destination", "outside the United States", "to overseas markets", 
and "sales for domestic consumption". In a number of codes the code 
authorities or advisory agencies (either with or without the approval 
of the Administrator) were authorized to determine what the term should 
include - particularly with regards to the status of territories and 
possessions. In some export exemption provisions, certain territojrf.de • 
and possessions were considered "domestic" and in others, certain and 
often the same territories and possessions appeared to have been given 
a "foreign" status. 

The record of code hearing did not indicate any serious attempt to 
obtain the approval of a code for exporters. The principal reason that 
exporters, either by commodity or by function, were not separately con- 
sidered, was the apparent close relationship which existed between them 
and "domestic" trades and industries. 

Under present-day conditions, the functional service of exporting, 
as distinguished from manufacturing, has greatly diminished, and what 
is left of exporting as a profession has become so intermingled with the 
function of wholesaling and other distributive service trades that there 
is little basis for according it separate consideration. 



9829 



-28- 



PART A: THE COMPETITIVE POSITION OF THE 
UHITiD STATES IK ISTEMATIOHAL 
TRADE, 1927-29 THROUGH 1934 



9829 



-31- 



.. £.• ■ RESTORATION OF THl INTERNATIONAL GOLD STANDARD 

As a consequence of difficulties and dissatisfaction growing out of 
disarranged currencies and disparities 'between national price levels, 
especially in reaction to the German currency experience, the period 
1925-29 was marked by a widespread and largely' successful effort to 
restore the international gold standard. As a resj.lt, the world currency 
relationships which prevailed during the years 192,7-1929 were more nearly 
s,table than at any time since before the war. 

P. CONFLICT IN G COMMERCIAL POLICIES 

The shift in .the pattern of international indebtedness and the ex- 
panding production of reconstructed Europe and other areas that .has been 
stimulated daring the war, pointed tc the necessity of a. rearrangement of 
trading relations. . As stated in the report of the world Economic Con- 
ference of 1927, the tine oad come when nations should take steps forthwith 
to reverse or diminish those tariff '-arriers and other trade restrictions 
that gravely hampered trade, and to move in the opposite direction. At 
that conference and immediately following, world commercial policy was 
characterized by Hesitation between policies leading in one direction 
toward a goal of "liberty of trading " and in the other, toward national 
self-sufficiency. 

Unfortunately "the world * * not as a matter of general policy but 
rather in a succession of immediate decisions, hesitated to embark upon 
the bolder course of international cooperation and, in consequence, was 
increasingly drawn into policies of national protection and self suf- 
ficiency, which have proved incompatible with the discharge of the heavy 
international financial commitments with which the world was burdened," 

The United States, after having revised tariff rates upward in 1922, 
largely on the basis of domestic considerations growing cut of the then 
existing depression and ignoring the important fact of the country's 
shift from a debtor to a creditor position, ' again instituted an upward 
revisionin 1929. This was paralleled by similar action and the institution 
of new forms of restriction in many other countries,. In the struggle to 
support greatly increased external obligations debtor countries resorted 
to both direct and indirect means of maintaining or enlarging export 
balances. Imports were curtailed by higher tariffs, quotas, licensing 
systems, exchange control, and other measures, and exports were "forced" 
by direct bounty, exchange subsidy, bilateral balancing with orincipa.1 
export markets, and other arrangements for diverting trade from comoeting 
countries, 

G. RESULTS OP THE POLICY OP RESTRICTION 

The pressure generated by the rapid succession of trade restrictions 
operated to decrease already falling prices both in inroort and export 
countries, and by lower prices, led to still further restriction of im- 
ports and aid to exports. Repercussions from the shrinkage in trade, 
particularly the realization of the inability of debtor countries to 
meet their foreign obligations, together with untoward political de- 
velopments, led to cessation of foreign investment and later to "financial 

9829 



-32- 

panic, thus patting in motion influences which r^sult^d in the suspension 
of the gold standard in the last Quarter of 1931 by a number of countries 
including England, the Eritish Dominions except South Africa, India, the 
Scandinavian countries, Portugal, Egypt, Bolivia-, Latvia, and Japan. 
These were followed in the first half of 1932 by Colombia, Nicaragua, 
Costa Rica, Greece, Si am, Peru, and Ecuador. 

Fluctuating exchange rates and i ncreasing competition from lower- 
cost exports resulting from currency depreciation led to the imposition 
of further trade restrictions and exchange controls. Between September 
1, 1931, and April 1, 1933, general tariff increases were imposed in 
over 20 countries, and on individual items or groups of commodities by 
roughly 5^ countries. Import quotas, prohibitions, licensing systems, 
and similar quantitative restrictions were imposed by more than 39 
countries. 

Sharply declining prices which began in late 1929, accompanied by 
a rapidly diminishing flow of credit, not only disclosed the uneconomic 
character of much of the investment and trade of the boom period bat 
greatly jeopardized that part of the credit structure which rested upon 
an otherwise sound economic ba.se, the maintenance of which would have re- 
quired a greatly expanded volume of world trade at higher prices. This 
was rendered impossible by the extreme restrictive measures in debtor 
countries to maintain export balances, and in creditor countries as pro- 
tection against the increasing competition of exports aided by depreciated 
currencies and other forms of direct and indirect subsidy. 

The resulting downward spiral of deflation led to financial crisis 
in country after country until by the spring of 1933, "thirty-five 
countries were off the gold standard and twenty-seven, inclusing nine 
that were nominally still on the gold standard, were officially exercis- 
ing exchange control, but unofficial controls were emoloyed in three 
other countries, and, in some which remained theoretically on the un- 
restricted gold standard, the control of com odity imports by pho- 
hibitions was virtually equivalent to an exchange control," (*) 

The value of world commodity trade declined from a peak averaging 
33.5 billion dollars (**) (gold) in 1927-29 to twelve billion in 1933, 
a drop of 64 percent. In contrast, the physical volume declined only 
23 percent, indicating that the serious shrinkage which occurred was 
chiefly the result of falling prices following widespread demoralization 
of markets and maladjustment in the supply and demand of international 
trade commodities. 



(*) World Economic Survey, League of Nations, 1932-33, page. 17 

(**) This rough measure is arrivpd at by adding the total gold value of 



world exports and imports and dividing by two. 



9829 



Year 



TABLE 1 
.iCHLD TRADE, 1926-1934. 



Value of all 
Commodities in 
world trade a/ 



Exports, 
world 
total 



Imports, 
world 
total 



In million dollars b/ 



1926 : 


30,944 


32,117 


29,770 


1927 


32,524 


33,740 


31 , 308 


1928 


33,791 


34,742 


32,839 


1929 


34,303 


35,585 


33,021 


1930 


27,791 


29,076 


26,483 


' 1931 


19,863 


20,795 


18,908 


1932 


13,434 


13,972 


12,895 


]S33 


12,112 


12,484 


11,740 


1934 


11 , 688 


12,011 


11,364 



Source: League of Nations Stat istical Yearbook 

a/ A rough measure, being the simple average of exports and imports. 

b/ Dollars of pre-devaluation gold content. 



9829 



-34- 



II. ADVERSE EFFECT OF FOREIGN OCi.hBlcCIAL AGREEMENTS CI'T UNITED 
STATES EXPORT TRA DE 

The '.Torld Economic Conference of 1927 recommended the following 
lines of action with respect to the liberalization of trade relations: 
(1) individual action by states with regard to their own tariffs, (2) 
■bilateral action through the conclusion cf suitable commercial treaties, 
and (3) collective action with a view to encouraging the expansion of 
international trade. 

Only one instance of a general unilateral tariff reduction 
has been recorded during the depression period, namely, Australia in 
the spring of 1932; however, this wad followed in the fall by an upward 
revision in accordance with the Ottawa Agreements. On the contrary there 
was an almost steady upward movement of world trade barriers, including 
the United States tariff of 1930, the general tariff increases during 

1931 hy India,. Peru, Argentina, Brazil, China and Italy, and the new 
British tariff of 1931 - 32. Tariff ; increases were alsd effected during 

1932 in Egypt, Norway, Japan, Portugal, Greece, Si am, South Africa, 
Belgium, Latvia, the Netherlands, Neiherland India, Nicaragua, Persia, 
and Venzuela. During the first months of 1933 t. e process continued in 
Sweden, Norway, Czechoslovakia, Poland, Switzerland, "ungary, Germany 
and France. 

A large number of bilateral agreements were negotiated which, 
however, instead of accomplishing a general lowering of tariffs, were 
largely directed toward the moderation cf the mere extreme protective 
measures such as bargaining or discriminatory rates, quotas j purchasing 
agreements, and other arrangements for quantitative trade regulation. 
These not infrequently involved preferential advantages based upon dis- 
criminations against third countries. It is significant that the United 
States did not participate in any of these bilateral negotiations and 
consequently it is not surprising that its interests were adversely 
affected by them. 

Only two multilateral trade arrangements were consummated. 
The first was a convention signed in 1932 by Denmark, Norway, Holland, 
Sweden and Belgium. The second was the Ottawa Agreements of late 
1932 between the United Kingdom and members of the British Commonwealth, 
the main purpose of which was to promote intra-imperial trade. The ex- 
change of concessions, in practically every case involved raising 
barriers against foreign goo Is, in consequence of which the trade of the 
United States, the principal competing country, was again adversely 
affected. 

1 1 . CUMULATIVE EFFECTS C? FOREIGN Chh ERCIAL ,d~J FINANC IAL POLICIES 
Oh UNITED STATES TNADE 



A. RELA TIVE DECLINE IN THE BXRRT TRADE P03ITI N IF TOE UNITED 
STATES 



As a result cf the cumulative effect of exchange disadvantage, 
of widespread tariff increases and other trade restrictions in foreign 



9829 



countries, mt! of numerous preferential treaties and other trading 
r ugem bs, (in addition to tiie indirect effect of United States 
tariff policy and cessation of foreign lending), the export trade of 
the United SLtates declined to a greater extent from the level of 1927- 
29 to 1933, in both quantity end gold value (Q-46#, V-74^) , than total 
world exports (G,~23.o, V-64.,) , and to a greater extent than the total 
export trade of any of the principal trading countries, including the 
United Kingdom (0,-33,0, V-65^) , Germany (Q-36J, ¥-53/,), France 
(q-40,3, V-65}), Canada (Q-.iot, V-63 ]) , Italy (Q.-15&, V-61,1), and 
Japan (0-31,0, 7-60,1). 

The relative decline in the export trade position of the United 
States is further demonstrated by the diminishing share of total 
merchandise imports (value) into the principal foreign markets. For 
example, from 192J to 1935, the United States snare of merchandise im- 
ports into the United Kingdom declined from 16 percent to 11 percent, 
of imports into Canada from 68 percent to 35 percent, of imports into 
France from 12 percent to 10 percent, of imports into Italy from 17 
percent to 15 percent, and of imports into Germany from 13 percent to 
11-g percent; during the same period the share of imports into Japan 
increased from 2S% percent to 32 percent. The United Sta.tes share 
of total VTcrld exports (value) declined from 15k percent in the period 
1927-29 to 11 percent in 1933. 



9829 



36 



COMPARATIVE CHANGES IN THE QUANTITIES AND VALUES (GOLD) 
OF WORLD EXPORTS AND OF THE EXPORTS OF THE 
SEVEN PRINCIPAL TRADING COUNTRIES 
1926-1934 



INDEX NUMBERS 
(1927-29=100) 



QUANTITIES 



INDEX NUMBERS 
(1927-29=100) 




INDEX NUMBER 

(1927-29-100) 

120 



INDEX NUMBERS 

(1927-29 = 100) 

120 



1926 



1927 



1928 



1929 



1930 



1931 



1932 



1933 



1934 



SOURCE "STATISTICAL YEARBOOK" 

OF THE LEAGUE OF NATIONS 

9S29 



N.R.A. 
DIVISION OF REVIEW 
STATISTICS SECTION 

NO, 532 



COMPARATIVE CHANGES IN THE QUANTITIES AND VALUES (GOLD) 
OF WORLD IMPORTS AND OF THE IMPORTS OF THE 
SEVEN PRINCIPAL TRADING COUNTRIES 

1926-1934 



INDEX NUMBERS 
(1927-29=100) 



160 



QUANTITIES 



140 



120 



INDEX NUMBERS 
0927-29=100} 

160 



40 



100 — 



120 



100 




1926 

INDEX NUMBERS 
(1927-29=100) 



1927 1928 1929 1930 1931 1932 1933 1934 

INDEX NUMBERS 
VALUES (1927-29=100) 



120 



100 



80 



60 



40 



20 



UNITED KINGDOM 
UNITED STATE S 

GERMANY 

FRANCE 

CANADA 

JAPAN 

ITALY 

WORLD TOTAL 



X X--X X 




120 



100 



80 



60 



40 



20 



1926 



1927 



1928 



1929 



1930 



1931 



1932 



1933 



1934 



SOURCE' "STATISTICAL YEARBOOK" 

OF THE LEAGUE OF NATIONS 



N.R.A 

DIVISION OF REVIEW 

STATISTICS SECTION 

NO. 533 



-38- 



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-39- 



TABL1 



3 



C0IIPA2ATIVE ChANGES IN T IS UNITED STATES 
SHARE 07 TOTAL LIESCIL&NDl SI IIIPCET3 INTO 
SIX QTIISPl PRINCIPAL TZADIKG COUNTRIES a/ 



Year 



Share of the United States in total imports of 



Uni ted : 
Kingdom : 



Canada- 



V 



Prance 



Germany 



Italy • Japan 









Percent 






1926 


: 13.4 


. 66.7 


13.1 


16.0 


21.7 


28.6 


1927 


: 16.4 


64.7 


12.3 


14.6 


19.4 


30.9 


1928 


: 15.3 


63 . 6 


11.6 


1 1.5 


18.3 


28.3 


1929 


: 16.1 


67.9 


12.3 


1 5 . Z 


16.7 


29.5 


1930 


: 14.7 


64.5 


11.7 


12.6 


14.6 


28.6 


1931 


: 12.1 


60.8 


9.0 


11.8 


11.4 


27.7 


1932 


: 11.9 ; 


57 . 2 


9.8 


12.7 




35.6 


1933 


: 11.2 


34.9 : 


10.0 


11.5 


15.0 


32.3 


1934 


: 11.2 : 


58.1 


9.6 


3.3 


12.5 


33.7 




: Index 


of share < 


jf United States in 


botal imports of 








1927-29 : 


: 100 







1926 


114 


99 


107 


113 


1927 


102 


97 


105 


103 


1928 


93 


102 


95 


103 


1929 


100 


101 


100 


94 


1930 


91 


96 


96 


39 


1931 


75 


91 


74 


83' 


1932 


71- 


85 


80 


90 


1933 


70 


82 


32 


31 


1934 


70 


37 


73 


59 



: 120 


. 97 


: 107 


104 


: 101 


96 


: 92 


100 


: 31 


97 


: 63 


94 


: 74 


120 


: 33 


109 


: 69 


114 



Source: 



a/ 

1/ 



U.S. Bureau of Foreign and Domestic Commerce, Commerce 
Yearbook , Vol. II, and Foreign Commerce Yearbook 

Dollar of pre-devaluation sold content. 

For Canada only, fiscal years ending i lurch 31 of year 
following that shewn. 



9329 



-40- 



3 . RE LATIVE SHAKES 05 
STATES LiAHKET 



PRINCIPAL TPADII'G COUNTRIES III THE TOUTED 



The relative share of United States imports supplied by tie 
above mentioned six principal trading countries declined to a less ex- 
tent tlian did tlie United Sta-tes share of their total imports. For ex- 
ample the sliare of merchandise imports into the United States from the 
United Kingdom declined from 7.5 percent in 1929 to 5.6 percent in 1932 
but rose to 7.7 percent in 1935; the share of Canada increased from 11.4 
percent in 1929 to an average of approximately 13 percent in 1932 and 
1933; the share of France declined from 3.9 percent in 1929 to 3.4 per- 
cent in 1932 and 1933; the share cf Italy increased from 2.7: percent 
in 1929 to 3.2 percent in 1932 and 2.7 percent in 1933; the share of 
Germany declined from 5.8 percent in 1929 tc 5.4 percent in 1933; the 
s lare of Japan increased from 9.8 percent in 1929 to 10. 1 percent in 
1932 but declined to 8.6 percent in 1933. 



9829 



-CI- 



TABLE 4 

COMPARATIVE ElANG-ES IE PRjF ail -IE 
UNITED STATES IiIPORTS SUPPLIED 3Y 
PRINCIPAL TRADING COUNTRIES a/ 



0? TCTAL 
SIX OTHER 





: s: 


lare 


in total imports of 


the United Stato3 




Year 


: United 
. Kingdom 


' Canada 


' France 


Germany 


Italy 


! Japan 










Percent 






1926 


8.6 




10.7 


3.4 


4.5 


2.3 


9.0 


1927 


. 8.6 




: 11.4 


: 4.0 


4.8 


2.6 


S.6 


1928 


■ 8.5 




: 12.0 


: 3.9 


5.4 


3.5 


9.4 


1929 


7.5 




: 11.4 


: 3.9 


5.8 


2.7 


: 9.3 


jkso 


6.9 




. 13.1 


: 3.7 


5.8 


• 2.6 


9.1 


1931 


6.5 




: 12.7 


' 3.3 


' 6.1 


3.0 


9.9 


1932 


5.6 




13.2 


3.4 


: 5.6 


3.2 


10.1 


1933 


7.7 




12.8 


3.4 


5.4 


2.7 


8.6 


1934 


6.8 




13.9 


5.7 


4 . 2 : 


o p 


7.3 


d 


■ 


Inde: 


c of share 


in United 


States total import 










927-29 = 


100 






1926 


105 




92 


86 


84 


38 


94 


1927 


105 




93 


102 


90 


100 


100 


1928 


104 




104 


99 


101 


96 


98 


1929 


91 




98 


99 


109 


1C4 


102 


1930 


84 




113 


94 


109 


100 


95 


1931 


79 




109 


97 


114 


115 


103 


1932 


68 




114 


86 


105 


123 


103 


1933 


94 




110 


86 


101 


104 


90 


1934 


83 




120 


94 


79 


85 


76 



Source: Absolute figures from Foreign Commerce and Navigation of the 
United States. 



a 



/ 



Valued in dollars of pre-devaluaticn gold content. 



9829 



-42- 



G. PECIPDGCAL LOSSES OF T/E UNI TED STA TES AND TNE OTHER 
iRiNCIPAL TRADING COUNTRIES 

The net effect of the shifting trade relationships of tie 
period 1927-29 to 1933, including policies of restriction and retalia- 
tion, changing prices and price relationships, fluctuating exchange 
rates, the influence of shifting currents of foreign investment and 
volume of international indebtedness, and other factors, may "be indicated, 
at least in part, by study of the reciprocal trade losses of the United 
States and the six other principal trading countries, as shown in the 
following table. 



TABLE 5 . 

DECLINE IN TEE LEVEL OP THE DOLLAR VALUE OF, 
UNITED STATES EXPORTS TC SIX PRINCIPAL TRADING'- 
COUNTRIES, AID OF TT EIR EXPORTS TO TNE UNITED 
STATES A3 INDICATED BY THE DIFFERENCE BETWEEN ■ 
THE TRADE OF 1953 AND THE AVERAGE OF 1927-29 



Countries 


Decline in . : 
U.S. experts to : 


:. Decline in 

: exports to U.S. from 


All countries 

United Kingdom 

Canada 

France 

Germany 

Italy 

Five countries 

Japan 


Liillion 
dollars 

. 3,702 • 

627 
584 
137 
303 
126 

1,777 

145 


Percent : 
68 : 

66 : 
72 : 
44 : 
72 : 
63 : 

67 : 
43 : 


: Liillion ; 
: dollars 

: 3,074 

:■ 235 
: • 304 
:: 116 
:■ 151 
: 70 

: 876 

: 278 


Percent 

66 

68 
62 
70 
65 
64 

65 

63 



Source: Based on Table 7. 

Note: This table is based entirely upon reciprocal imports 
because of greater accuracy of the statistics. 



9829 



-43- 



Tlie data in Table 5 indicate that United States exports to all 
countries in 1933 were $3,?02 million "below tlie level of 1927-29 and 
the exports of all countries to the United States were $3,074 million 
lov/er, a difference of $628 million in the absolute amount of decline. 
United St r -t^s experts to five principal trading countries in 1933 were 
$1,777 million lower than 1927-29, whereas their exports to the United 
States were only ,>876 million lower or a difference in decline amount- 
ing to $901 million. It may be observed that the United States "loss" 
was greater in absolute amount in each of five principal markets than 
any of their "losses" in the United States market, however, as a per- 
centage of 1927-29 trade, the "losses" were greater for the United 
States only in Canada and Germany, since the exports of the United 
Kingdom, France and Ital5 r to the United States wore lower in 1933 in 
proportion to 1927-29 than were United States experts to them. United 
States exports to Japan declined to a less extent both in absolute 
amount and in proportion to 1927-29, than Japanese exports to the 
United States. 



9829 



-44- 
CKAPTSR II 

G AIGES I!" THE COi.FETITIVE POSITION OF THE UHITED STATES 
II" IKTEEIJATIOrAL THAHE, 1227-29 TO 1334 

I. SHIFTING DISTI-JBUTIDI" OF WOBLE TPJUE 

The changing distribution of world trade gives some indication of the 
shifts in the competitive positions of particular countries. In this connection 
it is important to remember that the total volume of world trade and of the 
trade of eagh country, except Japan, has declined sharply in both quantity and 
value end that any data showing gains in recent years are merely xelative 
to a declining world total. 

In broad terms it may be stated that during the depression, France raid the 
United Kingdom hove taken a larger share of world imports; Italy, Japan, and 
Germany, an increasing share of world exports, although, Germany's share 
declined in 1933 and 1934. Canada about maintained her relative export 
position, but has taken a decreasing share of world imports. The share of the 
United States declined steadily from an average of 15-;/ per cent of world ex- 
ports in 1927-29, to 10§- per cent in 1933;(*)and from 12 per cent to 9 percent 
of total world imports. The more important relative gains in both exports 
and imports during this period were made by Japan and coimt2'i£s..f>f. lessfcri'te*. 
portance. 

The value of Inited Spates merchandise shipped to each of the six countries 
here considered has consistently exceeded the value of merchandise sold by them 
in the United States. Ordinarily the disparity between the volume of mer- 
chandise exchanged between two countries is compensated in considerable degree 
by invisible items of trade such as tourist's expenditures, insurance and 
transportation costs, interest payments, immigrant remittances, etc. As a last 
resort trade deficits are settled by the shipment of gold, and under present- 
day conditions this constitutes the weak link in the chain of triangular or 
multilateral trade. During the depression various countries were forced to take 
steps to safeguard their gold reserves and the resulting restrictions, as might 
be expected, affected most seriously the unbalanced segments of their trade. 

United States trade was affected adversely not only by measures talc en 
directly to reduce unfavorable balances, but indirectly in its triangular trade 
by pref rential arrangements effected between some of the principal competing 
industrial countries and countries with which they have unfavroable balances 
as a result of relatively large purchases of raw materials. These circumstances 
together with exchange disadvantages, explain in large measure the declining 
United States share of world trade since 1929 



fcr 



Although 1932 is thought of as the low year of the depression, U.S. 
foreign tra.de remained at approximately the same low level in 1933. 



9829 



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Average or 
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-46- 

TA3LE 7 
COMPARI SOI" OF AFHUAL MERCHANDISE TPADE AS MEASURED BY 
CIPROCAL IMPORTS BETWEEN THE UNITED STATES AND EACH OF THE 

OTHER LEADING- TRADING COUNTRIES FROM 1927-29 to 1934 ; 

Value of commodities Index of val lies 

Imports Imports Het Imports Imports Net 

from into U.S. from into U.S. 

U. S. • into "U. S. from' bala n ce U. S.' into • U.S. 'from' balance 
( In mill io n dollars )"" (. 1327-29 - 100 ) . 
UNITED HlFGrOM . 

.346 . ../6Q2 . .100 100 100 

75 /219 31 22 36 

111 /210 34 32 . 35 

115 /29C 44 33 50 

CANADA 

439 yS22 100 100 100 

174 / 29 25 36 9 

185 f 42 28 38 13 

227 f 30 38 46 25 

-... F RANCE 

165 { 98 " 100 100 100 

45 / 69 43 27 71 

50 / 77 56 30 79 

61 / 84 '55 . " 37' ' ' 86 

' OEPMANY ' '■; 

229 -/205 100 100 ' 100 

74 •/• 67 "30 33 28 

78 • • •/ 53 28 • ' • . • -35 ' 22 

63 / 77 31 31 32 

•• ITALY 

109 . . •/ 92 " " 10.0 . . .100 100 

42 ' f 15 28 39 16 

39 / 36 27 36 40 

36 / 46 41 33 51 

i/ JAPAN 

406 -102 100 100 Hot 

134 ■/ 9 47 33 practic- 

.128 . ■/ 31 5.2 . . 32 able to 

119 /110 75 29 compute 



1927-29 


948. 


1933 


294 


1933 


321 


1934 


413 




! W 


1927-29 


311 


1932 


203 


1933 


227 


1934 


307 


1927-29 


2G4 


1932 


114 


1933 


127 


1934 


145' ' :■ 


1927-29 


'" 434 


1932 


141 • •■ 


1953 


131- 


1934 


146 


1327-29 


201 


1332 


57 


1933 


75 


1934 


82 


1927-29 


304 


1932 


143 


1933 


159 


1954 


229 


Sources: 


U.S. Bureau of : 




Foreign Commerc 




State s Data fri 



Bureau of Foreign and Domestic Commerce, C ommerce' Yearbook, Vol . II, 
"earbbok," Foreign Commerce 'and Navigation of the United 
Data from Regional Information. Amounts for 1932 and 1933 in 

currency dollars. •• • 

Note: Based upon reciprocal imports, because of greater accuracy of statistics. 

a/ Canada's imports from the United States reported for years ending March 31 

of the year following that shown, 
b/ Unfavorable balance - excess of imports. 



:«829 



-47- 
II. FLUCTUATING EXCHANGE VALUES 0? CUBKBHCIES 

It has become customary to rate the recent breakdown of the gold standard 
from the date of suspension of gold payments by the United Kingdom, September 
1931. As a matter of fact, the movement began much earlier. The post-wax stru 
back to gold had hardly resulted in reasonable success before there became ap- 
parent serious maladjustments underlying the international financial structure 
in certain areas. The depreciation of currencies in Uruguay, Argentina., and 
Brazil during 1929 gave early foreboding of the difficult position into which 
raw material producing countries were being driven by the long period of declin- 
ing prices for their products a/id the consequent increasing burden of external 
indebtedness. The movement away from gold continued during 1930 in Bolivia, 
Australia, Hew Zealand, and Venezuela. 

The year 1931 marked the large scale si^.spension of gold payments by some 15 
countries, and the imposition of exchange control by several others. Following 
the lead of the United Kingdom were India, the Strait Settlements, Denmark, 
Norway, Sweden, Canada, Au s tria, Finl-nd, Japan, and certain other small 
countries. Five more countries moved away from gold during 1932, the most im- 
portant being the Union of SoLith Africa. 

After suspension of gold payments in 1933 by the United Status and from 
Latin-American countries only about 1C countries remained on the gold standard 
and without exchange control. The most inroortant of these were France, Italy, 
Belgium, Netherlands, Uetherland India, and Switzerland. 

The disastrous consequences of the wholesale collapse of world currencies 
cannot be adequatel., described; they can be indicated only briefly by reference 
to the now familiar phenomenon of unprecedented price decline, collapse of credi 
structures resulting in widespread moratoria on both public and private debts, 
failure of financial institutions, flight and counter- flight of funds in the 
form of gold and securities, and the progressive imposition of new and drastic 
forms of trade control, all resulting in a shrinkage of world trade by roughly 
25 billion (64 per cent) in the short period of 4 years. 

The details of currency fluctuation will be commented \\pon briefly for 
only a few countries with which the United States has important trading relation' 
ana which are representative of the shifting competitive relationships resulting 
from the changing exchange value-, of currencies. 

Based on an index of quarteiuy averages, the value of the pound sterling in 
terms of dollars declined more than 30 per cent in a period of roughly 12 months, 
ending in the fourth quarter of 1932, almost reaching the lrw level of the cur- 
rencies of Argentina and Brazil which began their downward course in 1929. 
During the same period the Canadian dollar declined ebou.t 12 per cent. The most 
disturbing development of the period was probably the decline of more than 5C 
per cent in the exchange value (gold) of the Japanese yen, which considerably 
increased the competitive impact throughout the world »f expanding low-cost 
production in Japan. The exchange values of the principal Continental European 
currencies (those remaining on gold), in terns of dollars, remained unchanged 
during this period. 

The significance of the declining exchange value of foreign ciurrencies, fron 
the standpoint of export trade, is to be found in the sudden and sharp increase 

9829 



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9820 



-49- 

in the cost of American merchandise in those market, e.g., the United Kingdom, 
the second most important United States market. From the standpoint of im- 
ports, depreciating foreign currencies have the effect of decreasing the dollar 
cost of foreign merchandise, thus increasing the impact of competitive imports 
from the depreciating countries. 

The depreciation of the United States dollar, which "began in the first 
quarter of 1933, had the effect of restoring approximately its normal relation 
to the pound sterling and the Canadian dollar by the end of the;; year. It also 
established the relation of the dollar to the "gold bloc" curr ncies at a point 
roughly 00 per cent below the normal gold standard parities. The Japanese yen 
continued to depreciate in relation to gold oaring 1933, with the result that 
at the end of the year it stood at only a little over 60 per cent of its 1927-29 
parity with the dollar. 

Prom the standpoint of exchange values, the depreciation of the dollar 
restored the competitive relationships between the United States and its 
principal competitors, e.g., the United Kingdom and Canada. It also established 
a new and favorable competitive position for United States products in the 
markets of Continental Europe, but unfavroable for the products of that..iar'ea . 
in the markets of the United States. It only partially offset the dis- 
advantage which previously prevailed .as a result of the depreciation of the 
Japanese yen, and, as a consequence, Japanese producers have continued to 
benefit from an exchange advantage both in the united States market and in 
relation to United States products in foreign markets. 

Widespread currency depreciation, broadly speaking, left only three 
possible courses of action for those countries still on the gold standard, 
namely, to undergo a drastic decline of internal prices to the newly estab- 
lished woVLd levels, to impose import restrictions and exchange control suf- 
ficient to offset the difference between internal and external prices, or to 
devalue their currencies in ord.er to bring both the internal and. external 
values in line with world levels. As a matter of fact, these policies have 
been followed separately or in varying degrees of combination by most of the 
important commercial nations. Consequently, any program for reviving world 
trade, if it is to succeed, must provide for readjustment along all of these 
lines. 

In the popular conception devaluation of national currency in terms of 
gold has been resorted to as a convenient method for changing the relative cost 
position of a country in relation to its competitors in international trade 
without serious immediate disturbance to the internal economy. As a result 
of the compelling circumstances of depression, attention has been focused 
largely upon the short-ran improvement in the competitive position of the 
depreciating country. The almost inevitable extension of the area of dep- 
reciation and the possibility of further competitive depreciation seem to have 
been considered of secondary importance. Moreover, the fact that countries 
unwilling to resort to depreciation have been placed in a perilous position 
has been viewed as a situation of peculiar individual misfortune. 

It is not generally realized, however, that currency devaluation has the 
effect of a sharp and arbitrary shift in the terms of commodity trade which 
work definitely against the depreciating country. The trading ratios are 
changed so that the country must offer a larger quantum of commodities in order 

9829 



-50- 

to receive the same- amount of foreign merchandise as formerly. Moreover, 
influences are set in motion which lead the depreciating country along the 
route of rising prices, upward recapitalization, end rising costs, and finally 
to the unfavorable position of a relatively high cost producer from which, 
paradoxically, the act of depreciation initially was designed to bring relief. 

III. CHA2T&I1TG PRICE LEVELS 

A. TI'E ROLE 0E PRICES 

Cne of the most complicated aspects of world trade is the role of prices 
in determining and directing the international interchange of commodities. In 
analyzing the influence of price changes, internal price inder.es must first "be 
converted into a common measure of exchange value such as gold. It is then 
possi le to determine what commodities, or whether commodities in general, in a 
given country are avilaole to foreign purchasers on terms which are favorable 
as compared with the prices at which similar products r.ia. be purchased in other 
markets* 

Domestic market prices in Country A converted to their gold equivalents 
represent the "offer" prices which determine the potential supply of commodi ties' 
available for profitable movement from that country into foreign markets. 
Conversely, the prices which are being paid in Country B, . when. converted to gold, 
represent the "bid" prices which determine the demand for commodities from 
Country A or other sources. These international or gold prices must be further 
adjusted for the price equivalent of the trade controls imposed by the coiin tries 
concerned, before their influence becomes effective in provoking an inward or 
outward movement of goods. International trade depends, therefore, upon the 
juncture of effective supply and demand in the ~rena of international prices 
where changing cost levels, fluctuating exchange values of currencies, the 
effects of customs duties, taxes, and other restrictions which burden imports, 
and taxes, bounties, and other factors which influence the price of exports are 
fully reelected. 

In considerable measure, the drastic decline of world trade since 1929 
has resulted from the multiplicity of aids and impediments which have been im- 
posed upon both phases of the exchange of commodities between countries. A l 
further factor of extreme importance is the rapidity with w] ich trade restric- 
tions have been changed* Normally, international trade becomes adjusted to a 
given degree of change in the level of tariffs or trade controls by means of 
compensating adjustments of price levels and changes in the commodity com- 
position of the t rade. However, offsetting adjustments are practical!: im- 
possible when both the type and degree of controls are continually changing. 
The factor of change, as well as the extent of governmental interference with 
trade, has markedly characterized the period of growing nationalism during the 
depression, having as the chief aim exclusion of articles of foreign origin 
from domestic markets aid aid to domestic industry in retaining foreign outlets. 
This peiiod of virtual economic warfare introduced serious internal and 
international price maladjustments ant. forced world commodity prices in terms 
of gole. to levels which, had they been permanent, would have resulted in a 
shift of property holdings almost as revolutionary as complete repudiation of 
national currencies. 



3829 



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B. INTERACTION OF x-LUCTUATINC- PRICK LEVELS 

In order to indicate the full extent of the influence of foreign trade 
on the internal economy of a country, it is necessary to take into account 

not only the ratio of the value of the trade to the total value of 

national production, hut of its influence an price levels. Under operation 

of the international gold standard, national price levels are directlv 

related and changes in the currents of world trade are largely the result 
of price changes in terms of gold. 

'.hen nrices within a given country rise more than world prices, cheaper 
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markets, thus' tending toward a rising favorable trade balance and a return 
flow of gold. Increased gold reserves normally result in expansion of credit 
and rising domestic prices until the reverse movement is again set in motion. 
This is ?n abbreviated description of the interaction of international prices 
under relatively simple gold standard conditions. Unfortunately, no such 
favorable conditions have prevailed in recent years. 

On the contrary, there probably never nas been a period of eoual con- 
fusion of world currency and price relationships resulting from such an 
unprecedented degree and complexity of controls. Under such conditions 
the usual interaction between exchange rates and price levels is inter- 
fered with by governmental action and by the operation of other in- 
fluences, largely psychological in origin, such as the flight of capital 
or speculative trading in currencies. Nevertheless such influences are 
largely sporadic in character and, in the long run, even under depreciated 
currency conditions, the basic changes in international prices work 
themselves out Dy the usual pattern, although the impetus to change may 
appear at unexpected points and certain phases of adjustment may be 
long delayed. 

C. SHIFTING T ExAlS Off TRADE 

Since 19?9 the level of export prices (gold) for the United States 
has been consistently higher than the level of world export prices. 
Correspondingly, the index of the volume of United States exports has been 
much lower than that for world exports. Although not the sole cause of 
the decline, undoubtedly foreign purchases of American goods were 
retarded by the relatively high prices. 

""uring the same period the indexes of import prices (gold) indicate 
that the United States has been able to buy imports at prices relatively 
lower, exclusive of customs duties, than the general level of world import 
prices. Consequently, the index of the quantity of United States imports, 
although for other reasons lower than the world average, did not diverge 
from the price index as much as in tne case of exports. 

9829 






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IOuPAFATIVE 

VALUE 07 UHIT. 



3HA2TGES 'IN THE IKDESLS 07 rQJJAETI-TY, PRICE AED 
2D STATES AID TOTAL "..'ORLD EXPORTS 
AED ILJP02TS 



Year 



Juantity 



(1927- 23 - 100) 



total 



United 

tates 



Frice a/ 



'..orlc 
total 



United 
States 



Value of 



7/o rid 
Total 



United 
States 









Eroorts 








1326 


: S3 


: 90 : 


: 104 


10 G : 


: 02 


94 


1327 


: 95 


: 37 : 


: 101 


9S : 


: 97 


95 


132s 


: 100 


: 100 : 


: 101 


Idl : 


: 101 


102 


1929 


: 104 


: 103 : 


: 3S 


100 : 


: 102 


. 103 


1330 


: 96 


s •• gR : 


: S5 


30 : 


: S2 


■ 76 


1331 


: S3 


: 70 : 


: 05 


59 : 


: "ig 


47 


1332 


: 73 


: 54 : 


: 51 


59 : 


: 40 


3i 


1933 


: 77 


S4 : 


: U 5 


US : 


: 36 


26 


1934 


79 


5S 


: 43 
Inoorts 


! 44 : 


: 35 


! 25 


1926 


: S3 


: 3k : 


: 104 


: 112 : 


: 93 


: 105 


1327 


: 95 


94 : 


: 102 


: 104 : 


: 97 


i." 00 


152s 


: 93 


: 96 : 


: 100 


101 : 


: 100 


1 97 


1-29 .- 


: • 105 


• . 110 : 


: 5S 


. or 


: 103 


104 


1530 


og 


33 : 


: S5 


7S : 


: S4 


: 72 


1331 


S3 


SI : 


: 37 


60 : 


: SO 


50 


1332 


77 


GG : 


: '32 


H7 : 


: 40 


31 


1933 


7£ 


: 72 : 


: 46 


37 : 


36 


27 


1534 


so 


72 : 

T 


: ^3 
otal Trade 


33 : 


: 35 


: 24 


1326 


S3 


92 : 


i 104 


109 : 


: 53 


100 


1327 


95 


96 : 


: 102 


102 : 


: 97 


97 


132S : 


100 


SS : 


: 100 


101 : 


: 101 


100 


1529 


104 


106 : 


: 9S 


97 : 


: 102 


103 


1930 


97 


SQ : 


: ':' : ' 


SU : 


: . S3 ! 


74 


1331 : 


29 


76 = 


: 56 : 


65 : 


: 59 


49 


1532 ! 


7^ • 


60 : 


: 32 


53 : 


: 40 • ' 


31 


1533 i 


7S : 


S3 : 


: 46 


43 : 


: 36 ! 


• 26 


193U i 


so : 


65 : 


: 43 : 


39 : 


: 35 ' : 


' 25 



a/ Dollar of pre-duvaluation gold content. 

_o/ Sum of Inde::es for exports and itiports divided "by 2. 

Source: Absolute figures fron: 

League of nations, Statistical Yearbook and 
U. S. Oureau of Foreign im\ Domestic Commerce 
Summary of the United States Trrde '-fith Tforld, 133^ 



3S23 



•ijo- 



The oivergent trends of United States and world tr->de may "be explained, 
at least in part, by the relative changes in prices ^hich resulted in 
a decided shilt of the terms of trade in favor of the United States 
after 1929, making it possible to exchange a given auantity of exoorts 
for a much larger quantity of imports than fori rl.y. Accordingly, the 
relative decline in United States trade lay oe regarded partly as a 
natural reaction of foreign merchants to an unfavorable trading situation 
in the United State;:. 

The high rates of duty imposed by the United States Tariff Act 
of 1930 contributed both directly and indirectly to r crease the dis- 
advantage of foreign sellers in the United. States market, directly by 
the burden of the duty and indirectly by forcing import prices to lower 
levels; lower prices, in turn', increased the relative burden of the 
duties insofar as thev involved specixic minimum -rates.. Lxoorts were 
likewise aiiected by tht resulting rise in the domestic price level and 
by retaliatory and defensive measures taken by foreign countries. 

An important reason for divergent trends o± United States import and 
export prices may be found in the different commodity co aposition of the 
two groups, Exports are predominantly manufactured goods and imports 
about half crude materials and foodstuffs. Baring the period 1929-33 
world prices of finished manufactures '-ere maintained at higher levels 
titan prices of crude materials and xoodstuffs. Prices of finished goods 
were even higher in the United States, relatively, than world levels. 
Consequently, the shift in the trading position of the United States 
resulted in part from the rigidity of industrial prices and in oart from 
unbalanced world production . of raw materials. The immediate gain of 
bhe United States from favorable tracing ratios '"as converted into a 
definite loss in trace volume largely as a corseauence of defensive 
measures taken by foreign countries to safeguard their credit and 
currencies and to protect expanding national production. 

Tlie disparity between United States nn^ world export nrices has 
practically disappeared sir.ce the devaluation of the dollar and, in fact, 
export prices have continued somewhat belo 1 ™ the level of internal 
pr ices. 

The recovers oi industrial activity and employment in the United 
Kingdom doubtless has been aided considerably by the relatively favorable 
trading ratios which have prevailed since 1929. Canada, on the other 
nana, has suffered from an adverse trading position during most of the 
depression for the reason that her exports are chiefly raw materials and 
imports largely manufactured goods. Tnt situation has improved recently 
because oi the relative gains mace by -'orld nrices of raw materials. 

In general, the "gold oloc" countries have enjoyed favorable terms 
of trace during most of the depression period largely because of the pre- 
dominance oi rpv materials in their imports and manufactured goods in their 
exports. The high purchasing power oi their currencies in the depreciated 
currency countries has enabled them to obt; in their raw materials on 
extremely favorable terms. The weakness oi their position is to be found 

9829 



in the growing disparity between the level o± their internal prices and 
"'orld -prices. 

From the point of view of the other principal industrial countries, 
increasing Japanese competition has been a disturbing element in inter- 
national trade since the devaluation of the yen beginring in Iieceiaber, 
1931, to a ^oint even lover than any otuer depreciated currency. As a 
consequence, the Japanese gainec , and nave since largely maintained an 
advantage for their exports in ■ orlc markets. In this connection it is 
note"'ortny that even thougn Japan har, become predominantly an 
importer of ra" material:', pro an exporter 01 manufactured goods, 
the shift in com lodity ter'ns of trade has been adverse during the 
depression. On the oasis of 19P7-29 relationships import ^rices 
curing 1933 and 1934 '-ere higher than internal prices and import 
prices "-ere loner. In fact, at trn trading ratios prevailing in 1^34, 
imports Fere bought at prices ( did) aoout 40 percent higher, than the 
level at "hich ex-ports vere sold as compared with 19^7-^9 relationships. 

The vide variations in the coa odity terms of trades "hich have 
characterized the irternational excnan, c ;e of mercnancise in recent years, 
broadly sneaking, hav- resulted from the disparity between the movement of 
the prices of rax" materials and mam fi c'tured goods and the disturbing 
influence of fluctuating exchange rates. 



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-53- 



I V . CHAl: GI NG G OMFET I T I VE 3 1LAT I JFSH I F S 

A. COi'.FAhlS OF OF NAT F'FAI. PFICI, LEV ELS ,IF. TEFMS. OF .GOLD 

Broadly sneaking a comparison of indexes of national price levels 
in terms of gold indicates changing competitive relationsnips between 
countries on a price basis, exclusive of transportation costs, tariffs, 
bounties,- and other forms of trade control, These 'indexes are sho'-m 
in Table 11 for the United States an. : si* other principal trading 
countries s together "nth the extent to "hich the -price levels of the 
other countries have diverged from that of the United States, indicating 
the extent oi their relative competitive advantage or disadvantage from 
one period to another. Although the internal prices of gold standard 
countries do not have to be adjusted for comparison with other price 
levels in terms of gold, the results oi such a comparison are less 
significant as an indication oi competitive relationships because of 
the effect of more severe forms" of trade control in force in those coun- 
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-60- 



For the six countries shown the divergence, of the indexes of their 
price levels from those of the United States ranged in 1930 from a 
competitive advantage of -9 for the United Kingdom to a disadvantage of 
/l for Germany. Only Italy, (-&) and the United. Kingdom.' (-9) diverged 
more than five points from the United States index. In marked contrast 
by 193?, following abandonment oi the gold standard by the United Kingdom, 
Japan, and a number' of other countries, • the ■ divergence had increased, to 
-24 j. or Japan; -18 for the United Kingdom, snu -6" for" Canada and Italy 
respectively, with no significant change for France and Germany. In 
fact in the last quarter oi 1932 the inde^. for the United Kingdom 
stood 21 points -below; and that of japan 35 points below, the ' index. .for 
the United States. 

With respect to the individual countries for which data are shown in 
Table 11, the competitive advantage of the United Kingdom increased from 
-10 to -21 and that of Japan xrom -5 to -55, in relation to the United 
States, in the t" r elve-month Dei iod following depreciation of their cur- 
rencies. There was" somewhat legs/change in tlie index for Canada and ■ 
practically no change for the other countries curing that period. In 
this connection it should be e iphasiz^d . that the competitive advantage 
of disadvantages as. .the case may be,, relate, not only to. .competition in 
the United. States market, but also to rivalry between products of the 
United States and those countries in other markets. Although the period 
1927-29 approximates the ideal of gold standard relationships, to some 
extent the changes shown ;nav' be interpreted as readjustments o'f preH- 
existing relationships. However, it is not without signii icance that 
both the quantity ptic value. of United ..States exports in 1932, relative 
to other countries., ..stood at. low levels as compared with the relation- 
ships prevailing in 1927-29. 

', hen the United States dollar began depreciating at the end of the 
first quarter of 1933 (after the widespread abandonment oi the gold 
standard had indicated fairly clearly that the world -orice level would 
be determined .on the b^sis of -gold parities considerably be" t ow the pre- 
depression level), the. oo^n' '.arc nip.ve.ment of the. price level indexes' 
(gold) of the countries which had previously moved away from gold in 
relation to the United States index, was reversed. In a fe™ months the 
indexes of the United . ingdora and Canada reverted to relation? hips ap- 
proximating those .which prevailed in 1.950. The Japanese . index recovered 
only a little over half of its relative decline because the gold value 
of the yen continued its downward course. 



3- COi lPA^rSON.'Oi" TKL FalCiL lio ^US ' O F UFITES STATES AND 
FOKKIGN INDUSTi-Ja L rA uDUCT S 

Indexes of the national price' levels of industrial products, as 
shown in Table 12, are available lor only a i ew countries. A comparison 
of such indexes, adjusted to gold, for the United States, the United 
Kingdom, France, and Germany, is significant of the changing competitive 
relationships of the industrial products oi different countries during 
recent years. 

9629 



61 



DIVERGENCE OF INDEXES OF INDUSTRIAL PRICES 

GREAT BRITAIN, FRANCE, AND GERMANY FROM THE UNITED STATES, 

1931-1934, QUARTERLY 



BRITISH 



















US INDEX 








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1931 



1932 



1933 



1934 



FRENCH 




1931 



1932 



1933 



1934 



1931 



GERMAN 




1932 



1933 



SOURCE. FEDERAL RESERVE BULLETIN, SHIF 1 

1927-29 BASE AND ADJUSTED TO GOLD. 



9S^U 



1934 



DIVISi- 


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SS29 






-63- 



Frora the data shown in Table 12, it may be observed that the price 
level of industrial products in the United Kingdom declined sharply 
from 1930 to tne first quarter ox 1933 in relation to industrial prices 
in tne United States, averaging roughly 25 percent lower during 1932, 
whereas the two- indexes had stood at approximately the same level for 
the entire period from 1956 to 1929. However, after the depreciation 
of the dollar during 1933, the United States index in terms of gold 
declined to the level of the British index, thus restoring the re- 
lationships which had prevailed during the pre-depression period. 

As a result of a decline in trie index of industrial prices in the 
United States, the index for France vgold) rose from its relatively 
low level in 1926 to approximately the level of the United States index 
during the three-year period 1927-29, hut declined thereafter to a 
point averaging nearly 20 percent lower during 1932 and the first 
quarter of 1933, However, the French index rose sharply during 1933 
and 1934, while the United States index was declining, with the result 
that in the latter year it averaged roughly 40 percent higher. 

From a relatively lo' n level in 1926, the German index of industrial 
prices ros'e to approximately the level prevailing in the United States 
in 1928 en& continued at that level until tne first quarter of 1933. 
Thereafter, as a result of the decline in the United States index, it 
stood at a level over 20 percent highei . 

The influence of the changing competitive relationships indicated' 
by the above comparisons, hasbeen ouscured during the depression by 
other factors, such as nigh tariffs, and the growing net-work of trade 
controls. However, during the three-year period 1930-32, when the index 
of industrial nric^s in the United States was high in relation to 
other countries, exports, ith slight exception, were relatively low 
(see Table 2,' p. 38). Likewise during 1933 and 1934 when the indexes 
of industrial prices in France and Germany were high in relation to 
other countries, their exports declined sharply. from the levels previous- 
ly prevailing, end particularly their exports to the United States, as 
contrasted with the exports of the United Kingdom' which did not decline 
in 1933 and rose relatively in 1934. 



9&29 



-64- 

CHAPTER III. FOREIGN TRADE A1JD INDUSTRIAL RECOVERY 

I. COMPARISON OF FOREIGN TRADE AND INDUSTRIAL ACTIVITY 

In the preceding pages an attempt has "been made to sketch in broad 
outline the international trade position of the United States during 
the period 1927-29 to 1934, for the purpose of indicating the importance 
of foreign trade as a factor in the depression and the extent to which 
it contributed to the problem of recovery to which the National 
Industrial Recovery Act was addressed. From the data shown in Table 13 
the outstanding fact emerges that in 1932 and 1933, not only had 
industrial activity in the United States declined to a greater extent 
than that of any other important commercial country, but that 
United States export trade had fallen to an even greater extent, and more 
than the export trade of any other important country. This leads to the 
conclusion that foreign trade has been the most vulnerable aspect of 
the national economy and, therefore, inevitably contributed in large 
part to the general collapse of economic activity. 

From the last column of Table 13, it mpy be noted that the index of 
industrial employment in the United States stood in 1932 at a consider- 
ably lower level than the indexes for the other important countries. It 
is apnroTjriate, therefore, to inauire more precisely into the importance 
of imports and exoorts in the commerce of the United States and regarding 
the extent to which foreign trade may have contributed to the problem 
of unemployment , probably the most difficult aspect of the recovery 
•program. 

II. IIIPORTANCE OF TOTAL EXPORTS AND IMPORTS IN THE COMilERCE OF THE 
UNITED STATES 

Should exportation and importation be considered as industries 
for the purpose of indicating their importance in the commerce of the 
United States, and be ranked with the sixteen industry groups of the 
Census of Manufacturers, they would have, been, respectively, sixth and 
seventh in value in 1929 and tenth and eleventh in 1933.- 

The value of United States merchandise exports averaged $4,890 
million in 1927-29 and was $1,647 million (currency) in 1933. The ratio 
of these exports to the value of domestic production of movable goods, 
including transportation costs, was 9.9 per cent in 1927-29 and 6.6 
per cent in 1933. 

The value of imports into tho United States averaged $4,200 million 
in 1927-29 and was $1,450 million in 1933. The ratio of the value of 
these imports (excluding customs duties) to the value of domestic 
production of movable goods, excluding transportation costs, was 
approximately 9 per cent in 1927-29 and 6 per cent in 1933. 

Obviously percentage figures showing the ratio of total exports and 
imports to domestic production of movable goods do not indicate fully 
the importance of foreign trade in the economic life of the country for 
the reason that the usual experience of industrial enterprise demonstrates 
that the loss of a small percentage of business may mean the difference 
between profitable and unprofitable operation. Moreover, the loss of 

9829 



-05- 

TA3LE 13: COMPARISON 0? TBS TREHD 03" EXPORTS AND IMPORTS WITH 
INDUSTRIAL ACTIVITY IN SEVEN PRINCIPAL TEADING COUNTEISS 



1927-29 - 100 



Exoorts 



Imports 



Industrial 



Year : Quantity : Valued/' : Quantity : Value'/ : Product ion ;Employme nt 









U 


tilted States 






1927-29 


100 


! 100 


100 






100 


100 


100 


1932 


54 


22 


66 






32 


57 


63 


1933 


54 


' 32 


: 72 






34 


68 


68 


1934 


58 


42 


72 






38 


71 


78 








U 


lited Kingdom 






1927-29 


100 


100 


100 






100 


100 


100 


1932 


67 


51 


89 






60 


86 


93 


1933 


67 


51 


90 






57 


91 


96 


1934 


71 


55 


95 






63 


102 


100 










Canada 






1927-29 


100 


100 


100 






100 


100 


100 


1932 


71 


43 


56 






55 


63 


77 


1953 


77 


44 


56 






32 


66 


72 


1954 


- 


57 


- 






43 


80 


84 










Franc e 






1927-29 


100 


100 


100 






100 


100 


100 


1932 


58 


38 


99 






54 


77 


82 


1933 


60 


35 


103 






52 


85 


80 


1934 


62 


34 


89 


! 


42 


7S 


77 










Germany 






1927-29 


100 


100 


100 






100 


100 


100 


1952 


68 


49 


66 






34 


61 


72 


1933 


64 


41 


67 






30 


69 


75 


1934 


60 


uO 


72 






32 


85 


88 










Italy 








1927-29 


100 


100 


100 






100 


100 


100 


1952 


85 


44 


75 






38 


72 


71 


1933 


85 


39 


77 






35 


80 


71 


1934 


81 


34 


SO 






35 


88 


72 




100 


100 


100 


Japan 


100 


100 




1927-29 






100 


1932 


118 


67 


99 






67 


112 


81 


1933 


131 


98 


103 






68 


129 


89 


1934 


155 


108 


: 110 






105 


146 


99 



Sources : Data from League of Nations S tatistical Ye-r Book , and 
Mon thly 'Bull etin of Sta tistics, adjusted. 

a/ In terms of national currency. 



9829 



-66- 

businesa volume by particular producers or industries often' sets in 
motion competitive influences which lead to declining prices, unemnloy- 
ment , decreasing purchasing power, and eventually to a diminished level 
of total industrial activity. 

III. THE IMPORTANCE OF UNITED STATES EXPORTS 0? UAIIUFACTURERS, THE 
AMOUNT OP THEIR DECLIKE, AIT) LOSS OF EMPLOYMENT 

Manufactured goods (including semi-manufacturers) '.accounted for 73 
per cent of the total exports in 1929 and for 61 per cent in 1933. Their 
value was $3,745 million in 1929 representing nbout 8 per cent of the 
net value of the domestic production of manufactures in that year, and 
$1,008 million in 1933, or 5 per cent of that year's production. : The 
absolute decline amounted to $2,737 million, (the difference between 
$3,745 million and $1,008 million), a loss eouivalent to 3.9 per cent 
of the average value of domestic manufactures (gross) as reported' by 
the Census of Manufactures for 1929. The 3ureau of the Census states 
that the duplication in' the cost of materials through the various 
stages of manufacture amounts to at least one-third of the total "value 
of products". Therefore, if adjustment is made for this duplication, 
the loss in 'the value of exports between 1929 and 1933 '^ould be 5.9 
per cent of the net value of products manufactured. It 'is not possible 
to make adjustment for changes in .the volume of exports, in wage rates f 
and in production methods, but applying the first percentage (3.9)- to 
the total number of wage earners (8,800,000) in manufacturing in 1929, 
the decline in the value of the export trade pi" the United Stages would 
represent a lass of employment of about 340,000 persons,- while the : use 
of the second percentage' (5.9) would indicate, that the loss of foreign 
markets represented loss' of employment to more than 500 K 000 wage ' 
earners in manufacturing. The significance of this is apparent when 
it is taken into consideration that the Census of Manufactures shows 
only six groups in 1929,. and four in 1933, that had more than 530,000 
wage earners. '. : 

It has been estimated that the decline in export trade from 1929 
to 1931 caused a decrease in employment of roughly 50,000 salaried 
employees, and of 100,000 v-age earners in forestry, fishing, mining 
and transportation. (*) Apart from the further decline of exports 
from 1931 to 1933, (**) this 150,000 added to the adjusted figures given 
in the above Paragraph would indicate a total loss of employment 
resulting from declining exports amounting to roughly 650,000 persons. 

Ho estimate is available of the number of employees in the whole 
field of distribution affected by the decline of foreign trade. The 
statistics published in the Census of Wholesale Distribution with 
reference to employment in importing and exporting are considered 



(*) U. S. Tariff Commission - " Economic Analysis of Foreign Trade of the 
United States in Relation to the Tariff " (1933), Part II, p. 23, 

(**) Although it has become customary to speak of 1932 as the low year of 
the depression, United States export trade remained at approximately 
the same low level in both Quantity and value in 1933. 

QROQ 



inadequate for the purpose of this inquiry "because of difficulties of 
classification and sampling. (*) Moreover, from the definitions given 
of exporters and importers and export and import agents, these 
statistics presumably do not cover direct export by manufacturers, 
direct import by department stores and other retailers, nor direct 
import of raw materials by domestic manufacturers. 

If it be assumed that the ratio of employment to total value of 
trade is the same in the distribution of imports and exports as in 
domestic wholesale trade, then the ratio between those aggregate values 
applied to the number of employees reported in domestic wholesale trade 
would indicate that employment in the distribution of imports and 
exports amounted to approximately 225,000 in 1929 and 105,000 in 1933, 
a decline of roughly 120,000. (**) 

It would seem therefore conservative to conclude that the decline 
of foreign trade from 1929 to 1933 resulted in a loss of employment in 
the field of distribution to at least 100,000 persons. If this figure 
is added to the estimates of loss of employment in industry, forestry, 
mining, fishing, and transportation, given above, it would indicate 
an aggregate loss of employment to more than 750,000 persons. 

D. THE RELATION OF DE C LINING- IMPORTS OF MANUFACTURED GOODS TO DOMEST IC 
PRODUCTION OF MANUFACTURES 

The average value of United States imports of manufactured goods 
was about 51 per cent of the total imports in 1927-29, ($2,150 million) 
while in 1933 these imports, valued at $819 million, were 56 per cent 
of the total. The ratio of their value to the net value of domestic 
production declined from about 5 per cent in 1927-29 to 3.8 per cent in 
1933. The value of manufactured goods imported dropped 62 per cent 
between 1927-29 and 1933, and the cmantity indexes indicate that the 
drop in physical volume was little more than one-third. It will be 
observed, therefore, that during this period the impact of imports upon 
declining domestic production was but slightly less quantitatively, and 
was made sharper by the decline of import prices. 



(*) U. S. Department of Commerce, Bureau of the Census, "Census of 
American Business, 1933," Vol. I, A-l. 

(**) This estimate involves an over-statement insofar as the figures used 
for the value of domestic wholesale trade may be less than the actual 
total of that trade. However, if data were available for a larger 
sample, presumably the number enroloyed would be proportionately greater. 

The assumption that the ratio of employment to total value of trade 
is the same for the distribution of imports and exports as for total 
domestic wholesale trade likewise involves an over-statement for the 
reason that this ratio is probably smaller for imports and exports. 
However, it is believed that this is largly offset by the fact that 
the estimate does not include other employment incident to foreign 
trade such as that provided in the field of banking, advertising, and 
credit management. 



9829 



-69- 

CHAPTER I. 
ANTECEDENT AND RELATED LEGISLATION 

I. ANT I -TRUST DAWS' 

Prior to the National Industrial Recovery Act the so-called anti- 
trust laws were applicable to both interstate and foreign commerce. The 
Sherman Act prohibited combinations or conspiracies in restraint of trade, 
and monopolies and conspiracies or attempts to monopolize any part of 
interstate or foreign commerce. The Federal Trade Commission and CI -y ton 
Acts, among other things, prohioited unfair methods of competition, price 
discriminations, "tying" contracts, monopolies, and interlocking direct- 
orates . 

A- limited' exemption from the anti-trust was granted oy the Export 
Trade Act (Webb-Pomerene law) to associations engaged solely in the 
business of exporting, with a proviso against restraint of trade within 
the United States or of the export trade of any domestic competitor, and 
provided the domestic prices of the class of comraooities exported are not 
affected. The importing phase of foreign trade enjoyed no such exemption 
On the contrary, in addition to the other anti-trust laws, it was specif- 
ically subject to the provisions of the - ilson Tariff Act of August 27, 
1824, amended February 12, 1913, which prohibited any importing combina- 
tion having as its object an increase in the price of any imported art- 
icle or any domestic manufactured article into which such import might 
enter. 

Section 5 of the NIRA create! an exemption from the' provisions of 
the anti-trust laws, for any. approved code cr any action complying with 
the provisions thereof. This exemption had the effect no.t only of exempt- 
ing the importing trade, when a code was approved for such trade, from 
the Sherman Act and the Federal Trade Conaiscion and Clayton Acts but also 
from the anti-trust ■ provisions of the Wilson Tariff Act which applied ex- 
clusively to imports. 

II. THE ANTIM3UJ5PING ACT A3 AMENDED MAY 27, 1921 

The operation ef the Anti -dumping Act was not affected oy the NIRA. 
Its provisions are applicable to all imported merchandise whether dutiable 
or free, of which the purchase price, or exporters sales nrice, is less 
than the foreign market value, and they provide for the imposition of a 
special dumping duty equal in amount to the difference between the pur- 
chase price and th^ foreign market value, in all cases in which it appears 
that a domestic industry is being or is likely to be injured, or is pre- 
vented from being established. 

III. THE TARIFF ACT OF 1930 

A. G-ener al Conditions Prescribed for the Adm ission of 'Imparts 

Section 1 of the Tariff Act of 1930 provides that there shall be 
levied and Paid upon all articles listed in' Schedules 1 to 15 inclusive, 
(abwut one-third of total imports in recent years, by value) when import- 

9829 



•• - -70- 

ed from any fcreign country into the United States or any of its posses- 
sions (except the Phillippine Islands, the Virgin Islands, American Samoa, 
and the Island of Guam), the rates of duty which are prescribed in those 
schedules, except as otherwise specially provided for in the Act. Sec- 
tion 201 similarly provides that the articles listed in Schedule 16 (ap- 
proximately two-tnirds of total imports, by value) shall be exempt from 
duty, except as otherwise specially provided. 

Section 301 orovic.es for imports, from the Philippine Islands on con- 
ditions similar to those prescribed for' articles imported from foreign 
countries; with the proviso that all articles, the growth or product of 
or manufactured in the Pnilippine Islands, from materials, the growth or 
product of the Pnilippine Islands, or- of the United'' States, or of both, or 
which do not contain foreign materials to the value of mor? than 20 per- 
centum of their total value, shall ue admitted free of duty, when import- 
ed .by direct shipment , on condition that imports from the United States 
into the Philippine Islands by direct shipment shall likewise be admitted 
free of duty. • .'.-•..•. 

(Imports from the Virgin Islands' into the United States or its pos- 
sessions which do not contain ' foreign materials. to the value of more than 
20 oer centum of their total value are likewise admitted free of duty under 
an Act of Congress approved March' 3, 1917. Reference --U'.S . Code, Title 
48, sec. 1394, c. 171, sec. 3, .39 .Stat. 1133.) 

Section 316 provides 'that 'nothing in the Act snail be construed to 
abrogate or in -my manner impair or affect the provisions of the treaty 
of commercial reciprocity concluded between the United States and the Re- 
public of Cuba. 

Section 304 requires th^t -every article imported into the United 
States, and its immediate container-, and the package in which 3uch art- 
icle is imported, shall be marked, stamped, branded, or labeled, in leg- 
ible English words, in a. conspicuous place , in such manner as to indicate 
the country of origin of such article. It provides for the imposition 
of a duty of 10 oer centum ad valorem as a penalty for failure to comply 
with these requirements. 

-^ . Provisions Prohibiting Imports 

The importation of immoral articles, of diseased cattle, sheep, 
swine, and meat unfit for human consumption, and of convict made goods 
is pronioited by Sections 305, -30$., and 307 of the. Act, respectively. 

C . Principal Provisions for the Imposition of Ne'w or Add i tional 
Duties 

Section 303 provides, with respect to articles on the dutiable list, 
for the imposition of an additional duty whenever the country of origin 
bestows, directly or indirectly, any bounty or grant upon the .manufacture 
or production or export of any article or merchandise manufactured or 
produced in such country. The duty. so imposed snail be equal to the net 
amount of such bounty or grant however the. same may be paid or oestowed. 



-71- 

Section 336 rovid^s that," the Tariff Commission: (l) upon request of 
ihe President, or (3) u on resolution' of either or both Houses of Congress, 
or (3) upon its own motion, or (4) when -in the 'judgment .of the Commission 
there is good and sufficient reason therefore, uoon application of any 
inter p st°d ^arty, snail investigate the differences in the costs of pro- 
duction of any domestic article and of any like or similar foreign article, 
./hen the Commission finds by investigation that the duties -provided in 
the Ace do not equalize the differences in the costs of production of the 
domestic article and the like or similar foreign article when produced in 
the principal competing country, the ^resident is authorized to aDprove by 
proclamation sucn increases or decreases in the existing rates of duty as 
ar° necessary to equalize such differences, -provided that in no case shall 
the total increase or decrease exceed 50 per centum. 

It is important to note that section 336 applies to the dutiable 
list only, and then only to li ke and similar articles, if produced in the 
orinci ial comoe tina country , and that the cnange is limited to 50 per cent 
of existing rates. 

Section 337 declares unlawful any unfair metnods of competition in 
the im-portation or sale by the owner, importer , consignee, or agent of 
either, the effect or tendency of which is to (l) destroy or substantially 
injure an industry, efficiently or economically operated, or (3) to pre- 
vent the establishment of such an industry, or (3) to restrain or monopo- 
lize trad--. 'hen the President, with the assistance of a Tariff Commission 
investigation, snail find the existence of any such unfair mptnod of com- 
petition or unfair act, the article concerned snail be excluded from entry. 

The effectiveness of Section 337 is limited by the difficulty involved 
in establisning (a) the existence of unfair metnods of competition and un- 
fair acts in importation, and (b) chat they tend to destroy or substanti- 
ally injure an industry or prevent the establishment of an industry or re- 
strain or rnononolize trade. 

P . Provision for th " - Promotion of Foreign Trade 

Section 3L;0, approved by the President on June 13, 1934, as an amend- 
ment to th- Tariff Act of 1930, delegated authority to the President, "(l) 
to enter into foreign trade agreements with foreign governments or instru- 
mentalities thereof, and (3) to nroclaim such modifications of existing 
duties and other imoort restriction* * * * * * as are require: or appro- 
priate to carry out any foreign trade agreement that the President has 
entered into n<=reunder. No proclamation shall be made increasing or de- 
creasing by more than 50 ner centum any existing rate of duty or trans- 
ferrin- any article be tween the dutitlt- and free lists. The proclaimed duties 
and otuf-i restrictions snail apply to articles, the growth, product, or 
manufacture of all foreign countries, whether imported directly, or in- 
directly." 

Almost immediately following the approval of this legislation, ques- 
tions v/er^ raised regar ing the apparently conflicting policies re-presented 
by section 3 (e) and by the Trade Agreements Act. Obviously the policies 
represented oy them ran in opposite directions. However, that did not 
mean tnat they were necessarily contradictory for that depended upon their 

9839 



-72- 

admini strati on, since ooth involved executive discretion. It was tnus 
possible for tne tvyo opposing provisions of law to be administered in 
such a way as to be complementary in . connection with the broad program 
of recovery which of necessity required a considerable degree of ad- 
Jiia*ment and ccvjitcraujustnojxt in' the course of its progress . 

The Trade Agreement Act made Section 3 (e) more important as a means 
of affording necessary protection in view of the face that it provided 
that Section 336 (the "flexible" tariff provision) should not apply to 
any article with respect to the importation of which a foreign trade agree- 
ment should be concluded. This had the effect, during the successive 
negotiation of trace agreements which followed, of orogressively narrow- 
ing tne scone of the application of Section 336 of the Tarriff Act, while 
Section 3 (e) was not so restricted. 

The Congressional intent with respect to the relation of Section 3 
(e) to the Trade Agreements Act was indicated by a statement in the report 
of the Senate Committee on Finance to the effect that "nothing in the 
present bill interferes with the protective provisions of Section 3 (e) 
of the NIEA." 



9829 



-73- 



CHAPTER II . 
CONDITIONS NECESSITATING- A TARIFF SECTIlN OF THE NIRA 



I. INADEQUACIES 'OF EXISTING LA^7 

The record of Congressional debate on the NIRA discloses relatively 
little disagreement with the suggestion of the need for a tariff pro- 
vision m the Act. It was suggested at that time that Sections 3 (a) 
and 3 (b) contained all the authority necessary to control imports. 
•This Plight have been true, but to achieve the end contemplated, namely 
restrictions would have necessitated resort to Sections 4 (b) and 3 (d) , 
containing authority to license business enterprises and prescribe codes 
since, obviously, importers would not voluntarily assent to codes or 
code provisions which would have the effect of seriously restricting 
imports or of limiting the functions of importers. Congressional Atten- 
tion appeared to be focused largely on the question of comnetition of 
imports oroduced at low cost in foreign countries under conditions hot " 
comparable with those contemplated in the domestic field, and aided at 
that time by depreciating foreign currencies. Consequently, and as a 
result of doubt concerning the effectiveness of import control by means 
of codes, the bulk of the discussion was , concerned with the question of 
specifically providing authority for import restriction, as contrasted 
with import •regulation. 

Both government officials and representatives of industry expressed 
the view that the program projected under the Act, involving increased 
prices and costs of production, would be greatly restricted, if not ' 
destroyed, unless there were some- effective provision authorizing the 
President to restrict imports which would compete with domestic production 
under conditions of limited hours of labor, minimum '^ages, fixed prices, 
i and other requirements. 

The Section of the Tariff Act of 1930 which provided for changes in 
existing rated of duty by executive authority was not considered adequate 
to meet the emergency conditions expected to prevail in connection with 
the program of recovery for the reason that only such changes could be', 
made as might be found by investigation of the Tariff Commission to' be. 
■necessary to equalize differences in foreign and domestic costs. This 
view was' based primarily upon the lack of effectiveness, during a period 
of rapid 'changes' in costs, prices, and in the exchange value of currencies, 
which inevitably results from the extreme difficulty and long lorocedur e 
involved in ascertaining foreign and domestic costs. 

Other sections of the Tariff Act were considered inadequate because 
of the relatively narrow limits of their application. For example, the 
Anti-dumping Act provided only for the imposition of special duties when 
the purchasing r>rice, or foreign exporters ' sales -orice, was less than 
•the foreign market value. 



9829 



-74- 

II. ANTICIPATED ECONOMIC CONDITIONS NECESSITATING IMPORT RESTRICTION 

Section 3 (e), which did not apoear in the original draft of the 'bill, 
was adopted as an amendment, providing for broad discretionary executive 
authority to impose fees, quantitative limitations, or other terms and 
conditions on inroorts. Its adoption, was a recognition of the fact that 
the program of industrial recovery projected under the Act would involve 
important economic adjustments, the effect of which would substantially 
increase domestic costs of production and prices, thereby "placing" 
domestic industry at a disadvantage in. competition with imoorts. It pro- 
vided protection against outside interference' with the domestic. Program, 
and an avenue for relief when necessary, by authorizing the President to 
take whatever action necessary to safeguard the code ' standards involving 
the obligations of increased wages, shorter hours, better working con- 
ditions, and improved methods of competition as against imports not 
subject to ajiy such obligations. 

III. SUMMARY CP CONFLICTING VIEWPOINTS 

A. The V:.er r of the Immediate Sponsors of the Bill 

The need for a tariff provision in, the Recovery 4ct was not at the 
beginning admitted by the . immediate sponsors of the original bill. In 
rpply to a question, during the hearing before the V/ays and Means Committee, 
as to whether an amendment would be germane that Would provide for' the 
competition of foreign commodities, one of the sponsors stated that "that 
presents a question that ought not to be dealt with'in this particular 
legislation * * * * it involves other questions. V/e are talking now about 
removing some barriers in -the international trade. 'I "hear men who advo- 
cate the sale of their goods in foreign markets and at the same time want 
to prevent any goods from, coming into this country * * * there is an 
inexorable economic law which says that if yoa are going to export goods, 
you have also got to import goods. There is no other way in the long run 
of paying for ojt exports except by imports." 

It appears from the record that the Recovery Act was 'thought of 
primarily in terms of , the internal aspects of the domestic economy. In 
fact, one of the sponsors of the bill stated at one point" that "this 
(the Recovery Act) is attempting to solve our domestic problem", in con- 
trast to the consideration of . foreign competition which' "presents an 
international question." The Senator admitted, however, that "there may 
come a time, if we get our prices up sufficiently,' that readjustments may 
have to be made somewhere; but thi-s a matter for future jict ion, and I 
do not think it can be intelligently dealt with in the'ieg'islation we 
nave before us now. I; 

• ' "" ."'•'' '■" 

B. Other Congressional Viewpoints •. • . t .-., . 

Only a short time' preceding Congressional consideration of the NIRA, 
the Committee on Labor of the House of Representatives had held hearings 
on the so-called 30-hour week bill, during which extended consideration 
was given to the question of foreign competition, With this in mind, 
during debate in the House of Representatives, one Congressman offered the 
opinion that the 30-hour week bill, except for the lack of a public works 

9829 



-75- 



Drogram, was otherwise a very superior -md. better balanced bill because 
it provided t>rotection to American industry and American labor which un- 
fortunately was not provided for in the bill under consideration. His 
discussion closed with an urgent request that the bill be amended by 
adding to it what was known as Section 8 of the Black-Connery (3<">-hour 
week) bill, which reads as follows: 

"To insure a purchasing power on the part of the American Consumers 
the Secretary of the Treasury is hereby directed, while this act 
continues in force and effect, to prohibit the entry of foreign- 
made goods, which goods are similar or comparable to goods pro- 
duced in the United States of America, if such foreign-made goods 
are entered at total landed costs which are less than American 
cost of production of similar or comparable American-made goods. 
The Secretary of the Treasury is hereby authorized to make findings 
of the cost of t>rodix tion, and his decision shall be final." 

The most extreme protectionist view expressed during the debates in 
Congress was to the effect that the American market ought to be kept ex- 
clusively for the domestic producers. In fact this Congressman went so 
far as to say that "if yeu were to have an embargo on foreign commodities 
for t T ?o years, inside of six months you would see- every wheel in this 
country turning." To this it was replied that the countries that pur- 
chase, or ^he nationals of the countries that purchase, can not pay for 
foreign trade (exports) unless their goods come into this country, and 
that to have an embargo en importation and yet export is an absolute 
contradiction. The rejoinder added further that it was that sort of con- 
flicting policy that we had been pursuing which was one of the roaccr.c 
for the existing world disorganization. 

t 

C. The View of Industry 

The question of incorporating a section in the bill providing for 
control of foreign competition was urgently pressed during hearings before 
the Senate Finance Committee by representatives of domestic industry. A 
representative of the National Association of Manufacturers made the 
following statement and proposed an amendment delegating to the President 
broad authority to control or, if necessary, embargo imports: 

"We are convinced that it is essential to the success of the plan 
proposed that there should be ample .executive authority to control 
or, if necessary, embargo imports. This becomes evident if we con- 
sider the effects which the proposal is intended to accomplish. 
It is aimed to increase wages, shorten hours, andj in cooperation 
with other measures, raise the level of commodity prices. This 
inevitably increases the unit cost of production. To the extent 
that this is accomplished, it will obviously place domestic in- 
dustry in a competitive disadvantage with foreign producers, par- 
ticularly in the debased currency countries. To the exact extent 
that such conditions divert the increased consuming power that m e 
anticipate away from production, it will immediately react to 
stagnate reemployment or cause under-emuloyraent by diminishing the 
domestic consumption of the products, of American agriculture and 
industry. 

9829 



~7G~ 



"The power suggested would be employed only in the discretion of the 
.Executive, lor will it lessen his authority for international 
negotiation On the contrary, it is strengthened,, 

" e suggest the following additional subsection of Section 3 of 
the bill: 

'If any labor organization or any trade or industrial organization, 
association, or group, which has complied with the provisions of 
this Litle, or any person, shall nake complaint to the President 
that any commodities, articles^ or materials are being imoorted 
into the United States, :.and that such importation is detrimental 
to the effectuation . of the policy of this title in that the 
business, of any industry, trade, or subdivision thereof, as to 
which a code of fair competition under this title is in effect, 
is adversely affected hereby, and unfair methods of competition 
in the United States are resulting, the President may cause an 
investigation to be made of such complaint, and if after such 
public notice and hearing as he shall specify the existence of 
such unfair methods of competition shall be found he may, in. 
order to effectuate the policy of this title, direct that the 
commodities, articles, or materials concerned in such unfair 
methods of conroetition, shall be excluded from entry into the 
United States, and upon information of such action by the President 
the Secretary of the Treasury shall, through the -proper officers, 
refuse .such entry. 

Any refusal of entry under this Section shall continue in effect 
until the President shall find and instruct the Secretary of the 
Treasury that the conditions which led to such refusal of entry no 
longer exist c ' " 

P. The View of Labor 

The view of labor was presented in Congress in the following auota- 
tion from a statement by the President of the American Federation of 
Labor: 

"The opportunity to ship into this country goods manufactured at a 
. price with which no American manufacturer can compete can be met 
in two ways: First, by the provision in the Connery bill; and, 
second, by a coun tar vailing tax. In my judgment, no tariff can be 
sufficiently high to me<=t the debased foreign currency conditions 
in Europe and oth^r foreign countries. That cannot be fix<=d by a 
rigid tariff act. " 

£. A Suggested Compromise > 

During the course of its deliberations the Senate Finance Committee 
adopted a tariff amendment substantially in the form proposed by the 
National Association of Manufacturers. Sentiment of the majority of the 
Committee was expressed during debate on the amendment in the following 
terms: 

9829 



-77* 



"Mr. President, the committee * * * * felt that the effectiveness 
of the measure would he greatly restricted, if not destroyed, un- 
less there were some provision giving the President authority to 
restrict imports that would "be in competition with the domestic 
producers who were ohliged to comply with codes fixing limited 
hours of labor, with a minimum wage, and sell their products at a 
fixed price not incompatible with the public interest." 

Opposition appeared to the extreme nature of the amendment first 
proposed, namely, the power of embargo. Gut of the deliberation and 
discussion which ensued there was evolved a substitute amendment, which, 
while maintaining broad discretionary authority, omitted the delegation 
of power to exclude imports (except as a condition of license for the 
purpose of imposing regulations), and provided in lieu thereof that the 
President might oermit the entry of articles on terms and conditions which 
would prevent their interference with the policy of the Act. The re- 
vised amendment was broader than the original draft with respect to the 
conditions rarecedent to action by the President. The original amendment 
required oroof that imports had already driven some American producer 
into a course of unfair competition before the President might act, which 
meant that the only way to bring the section into operation was for some 
producers to violate their code of fair competition, and this obviously 
would operate as an inducement to such violations. The revised draft 
ODviated this difficulty by providing that the President could act when 
imoorts were entering on such terms or under such conditions as to render 
ineffective or seriously to endanger the maintenance of any code or 
agreement. This revised draft was finally adopted with only slight 
modification. 



9829 



-73- 
CEAPTER III 
ANAL YSIS 'TS SZCTIOIT 3. (e) 0? THE HIEA. 
TEXT Or SECTION 3 (e) 

"On his own notion, or if any labor organization, or any trade 
or industrial organization, association, or group, which has 
complied with the provisions of this title, shall make corn- 
plaint to the President that any article or articles are Toe- 
ing imported into the United States in substantial quanti- 
ties or increasing ratio to domestic production of any compe- 
titive article or articles and on such terms or under such 
conditions as to render ineffective or seriously to endanger 
the maintenance of any code or agreement under this title, the 
President may cause an immediate investigation to be made by 
the United States Tariff Commission, which shall ..give pre- 
cedence to investigations under this subsection, and if, after 
such investigation. and such public notice and hearing as he 
shall specify, the President shall find the existence of such 
facts, he shall, in order to effectuate the policy of this 
title, direct that the article or articles concerned shall 
be permitted entry into the United States only, upon such 
terms and conditions and subject to the payment of such fees 
and to such limitations in the total quantity which may be 
imported (in the course of any specified period or neriods) 
as he shall find it necessary to prescribe in order that the 
entry thereof shall not render or tend to render ineffective 
any code or agreement mace under this title. In order to 
enforce any limitations imposed on the total quantity of 
imports, in any specified perioc 1 or meriods, of any article 
or articles under this subsection, the President may forbid 
the importation of such article or articles unless the im- 
porter shall have first obtained from the Secretary of the 
Treasury a license pursuant to such regulations as the 
President may prescribe. Upon information of any action 
by the President under this subsection the Secretary of the 
Treasury shall, throiigh the proper officers, permit entry 
of the article or articles specified only upon such terms 
and conditions and subject to such fees, to such limita- 
tions in the quantity which may be imported, and to such 
requirements of license, as the President shall have direct- 
ed. The decision of the President as to facts shall be con- 
clusive. Any condition or limitation of Gentry under this 
subsection shall continue in effect until the President 
shall find and inform the Secretary of the Treasury that 
che conditions which led to the imposition of such condi- 
tion or limitation upon entry no longer exists." 



9829 



-79- 



ii. geeepal CiLiHACTza 



In general, Section 3 (e) provided authority for prompt action by 
the President "based upon definitely ascertained facte or conditions in 
cases where the problem was such as to cone clearly within its terms. 
It prescribed immediate investigation b^ the United States Tarriff 
Commission as the r.eans of determining the merits of complaints from 
any labor organization or any trade or industrial organization, asso- 
ciation or group, which had complied with the provisions of Title I of 
the Act. Tie requirement of an investigation necessarily implied some 
delay, but the length of time involved in the movement of merchandise 
from foreign points of origin to the domestic market was usually suffi- 
cient to allow for all of the investigation necessary, and prompt 
enough action to orevent injury in clear-cut cases. Farther delay was 
inevitable, and to be expected, in doubtful cases but serious injury 
was not liable to occur ii: such cases in any event. 

The Section was unusual in its provision dor the imposition of 
quantitative limitations by executive authority and in the delegation 

of authority to license importers as a means of imposing and enforcing 
necessary restriction or regulation. 

III. THE PA1T&E Of ITS APPLICATION 

A . Scooo of the Pelorated Authority 

In contrast to other existing provisions of law (e.g. Section 336 
of the Tarriff Act of 1930) which delegated authority to the executive 
branch of the government to raise or lower tariff duties for the pur- 
pose of altering competitive relationships between domestic and foreign 
industries, Section 3 (e) was broader both in the scope of its applica- 
tion raid the basis upon which action -'as authorised. The action auth- 
orized was not limited to dutiable articles but also included articles 
on the free list., and the basis of action incorporated the broad con- 
cent of articles competitive with domestic production, as contra.sted 
with the so-called "flexible" tariff provision which is confined to 
"lihe or similar articles ." Section 3 (e) therefore indicated more 
clearly a willingness or intent to base import restrictions on both 
direct and indirect factors of competition. 

moreover, the action permitted by the terms of the "flexible" 
provisions of the Tariff Act is limited to the "differences in the costs 
of production of the domestic article anc" the like or similar foreign 
articles," and/or to a maximum change of 50 ve:^ cent of the existing 
rates, and depends upon the ascertainment ol such differences. Under 
Section 3 (e) the action authorized, including quantitative limitations, 
fees, or other terras arc conditions, was only limited to that which the 
President "shall find it necessary to prescribe ' , in order that the 
entry thereof (the imported article) shall not render' or tend to render 
ineffective any code or agreement." 

The maintenance of code standards obviously necessitated a con- 
sideration of many connetitive .factors including the relationship of 



-CO- 
foreign and domestic costs and prices, but the emphasis in Section 3 
(e) was upon the maintenance of code; standards regardless of the extent 
of their effect upon the competitive relationships "between domestic 
and foreign industry rather than "being specifically limited to consid- 
erations of price or cost difference. Accordingly, it provided for 
the imposition of quantitative limitations, which were not dependent 
upon ascertained cost differences, and which might he used independent- 
ly or in conjunction with "fees". 

3. Application to Territories and. Pos sessions 

Section 1 of the KI3A asserted a policy "to remove obstructions 
to the free flow of interstate and foreign commerce." Section 3 
provided for the formulation of c^des of fair corn-petition and prohibited 
violations of cede standards "in any transaction in or affecting inter- 
state or foreimi commerce." Sc-ction 7 (d) defined "interstate and 
foreign commerce" as including, unless otherwise indicated: 

"Trac'e or commerce among the several States and with 
foreign nations, or between the District of Columbia or 
any Territory of the United States ana s:ny State, Terri- 
tory, or foreign nation, or between any insular -posses- 
sions or ot he r 'place s under the jurisdiction of the 
United States, or between any such possession or place 
and any State or Territory of the United States or the 
District of Columbia or any foreign nation, or within 
the District of Columbia or any Territory or any insular 
-possession or other place under the jurisdiction of the 
United.' States ." 

The terms of the Act were thus clearly applicable to the territories and 
possessions of the United States, with one exception, namely, the 
Philippine Islands. The Attorney General issued a ruling in December 
1933, that the code provisions of the Act were not applicable in the 
Philippine Islands and that Section 3 (e) was applicable to "imports" 
into the United States from the Philippine Islands. This ruling was 
based upon an Act of Congress of August 29, 1916 (*) which provided: 

"That the statutory laws of the United States hereafter 
enacted shall not apply to the Philippine Islands, except 
when they specifically so provide, or it is so provided 
in this Act", 

and upon the fact that there was no clear statement in the ITIPA that 
the code provisions thereof should apply in the Philippine Islands. 
The absence of a provision defining the application of the Act with 
respect to the Philippine Islands' contrasts with the Tariff Act of 
1930 which specifically provides in Section 301 for the collection of 
the duties provided in that Act upon all articles coming into the 
United States from the Philippine Islands, with certain exceptions 

(*} 39 Stat. 545, 547 



9829 



-81- 

and with the provision in Section 337 union defined the tern "United States 
to include the several states and territories, the District of Colu mbia, 
and all possessions of the United States except the Philippine.'Islands, 
the Virgin Islands, American Samoa, and the Island of Guam. This 
definition was the basis of an opinion of the Attorney General to the 
effect that "imports" from the Philippine Islands come within the pur- 
view of the provisions of the tariff latrs forbidding unfair methods of 
competition and unfair acts in the importation of articles into the 
United States and, as such, subject to exclusion by order of the Presi- 
dent after investigation by the Tariff Commission (35 Op. Atty.Gen. 
273,281, July 25, 1927). 

iv. commons ppecedeiit to the initiation op an action under 

SECTION 3 (e) 

The filing of any complaint under Section 3 (e), that is, the 
initiation of an action thereunder, was subject to certain precedent 
conditions set forth in the section, except that the President was 
authorized to initiate such proceedings on his own motion. In every 
other case, it was necessary. to show that - 

(1) The complaint was either 

(a) A labor organization, or 

(b) A trade or industrial organization, association, 
or group, and that, 

(2) The complainant had complied with the provisions of 

Title I, that is to say, that he was party to 
an approved code or agreement . 

These conditions" precedent were vital in the early months of code 
malting, and may even be said to have contributed a definite impulse 
toward codification in certain industries, but as compliance with 
Title I became the rule, they became relatively unimportant except in- 
sofar as they indicated the representative character of the complain- 
ants. Compliance with Title I included the limitations of Section 3 
(a), which required that the code sponsoring group must not impose 
any inequitable restriction on admission to membership, and must be 
truly representative of such trade or industries or subdivisions there- 
of and the code itself must not be designed to promote -monopolies or 
to eliminate or oppress small enterprise^and must not operate to dis- 
criminate against them. 

A fair and reasonable interpretation of Section 3 (e) woulc re- 
quire as an added condition precedent that an action by the President 
either "on his own notion" or on complaint by a duly qualified com- 
plainant be initiated only when "any article or articles are being 
imported into the United States in substantial quantities or increas- 
ing ratio to domestic production of any competitive article or articles 
and. on such terms or under such conditions as to render ineffective 
or seriously to endanger the maintenance of any code or agreement." 



9829 



-82- 

Stated negatively, the mere threat of a future importation, or of a 
future increase in the amount, or change in the terms and conditions 
of importation, would not alone he a sufficient "basis for initiating 
such an action. 

V. C01TDITI01IS PRECEDENT TO THE GRANTING OE RELIEF BY THE PRESIDENT 

The language of the section provided t^o other conditions which 
were precedent to the granting of relief "by the President: 

(1) An investigation, and 

(2) Findings of fact. 

As to the first of these, the language used is ambiguous. 

11 * * * rphg president may cause an immediate investigation 
by the United States Tariff Commission * * * and if, after 
such investigation and such public notice and hearing as 
he shall specify, the President shall find the existence of 
such facts, he shall * * direct * * *." 

According to one interpretation, the vrord "may" was used in place 
of "shall" in order that the President might exercise his discretion 
as to whether any action at all would be taken on a stated complaint, 
making the action permissive rather than mandatory. If the President 
chose to act, he was to specify such investigation by the Tariff Com- 
mission and such public notice as he deemed appropriate, and thereafter, 
if he found certain facts, he was to direct certain action. 

According to a second interpretation the use of the word "may" 
left it to the President to decide whether he would have an investiga- 
tion by the Tariff Commission, or whether he would specify some other 
agency. Prom this viewpoint "such investigation" did not relate back 
to the investigation by the Tariff Commission, but related forward, 
with the second "such", to the dependent clause "as he shall specify." 

The phraseology used is such that a plausible case may be made for 
either viewpoint. However, in practice the first was followed as indi- 
cated by the terms of the Executive Order (Number 6353 of October 23, 
1933) , setting forth the procedure to be followed in handling Section 3 
(e) complaints. 

Apart from the question of who or what organization should make the 
investigation, or the type of investigation required, the language of 
the section is clear in setting forth that the President, after such 
public notice and hearing as he should specify, was the only one auth- 
orized to make the finding of facts required by the section, namely, 
whether "articles are being imported into the United States in substan- 
tial quantities or increasing ratio .to domestic production of any com- " 
petitive article or articles and on such terms or under such conditions 
as to render ineffective or seriously to endanger the maintenance of 
any code or agreement." It specifically provided that decision of the 
President as' to the facts should be final. 

9829 



-83- 

VI . SCOPE OF BELIEF AUTHORIZED . 

After a finding of facts, the President was authorized to impose 
such fees, quantitative limitations, or other terns or conditions, as 
he might find necessary in order that imports should not render or tend 
to render ineffective any code or agreement. 

Since the end in view was to safeguard the operation of codes or 
agreements, it was appropriate that both the form and extent of relief 
authorised "be adaptable to the peculiar circumstances of each problem, 
particularly in vier of. the chaotic conditions of competition which 
prevailed in international trade, involving a wide range of government- 
al measures affecting industrial and commercial operations, fluctuating 
exchange value of currencies, and other factors, resulting in rapid 
changes in costs and prices. 

During the period when Section 3 (e) was operative, the question 
was raised' on numerous occasions, usually in connection with the distur- 
bing effects of new offerings of foreign commodities on the domestic 
market, as to why it was not possible or desirable to take action to 
prevent imports or to anticipate the serious effect of import competi- 
tion. The answer, of coiirse, was that there was no warrant in existing 
law for the adoption of a policy which comprehended the complete elimi- 
nation of competition. Successful entry into a new market, whether 
domestic or foreign, almost always rcouirethe offer of merchandise on 
favorable terms, and experience indicated that much of the fear or an- 
ticipation of foreign competition was based upon ill-founded rumors, 
often reported by salesmen in justification for failure to secure busi- 
ness. Such initial offerings inevitably have a disturbing effect on 
prevailing prices, particularly if they are more or less rigid. However, 
competition is always a matter of ..'degree, and the provisions of 
Section 3 (e) were designed to set a limit to or effect control of such 
competition. 

To have made Section 3 (e) applicable to cases where competition 
from imports was merely anticipated, in effect would have necessitated 
basing action on conditions which were not susceptible to measurement. 
Obviously, the provisions of Section 3 (e) were sufficiently broad to 
make possible the prevention of or effective relief from pny seriou.s 
injury to domestic industry from import competition, and they were suf- 
ficiently flexible to meet the changing economic conditions which the 
Recovery Program and other influences were liable to create, and to make 
effective the policy of maintaining the competitive position of domestic 
industry with reference to imports. 

VII. RELATION OF SECTION 3 (e) TO OTHER PROVISIONS OF THE ACT 

During the period of the operation of the 1TIRA there was consider- 
able discussion regarding the relation of Section 3 (e) to other pro- 
visions of the Act, particularly Section 3 (d) which provided that the 
president might, under certain conditions, prescribe codes of fair 
competition for trades or industries or subdivisions thereof, Section 4 
(a) which authorised the President to approve voluntary agreements to 
.aid in effectuating the polic3r of the Act with respect to transactions 

9329 



in or affecting interstate or foreign commerce, Section 4 (b) which 
authorized the President to license business enterprises in order to 
make effective codes or agreements, and Section 10 (a) which authorized 
the President to prescribe such rales and regulations which might 
be necessary to carry out the purposes of the Act. Various proposals 
were brought forward from time to time by domestic interests for invok- 
ing provisions of the Act other than Section 3 (e) as a means of accom- 
plishing certain types of import restriction or regulation. In addition 
to the fact that importers were specifically included in the definitions 
of 25 industry codes or divisions or subdivisions thereof, and indirect- 
ly in provisions of numerous other codes, industry representatives 
vigorously opposed the approval of a separate code for the importing 
trade, and finally, after the approval of such a code, efforts were made 
to have incorporated in it provisions designed to regulate or control 
certain aspects of importing which affected the competitive position of 
imports in relation to the products of domestic industries. (*) These 
efforts led to the adoption of a general policy by 1IRA with respect to 
code provisions affecting imports, which was summarized in an Office 
Memorandum dated lioveraber 17, 1933, as follows: 

"Section 3 (e) of the Act provides a remedy and method of 
procedure for the correction of evils in any industry 
arising out of the importation of goods with which any 
such industry is concerned. Code provisions, the pur- 
poses of which are directly or indirectly to restrict 
or handicap importations, should, therefore, be avoided. 

This does not mean that a provision is to be condemned 
merely because it may possibly affect imports, regard- 
less of whether ov :iot 'such is<v.its purpose. -Eowcvoanjreven 
if a provision does not have such purpose and is other- 
wise justifiable, yet, if, in effect, it does restrict 
or handicap imports, it should not be approved unless 
the importers have been notified and given an opportun- 
ity to attend the hearings and present their views and 
objections. In all cases, if there is any doubt as to 
the propriety or purpose of the provision in view of its 
effect on imports, that portion of the provision should 
be eliminated and the industry advised to seek the dir- 
ect remedy, provided for ;by Section -3(a) of the Act." 

Daring consideration by the HHA of problems which involved the re- 
lationship of Section 3 (e) to other provisions of the Act, the follow- 
ing typical legal considerations were advanced in support of the view 
that it would be improper to invoke the other broader sections of the 
Act since Section 3 (e) provided in explicit terras the machinery that 
should be used to govern problems arising from imports. It was argued 
that v.hen an Act contains general and specific provisions relating to 
a particular subject, the specific provisions control, even though 



(*) See Part C of this study, entitled "Imports and Importing 
under NHA Codes." 



9829 



n r- 

— OD~ 

the "broader provisions standing alone night he read to include the sub- 
ject to which the more particular provision relates. Applying this 
rule, the terns of Section 3 (e) of the Act, which is a specific provi- 
sion, nust prevail over the "broader terms used in other sections- The 
President's power over imports is specifically defined in Section 3 (e) 
and to control imports under other provisions would he to evade the 
provisions of Section 3 (e), including its specific requirements as, 
for example, investigation by the Tariff Commission. That the "broad 
terns of" Section 3 (e) were sufficient as a "basis for dealing with any 
type or degree of import problem was indicated by an opinion rendered 
by the ERA Legal Division, to the effect that Section 3 (e) applied to 
imports whether legal or illegal and therefore was available in connec- 
tion with smuggled goods as well as legally imported goods. 

VIII. S01JE LEGAL QUEST ICES EEGAEDI1TG- SECTION 3 (e) 

In view of the Supreme Court's decision in the Schechter case, and 
of the fact that at that time action had been initiated by counsel for 
certain importing interests to test the constitutionality of Section 3 
(e), it nay not be amiss to record certain questions which are perti- 
nent to a consideration of the constitutionality of that section or any 
similar provision of law. 

The first question involves the sufficiency of the legislative 
standard provided as the basis of Executive action. In the analysis 
of the terms of Section 3 (e) presented above, certain conditions pre- 
cedent to the initiation of an action under that section were enumer- 
ated. These conditions merely defined or limited the availability of 
the remedy but did not relate to the nature and extent of the relief 
that might be granted. That standard was provided in the phrase "in 
order that the entry thereof shall not render or tend to render inef- 
fective any code or agreement." The question relates to the indefin- 
iteness of that standard and the difficulty of arriving at a decision 
that r'ould not be based more on opinion than on a reasonably definite 
measure of the facts in a particular case within the limits of the 
phrase specifying the rale or standard. The difficulty does not lie 
in the problem of determining whether imports render or tend to render 
ineffective any code or agreement but rather in the decision as to 
what terms or conditions, fees, or limitations, may be reasonably cal- 
culated to accomplish the specified end. 

The Supreme Court in the case of Hampton & Co. v . U. S. 276 U. S. 
394, upheld Section 315 of the Tariff Act of 1922 which was based upon 
the ascertainment of differences between foreign and domestic costs of 
production of "like or similar articles." That case was taken to the 
Supreme Court on the theory, among other things, that such differences 
could not be ascertained as facts, because costs themselves were in- 
capable of accurate ascertainment , and consequently, it was maintained, 
the section could only operate on the basis of opinion and therefore 
involved a delegation of legislative authority. In sustaining the pro- 
vision, the Court seemingly rested its conclusion on considerations of 
the degree of accuracy with which these differences were capable of 
ascertainment. But the legislative standard provided in Section 3 (e) 
was much less definite than that of the ascertained differences between 
foreign and domestic costs of production, and the range of action 

9329 



-36- 

authorized was practically unlimited in scope insofar as the object 
was the prevention of any tendency of imports to render the codes in- 
effective. Hence, the power to fix quantitative limitations and to 
impose terras and conditions was practically unlimited. 

During consideration of Section 3 (e) in the Senate as a proposed 
amendment, one Senator stated that he did not "believe part of it was 
constitutional. "It means," lie said, "that we are trying to give the 
President power to put on additional tariffs, and we are not giving him 
any rule to guide his action. It is left to his free discretion under 
all the circumstances, with no rule to control his action. I do not 
think Congress can delegate that power in that fashion." 

The second legal question relates to the imposition ."by Congress 
of "fees" for the purpose of regulation. The term "fees" as used in 
Section 3 (e) connotes new or additional duties imposed for the purpose 
of restricting importation or of altering the competitive relation of 
foreign and domestic articles in the interest of maintaining code-, stand- \- 
ards. Obviously the primary purpose was regulation ond revenue was 
secondary- One line of cases (re: the prohibitive tax on oleomargarine) 
sustains the right of Congress to levy taxes ((or fees) for the purpose 
of regulation, while another line of cases (e.g. the second child labor 
decision) denies that right. There is only the opinion of the Court as 
to what factors cause an article to be helpful or injurious to distin- 
guish between the two views. 



S329 



-07- 

chaptt t iv. 

policy, orgv. izati : r , A; 7 : ,' r :oc: suii'". i ' co:~t:ctioi t 
v:i_ ! :- t:-z ATTrrjisTPTic " c" stctiot 5 (e ) 

I. SOLS SUGC-ESTI.aTS 0" POLICY 

That Section 3 (e) was intended by Congress exclusively as a means 
of irotectingcb.de staiic rds in the domestic field was clearly indicated 
by the" following st .teraent of purpose which was made at the time it was 
introduced as an amendment to the then pending TIRA: 

"The amendment proposed * * is simply to make effective the 
purpose of Title I of 'this Act. It is inconceivable that 
hours of labor can be reduced, and wages fixed, and prices 
of commodities established by government agency and no power 
given to the - ; ~me r ;ency to prevent a flood of imports into 
this country, * * * ;: * liis purpose of the amendment is to 
give the President the same .uthorit over these imports that 
he is assuming over domestic production * *." 

A prominent representative of industry, in co imenting on r similar 
provisions previously submitted* c t".tch that its object was to remedy 
immediately : ;he conditions thai; might be ere- ted by the Act if it should 
become r.ece's^ary . -lie same spoTcesiaan also stated that he did not think 
that "one-way intern-.tio: 1 trade cai ever operate" and that "people 
can not sell who do not hup; hut * * if you ^re going to put in i plan 
thai will increp.se the cost of your own production, you operate to the 
disadvantage of industry where it has to compete with foreign products, 
especially at debased currency and low wages." 

Another indie ,tio:i that the .dministration of Section 5 (e) should 
he limited to the protection or coc~e st n&ards^ anc" in such manner as to 
avoid undue restriction ol foreign trade is to be found in the following 
statement of one of the Senators who sponsored the Recovery Act: "We 
are talking now about removing some trade barriers in the international 
trade. I hear men w :.o dvocate the sale Df their goods in foreign markets 
and \t the s me time want to revent any goods from coming into this 
country,, well * * * * if you yce goirp to export goods you have also got 
to import poods. There is no way in the long run of paying for our ex- 
ports except by imports." This view was supported by another Senator in 
the following statement based upon a similar line of reasoning: 

"If these powers are employed by the President, and foreign goods 
".re further excluded from the United States, of course the chances 
of collecting the ,var debts will be just that much more minimized, 
so I hope those \-lio re now voting for these new tariffs will not 
insist too heavily, as they have in the past, upon payment in full 
of the war debts., because the t" o "'olicies will not o hand in hand," 

T'ae attitude of Congress toward the question of import restriction 
was somewhat modified as a result of the discussion of the full impli- 
cations of t.ie "tariff" ■rovisions . As originally adopted, the amend- 
ment made it m ndatory v: on the Preside it to order :.: Tariff Commission 
investigation on receipt of complaint '.gainst imports .nd to take action 

9829 



restricting imports when investigation disclosed conditions under which 
imports tended to render ineffective or seriously endanger the mainten- 
ance of any code or agreement. During consideration of the Dill in con- 
ference the phraseology was changed by striking out the word "shall" and 
inserting the word "may" , thus malpLng action by the President discretion- 
ary. 

The purpose of that change was stated by the Chairman of the Senate 
Conference Committee, as follows: 

""Then * * complaint is made and presented to the President, 
we do not malts it' mandatory that he shall act, but he may act; 
and he may act by causing an immediate investigation to be ma,de 
~'oy the United States Tariff Commission." 

On account of the fact that the impression had been received at 
the World Economic Conference then meeting in London that the legis- 
lation made it necessary for the President to act immediately and that 
discretionary power was not lodged in him, it was re-emphasized at that 
time that under the amendment as finally approved the sole power was 
given to the President \iho might or might not act. 

Stated negatively, Section 3 (e) was not intended to provide 
general protection apart from the maintenance of code standards, or as 
a means of directly extending employment, or of correcting conditions 
which came into existence prior to the codification of industry and 
which were unrelated thereto. In fact,, during the Congressional debate 
attention was called to the fact that there already hac ; . been discission 
about reducing trade barriers in line with the declaration of policy 
with respect to the tariff in the 1932 platform of the Democratic party. 
The record of discussion discloses that the leaders of the majority 
party in Congress were reluctant to a"0"~rove the provision and that 
their final approval was conditioned upon the understanding that action 
under the provision, would be left to the discretion of the president 
and be limited to the maintenance of code standards. 



The most direct and definite suggestion of policy in connection 
with the administration of Section 3 (e) is to be founJ in the proposal 
for the continuance of the tariff truce made by the American delegation 
at the World Economic Conference which convened in London before final 
approval of the Recovery Act by Congress. An exception was incorporated 
in the tariff truce, with the approval of the Administrator for Indus- 
trial Eedvoery, which was designed to protect the interests of KRA, 
definitely reserving the right of action under Section 3 (e) to 
impose "new or additional duties or restrictions necessitated ~'oy govern- 
mental measures of an e er policy character which - by raising wa es, 
shortening hours and in improving conditions of labor - have resulted 
in increased costs and prices." The proposal stated further that "any 
new or addition-: 1 duties or restrictions authorized under" these circum- 
stances "shall be imposed only for, the purpose of preventing an exces- 
sive influx of imports of particular commodities. They should not be 
more than sufficient to meet the emergency and should continue in force 
only for the period of the emergency. It should not reduce foreign 
trade in the commodity affected below the level of a pre-arranged period 
and should be used only to prevent drastic increases of imports above the 

9329 



-39- 
level of such period." . ' . 

Superficially it would appear that to invoice Section 3 (e) only 
for the purpose of r.rever.tin-., ■' n infl ux of imports, and i.o limit action 
thereunder to only such measures as wold not reduce foreign trade 
below the level of a pre-arranged period would render the provision 
wholly negatory. However, this was not necessarily the case if Section 
3 (e) was to be used only to prevent interference with the maintenance 
of code standards and not as a means of d.irectly extending employment or 
of correcting conditions which came into existence prior to the cod.es. 
To .accomplish this limited aim it was only necessary (l) to prevent 
imports from forcing domestic prices down, or from estopping them from 
increasing to a "point which would sustain the increased costs incident 
to the code program, and. (.?) to prevent the entry of imports on terms 
and conditions, other than those prescribed in the codes for the sale 
of domestic products, which,' .apart from price, would have the effect of 
giving to imports a larger share and to domestic products a smaller share 
of the market. The usual situation involving a sufficient increase in 
import competition to interfere with code standards was likely to "be 
such that the imposition of fees or quantitative restrictions, even 
though only sufficient to prevent an influx of imports, would have the 
effect of increasing prices, or of arresting price declines, thus en- 
hancing returns, relatively, to all sellers of the products, nnd possibly 
even of enlarging the market share of domestic producers. 

: Perhaps the most important influence on policy in connection with 
the administration of Section 3 (e), and certainly the factor most 
affecting the i: ternational trade position of the United. States during 
the Recovery Program, was the depreciation of the dollar which began in 
the spring of 1933, prior to the passage of the HI PA. The sharp decline 
in the exchange value of 'one dollar had the effect, in general, of off- 
setting the competitive advantages previously enjoyed by several foreign 
countries as a result of t.r depreciation of their currencies, with 
respect to sales in the United States and in competition with United. 
States products in foreign countries, and. of greatly improving the com- 
petitive position of United States industries in relation to the indus- 
tries of countries remaining on the gold, standard," thereby affording a 
considerable measure of relief from import competition during the period 
of rising costs one prices under the Recovery Program. However, American 
industry continued at a competitive di sad. vantage with respect to Japanese 
industry on account of the fact that the exchange value of the yen was 
allowed to decline further than the dollar in relation to previous gold 
parities, thereby increasing the competitive impact of low-cost Japanese 
products. 

II. ORGANIZATION 

In view of subsequent criticisms, on one hand, to the fact that 
Section 3 (e) provided for unjustified and arbitrary restriction of 
imports an:" interference with importing o-perations and, on the other 
hand, that the procedure set up was unnecessarily involved and. burden- 
some upon the complainant domestic interests, particularly small and 
unorganized industries, it seems appropriate to describe somewhat in 
detail the organization and procedure adopted, for the administration 
of Section 3 (e). The procedure should be considered in the light of the 

9829 



-90-" 

specific purpose of Section 3 (e), previously indicated, and in the light 
of administrative problems: and difficulties discussed in a later chapter. 

A. The Imports Division 

Under authority of Executive Order "do. 6353 dated October 23, 1933, 
the Imports Division, which subsequently "became the Import Section of 
the Research and Planning division, was established by ERA Office Order 
do. 33 to handle all requests by industries or by any labor or trace 
organization, with instructions to receive requests only after the com- 
plainant had adhered to an approved code or agreement, and to require, 
as a general matter, thai; complainants make a prima facie case before 
any request should be forwarded to the President. 

The functions of the Import Section with respect to complaints, 
outlined in detail in NBA Office Order 'do. 37, and the supplement there- 
to, may be briefly summarized as follows: 

(1) To receive complaints under Section 3 (e); 

(2) To examine the facts presented in support of any complaint, 
and to aseemble all pertinent information obtainable from governmental 
and other sources; 

(3) To assist the rational Industrial Recovery Board in formulating 
an appropriate recommendation in each case; 

(4) To keep in touch with any Tariff Commission investigation 
under Section 3 (e) and to represent the National Recovery Administration 
at the public hearing held in connection with such investigation; 

(5) To examine the Tariff Commission report and recommendation to 
the President in each case, and to assist the National Industrial Recovery 
3oard in formulating, an appropriate recommendation to the President as 

to what taction should bi taken to effectuate the policy of Title I of 
the Act. 

In performance of its duties, the Imports division received active 
cooperation from the United States Tariff Commission in the assembly 
of data, and in the form of advisory consultation with expert? of the 
Commission's staff. As regards agricultural commodities, the Export- 
Import Section of the Agricultural Adjustment Administration cooperated 
in an active manner. in the handling of complaints under Section 3 (e) 
which arose from Joint AAA-1TRA code agreements. 

B . The Schedule of Information Requi red in Support of 

Section 3 (e) Complaints 

The practical problem of administration .ado it necessary from the 
outset to require that requests for investigation under Section 3 (e) 
be supported by specific facts indicating an investigation to be warranted. 
Accordingly, Office Order Ho. 33 specified. that, as a general matter, 
complainants should be required to, moke a prima, facie case before a 
Tariff Commission investigation would be recommended. 

The Schedule of Information contained in Office Order No. 37 was 
designee, to assist in the presentation of concrete statistical evidence 
in support of complaints for the reason that a prima facie case coxild 
not be made general statements, unsupported by specific information. 

9829 



-91- 

The schedule was formulated as a means of obtaining the information 
essential in specific cases and with the particular purpose of ex- 
pediting 3.ctioir u Accordingly, it outlines "the type of information 
necessary to enable a decision on the question whether an, investigation 
is warranted"; it was broad in scope on account of the necessity that 
it apply to a wide range of industries and cover widely varying con- 
ditions. It included the statement that "if the information called 
for is given fully at the time of filing a complaint, it not only will 
facilitate decision whether the complaint should be made the subject 
of investigation, but will also e ^-pedite the completion of the investi- 
gation should it be ordered." The schedule also contained the statement 
that "where it is not possible to supply the information called for in 
any section of the schedule, the reason why it is not possible should 
be clearly stated." 

In practice, the requirements of Office Order I T o. 37 were made as 
flexible as possible with a view to adapting them to the -problems of 
different industries. Special consideration was shown in the case of 
small, unorganized indxistries, and anything working undue hardship in 
the case of a particular industry was not insisted upon. When a prop- 
osal was made to file a complaint under Section 3 (e), the complainants 
or their representatives were invited to a conference for the purpose of 
disposing of any questions or special problems which might arise in 
connection with obtaining and submitting the necessary supporting in- 
formation.. In cases where this was not possible, the same result was 
accomplished by means of an exchange of correspondence. 

III. PROCEDURE 

Executive Order ITo. 6353, dated October 23, 1933, delegated the 
following authority to the NBA with respect to complaints and investi- 
gations under Section 3 (e): 

(a) To make preliminary investigations; 

(b) To prescribe regulations governing the making of 

complaints and to receive such complaints; 

(c) To require sworn or unsworn information and to determine 

whether the showing by tae facts appears to warrant 
further investigation by the Tariff Commission and to 
make appropriate recommendations to the President; 

(d) To recej.v r e, after investigation vad public hearing 

by'the Tariff Commission, a copy of its findings and 
recommendations to the President, aad to recommend 
to the Fresident such action as may be deemed best 
devised to effectuate the policy of Title I of the Act. 

A. heceiving and Handling Complri nts 

1. ?relimina.ry Contacts with Industry 

All communications relating to import problems were referred to 
the Imports Division. In addition, a la.rge number of complaina.nts 
sougnt and received personal interviews with the staff of the Division, 
during which the provisions of Section 3 (e) and the type of information 
required to establish a prima facie ca.se for action were explained in 

9829 



detail. On receipt of complaints and supporting information in reason- 
able degree of completeness, preliminary investigation was initiated. 

2. Determination of Compliance 

In accordance with the requirement of Section 3 (e) that complain- 
ants "be operating under an approved code or agreement, the first step 
in each investigation was to establish that fact. In cases where com- 
plaints were filed by code authorities, prima facie evidence of such 
compliance was accepted* In the cose of complaints based upon the 
President's Reemployment Agreement, inquiry regarding the status of the 
individual complainants was made through the "TRA offices in the localities 
in which these producers operated. 

3. Review of Checking of Information Submitted in Support 

of Complaints 

The first step in analyzing a given complaint was to examine the 
supporting information and to reouest such essential data as might be 
lacking. The adequacy of such information was measured largely accord- 
ing to the standards set forth in Office Order Po. 37, although a reason- 
able amount of leeway was allowed, defending upon the circumstances. 
In some cases it was necessary to inquire into problems peculiar to the 
complainant industries, requiring special research, either by corres- 
pondence or direct investigation. 

4. Supplementary Investigation 

Having obtained such information as might reasonably be expected 
from the complainants, it was then customary to obtain information 
pertaining to the subject from other governmental agencies and from 
such published material or other sources as might be available. In 
addition, importers and others interested parties were generally given 
the opportunity of presenting such information as they might desire 
regarding the complaint. 

In all cases of formal complaint and in ceases where correspondence 
referred to definite iroblems regarding imports, the Imports Division 
requested and received from the Tariff Commission, the Bureau of Foreign 
and Domestic Commerce, and other government agencies, statistical and 
other information regarding the commodities in question. In the case of 
formal complaints, this information was compared with production data 
as submitted by the complainants in order to establish the course of 
the relationship between imports and production. In cases where the 
imports were not specially provided for in the Tariff Act of 1930 and 
were not separately listed in official statistics, the Imports Division 
received assistance from the Tariff Co mission in the form of special 
analysis of import invoices. In addition, technical and other information 
regarding the imports of these items, was requested and obtained from 
United States Customs examiners in Jew York. 

5. Preparation of Surveys of Information 

When the assembly of all available information was completed, it 
was then organized in the form of a survey, consisting of (l) statements 

9329 



or evidence of compliance on the part of the complainants, (d) descrip- 
tion and tariff treatment oi tlie commodities', (-3) course of production, 
exports r.ncL imports, (4) the ratio of imports to t>roduction, (5) special 
competitive problems", (c) the effect of compliance with the national 
Industrial Hecovery Act upon employment, payrolls and costs, and (7) 
t ie trend of prices and the unit value of imports. These surveys served 
as the oasis of reports and recommendations to the President. 

6, Special Procedure in Handling Complaints Relating 

to Joint ERA-AAA Codes 

An arrangement was rp^e with th ■■ Agricultural Adjustment Adminis- 
tration regarding the method of handling complaints from producers, 
distributors, or processors of various agricultural products under the 
authority of that agency, v'Meh may "be outlined ^s follows: 

(1) Complaints should! "be filed with the Imports 

Division of the rational Hecovery Administration. 

(2) A copy of each complaint should be transmitted to 

the Export-Import Section of the Agricultural 

Adjustment Administration. 

(3) That Section woul' make a preliminary analysis and 
a survey of information with respect to the com- 
plaint. 

(4) On the basis of this survey of information, the 

Imports Division of the LIRA would prepare a 
report and recommendation which would be trans- 
mitted to the President after approval by the 
Administrator of the Agricultural Adjustment Act. 

7. Pr> ■•■. ration of Reports and Recommendation to 

the President 

On the basis of the surveys of information, it was the duty of the 
Chief of the Imports Division to formulate draft reports and recommenda- 
tions to the President regarding the formal complaints. These reports 
took the form of summaries of facts regarding the complaints, and find- 
ings "'ith respect thereto. On the basis of these findings, recommenda- 
tion*v. r as made either that the complaints be dismissed without further 
action, or that thoy be referred to the Tariff Commission for futher 
investigation, public hearing and report. 

B. Investigat ion by o/.c Tariff Commission 

Executive Order Ho. G353 of October 23, 1933 (Section 4), specified 
that "when so directed, the United States Tariff Commission shall make 
an immediate investigation, jiving precedence over 11 other matters to 
such investigation; if directed shall give suchpublic notice and hold 
such hearings as I (the President) shall specify; -shall make its find- 
ings of fact avid recommendations, having due regard for the provisions 
of said Section 3 (e); and shall submit the same, together with a report 
of all proceedings, uo me (the President) and shall transmit a copy of 

9829 



-94- 

such findings, recommendations, and report to the Administrator." 

IThen directed b;* the President, the T, -.riff Commission proceeded to 
make a detr.iled investigation, end to hold a public hearing. In general, 
these investigations covered such natters as costs of production under 
pre-code and code conditions, price trends, and comparability and comp- 
etitiveness between the domestic and imported article, together with 
any other competitive factors pertinent to bhe problem. They differed 
fro :: investigations pursant to the "flexible" tariff in that they were 
not limited to strict comparability between the domestic and imported 
merchandise; the investigations of costs of production did not include 
investigations of foreign costs; and such costs were not limited to 
specific time periods. Rather, the comparison of costs of production re- 
le ted to precode operations and operations under the codes, Iloreover, 
special attention was ">aid to evidence of compliance on the part of the 
complainants, as regards labor policies end other pertinent code pro- 
visions. Attention was-' directed toward ascertaining the extent to which 
the terms and conditions of importation tended to endanger the m ain- 
tenance of codes, and the extent to which the costs of importing had in- 
creased. The BRA. was represented at all public hearings held in connec- 
tion with these investigations. 

G. T ariff Commissi on Repo rts and P.e co: rxienda t ions to the Presiden t 

Section (5) of Executive Order To. 6353 directed that "the Admin- 
istrator, after such investigation by the Tariff Commission and after 
any specified hearings and on the basis of findings, recommendations and 
report transmitted tc him, shall recommend to me ( the President) such 
action as he (the Administrator) may deem best devised to effectuate the 
policy of said Title (Title I, ITIRA.)!! In line with this order, the Imports 
Division of the ERA received copies of each Tariff Commission report to 
the President, following its investigation. After careful review, a draft 
report to the President was formulated, setting forth concurrence with 
or dissent from the findings of the Tariff Commission. 

IV. COORDIPATIOP OP C0L12RCI-L POLICY 

As a result of . the increasing complexity of American commercial 
relations with foreign countries resultix from the exercise of powers 
and duties touching directly upon trade relations with other countries 
by numerous departments of the government, and arising out of changing 
methods of regulating international trade in foreign countries, there 
was set up in late 1935 an Executive Committee for the Coordination of 
Commercial Policy and the negotiation of commercial treaties and trade 
agreements. This Committee was composed of representatives of various de- 
partments aid agencies concerned with matters of commercial policy, in- 
cluding the ERA. 

In iTovember, 1933, the President instructed the Administrator for 
the iTational Industrial Recover;- Act to advise the Chairman of t he Ex- 
ecutive Committee on Commercial Policy concerning any action under the 
EIRA affecting the export or import trade of this country, and requested 
that he designate a representative of the ERA to assume that responsibility. 

9829 



-95- 

Accordincly, the Chief of the Imports Division was designated to repre- 
sent the ERA. on that Committee. 

In r>raetice, the functions of the Executive Committee on Commercial 
Policy, with respect to the administration of Section 3 (e) were large- 
ly confined to advising the President as to what action should be taken 
on those cases which reached the final stage of a recommendation to the 
President after investigation by the United States Tariff Commission. 



9829 



-S6- 

SC0P3 

IIUMEZR, CEIJTIj'iL DEA2AC27Z, SC0P7, AMD DISPOSITION OP COMPLAINTS 



Zie sGope o? the problem involved in the administration of Section 
3 (e) is i - ' icated "by the fact that complaints (both "orraal and informal) 
were received vrith respect to over 250 commodities or croups of commodi- 
ties, the" exact number depending noon the extent of the breakdown of 
individual. items. These complaints will "be dealth with in this chanter 
■under two general headings: (i) informal comolaints, and (II) formal 
complaint':. Broadly speaking, the difference "between the two groups was 
that the formal com-olaints were those with respect to which sufficient 
information was submitted or available to indicate the existence of 
problems or conroetition which appeared to justify a oreliminary investi- 
gation, whereas, the informal cases '-ere those with respect to which the 
limited data available either indicated clearly that no basis for action 
existed or --ere entirely insufficient to establish a -orirna facie case 
for actio::. 

I. IK?CMAL COIaPLAUTTS 

A. I lumber and General Chare cter 

The aggregate number of commodities which were the subject of in- 
formal complaint was rou htly 200, the exact number deo ending upon the 
extent of the detail with which certain closely related items are listed. 
If the list of commodities were broken down by tariff paragraphs or rates 
of duty, the number would be considerably larger. Problems involved in 
the informal complaints varied in character and degree of severety but 
they necessitated a considerable amount of investigation of a preliminary 
natur , particularly in connection with obtaining and analyzing the 
available statistical information with reference to each problem. The 
failure of these cases to develop into formal comolaints ray be explained 
for the most part by the following: (s) Some complainants were unable to 
show c-roli- nee with a code or agreement under the national Industrial 
Recover" Act; this was especially true during the early period of the 
Recover;--- Act. (b) With respect to nr.n-- r individual cowrodities imoort 
statistics were not separately available. It developed in a epod many 
cases, afte. preliminary investigation, that the imorts complained of 
were insufficient as a basis for a formal complaint. In feet, there 
were a considerable number of cases where imports not only friled to 
show a increasing ratio to domestic production but octually were 
negligible in quantity, (c) Some informal comolaints were made with 
respect to eo , odities shipped from territories of the United States 
against which the orovisions of Section 3 (e) did not apply. 

•'. -illo-'in.-- list shows the total number of commodities, or related 
groups of commodities, which -'ere the subject of complaint, classified 
by tariff schedules. It includes th- c 6 formal comolaints which are 
discussed in detail later in this chapter. 



9829 



97 



Schedule 1. Chemicals, oils and Paints 



Acid, acetic 

Agar agar 

Asp ar agin 

Barites 

Canrohor 

Cups, "bird cage, celluloid 

Glue , marine 

Ink 

Menthol 



Oil, soybean 
Perfumery 

quebracho extract 

Salt 

Sand , gl as s 

Sodium sulphate 

Thumb tacks, celluloid 

Turpentine 



Schedule 2. Earths, Earthenware, and Glass 



Bricks 

Bulbs, electric light 

Cement, portland 

Clays, kaolin, china, and fire 

Earthenware and chinaware 

Electric arc carbons 

Fluor soar 

Fuses, glass 

Glass tableware 

Goggles, sun 

Granite 

Graphite 



Lamps, electric, miniature 

Lamps, incandescent 

Lenses 

Lime 

Microscopic slides 

Mirror switch plates 

Tiles, quarry 

Tiles, roofing 

Reflectors, silvered glass 

Slate 

Tinsel, silvered glass 

Window glass, stained 



Schedule 3. Metals and Manufactures of 



Aluminum foil' 

Antimony, regulus 

Antimony ware 

Balls, steel 

Bells, electric 

Bicycles 

Brass novelties 

Buckles, waistcoat 

Cast metal novelties, brass 

Clippers, fruit trees 

Clocks, cuckoo 

Instruments, surgical 

Iron, pig 

Iron, sponge 

Machine knives 

Machinery, textile 

Mangane se 

Nails, steel wire 

Netting, poultry 

Pumps, mining 

Quicksilver 

Sausage stuffers 

Saws, steel 

Sheet metal 

Silvered plated hollow-ware 

Socket, screw, brass, miniature 



Embossing goods and rollers 

Engines, diesel 

Fasteners, dress 

Fasteners, slide 

Flashlight cases 

Fly swatters 

Fourdrinier wire 

Gas appliance apparatus 

Grate bars 

Horse shoes 

Instruments, dental 

Spring hinges 

Steel, fabricated structural 

Tin foil 

Tin plate scrap 

Umbrella frames 

Upholstery nails 

Valves and fittings 

Velocipedes , 

V/atches 

Tfire rope 



9829 



Schedule 4 t Wood end Hanuf acture s of 



Barrels, b'j r 

Chairs, oer/frrood 

Container!:, fruit and vegetable 

Container s , • ooden 

Cord'^ooc". 

Dowels, rro don 



Lumber (Canadian "border) 
Llohogany 

Shades, bamboo 
Shingles 
S^emers, wooden 
Toothpicks 



i Classes 



Cigars 



Schedule 5. Sugp r , liolasses, and manufacture of 



Schedule' 6. Tobacco and I anufPcturerB of 



Schedule 7. Agricultural Products and Provisions 



r. arl ey 

Birds, car.r 

Bran 

Bulbs, flo - :er 

Chicks, baby 

Claras 

Cocoanuts 

Corn products ■ 

Crab meat 

Cucumbers 

Fgga, dried a: d frozen 

Fruit, citrus -eel 

Fruit, cherries, marashino 

Fruit, graces 

Hops 

Horses anc riul.es 

Meats, can 

Nuts, Brazil 

Nut", -pecan 



Fish, cured 

Fi?h, fresh ^ater 

Fish, °:ol& 

r "ish, halibut 

Fish, srlmon 

Fish, tuna, crnn' j d rnd frozen 

Fish, raeal 

Flaxse -d 

Foodstuffs (groceries, iiexican 

border) 
Fruits, a-o-oles 
Olives 
Oysters 
Rice 
Rye 

Sardines 
Seal Ions 
Trees, Christraas 



Beer 

Bottle-., cha.npagne 



Schedule 8. Snirtts, Wines and other B-verages 

Water, mineral 



Schedule 9. Cotton manufacturers 



A-o-oarel, infant's '"'ear 
Cloth, bleached cotton 
Garters and suspenders 
Gloves, cotton 

Hosiery, cotton 
Nettin , cott-: : 
Ponder ivf'l s 
Rags, cotton 
Robes, ter ■ cloth 



Rugs, cotton 

Swerters, men's, women's, children's 

Shoe laces 

Table damask, cotton 

Taoe, friction 

Taos, pxmraed 

Tr-oe, insulating 

Tire fabrics 

'Taste, cotton 



9829 



-99. 



Schedule 10, "lax, Hemp, Jute a "id "amifactures of 



Eags, burlaw 

Fishing .lines, he'jp halibut 

Netting, li:.3n 

Piece " : :o!: " r , lir-.sn 

Rugs, [pass a:u". filter 



Ruas, jute oriental 
"•able damask, linen 
Tailors' oadding 

'J'owels, linen crash 



Schedule 11. ",7c -1 r;id Lianufacturers of 



Berets, knitted 
Gloves, r - 3?.: knit 



Faeries, : ill: 



Hat bodies, ^ool felt 
loci, angora rabbit, 



Schedule 12. Silk manufactures 

Hosiery, silk 



Schedule 13. -Manufacturers of Jtayin and other Synthetic 

Textiles 



■nns 



Schedule 14. Pacer and books 



Bood bir.di" , leather, art 

Cardboard : oyclties 

Cases, jevTclry 

Di ar i e c , 1 c ath c. rb ound 

Doilies, v-per 

Fiberboard 

Ply catch rs, ribbon 



Schedule 15. Sundries 



I deographi c printing 

Labels, printed 

Pa.-oarboaid 

pa-oer, '-raft Trapping 

p.- rier and riulp 

Printed natter (I'etican border) 



Accordions, dare 

Asbestos 

Brooms 

Brush-e s 

Bugles 

Buttons, nearl 

Canes, ualki -■ 

Cigarrete pa . : rs 

Collar e 1 1 r. , -os ai 1 bead 

Diamonds, cut 

Dice 

Firecrackers 

Fishing ta.ckle 

Flowers and feathers, artificial 

Furs 

Fur plates - ' - 



Pats, harvest 

Hats, straw 

Laces, machine aade 

Leather, calf and ';ip 

Hatches 

] icroscooes, toy 

Pearl essence 

Pearls, imitation 

Peat i'oss 

Pencils, mechanical 

pencils, wood-cased 

Ihinestone banding 

Rubber, combs 

Rubber, erasers 

lubber, toys 

Rubber water bottles 



9829 



-100- 



(Schedule 15 continued) 

Gloves, leather 

Handbags 

Handkerchiefs, embtoidered 

Hat bodier; and. braids, oedaline 

Hat s , fur 



Shoes, misses' and children's 
Thermostatic containers 
Totds, mechanical spinning 
Toys and playthings 
Trays - novelty 
Umbrellas 



Schedule 16. Tree list 



Altars, marble 

Asphalt 

Bark, ta nir 

Binder t' "ine 

Bread 

Charcoal blocks 

Coal, anthracite 

Coffee 

Coke 

Co-o-oer 

Fertilize 

Fiber, vegetable 

Forks a \c". ho - s 

Horsehair 

Ice 

Iodine 

Iron oxice 

Laths 

Lobsters 

Logs 

Llother of mearl, 



and bituminous 



(tampica) 



Fews-or i a t 

Oil, inedible, vegetable and 

animal 
Oil, sunflower 
Petroleum, crude 
^otash 

P o t a s s i urn sul chur e t 
Pulpboard 
~mp- -ool^s 
Salt cake 
Statuary, bronze 
Taoioca 
TIToodriul-o 



ocean 



Or or. dc 
fell within 
for, among 
number of it 
volving a wi 
mo chine and 
design of ■ r 
grouo inclv-f 
States mar :e 
ship, e.g. •: 
machinery, . 
Sweden. At 
number of it 
"orices based 
inroorts from 
slide faste: 



by tariff schedules the largest number of comt)laint items 
Schedule 3, "Metals and ! ar.ufacturers." This may be accounted 
t r things, by the fact that the group is comoosed of a large 
ens which are highly cimoetitive in international trad^, in- 
dely varying degree of specialization and skill in both 
hand -orocesses of manufacture, a wide range of qualitv and 
oducts, and advantages of natural resources. For examnle, the 
?:, numerous fa/bricated metal, products which enter the United 
t largely on a ba. c is of high quality of material and uorkman- 
ine knives, fourdrinier wire, diesel engines, textile 

C T 3 ntal and surgical instruments, from Tngland, German^ and 
the other end of the- competitive range, there is a considerable 
eiis which com-oete successfully because of relatively lo ,_r 

upon low quality of materials and workmanship; these include 

Japan of dental and surgical instruments, upholstery nails, 
ners, silver dieted hollo-'-'-^re and othe: si dlcr products. 



98".S 



-101- 

Oertain commodities in this schedul-, such as antimony from Chine., 
cruicksilver from Snain, and nanganese from Russia and Brazil, are im- 
ported Decrease of superior resources available in foreign countries. 

The metals grouo also includes items such as watches from Switzer- 
land, cast natal and brass novelties from China, and various types of 
mstal toys and playthings from Jar>an, which compete successfully in the 
United States market largely because of the high oercentage of hand 
labor involved in their manufacture which is available at relatively 
low cost in those countries. 

The " SurrriesH grouo, is which the next large sb number of comolair.t 
items falls, is composed of a wid? range of miscellaneous items which 
are difficult to characterize in broad terms. Included is a relatively 
large nxrfbe:: which enter the United States market as a result of ad- 
vantages in the availability of raw materials and in the relatively 
low-cost labor which is reouired in large -orouortion in their manufacture; 
these include brushes,' hats and hat bodies of vegetable fibers, rubber 
■oroducts, and a considerable number of nov-lty articles which have come 
to be more or less a specialty of Japanese industry, including such 
items as toys and olaythings, beaded hand oags, imitation pearls, pearl 
buttons, etc. Certain important items in the group are Imported as a 
result of natural advantages in the countries of suwoly, eg. asbestos, 
diamond.r, and furs, and others such as hand-msde lace and high °rad.e 
leather because of' specialized skill. The remainder are items of more 
limited irroortance, end. with rescect to which the competitive croblem 
is either restricted in scone or of limited severity. 

The articles of greatest inroortance of the "Tree List," broadly 
sneaking, are those which are .uermitted entry because of the extent to 
which they supmlr-ment exhaustible domestic resources, for example, 
forest products crude petroleum, and lobsters; or because they are 
non-competitive, such as coffee; or aids to agriculture, such as 
binder twine, fertilizers, and forks and hoes'.} or on an expert basis, 
such as coal; or ourchased by religious institutions such as marble 
altars and. statuary. Although items. on thio list have been heretofore 
imported free of duty, nevertheless in almost all cases they involve 
problems of competition and in some cases of substantial severity. 
Accorair^ly the producers welcomed the opportunity 

afford d by Section 3 (e) to' seek restrictions on iraoorts with a view 
eith-sr to hi her rrices, or s larger share of the domestic market, or 
the maintenance of existing shares, or with a vie - ' to arresting a 
declining share of domestic sales. 

7..- ■ or.t important items in the schedule of agricultural -oroducts 
are fish and fish products, certain grains, and a limited number of 
fruit and vegetable items. The severity of competition from imtiorts 
in these articles usually varies according to th = urevailing seasonal 
or climatic situation, which affects the amount of the current crops, 
run o n fish, etc. 

"h ■ schedule covering ."Earths, '-Jlarthenware and Glassware," ranks 
fifth in the number of commodities comnlained against, It includes a 
number of relatively heavy articles such as with bricks, cement, granite, 
lime, fluorspar, and quarry and, roof lug tiles, with respect to which the 

9829 



-102- 

conroetitior. in limited geographically, usually to oordsr or rea coast 
areas, because of transportation costs. It also includes earthenware 
and chinaw&rs ~'hich are highly competitive in certain categories, as 
also are "lass tableware, sun goggles, electric lamps and bulbs. 

TV list of ^'Cotton ' anufacturers" wrobably includeds the items of 
creates'; industrial imoarta'ce to the United States in which competition 
from Ja-oan has beoome severe both in the United States and in export 
markets. Those which compete in the domestic market include cotton 
cloth, :.t. ;s, r 'lovos, hosiery, and a limited list of apparel items. The 
scope of Japanese -oroduction of cotton manufactures in ..indicated by 
the items in the list, ranging from the important standardized bleached 
cotton cloth down to -oowder puffs, garters and suspenders, and friction 
tape. 

The imports of "Chemicals, Oils, and Paints" comolsined against 
include important items which are not oroduced at all or not in sub- 
stantial commercial quantities in the United States. These include 
camphor", menthol, and solid auebra.cho extract. Other important 
items in the list which are more directly competitive include sodium 
sulphate, turpentine, barytes, and soybean oil. 

Th: items of most importance listed under "Paper and Boods" are 
pulp, pap-irboard, fiber board, and kraft wrapping pap:r, imported from 
Canada, and the Scandinavian countries. The others a.re relatively un- 
imoorta t com inrcial items. 

Tho most im-oortant items listed under "Uood and Manufacturers" are 
those with respect to -which a large number of complaints were made against 
competition along the Canadian border. These include lumber and sawn 
timber, shingles, and cordwood. 

The items listed under the remaining schedules are, in general, 03" 
relative less importance although in some cases involving serious pro- 
blems of competition, such as in linen textiles, rugs of vegetable fiber, 
and wool ; loves and hat bodies. 

11. to:::ial couflaihts 

A. "-'timber and G-eneral Character 

Tho bulk of the work involved in the administration of Section 3 
(e) was connected with the handling of the 56 formal comolaints {$}:/which 
were filed under Section 3 (e) in accordance with the prescribed -oroce- 
dure an,-; supported by information. indica.t ing problems of co npetition 
sufficient in severity to justify preliminary investigation. As light 
be e:ro~u;ted, the bulk of these comolaints were filed during periods 

(*) Senan-ate studies of Section 3 (e) complairts "ith respect to 
binder twine, cigars, handkerchiefs (embroidered), horseshoes, jute 
webbiiv;, newsprint, nig iron, quebracho, rubber erasers, salt ca'-e, 
and table damask, are to be found in the Appendix to Part B, separately 
bound. Preliminary inf-rma.tion with res-oect to the others are filed 
in the ITBA Studies Special Exhibits, Work Llat trials ¥0. 37. 

9829 



-103- 

when "total imports were entering in increasing volume, i.e., principally 
in the last quarter of 1935 (12) and in the last quarter of 1934 (13), 
and to a lesser extent in the spring months of 1934 end 1935. 

1. Import Restrictions Sought 

She depression -oeriod was characterized by a generally low level of 
industrial activity and increasingly 'teen competition on a price basis 
for the diminishing total volume of business. As a consecuence of those 
influences, and of the more or less general opposition to '-'foreign 
competition*' particularly under conditions of depression, rhich prevailed 
in the business community, th-3 code program wa.s marked by -a widespread 
movement on the oart of representatives of domestic industries to obtain 
import restriction and regulation* In -oart of this was also the result 
of the fact that the broad authority provided, in Section 3 (e) was 
applicable to articles imported free of duty as well as to those already- 
subject to the payment of customs imposts as a. result of congressional 
action. Accordingly domestic industry groups strenuously sought to have 
both direct ar.d indirect restrictions imposed upon inroorts by means of 
code provisions. They opposed the approval of a separate code for the 
importing trade on ;the ground that sue 1 ! a code would nave the effect 
of exempting importers from the more stringent provisions embodies or 
expected, to be incorporated in domestic industry codes. Moreover, v en 
the proposal of a separate code for importing was accorded administative 
approval, ""the opposing interests sought to have provisions incorporated 
in it which would have the effect both of restricting its scope and of 
stringently regulating the importing operations which became subject to 
it. 

When the proposal of domestic industry code provisions directly arS* 
fecting imports met with administrative disapproval, including in some 
cases insistence upon action restricting imports as a condition prece- 
dent to the acceptance of a code by the industry concerned, other provi- 
sions were written into more than 50 codes authorizing, and in some cases 
specifically instructing, the code authorities to assemble information 
regard.i:/ competition from imports and to ^ile complaints under Section 
3 (e) when conditions were such as to warrant it. 2hese provisions were 
roughtly similar in form and scope, and the following paragraph from 
Article IX of the Newsprint C^de is typical: 

"The Code Authority may secure current information concerning the 
competition ir d.om sstic markets of imported, newsprint, and if it 
shall find that such newsprint is being imported into the United 
States in substantial quantities or in increasing ratio to domestic 
production and on such terms and under such conditions as to render 
ineffective or seriously endanger the maintenance of this code, it 
may complain to the President pursuant bo the provisions of 
Section 3 (e) of the national I dustrial Recovery Act and petition 
for sxii table rest ictions on the importation of such newsprint." 

EPA Office Order iio. 37, among other things, requested complainants 
under Section 3 (e) to suggest the type of action considered by them 
most appropriate to accomplish the resbrictio or regulation desired. 



9829 



-104- 

In response, numerous types of restrictive notion were suggested either 
separately, or in combination, renging from increased duties or "fees" 
to absolute embargoes. In 20 cases the complainants requested an in- 
crease in duties or the imposition of fees; in 23 c^ses requests were 
made for quantitative restriction of imports; and in 12 cases the 
suggestion was mode that imports "be prohibited "by means of an embargo. 
In a few cases the complainants proposed that importers be required to 
obtain a license as a means of forcing them to refrain from underselling 
domestic products or to conform to domestic codes or standards. 

2. Tariff and Code Status of Complainant Industries 

The following table (Table 1) shows a list of the formal comolaints 
under Section 3 (e), the commodities involved, and the tariff and code 
status of the complainant industries. 

The formal complaints under Section 3 (e) involved 62 separate 
paragraphs of the Tariff Act of 1930. The height of duties (ad valorem 
or equivalent for 1933) provided for the commodities which were the 
suoject of formal complaint may be summarized as folio - 's: free of duty , 
fourteen; under 25 percent, nine; 25 to 50 percent, twenty- three; l.to 75 
percent, fourteen; 76 to 100 percent, five; 100 percent and over, five. 

Twenty-four cases were, at the time of filing, based upon adherence 
to the President' Re-employment Agreement; codes were subsequently 
approved for most of these; the remaining 32 were originally upon 
adherence to approved NBA codes. 



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-105- 



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3. Formal Complaints "by Industry Groups 

Classification of formal complaints "by industry groups discloses- 
that textile manufacturing industries accounted for almost one-third (17) 
of the total number ; miscellaneous industries accounted for eight; 
chemicals and allied products for seven; nonferrous metals and food 
products each accounted for five, rubber products, forest products, and 
paper and allied products each accounted for three; iron and steel 
accounted for two; leather for one; products of petroleum and coal for 
one; and stone, clay, and glass -products for one. The relatively large 
list of complaints filed by various branches of the textile manufactur- 
ing industry is accounted for, in part, by the fact that the commodities 
concerned are those with respect to which conroetition from low-cost 
production in Japan has become severe in recent years. 

4. Formal Complaints by Economic Classes 

A list of the formal complaints by economic classes shows more than 
half (31) of the total to be finished manufactures, and roughly an 
additional one- third (19) semi-manufactures, with only one classed as 
a crude material, one as a crude foodstuff, and four as manufactured 
foodstuffs. 

5. Principal Conroeting Co\intries 

The commodities concerned in the 56 formal conralaints involved 
twenty-six countries as sources. More than one-third (22) of the total 
were commodities with respect to which Japan was the principal or one 
of the coirroeting countries. .These were cotton rues, matcnes, wood 
cased lead pencils, shoe laces, tuna fish, pottery, rubber water bottles, 
sun goggles, braids and hat bodies of vegetable fiber, menthol, silver- 
plated hollow-ware, ruboer toys and erasers, umbrellas, thermostatic 
containers, wool knit gloves, cotton fish netting, bleached cotton 
cloth, fiber rugs, brushes, and cardboard novelties. In part, the 
predominance of. Japan may be accounted for by the favorable competitive 
position resulting from relatively low costs of production and the 
extreme depreciation of the exchange value of the yen. 

The Unit ed Kingdom and Germany were each the so\irce of commodities 
complained of in 11 cases. The principal commodities coming from the 
United Kingdom included calf and kip leather, pottery, silver-plated 
hollow-ware, table damask, handkerchiefs, fish netting, wool knit 
gloves, brushes, and cotton cloth. Those coming from Germany were: 
matches, lead pencils, calf and kip leather, pottery, horseshoes, brushes, 
umbrellas, ribbon fly catchers, thermostatic containers, wool knit 
gloves and sodium sulphate. 

Canada ranked next as a source of conrolaint commodities, being a 
supplier of the following principal items: newsprint, red cedar shingles, 
bread, sodium sulphate, bituminous coal, and fertilizers. 

Belgium was an important source of cotton and jute oriental rugs, 
table damask, ribbon fly catchers, jute webbing and sodium sulphate. 
The Netherlands was an important source of «alf and kip leather, fiber 
board, pig iron, binder twine and fish netting. Mexico was an 

9829 



-112- 

iraportant source of quicksilver, antimony, ice, tuna fish, and 'binder 
twine. 

The Soviet Republic was an important supplier of the following 
comm'odities which were complained against: matches, horsehair, sunflower 
oil, and pearl essences Sweden was an important supplier of matches, 
newsprint, bread, and kraft wrapping paper. Italy was an important 
source of cotton and jute oriental rugs, wool felt hat bodies, quick- 
silver, and umbrellas. 

The principal items coming from Switzerland 'were watches and watch 
movements, braids and hat bodies, embroidered handkerchiefs, and cotton 
cloth. France was an important source of only one commodity class, 
namely, cotton and jute oriental rugs. 

The complaint commodities sup-olied principally by other countries 
were as follows: Czechoslovakia,- lead pencils, table damask and wool 
knit gloves; China - antimony , dressed horsehair, and embroidered 
handkerchiefs; Finland - kraft wrapping paner, and fiber board; Spain - 
quicksilver, and sodium cnloride; British India - pig iron, and jute 
i "'ebbing; Cuba - binder twine, and cigars; Philippine Islands - rice, 
and cigars; Argentina and Paraguay - ouebracho; Norway - halibut fishing 
lines; and ITetherland India - tapioca. 

B. Comparison of t he Trend of Imports and Production 

Table 2 shows, insofar as data are available, a comparison of the 
domestic production and imports of the commodities which were the subject 
of formal complaint, for the years 1929-1934, These data indicate the 
range of the problem of import competition from the standpoint of the 
degree or seriousness of the impact of imports upon domestic production. 
For example, on one extreme is to be found those commodities such as 
coal and coko, common salt, cotton cloth, cigars, rice, and certain 
other articles of less importance, of which 95 per cent or more of the 
domestic consumption is supplied from domestic production. On-, the other 
extreme is to be found commodities such as menthol, and certain types 
of cotton rugs, which are supplied almost exclusively from foreign 
sources. Between these extremes is to be found a considerable number 
of commodities with respect to which the domestic market is more 
equally divided between imports and domestic production. These include 
matches, wool felt hat bodies, watches, calf and kin leather, newsprint, 
tuna fish, po.ttery, shingles, table damask, embroidered handkerchiefs, 
fiber board and counter board, and sodium sulphate. 

From the standpoint of the provisions of Section 3 (e) it is 
significant that in not more than a dozen cases was the ratio of imports 
to production substantially higher in 1933 or 1934 than in previous 
years or with respect to which the ratios in those years had not been 
exceeded in some previous year. , 



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-126- 

C. Volume of Production, Employment, and .Payroll Involved in 
Pornal Complaints 

Complete industrial statistics are not available with respect to 
all of the industries which were complainants under Section 3 (e). 
However, reasonably complete information has been assembled with re- 
spect to most of them for the year 193". Data with respect to the 
value of production, number of establishments, employment, and payroll 
have been carefully assembled in the following table (Table 3) from 
numerous sources or computed in order to indicate the broad scope and 
importance" of the problem of import competition in connection with the 
program of recovery under the Factional Industrial Recovery Act. 

Prom the data in Table 3 it will be noted that fifty-one cases, 
for which reasonably complete data are available, involved 3,500 in- 
dividual establishment? in industry groups having a total domestic out- 
put in 1335 amounting to $1,020,000,000. The portion of these same 
groups which was alleged to be in direct competition with imports in- 
volved 1,800 individual establishments having an annual output in 1933 
amounting to $369,000,000. Porty-six industries for which reasonably 
accurate employment data are available, employed in 1933, 550,000 
persons and in 41 of these the total payroll in that year amounted to 
$335,000,000. and of these 46 were alleged to have employed in that 
year in producing articles in direct competition with imports, 128,000 
persons with a payroll of roughly $75,000,000. 

That the import problem represented by the formal complaints under 
Section 3 (e) affected practically every important branch of American 
industry is indicated by the fact that the complainant industries rep- 
resented every major industrial group listed in the Census of Manu- 
factures • The problems were most serious in those groups, such as 
textiles and miscellaneous industries, where the bulk of the commodities 
necessitated a large amount of fabrication or processing. 

The complainant industries as a group were widely distributed geo- 
graphically but with considerable concentration in the more indus- 
trialized areas. New England was concerned in the complaints against 
imports of woolfelt hat bodies, watches, shoe laces, calf and kid 
leather, newsprint, silver plated ho How- ware, pearl essence, jute 
webbing, thermostatic containers, brushes, fertilizer, bread, and 
fiber board; Hew York, Hew Jersey and Pennsylvania, were concerned in 
the complaints against cotton rugs, dressed horsehair, chinawarc and 
earthenware, sodium chloride, ribbon fly catachers, horseshoes, sun 
goggles, cigars, umbrellas, pig iron, wool knit gloves, braids, and hat 
bodies, and cardboard novelties. Interests of the Southern states were 
involved in complaints against cotton rugs, woodcased lead pencils, 
rice, table damask, horseshoes, tapioca., pig iron, binder twine, 
bleached cotton cloth, antimony, ice, and salt cake. Middle Western 
states were interested in the complaint s against matches, wood-cased 
lead pencils, newsprint, chinawere and earthenware., rubber water 
bottles, rubber erasers, horseshoes, tapioca, binder twine, grass and 
fiber rugs, rubber toys and balloons, and sunflower seed oil. Par 
Western States were interested in the complaints with respect to 
quicksilver, newsprint, tuna fish, rice, halibut fishing lines, red 
cedar shingles, and coal and coke. 

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-131- 

D . Di sj>o_s itipn_p f I nve s t igat e d_ Cases 

The following list shows the disposition or status of formal com- 
plaints at the time of the Supreme Court's decision in the Sch.ech.ter 
case. The list is not precisely accurate for the reason that some of 
them were at that tine somewhat between the categories listed. For ex- 
ample, certain cases which are set down as pending investigation by the 
Tariff Commission had been reported to the President with recommendations 
but no decision had been reached regarding the final action to be taken. 

1. Cases Recommended for Further Investigation by the United 
States Tariff Commission 

(a) Relief Granted by Executive Action 

Pi?S£lA^Iii. Complaint 

Number Commodit y lumber Commodity 

1 Rugs, Cotton Oriental 5 Pencils, ","ood~cased Lead 

2 Rugs, Cot-ton 18 Shingles, Red Cedar 

3 Matches 1/ 24 Rice jg/ 

1/ Relief granted by Congressional Action — Revenue Act 1934. See 
Section III, A.2,.this Chapter. 

2/ Negotiation of voluntary restriction by Philippine producers re- 
commended and approved but not put into effect. 

(b) Dismissed after Tariff Commission Investigation 

4 Hat bodies, 7fool-felt 13 Paper, newsprint 

7 Quicksilver 21 and 22 Braids and Hat bodies, 

Pedal ine 

(c) Pending Investigations by the Tariff Commission 

12 Ice 33 Horseshoes 

15 Chinaware and earthenware 48 Pish netting, cotton & 

linen 
20 Goggles, sun 50 Cloth, bleached cotton 

31 Rubber erasers 

2. Cases dismissed without Tariff Commission Investigation 



6 


Watches and Watch move*-. 








ments 


28 


Pearl essence 


8 


Antimony 


43 


Iron, pig 


23 


Menthol 


44 


Hat bodies, VTool for ladies 


25 


Quebracho 







3. Cases Withdrawn by Complainants after Preliminary Investigation 

9 Shoe laces 17 Pish, Frozen tuna 

11- Leather, Calf and 'Kid 36 Fly catchers, Ribbon 
14 Fish, Canned Tuna 38 Paper, Kraft V/rapping 
16 Oil, Sunflower -39 Fiber Board, Count erboard 

9829 



Complaint 


Complaint 


Humber 


Commodity 


Number 


10 


Horsehair, dressed 


45 


19 


Rubber Water bottles 


46 


26 


Hollow-ware, silver plated 


47 


27 


Bread 


49 


29 


dinars". 


51 


30 


Rubber toys 


52 : 


32 


Damask, table 


53 


34 


Handkerchiefs, embroidered 


54 


35 


Umbrellas 


55 


37 


'Jebbing, jute 


56 


40 


Pishing lines, hemp halibut 




41 


Tapioca, flour 




42 


Thermostatic containers 





.132- 
4.. Cases Pending in the N.R.A. 5/27/35, or Recently Filed 

Comm odity 

Gloves, wool knit 

Salt Cake, sodium sulphate 

Binder twine 

Rugs, jute oriental 

Coal and coke 

Rugs, grass and fiber 

Salt, common 

Fertilizer 

Brushes 

Cardboard novelties 



From the foregoing it will be noted that seventeen(excluding case 
No. 24)had been recommended for further action by the NRA; seven were 
dismissed, and eight were withdrawn by complainants after preliminary 
NRA investigation; and twenty-three c^.ses were pending at the time of 
the Supreme Court's decision in the Schechter case, May 27, 1935, and 
several of these had only recentl^ been received. 

Of the seventeen cases recommended for further action by NRA, relief 
was granted with respect to four (excluding case No. 3) and approved with 
respect to one; five were dismissed after investigation raid report by the 
Tariff Commission; seven were pending before the Tariff Co;nmission, and 
recommendations with respect to some of these had been made to the Pres- 
ident but no final action had been approved. (*) 

III. RESTRICTION OR REGULATION OF I1P0RIS BY uEAUS OF "STIES" AND INFORMAL 
AGREEMENTS 

Largely as a result of the depreciation of the dollar, which had the 
effect of improving the competitive position of domestic industry in re- 
lation to imports from practically all countries excepting Japan, restrict- 
ive action under Section 3 (e) was approved in only a few ca:=es and chief- 
ly in connection with articles coming from Japan. In addition to the dut- 
ies already provided in the Tariff Act of 1930, fees "fend quantitative -limit- 
ations were imposed on three classes of commodities. Quantitative limit- 
ations were also imposed on two other classes of commodities, by means 
of informal or voluntary undertakings by the foreign manufacturers concerned, 

A. Import Fees 

1. Cotton Rags ' 

Under the provisions of Section 3 (e), and after investigation and 
report by the Tariff Commission, the President directed, on May 30, 1934, 



t 



(*) The Tariff Commission has since published the results of its investi- 
gations of Earthenware and Chinaware, and Sun Goggles. 

9829 



-133— 

that t .ere be assessed the --' 1 loving fees in addition to the duties provided 
by existing law- in each case: , .. •■ 

(1) On. chenille rr. .-;-.■.,• ••- ally 01 in chief value of cotton, 15 cents 
per square "yari . 

(2) On imitation oriental rugs, wholly or. in chief value of cotton, 
23 cents per square yard,, .. •■ ■" 

(3) On rugs-, -wholly cr in chief value of cotton (except grass or 

• • rice-straw), other than chenille, imitation oriental, and rag 
rugc, of the type commonly -known as hit-and-miss, 20 percent ad 
valorem "but .not "le'ss then 5 cents per square yard. 

• A't that time it War: directed, that the effective date for these fees 
he June 10, 1954 unle.ss- during the period from Hay 11 to May 31, 1934," "the ej 
pert:- of cotton chenille rugs from Japan to the United States should ex- 
ceed 90 ,'00 square yards. These exports during that period did exceed 
that amount and the ef 'ective date was changed to, June '5th. The effect- 
ive date for the fee on imitation oriental "rugs, which were imported 
chiefly from France, "Belgium and Italy, remained June 10, 1934. 

The following table (Table 4) shows the imports of these three 
classes of cotton rugs by months from January 1933 to April 1935, in- 
clusive, indicating the effect- of the fees, and of the .quantitative 
limitations imposed which are described below.:. • ■■ 



•9829 



-134- 



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-135- 



Matches 



After an investigation under Section 3 ( e) "by the Tariff Commission 
with respect to matches, Section 611 was inserted in the Revenue Act of 
1934, then pending in Congress. Subsequently. that bill became a law, 
including provision for an excise tax of 5^ per 1,000 matches on fancy 
wooden matches and wooden matches having a stained, dyed, or colored 
stick or stem, packed in boxes or in bulk. : ( These had previously been 
imported at a lower rate of duty than other: wooden matches). The 
provisions of that section were generally similar to the recommendations 
made by the Tariff Commission as a result of the investigation and 
consequently Executive action putting into effect the Commission's 
recommendations was rendered unnecessary. The excise tax had the 
effect' of eliminating' imports of colored stem matches. 

3 . Quantitative limitations by Informal Agreement 

1. Cotton Rugs 

In addition to the fees imposed en the various classes of cotton 
rugs, other than imitation oriental, a voluntary agreement was 
negotiated 'in accordance with which the exporters of cotton rugs from 
Japan to the United States, with a view to cooperating with the 
National Industrial Recovery Program, undertook to limit exports. on 
and after June 1, 1934, as follows: 

(l) On chenille rugs ; , Wholly or in chief -value of cotton, 
to 650,000 square yards per annum, provided that if 
the exports from Japan to the United States between 
May 11 and I/ay 31, 1934, exceeded 90,000 square yards 
the excess s hould be deducted from that annual quantity. 

(3) On hit-and-miss rag rugs, wholly or in chief value of 
cotton, to 3,250,000 square yards per annum. 

(3) On rugs wholly or in chief value of cotton (except 
grass and rice straw, other than chenille, imitation 
oriental, end rag rugs of the type commonly known as 
hit-and-miss, to 4,070,000 square yards. per annum. 

2o Wood-cased Lead Pencils 

Effective on and after May 1, 1934, exporters of wood-cased lead 
pencils from Japan to the United States undertook to limit exports to 
the United States to not more than 125,000 gross in any one year, 
45,000 gross in any one quarter, and 25 ; 000 gross in any one month. 
This action followed an investigation and report by the U. S, Tariff 
Commission pursuant to Section 3 (e), in connection with which it was 
announced that no action would be taken so long as the Japanese exports 
to the United States were limited to the figures above mentioned. The 
amount of the limitation in this case should be compared with imports 
from Japan in 1933 which amounted to approximately 160,000 gross, of 
which 148,000 gross were imported in the last six months of the year, as 
shown in the following table (Table 5). 

9829 



"Loo- 
table 5 
imports for consumption op lead pencils, not metal-cased, 
prom japan, by months, january 1933 to june 1935 





1933 


1934 


1935 


Period 




: Unit 




: Uni t 




Unit 




Quantity 


: value 


Quantity 


value 


Quantity 


valtie 




jp;ross 


: <£ per gr. 


gross 


' $ per gr. 


gross 


$ "ner £r 


January 


1,125 


28.2 


30,527 


24.2 


6,641 


21.3 


February 


100 


: 84.0 


8,987 


: 26 . 6 


O j e^t*J^j 


21.0 


March 


355 


21.4 


7,983 


42.5 


7,224 


23.4 


April 


38 


76.3 


10,944 


25.3 


4,590 


27.2 


May 


3,701 


18.0 


12,867 


23.8 


1,852 


32.6 


June 


7,888 


20.0 


16,986 


24.2 


2,005 


31.4 


July 


8,967 


25.7 


13,731 


22.0 






Augus t : 


30,910 


25.6 ! 


11,104 


26.6 






September 


36,100 


20.5 ; 


19,396 


23.1 






October ! 


20,000 


22.6 : 


7,182 


14.5 






November : 


34,095 


22.2 : 


4,603 


21.5 






December : 


17,415 : 


22.4 : 


4,604 


, 22.6 







Source: United States Tariff Commission, St>ecial Compilations 



3. Red Cedar Shingles 

Following an investigation of red cedar shingles by the United States 
Tariff Commission under the r>rovisions of Section 3 (e), it was announced 
that Canadian manufacturers and exDorters of red cedar shingles had under- 
taken, with a view to cooperating with the Recovery. Program in the United 
States, to voluntarily limit their exports to the United States to an 
amount equal to 25 ner cent of domestic consunrotion as estimated for 
stated intervals for the domestic industry by the Lumber Code Authority. 
Furthermore, Canadian shingle producers agreed to certify each shipment 
of shingles of No. 1 Grade as being of that grade and conforming to the 
standards promulgated by the U. S. Department of Commerce, that all other 
red cedar shingles be marked to indicate their grade; and that so long 
as the system of cost protection prices was maintained by the domestic 
industry, each import invoice should show the nrice and terms of sale. 

The limitation of Canadian red cedar shingle exports to the United 
States to 25 ner cent of domestic consunrotion was approximately the average 
percentage for the period from 1920 to 1933 inclusive. However, in 1932 
and 1933 it had risen to 33 per cent, and in fact reached a high point of 
37 per cent in September, 1933, after the domestic industry commenced to 
operate under the code for the Lumber and Timber Products Industry. 

Table 6 (immediately following) shows the imports of shingles, 
monthly, from January, 1933 to June 1935, inclusive. 



9829 



I 



-137- 

' TABLE 5 
IMPORTS OF ..SHINGLES, MONTHLY, JANUARY, 1933- JUNE, 1935 





1935 


1934 


1935 


Period 


Quantity 


Unit Value 


Quantity 


Unit Value 


Quantity 


Unit Value 




Squares 


$ Per Sq. 


Squares 


: * Per Sq. 


Squares 


% Per Sq. 


January 


88,500 


1.77 


74,145 


2.55 


75,143 


2.39 


February 


67,820 


1.78 


91,712 


: 2.67 


: 113,758 


2.41 


March 


75,829 


1.69 


118,919 


! 2.66 


; 98,831 


2.48 


April 


111,030 


1.76 


107,363 


: 2, S3 


205,499 


2.41 


May 


183,397 


1.83 


97,404 


2.59 


129,568 


2.53 


June 


181,107 


3.04 


70,214 


: 2.68 


236,063 


2.64 


July 


185,220 


2.34 


92,435 


: 2.68 


! 335,679 


2.82 


August 


196,088 


2.60 


195,917 


: 2.54 






September 


145,218 


2.67 


115,941 


: 2.58 






October 


145,404 


2.63 


179,695 


: 2.50 






November 


116,738 


2.33 


116,044 


: 2.46 






December 


73,930 


2.56 


116,390 


: 2.49 







Source: U. S, Bureau of Foreign and Domestic Commerce, Monthly Summary 
of Fo-'jign Trade 

Note: Rcr" •:-'j.ar Shingles are estimated to be 90 per cent of the above total 
qua i «!' j i e s 



4. Operation of Informal Agreements 

An important reason for resort to quantitative limitations as a form 
of relief, or to prevent imports from rendering ineffective or seriously 
endangering the operation of codes or agreement, was the fact that duties, 
or fees, were likely to be ineffective as a, form of import control during 
a period) of such ranid changes in costs and -prices as had occurred during 
recent years. Quantitative limitations are not only certain and definite 
as an assurance against undue import competition, but to a considerable 
extent they also remove the incentive to severe -price competition, and 
this effect in itself affords a considerable measure of relief to domestic 
industries. 

The informal agreements which were put into effect for the purpose 
of limiting the quantity of imports were reasonably successful. The 
extent of the limitation in each case was determined only after careful 
study. A number of complaints were made, as might be expected, but the 
statistics indicate that the agreements were carried out with a fair 
degree of diligence. Imports were restricted or -prevented from expanding 
beyond fixed limits, and the result was an improvement of the competitive 
situation for domestic industries. 

One of the principal advantages of import limitation by agreement, 
as compared with various types of unilateral action, is its effect on 
commercial -policy. It minimizes- the possibility of retaliation by the 
foreign country or countries affected and does not disrupt cordial or 
reciprocal trade relations. 
9829 



-133- 

CHAPTER VI . 

ANALYSIS 'OF CHANGES IN THE COi/lPETITIVE POSITION OF CODED 
INDUST RIES INVOLVED IN COM PLA INTS INVESTIGATED UNDER 
S ECTION 3 (e), IN RELATION TO IMPORTS 

I. TARIFF STATUS OF COMPLAINT COMMODITIES 

The tariff status of commodities which were the subject of formal 
complaint under Section 3 (e) ranged from duty-free imports in 14 cases 
to 5 which were protected by .duties amounting in 1933 to 100 per cent 
advalorem or over. Of the 41 dutiable classes or articles, approximately 
one-half were dutiable at rates less than 50 : per cent ad : valorem (1933) 
and one-half of rates exceeding 50 per cent. (*) 

II. SOURCES AND KATUBE OF AVAILABLE STATISTICS 

The tables in this chapter summarize the available information on 
production, employment, hourly and weekly wages, costs of production, 
and prices, with respect to the commodities concerned in formal complaints. 
The data shown for commodities which were investigated by the United 
States Tariff Commission were drawn, insofar as available, from the re- 
sults of those investigations. (**) With respect to other commodities, 
most of the data were computed from information submitted in support ' 
of the complaints. In some cases the data, were supplemented by or 
computed from statistics available from the Bureau of Labor Statistics, 
Bureau of the Census, Bureau of Fisheries, and Bureau of Mines. 

With the exception of the information drawn from investigations by 
the United States Tariff Commission, the da.ta are not sufficiently 
accurate to justify any precise or absolute interpretation. They are 
significant only as a rough indication of the changes which occurred, 
but, since they are based upon the records and calculations of the 
business units or industries concerned, they represent changes which 
influenced industrial activity during the operation of the Recovery 
Act, 

Attention should be called also to the fact that the data are 
based upon representative periods before and after adherence to NBA 
codes. Because of fluctuations in industrial activity, which result 
from numerous influences, the periods selected for such calculations 
as those shown necessarily have an important influence on the results 
obtained. However, the selections were made only after a careful study 
o^ the peculiar characteristics of each commodity and the other factors 
which influence operations of the industries concerned. 

The scope of the data presented in this chapter is indicated, 
broadly speaking, by the fact that they represent industrial, mining, 
and agricultural production in forty-four different states, although 
chiefly the more industrialized areas in such states' as New York, 
New Jersey, Pennsylvania, Massachusetts, Ohio, Illinois, Connecticut 

and California (roughly in order of importance). 

(*) See Table 1, showing tariff pnd code status. 

(**) These included cotton rugs, matches, wood-cased lead pencils, shingles, 
■' wool-felt hat bodies, Quicksilver, pedaline braids and hat bodies, ice, 
pottery, sun goggles, rubber erasers, horseshoes, and cotton cloth. 
9829 






-139- 

III. CHANGES IN PRODUCTION, EMPLOYMENT, AMD V/AGES, FOLLOWING 
ADOPTION OF NBA CODES 

A» Product ion 

The unadjusted index of industrial production, shifted to a 1929 
base, stood in the first ouarter of 1933 at roughly 50 per cent of the 
1929 level. It rose to 81 in July, the peak for 1933, hut declined 
steadily thereafter at 56 at the end of the year. There was much 
lens fluctuation' during 1934 as indicated by the fact that the index 
varied between 60 and 75 during that year. Such fluctuations indicate 
the necessity of considerable care in selecting representative periods 
before and after the adoption of codes' at various dates during the 
period. On the other hand it may be observed that most business units, 
•and particularly those for which data are shown in the following table, 
•either 'subscribed to ' codes or the PRA about the middle of 1933. 
Accordingly, in most cases, the comparisons made are based upon a 
-period, usually three to six months, before June 1933, and a period of 
similar length subseciuent to adherence to the PRA or the adoption of 
a code. 

Data shown in Table 7 on the changes in Droduction for periods 
before and following adherence to codes or agreements were available for 
39 industry-.groups or items involved in Section 3 (e) complaints. The 
total value of -oroduction in these groups in 1933 was roughly 
$900,000,000, of which about $275,000,000 was goods said to be in 
direct competition With inroort's (see Table 3). 



9829 



-140- 

TABLE 7 

-< . . ., 
Percentage Changes in Production, Employment, 

and Wages, Following Adoption of NRA Codes 

(Based upon representative periods bofore 
■and after adherence to codes) 



Com- 


: Commodity 


: Production 


: Employment 


: Wages 


plaint 


: Hourly 


:.\ Weekly 


Number 


5 














: Percent 


: Percent 


: Percent 


: Percent 


1 


:Rugs, cotton oriental 


: -69.1 


: -27.6 


:• /55.0 


: 7 8.5 


2'' 


:Rugs, cotton "- chenille 


: -36.9 


r n.a. 


: a//24.4 


: n.a. 


t ■ 


: Hit-and-miss 


:• -11.2 


n.a. 


:/45 to 7Q0 


: n. a. 




: Tufted 






: /20 to 78. 


: n.a. 




Ho oke d 






: a/-/25.0 


: n.a. 




•a/ Piece rate» 


/14.1 


-35.0 


: /21.0 




3 


Matches 


! i 

: 7*22,0 


4 


Hnt bodies, wool-felt 


-20. 5 


n.a. 


: n.a. . 


: n. a. 


5 


Pencils, wood-cased lead 


7*68.9 


jtei.i 


: / 7.5 


: fL5.6 


6 : 


Watches, parts & movement sb/ 


,7*237.7 

Comparal 


7*39.7 
)le informal 


: 7*21.0 

;ion not av; 


7*33.9 




b/ After P.E.A. . . 


t * 


7 : 


Quicksilver : 


iilable 


8 


Antimony « 


/53.8 : 


7*39.3 


7*32.1 


7* 9.3 


9 : 


Shoe laces • 


-24.9 : 


/19.4 


7*42.9 


7*10.9 


10 : 


Horsehair, dressed : 


■f 6.3 : 


7*35.7 : 


7*16.4 ; 


■f e.o f 


11 : 


Leather, calf and kid : 


■f 6.4 : 


- 0.1 : 


7*15.4 : 


- 4.9 


12 : 


Ice (Mexican border) : 


-11.8 : 


n.a. : 


n.a. ; 


n. a. 


13 : 


Paper, newsprint : 


i 6.5 : 


7*13.0 : 


7* 1.5 : 


/ 1.0 


14 : 


jFish, canned tuna : 


n.a. : 


/ 1.6 : 


•/ 9.1 : 


7*22. 7 


15 : 


Chinaware & earthenware : 


7*21.9 : 


/54.0 : 


7*22.1 : 


7*15.0 


16 : 


Oil, sunflower seed : 


-20.7 : 


n.a. : 


n. a. : 


n.a. 


17 : 


Fish, frozen tuna : 


n.a. : 


n.a. : 


c//25.0 : 


c//25.0 




c/ After P.P. A. : 





n.a.- Hot available 



(continued) 



9829 



- 141 - 



001:1— . 

plaint 

I~txi"ber 



21 



IS 



IS 



20 

L C. 

22 

2U 

25 



2.6 



27 



2S 



PC 



30 



31 



3? 
33 
3^ 
35 



36 



Commodity 



Shingle's, red cedar 
SuLboer nater "bottles 
C-o;j.;-les, sun 

Braids & "bodies, : pedal ine 

Llentiiol 

Idee 

Quebracho extract 
Quebracho 

Chestnut 

Hollcs-Trare, silver plated 
Breed (Her: Bngland Border) 
Pearl essence : 



wi; 



hanc. 



d/_ After P2A 

b/ Clary- "A" oi^ar-s 



Rubber tors 

Rubber erasers 

Damask, ■ table' 

Horse slices 
Handkerchief s ■ ( e: ibro idered) 
Umbrellas : 

Fly catchers, ribbon 

- ITot available 



To auct- 
ion 



;oer cent 



-5.0 



/Vl' )• 

r'i'r. .4 



/17-S 



n.a. 



Employ- 
ment 



rer cent 



-13.2 
Compare 

/30.5 

/7.2 



Comoarable Inform 



-1 



j» . 



Ao.O 

•/57.0 

n.a. 

/13-5 
/12.4 



/23.S 

/to 

A3.0 

Compar 
^.0 
n, a. 

d//!7.9 
e/ 



:es 



lourly : weekly 



Fer cent 



/112.S 



Fer cent 



n.j 



le Information n.a, 
/ 13.7 



/i6.^ 



D 



-6.S 



/ 13.0 

.tion Kot Available 



+ 59 .8 



/11.0 
/3S.o 



/6.4 



-3.0 
-5.0 



ble Information n.a. 
-24.4 



n.a. 



-IS. 3 

/32.S 



/14.0 



n.a. 



Compare 


ib: 


.e Inform; 


rtion Nat J 


Available 


/3L7 




No t 


available 




/lo.O 




/14.5 


:/l2.9 : 


n. a. 


/16.2 




A5.7 


/7 -5 


/3.1 


-1.1 




n.a. 


n. a.. 


n.a. 


n.a. 




- 6.4 


^53.7 


J/19.1 


Compare 


a .ble Inform. 


rtion ITot < 


available 


(Co- 


it 


Lnued) 







9229 



- 142 - 



Com- : 


Commodity : 


Production; 




"Wages 


plaint: 


Employment; 


Hourly : 


Weekly 


Number: 














Webbing, jute : 


Percent : 

— 2o. o : 


Percent : 
-4.4 : 


Percent : 


Percent 


37 : 


-1.5 i 


-24.5 


38 : 


Paper, kraft wrapping : 


- 8.7 : 


Not avai 


leble : 




39 : 


Fiber board, counterboard : 


Comparable Information Not Available 


40 : 


Fishing lines, hemp halibut : 


./52.C . 


/16.7 : 


■/■ 4. 6 : 


- 5. 6 


41 : 


Tapioca flour : 


i 9.4 . 


/10.2 


•/11.4 


-11.7 


42 : 


Thermostatic containers : 


/62.3 


^65. 9 


n. a. 


/32.1 


43 : 


Iron, pig 


/121. 6 


•/78.4 


/24.8 


■/14. 7 


44 . : 


•Hat bodies,' wool ' felt for 
ladle s ■ 


See No. 4 








45 : 


Gloves, wool- knit , . 


/20.7 


/44.0 


n. a.. 


/37.0 


46 : 


Salt cake, sodium sulphate 


-49.5 


Not ava. 


Liable 




47 _ .: 


Binder twine • • 


-45. 4 


-16.7 


•/1 4. 7 


i 4.5 


48 : 


Fish netting, cotton l- linen' 


- 3. 3 


/ 3.4 


/30.4 


•/10. 8 


49 : 


Rugs, jute oriental 


No pre-( 


"ode production 




50 : 


Cloth, bleached cotton 


1 8.1 


. ^30.5 


: /73. 1 


727.4 


51 : 


Coal and coke (N. W. area) 


Comparal 


ale information not available 


52 


Grass and fiber rugs 


:' Compare.' 


ole information not available 


53 


Salt, common 


;• yV.i 


: /10.4 


: /32.C 


: / 0.9 


54 


: Fertilizer (Maine 'area). 


: n. a. 


: /19.5 


: -/24.5 


: n. a. 


55 . 


'• Brushes,' 


: n. a. 


: n. a. 


: n. a. 


: n. a. 


56 


: Cardboard novelties 


: n. a. 


: n. a. 


: • n. a. 


: n. a. 




•n. a. = Not available ' 








'• 






Sources: Census cf Manufacturers, Tariff Commission or complaint data. 



9829 



AVf ra^ e within 
each range 


(Per 


cent) 


7 
18 
49 


.3 
.4 



-143- 

Froduction declined in 15 of theap ^rou,.^ , ranging from 1.1 oer 
cent ( nandk-rcnipf s) , to 59.1 per c j nt (ru t >-S, cotton imitation oriental) 
The distri oution of tfc°S( declines may b:' summarized as follov.s: 

Industry Fange of d^clinps Avf>rag j within 

groups In r roquet ion each rang 

( number ) (-t cent) f P---r cent ) 

4 1.1 to P. 7 4.5 

5 " 11.2 to 24 .9 17.1 
4 ^8.7 to 49.5 39.3 
1 59.1 

Production incr-as-^d in 34 groans, ranging from 5.3 r>-r c^nt 
(horsehair), to 337.7 per c-nt (watcuss and parts). Distrioution of 
tn°se inci eases may bfi surr.m.-iri ::--d as follows: 

Industry . • Rang-' of increases 

grouns in nrod/qcti on 

( nunoi-r ) ( Per cent ) 

5 6 . 3 t o 9 . 4 

8 12.4 to 33. 5 

7 31.7 to 68.9 

2 ■ 115.0 to 131 ."6 

1 337.7 

3. Zmoloyment 

The bureau of Laoor Statistics ind-x of employment in manufactur- 
ing industries fluctuated during the first six montns of 1933 Detween 
55 and 50 p?r cent of tu 1929 1 el, and during tne second six montns, 
betve'n 58 and 76 per cent.' During 1934 it fluctuated batwepn 70 and 79 
per cent, anc during the first naif of 193d, b-tv/--n 75 and 79 per cent. 

Data were available on the changes in ^nroloym- nt in 33 industry 
groups involvt-d in Section 3 (e) complaints ( Table 7). Thes- groups, 
in 1933, nreloypd rnorp than ^00,000 wage -nrn°rs, of whom roughly 
100,000 w=r» engaged in t..- manufacture of goods in direct competition 
witii, imports (se° Tablp 3). 

Seven groups regist°r-d declines in employment ranging from 0.1 
p<-r cent (l^tner, calf aiid kid) to 35 per cent (matcu-s). A sutimary 
of tc s d clin< s follows: 

Industry Rang? in declines in Av-ra e witnin 

groups em v lo;,'m-ntt e ach range 

( nuuiP-^r ) ( :^r c-n t) ( Per cent ) 

b 0.1 to 13.7 8.3 

2 37.5 and 35.0 



98:;9 



Employment increased in 2fi of these groups, ranging from l.fi per 
cent (fish, canned tun-,) to 7C.4 per cent (iron, pig,). A summary of 
these increases is as follows: 

Industry ilange of increases in Average within 

groups, _ ..... .employment in each r ang e 

(number) .. (Per cent) (£er ..cent ) 

5 l.fi to 10.4 fi.5 

3 13.0 to 23.8 13.2 

10 30.5 to' 45.7 38.7 

3 54.0 to 73.4 fifi.l 

C. Wages 

Data .re shown in Table 7 on changes in hourly wage rates for 33, 
".nd in weekly wages for 31, industry groups or commodities involved i.i 
Section 3 (e) complaints. The payroll for the total operations of these 
groups in 1S33 amounted to more than o27 :>,<?/. ,000, -nd. about £50,000,000 
in the manufacture of products in direct competition with imports 
(see Table 3). 

Declines in hourly wage rates occurred in only three groups .nd were 
1.5 per cent (jute webbing) 18.3 per cent (hand made cigars), and 24.4 
per cent (oread). Weekly wages declined in seven groups as follows: 

Industry Range of declines in Average within 

gro ups weekly w age s „ _ .^.\ c )\ . r . r '-P Sl e . . 

(number) (Percent) (Per cent) 

5 3.fi to 8.0 5.6 

2 11.7 to 2-:.5 

Hourly wage rates increased in 31 groups., A/ ranging from 1.5 per 
cent (news-print paper) to 112.fi (shingles, red cedar). The distribution 
of these increases is summarized as follows: 

Industry Range of increases in Average within 

. J^vy-IL^ . Jl°urly_ S£ige .rate, s each £ange 

( number ) ( P er c ent ) ( Per .cent ) 

5 1.5 to 9.1 fi.O 

In li.o to 25,0 13.3 

4 30.4 to 42.9 35.9 

5 55.0 to 73.1 59.0 
1 112.fi 

In 24 groups, the weekly wage increases ranged from 0.9 per cent 
(salt, common) to 37.0 per. cent (gloves, wool knit). The distribution 
of these increases is summarized as follows: 

Industry Hange of increases in Average within 

J^opss.. . _ . E^ekJLy. >'LZ£ e JL ~. - . . . each range 

(number) (Per. _cent ) (Per _cent) 

8 0.9 to 9.3 5.0 

12 10.3 to 25.0 lfi.7 

4 27. < to 37.0 32.fi 

A/ One group (cigars) involves both and increase and a decrease 

9829 



IV. CHANGES DT COSTS OF PRODUCTION FOLLOWING ADOPT I Oil OF 'ERA CODES 

A. Ch ange s in the JJeneral Level of Industrial Co sts 

Changes in costs of production are the result of numerous factors, 
the principal of which are reflected in the costs of raw materials and 
the costs of labor. Some idea of the changes in the general level of 
industrial ccsts may be had by reference to the general indexes of raw 
material prices and of industrial payrolls. 

The Bureau of Labor Statistics index of the prices of raw materials 
was 5 per cent lower in the first half of 1933 than the level of the 
last six months of 1932. However, it rose thereafter on the average 
during the period of the Recovery Act above the last half of 1932 as 
follows: second half, 1933, thirteen per cent; first half, 1934, twenty 
per cent; second half of 1934, thirty-two per cent; first half of 1935, 
forty-one per cent. 

The index of payroll in manufacturing industries during the first 
half of 1933 stood at the level of the second half of 1932. However, 
during the succeeding six month periods it rose on the average as 
follows: last half of 1933, 33 per cent; first half of 1934, 50 per 
cent; second half cf 1934, 44 per cent; first half of 1935, 33 per cent. 

B. Cha nges i n .( fasts, .ojf Prp_ductio_n of, Specific Commodi ties, 

1. Changes in Total Costs 

The first column of Table 10 summarizes the production cost changes 
resulting from comparison of periods preceding and following the adoption 
of UFA. codes for those commodities and industry groups, involved in 
Section 3 (e) complaints, for which reasonably satisfactory data, were 
available for representative periods. Insofar as available, the cost 
changes shown were derived from the results of investigations by the 
United States Tariff Commission. (*) The others vie. e calculated from 
information submitted in support of the complaints. It should be ob- 
served that these data do not represent directly the operations of every 
producer of each commodity or of every unit in each industry, but only 
a sample which may be taken as representative, or at least as a rough 
indication of the cost changes which took place. 

Data with respect to changes in costs of production (Table 10 col. 1) 
for representative periods before and following adherence to codes and 
agreements were available for 31 industry groups (39 items) involved in 
Section 3 (e) complaints. In 1933 the total value of the production by 
the industries concerned was more than $375,000, 000. They were produced 
in some 1900 plants employing about 450,000 wage erners, with payrolls 
amounting to more than $230,000,000. The portion of this production 
said to be in direct competition with imports was estimated at about 
•200,000,0.00, from 900 plants employing more than 70,000 persons having 
payrolls totalling almost 550,000,000. (See Table 3). 

(*, Cotton rugs, other than imitation oriental, wool felt hat bodies, 
chinaware and earthenware, shingles, sun goggles, rubber era.sers, 
horseshoes, and bleached cotton cloth. 

9829 



-147- 

The cost of production declined for o.,ly two commodities, horseshoes 
(1.9 -ner cent) and rubber erasers (6.6 to 11.6 oer cent). It increased 
for 29 industry groiros, ranging from 4.0 per cent, for machine--oroduced 
cigars to 82.9 ner c^nt for cotton clotn. The distribution of these 
cost increases is summarized as follovvrs: 



Industry 

groups 

(number) 



Range of increases in costs 

of production 

(P er cent ) 



Average witnin 
each range 
(Per cent) 



5 (8 items) 
10 (10 items) 
12 (15 items) 

2 (2 items) 



4.0 to 10. 

11.0 to 24.5 

25.5 to 4F.4 

77.2 and 8'- ; .9 



7.2 
15.7 

35.6 



2. Changes in the Cost Labor, Materials, and in Expense 
or "Overhead" . 

Cost data arp available with respect to labor, materials, and over- 
head burden for only a few (P) complaints which were the subject of 
investigation by the United States Tariff Commission. However, the data 
for these cases, shown in Table 8, re-ores^nt 18 separate commodity items 
produced in over 75 different establishments located in at least 15 
states . 



9829 






table g 



Percentage of Changes in Costs following Adoption of H.R.A. Codes, 

"by. Commodities 



Commodity 


•Material 


Lahor 


: E: 


noense 


Total 




Per cent 


Per cent 


•Pe] 


' cent 


Per cent 


Rugs, cotton chenille 
Jan- June, with July-Lee, 1933 


4 4S.H 


i L ^ 


; / 


17.0 ; 


/ U0.5 


Rugs, hit-and-miss rag 
J an. -June, with July-Dee, 1933 


/ 57. u 


+ 15.7 


/ 


22.0 


/ 36.2 


Rags, typical plaid rag 
Jan. -June, with July-Dec, , 1933 


/ 28.7 


/ 17. S 


! * 


lg.U 


/ 25.3 


Rags, cotton tufted 
Jan. -June, with July—Dec*, 1933 


• / U5.O 


/ 59.9 


t 





/ 33.U 


Rugs, cotton hooked 
Jan. -June, with July-r.ec, 1933 


/ 73-3 


4- 20.7 


! + 


23.6 


' / 3^-5 


Hat "bodies, wool felt 
Jan .-July, with Aug.-Dec, 1933 


/ g.O 


/ 23.1 


i / 


U.6 


/ 11.5 


Goggles, sun, Item I 
Jan. -June, with July-Dec, 1933 


/ 29. u 


/ 3H.6 







/ 2U.3 


Goggles, sun, Item 2 
Jan. -June, with July— Dec, 1933 


/ 30.0 


4- 3^.6 







/ 2U.g 


Goggles, sun, I ten 3 
Jan. -June, with July— Dec. , 1933 


/ g.l 


+ 30.9 






3 


/ 9.0 


Chinaware and earthen'.. 'are ("based 








1 




on total operations) ' 
July-Dec. ,1933 with Jan- June , I93U 


/ 1,2 


■/ 2.S 


! - 


1.6 


1 1.5 


Shi ngl e s , red ce dar 
March with Octooer, 1933 


/ 32.9 


•/■ 91.7 


: / 


20.0 


/ U5.I 


Horse and mule shoes, Item 1 
Oct. Dec, 1932 with Sept-Oct,1933 


/ 0.7 


/ l.S 




15.7 


- 2.U 



( continued) 



9829 



-149- 



TA3LE 8 



Percentage sf Changes in Costs following Adoption of N.R.A. Codes, 
by Commodities (continued) 



Commodity 


Material 


Labor 


Expense 


Total 




2 Oct, 


Per 


cent 


Per cent 


Per cent 


Per cent 


Horse and mule shoes, Item 








Dec, 1932, with Dec, 1933- 


•Jan, 












1934 




- 


0.9 


- 2.6 


/ 14.1 


f 1.9 


Cloth, cotton (grey) 














March, with October, 1933 




/101.8 


AC5.3 


/• 37.4 


/ 82.9 


Erasers, rubber, Item 1 














Jan. -June, with July-Dec. , 


1933 


/ 


6.5 


/- 3.7 


- 27.7 


- 11.6 


Erasers, ruboer, Item 2 














Jan . -June ,. wi th July-Dec . , 


1933 


I 


7.3 


/ 5.0 


- 20.0 


- 6.6 


Erasers, rabber, Item 3 














Jan. -June, with July-Dec, 


1933 


1- 


3.0 


/ 4.3 


- 19.7 


- 6.9 


Erasers, ruboor, Item 4 














Jan. -June, with July-Dec. , 


1933 


f 


6.'. 8 


- 2.6 


- 23.3 


- 11.1 



Based on c^sts (weighted average of companies) as determined by U. S. 
Tariff Commission in its investigations for purposes of 3(e) of the 
N.I.H.A. 



9829 



-150- 

Of the 18 co'v.iodit;/" items for which data are presented in Table 8, 
only two showed a decline in labor cost, averaging 2f per cent; 16 shone d 
increases ranging from 1.8 per cent (horse and nrale shoes, item l), to 
105 per cent (cotton cloth); most of these vr ere less than 50 per cent, 
as indicated by the simple average of 30.8 per cent for the group. Only 
one iten shored a decrease in the cost of materials (horse and mule shoes, 
item 2), and 17 showed increases ranging from .7 per cent (horse and male 
shoes, item l), to 102 per cent (cotton cloth); the bulk of these were 
also in the lower ra.nge, as indicated by the simple average of 30 "oer cent 
for the group. 

The data with respect to expense or overhead burden showed increases 
in 8 cases, averaging 19.6 per cant, and decreases in 6 cases, averaging 
18 per cent; there "as no change in 4 others. 

3. Range of Cost Changes by Commodities and Companies 

Table 9 shows the range by companies of the percentage changes in 
the costs of material, labor, exoense, and in total, for the commodities 
for which averages are shown in Ta.ble 8. These data are presented for 
the purpose of indicating the extent of the variation of cost changes 
among companies producing the some commodities and as between companies 
producing different commodities. They also indicate the widely varying 
effect or incidence of the Recovery Program upon the operations of diff- 
erent producing units during the period of the Recovery Act. 



9829 



-151- 

TABLE 9 
PERCENTAGE INCREASES III COSTS FOLLOWING ADOPTION OF ERA CODES, 
BY COMLDDITIES AND COHPAFIES 

(A minus sirn allies only to the -percentage it immediately precedes) 

Material La"bor Expense Total 

Per cent 
Rugs, cotton chenille 

(8 companies) Range 36.1 to 57.9 13.8 to 64.9 0.0 to 59.6 24.5 to 55,6 
Wtd. average 48.4 41.4 17.0 40.5 

Hat "bodies, ^.;ool felt 

(5 companies) Range 7.3 to 10.1 6.8 to 53.1 3.3 to 5.6 4.9 to 13.7 
Wtd. average 8.0 23.1 4.6 11.5 

Chinaware & Earthenware 

(12 companies) Range -14.5 to 73.4 -30.1 to 36.9 -29.0 to 24.9 -16.3 to 32.6 
~ Wtd. average 1.2 2.8 -1.6 

Shingles, red cedar 

(17 companies) Range 10.1 to 79.7 0.0 to260.0 0.0 toll0.3 11.3 to 70.6 

Wtd. average 52.9 91.7 20.0 45.1 
Sun Goggles (item llo.l) 

(4 comoanies) Range 23.0 to 34.3 27.5 to 45.8 23.2 to 25.6 

Wtd. average 29.4 34.6 24.3 

Sun Goggles (item Ho. 2) 

(4 comoanies) Range 23.7 to 33.7 27.5 to 45.8 
Wtd. average 30.0 34.6 

Sun Goggles (item Uo.3) 

(4 companies) Range 4.1 to 12.3 21.6 to 45.6 
Wtd. average 8.1 30.9 

^ Rubber Erasers (ltemED,J3 

(4 companies) Range 3.5 to 8.3 0.0 to 5.9 -35.7 to 22. 2 -19.6 to 11.6 
Wtd. average 6.5 3.7 -27.7 -11.6 

Rubber Erasers (ltemilo.2) 

(4 companies) Eange 1.75 to 10.7 -1.2 to 5.1 -36.2 to 19.8 -20.4 to 9.1 
Wtd. average 7.3 5.0 -20.0 -6.6 

Rubber Erasers (ltemllo.3) 3.6 to 7.3 -3.5 to 6.4 -37.0 to 19.3 -21.7 to 9.3 
(4 comoanies) Range 

Wtd. average 8.0 4.3 -19.7 --6.9 

Rubber Erasers (ltemlTo.4) 

(4 companies) Range 3.2 tol0.5 -5.3 to '5.6 -33.4 to 18.3 -17.0 to 8.8 

Wtd. average 6.8 -2.6 -23.3 -11.1 

Korse & Mule Shoes a/ 

(itemNo.l) 5 conroanies-10.1 to 9.6 -15,5 to 13.7 -33.1 to 13.4 -10.4 to 11.0 
Wtd. average" 0.7 1.8 -15.7 -2.4 

(Continued) 
9829 






23.6 to 25.4 





24.8 





7.4 to 11,0 





9,0 



-152- 

TABLE 9 (Continued) 

PERCENTAGE INCREASES IN COSTS FOLLOWING ADOPTION OF' MM CODES, 
BY COllIODlTIES AND COMPANIES 



Material Labor Expense Total 

Per cent 
Horse and Mule Shoes a/ , . 

(ltem2) (5 companies) 

Range" -5.8 to 13.4 -7.0 to 14.9 -25.9 to 42.4 -8.7 to 15.6 

Wtd. average -0.9 -2.6 14.1 1.9 

Cotton cloth, grey ' . :• 

(21 companies) Range' 90.6 toll?. 5 39.9 tol57.1 - 1.8 to 70.3 60.7 tol02.7 

fftd. average 101.8 105.3 37.4 82.9 

H ; i r . . . ■ — . ; ■ — • 

Source: Based on costs (weighted average of companies) as determined by -United / 
States Tariff Commission in its investigation for purposes of 3 (e) of 

the ITIM. 

a/ Only four companies included in ranges, but 5 companies, in weighted avero.ges. 



Table 10, which follows, shows a comparison of the percentage changes in 
costs of production, selling prices, and the average unit values of imports 
for those commodities involved in Section 3 (e) complaints for which the 
data are available. The first column of this table, shrrwing cost changes, 
was summarized above. 



9829 



153 

■ TABLE 10 

Percentage Changes in Cost of Production, Selling 
Prices, and Unit Value of Imports, lolloping Adop- 
tion of N.R.A. Codes 



(Selected periods before and 



tuu.er c 



ode) 













Unit 


value : 




Unit value 


No. 


CoTiodity , 


Cos 


t of . 


Selling 


0: 


? . 


: Selling 


of 






'01* oc" 


action 


prices 


irrp< 


srts : 


: prices 


imports 






, Pei 


cent age change folio 
adoption of code 


-ring : 


Ipercentage 
; to code 


change, 1929- 
to 1935 
















: -period 




1. 


Hags, cotton , 


















imitation oriental 


' / 


42.0 


/ 52.6 ; 


; / 


22.6 : 


: n.a. 


n.a. 


2. 


Rugs, cotton 












: n.a. 


• - 64.1 




Chenilles 


i / 


40.5 


/ 39.0 ■ 


i / 


40.2 : 


: n.a. 


! n.a. 




Hit-and-miss 


- J. 

* i 


36.2 


• /'42.0 


I ;/ 


26.5 : 


: n.a. 


■ - S7.3 




Plaid rag 


■ / 


25.3 


/ 31.0 




n.a. : 


I . * ' ' • 


: n.a. 




Tufted 


I 


33.4 


/ *+?. . 




n.a, : 


: n.a. 


: n.a. 




Hooked 


■f 


3^.5 


j.a • ci • 




n.a,: 


: n.a. 


: n.a. 


3- 


Hatches • j 


/ 


5.1 


/ 9.5 




0.0 : 


: n.a. 


: - 63.O 


k. 


Hat bodies, wool : 


















felt ; 


i 


11.5 


". 1#5 


'-. / 




: n.a. 


I n.a. 


5. 


Pencils, wood-cased' 


K / 


5.0 














lead 1 


(to/ 


10.0 


/ 9.5 


; - 


56.6 • 


:/ 9.7 


! - 9-2 


6. 


"latches, parts, ! 












:(-20.0 to 






movements 


: / 


XQ 7 


/ 33.5 


: / 


10. 9 : 


:(-50.o 


' / 3S.5 


7. 


Quid: silver 




n.a. 


/ 23.3 


: / 


52.3 : 


: -Hi. 9 


: - 56.5 


g. 


Antimony 


f 
- r 


11.0 


/ 12.5 


i / 


5.6 : 


: /So.o 


: 


9- 


Shoe laces 


: / 


14.3 


/ 52. s 




n.a,: 


: -21.1 


t n.a. 


10. 


Horsehair, dressed 


; / 


22. 4 


/ 25.0 




n. a, : 


: n.a. 


! n. a. 


n. 


Leather, calf & hid 


















upper and lining . 




n.a. 


/ 3U.0 

] 


iup./; 

Jan./ 


11 C ; 

j>7,o : 

50.0 ; 


: -16.0 


! Up. -13. 7 
:Lin-49.3 


12. 


Ice (Kexican border' 




n.a. 


n.a. 




n.a. ; 


: n.a. 


! n.a. 


13. 


Paper, newsprint 


: ^ 


9.5 


0.0 


: — 


10,0 : 


: -65.0 


- 42.0 


14. 


Pish, canned tuna 




11 • o.» 


: / 6.0 


j / 


13.1 : 


: -23.2 


: n.a. 


15. 


Chinaware and 
earthenware (com- 


















petitive) 


; / 


12.0 


! / 26.1 


i / 


50.0 : 


: /22.O 


: n.a. 


16. 


Sunflower seed oil 




n.a. 


: n.a. 




n.a,: 


: n.a. 


: n.a. 


17. 


Pish, frozen tuna 




n.a. 


: / 25.0 


i / 


67,5 : 


: -16.6 


' / 17.3 


IS. 


Shingles, red cedar 


! / 


43. 66 


■ / yh.g 


1 / 


33.0 : 


: - 7.1 


! - 23.5 


19. 


Rubber water bottle 


3 


n.a. 


: n.a. 




n.a, : 


: n.a. 


t n.a. 


20. 


G-og \Les, sun 


: / 


24.5 


: / lb.2 


i / 


o.j : 


: n.a. 


1 - 32.1 


21. 


)Hat braid & bodies 
















22. 


) pedal ine 


\ / 


13.3 


: - 31.2 


: - 


21.3 .' 


: -23.9 


: n.a. 


23. 


Menthol 




n.a. 


! n.a. 




n.a, : 


: n.a. 


: n.a. 



(continued) 



9829 



15^ 

TABLE 10 
Percentage Changes in Cost of Production, Selling Prices, and Unit 
Value of I • -.ports, following Adoption of IT.P..A. Codes 

(Selected, periods "before- and under code) (continued) 







: :Unit value; 




Unit value 


No. Commodity 


: Cost of 


: : Selling: ■ of : 


: Selling 


of 




!"oro duct ion 


: prices : 'imports : 


; prices 


imports 




[Percentage change follo-.7ing : 


[Percentage 


change , 1929- 




! adoption of cede : 


rto code 
: -oeriod 


to 1935 


2k. nice (Philippine 












I slands.) 


: / 77-2 


1 / 75.7 


:P.I./67.S : 


• : 4 2.6 


: P.I. neg. 


25« Quebrachd extract 


n.a. 


(:Q/lU.O 


■ / 36.5 : 


:(o/ 28.0 


: 4 37.0 




: (ch/20.0 




(ch/ U.O 




2.6. Holloware, silver 












plated 


n • s, • ■ 


: : n.a. 


n.a. ' 


!' n.a.. 


: n.a. 


27. Bread (Hew Engl nd. 












(border) 


• 4 23-0 


/ 17.0 


-• 0.2 : 


! n.a. 


• - U6.0 


28. Pearl essence 


n.a. 


• * 16.7 


■ -23.7 : 


: n.a. 


: n.a. 


2?. Cigars 




?. 1. -:.... 


Pil-.- . . : 


1 • 1' 


: P.. I. 22.0, 


Hand producers 


■ 4 12.0 


"fixed 


*• 


: »f i*ed 




Machine producers. 


• 4 k.O 


price 
lines" 


. 


: price 
! lines" 




30. Robber toys ! 


il • £L » 


n.a. 


• n.a.: 


! n.a. 


: ' n.a. 


31. Subber erasers ; 


X~ 6.62 to 

(r.11.61 


n.a. 


- : - 56.O : 

I/in. - Dan.': 
•Pc : .- 4 &',.0: 
Table- : 


! n.a. 


! n.a. 
: - 23.O 


32. Damask, table 


.4 lif.o 


-33*0 


cvrc->U9,0: 

Napkins : 
120 thrd. : 


i 4 3.0 


I - 3.0. 




~ 




•433.0 : 




0.0 


33 • Horseshoes ! 


~ 1.9 


/ IS. 7 


■ / 1.8 : 


/ 1.2 


4 7.i 


3^. Handkerchiefs, J 












'embroidered , 


n.a. 


n.a. 


• /10.1 : 


! n.a. 


0' 


35 • Umbrellas : 


4 39-2 


■/ ■ 2.-6 


* n « ci • '. 


! '? 2.9 


n.a. 


36. Ply catchers, : 






• 






rib on ! 


'4 32.1 


/ ' 6.U i 


' / 3.3 : 


- - S.k 


/ 6.7 


37 • 'Teobing jute ! 


n.a. 


/ . H.o 


• '• - 1.2 : 


! - 19.9 


- 53.^ . 


38. Paper M-G Kraft : 












wrapping : 


n..a. 


/ 13.1 I 


- ■4lh.k ':, 


n.a. 


n.a. 


39« Piber borrd, countej 












board, etc. : 


n.a. 


n.a. , 


n.a. :.: 


n.a. 


n.a. 


Uo. Pishing lines, heripi 




* , 








halibut : 


fkl'.z . 


/ 18. 9 • 


A7.6 r 


n.a. 


n.a. 


Ul. Tapioca flour : 


4.)&.k : 


■4 27.3 : 


■426.1 :. 


~ 2.7 : 


- 21. k 


^2. Thermostatic : 


1 "vli, runder . • .• : 








containers : 


4 5-9 : 4 5.6 : 

1 ct. clover - : 


/13.3 : 


- 13.6 


- 36.6 




4 5.6 


/ 6.7 


/ 6.3 II 


- 5.9 ! 


- kk.k 



(continued) 



QKPO 



155 



TA3LE 10 



Percentage Changes in Cost of Production, Selling Prices, and Unit 
Value of Inports, Pollowirig Adoption of IT.Ii.A. Codes 

(Selected periods "before and under code) '(continued) 



• 
• 




: :Unit Value: : 


: 


Unit value 


No. Commodity : 


Cor 


t of : Selling : of : : 


Selling : 


of 


: 


proc 


'iction: prices : i roortr. :: 


prices : 


imports 




Per 


centage change following ::P 


ercentage 


change, 1929 


• ' ' 




adoption of code ':: 

• • 


to code : 
period : 


to 1935 


kj. Iron, pig (raerchrni 


) 


j. 1 * 3. • t 


Phila. : 

i 31-1 i 
3iTa'ham! 


• • 

• • 

• • 

• » 

• • 

• • 

• • 




f ; 








/, Zh.S : 


■f 17-5 - 


1 7.7 : 


- 11.6 


4H. Hat bodies, wool : 

felt ; 

hy. G-loves, wool knit : 






: 1 , 

" -(See 

/•22.0, : 


• • 

• • 






y 


33.7 : 


- 17.0 :: 


n.a. 


■/■ 19.O 


ho. Salt, cake 




n.a. : 


Chem.0.0 : 


I i * t . a • ■ 


- 21.8 . 


n.a. 


(sod. sulphate) : 




ii • a. • i 


Natl. 


■ a • 
* • • 












/ 6S.9 


0.0 :: 


/ 63.O 


- .1.7 


h~[ . Binder twine • ! 


/ 


27.2 ,: 


500 ft. 


• « 












4 29.2 


7 ■ 3.2 :: 


- 35.6 


• - H5.5 


hS. ?ish netting cottoi 








Co./oS.U :: 




: n.a. 


and linen 








Li .fe.O :: 






Sardine netting 


1 / 


Ho. 2 


■f 79.2 


1 • • 

• * 


- 7.2 




Gill netting 


! / 


10.7 


1 11.9 


1 * * 

• • 


- 17.5 ' 




U9. 3ugs,jute oriental 




n.a. 


: n.a. 


» in " • • 


n.a. 


: n.a. 


50. Cloth, bleached 








• • 
1 • • 






cotton, v -jC . 


\ ■/• 


S2.9 




: - 19. 8 :: 




: - 59.2 


Cot; on goods 






: / 62. 5 


1 • • 
1 • • 


- 16.7 




Print cloth 






: / 72.0 


• • • 

■ • • 


- 11.9 




51. (Joel (tiF.W. area) 




n.a. 


: - 2.3 


: 0.0 :: 


n.a. 


: 7-0. 


52. Bugs, grass and 








• • 






fiber 


: / 


35.0 


: n. a. 


: n.a. :: 


n.a. 


: n.a. 


53 • Salt con ion 




n.a. 


: bulk- 3. 


:( chit. -.6.0 :: 


/ h.3 


:(dut.-23.3 


5U. fertilizer (llaine) 


: / 


11.0 


: / 10.0 


: / 22.0 :: 


n.a. 


: - 59.0 


55* Brushes 




n.a.' 


: n.a. 


: n.a. :: 


n.a. 


: n.a. 


56. Cardboard 








* * • 






Novelties 




n.a. 


: n.a. 


: n.a. :: 


n.a. 


: n.a. 



3ased on data from Complai: 
Navigation of the United 



l j cs, Tariff Commission lleports, 
;t tes, arid Trade Journals. 



oreign Commerce and 



IT.A.r Not available. 



9829 



-156- 



V. CHANGES IN SELLING PRICES FOLLOWING NRA CODES OR AGREEMENTS 

Data were assembled (Table 10, col. 2) indicating the changes in the 
selling prices in 40 of the industry groups (47 items) involved in Sec- 
tion 3 (e) complaints, for periods preceding and following the adoption 
of NRA codes. The selling prices of newsprint paper and of chemical salt 
cake remained unchanged. In five of the industry groups, selling prices 
declined from 1,5 percent (wool felt hat bodies) to 31,5 percent (ped- 
aline hat braids). The average of the declines was 12,3 percent. 

Increases in selling prices were registered by .34 of the industry 
groups, ranging from 2.6 percent (umbrellas) to 79.2 percent (fish net- 
ting, sardine). A summary of these price' increases follows: 



Industry 
group s 

(number) 

8(9 items) 
11(12 items) 
11(16 items) 

4(5 items) 



Ranges of increases in 
selling prices 
( Percent) . 

2.6 to 10,0 
11.9 to 25.0 
26.1 to 52.8 
68.9 to 79.2 



Average within 


each range 


(Percent) 


6.5 


19. n 


32.1 


71.7 



VI. CHANGES IN THE '.COSTS OF IMPORTATION ', 

For 40 of the Industry grouios (46 item's) involved in Section 3 (e) 
complaints (Table 10, col. 3), the average' 'unit values of imports which 
are said to be in competition with the domestic production of the com- 
plainants were computed for periods before' and following adherence to 
NRA codes. The unit' values of the imports of matnhes, natural salt cake, 
and of coal (Northwest area) remained unchanged. For 11 of the com- 
modities or groups, practically all of which are imported from Japan, 
the unit values declines, ranging from 0.2 percent (bread, New England 
area) to 56,6 percent . (wood-cased lead pencils). The distribution of 
these declines is summarized below: - 



Industry groups 
(and items) 
(number) 



Range of declines' in 
Unit values o f imports 
(Percent) 



Average within 

each range 
(Percent). 



5 
4 
2 



0'.2 to 10.0 
17; to 28.7 

56 ";0 and56.6 



3.7 

21.7 



The unit values of imports increased in"26 of the industry groups, 
ranging from 0.3 percent (son goggles), to 67.8 (rice, from the 
Philippine Islands), mostly as a result of the 'declining exchange value 
of the dollar. The distribution of these increa.ses is summarized as 
follows: 



9829 



-157. 



Industry 
_grou£S_ 
(number) 

7 ( 8 items) 

7 ( 7 items) 

8 (11 items) 
4 ( 6 items) 



Range of increases in 
unit valu e s of i imports 
( Percent) 

0.3 to 10. 1' 
10.9 to 25.5 
26.7 to 50.0 
51.0 to b7.8 



Average 


within 


each 


range 


(Perec 


mt) 


4. 


9 


17. 





38. 


3 


59. 


7 



In order to present a long run view of the competition between imports 
and the articles of domestic production involved in Section 3 (e) complaints, 
during the NJLA. code period, data are shown in the last two columns of Table 
10, insofar as available, indicating the relation of selling orices and unit 
values of imports for that period to the levels prevailing in 1929. Ho 
uniformity of movement or relationship is evident, .but that was to be ex- 
pected in view of the important industrial changes, and wide fluctuations 
in the exchange values of currencies, and other factors, which occurred. 



9829 



-158- 

CH1P232. VI I. . 

PROBLEMS IOTOLVED IK THE AM.inSTSA.TIQN 
' OF ^SECTION 3 X.e 1 

I. DIFFICULTIES IN OBTAINING ADEQUATE AND ACCURATE INFORMATION 

In connection with the administration, of Section 3 (e), two circum- 
stances pointed to the necessity of obto.ining -. bod/ of information con- 
cerning each complaint sufficient in c'.et'.il to m' Ice reasonably clear the 
outline of the problem involved. The first w ,s the practical problem of 
handling the 1 ~.rge number of individual c.ses which might e'-sily have 
involved an amount of investigation of such overwhelming proportions as 
to result in a virtual stalemate of administrative machinery. The second 
grew oiit of the terms of- Section 3 (e), which clearly restricted its use 
to the maintenance of code standards .nd to relief from substantial in- 
terference from imports. 

In spite of the broad terms of Section 3 (c), certain definite types 
of information necessary for the effective handling of complaints were 
indicated by the provision that complaints might be ra de when articles 
were being imported in substantial quantities or increasing ratio to 
domestic production of any competitive article and on such terms or under 
such conditions as to render ineffective or seriously to endanger the 
maintenance of any code or agreement. In order to meet the requirements 
of this provision it was necessary to obtain and analyze: 

(a) Information disclosing the identity of the imported -.rticle 
or -.rticles ".nd the tariff status; 

(b) Sufficient information regarding the uses ".nd selling prices 
of both imported -.nd domestic ".rticles to indicate whether or not they 
were competitive; 

(c) Information indicating whether or not the volume of imports 
was substantial in ".mount; 

(d) Comparative statistical data with respect to imports ".nd 
domestic production for a period of sufficient length to indicate 
whether the ratio of imports to production was definitely increasing; and 

(e) Information regarding the terms and conditions of importation 
and sale, to indie. te their actual or probable effect upon the terms ".nd 
conditions provided in codes or agreements with respect to the production 
and marketing of the domestic products concerned. 

To provide a minimum of required information, a schedule was prepared 
(NBA Office Order No. 37) which outlined the type of information necessary 
to enable a decision on the question whether a Tariff Commission investi- 
gation was warranted, in accordance with the terms of Section 3 (e). In 
order to make it flexible and adaptable to v .rious industries and 
their particular problems, it included a statement to the effect that 
where it was not possible to supply the information called for in any 



9829 



— 1 p ,9— 

section of the schedule, the reason why it was not possible should he 
clearly and specif ieally explained, vfith reference to certain types 
of information, prevision was made for the presentation of representa- 
tive data. For example, prices for one or two t;rpes of grades of com- 
modities, and costs of production for a few producers which were re- 
presentative geographically, and of large and small producers. The 
information called for in the schedule nay he briefly summarized as 
follows: 

(a) Identity of products 

Under this heading information was requested with regard to the 
name and tariff status of the imported commodity, and the specific 
varieties, grades, or types of both the foreign and domestic articles 
involved. 

(h) Character of competition 

• In order to determine the character and extent of competition, in- 
formation was requested regarding (l) the comparability of imports and 
production, including the numerous factors which influence the uses and 
selling prices of the products; (2) the location of principal centers 
of domestic production, market areas, and channels of distribution for. 
the 'domestic products; and (3) the foreign sources, principal domestic 
market areas and distribution channels for the imported, articles. 

( c ) Trend of. imports and production 

Statistics covering imports and domestic production of the articles 
concerned for a period of sufficient length to indicate their normal re- 
lationships, and in sufficient detail (usually by months or quarters) to 
indicate recent changes, particularly during the period of the Recovery 
Act. 

(d) Degree of cc: roet it ion 

In addition to the changing ratio of imports to production, informa- 
tion was called for regarding the trend of production and prices of the 
types or grades most comparable with the imports which were the subject 
of complaint; the importance of the competitive article in the total plant 
or industry output; the amount of employment and payroll involved in the 
production of the comoetitive article; and information regarding costs 
of production for a period before and following the adoption of a code 
or agreement. 

( e ) Conditions of employment 

In order to permit an approximate analysis of the extent of the 
obligations assumed by producing companies or industries under the 
codes, and the actual or probable effect of imports, information was 
requested concerning employment and payrolls for periods before and 
following the adherence to HEA codes or agreements. 



9329 



-160- 

In practice, every reasonable effort was made to assist complainants 
in obtaining information which was available from official sources, in- 
cluding import statistics, technical information regarding the character 
and tariff status of import commodities, census data regarding the num- 
ber of establishments and approximate volume of production in census 
years, and price data gathered 'ay other government agencies. In fact, 
xn some cases where industrial statistics were clearly unobtainable, pre- 
liminary field, investigations were conducted. 

However, in spite of the urgency of particular problems with respect 
to which strong protests of actual or imminent injury from imports were 
made, and of the obvious necessity of a reasonable minimum of informa- 
tion, efforts were made by complainants in some cases to avoid the pre- 
paration of either part or all of the information essential in determin- 
ing whether investigations were warranted. 

The argument was often advanced that the government should assume 
the burden of proving that the problem was not such as to require reme- 
dial action, as against assumption by the complainants of the responsi- 
bility of making a prime, facie case for action. In some cases it was 
discovered by investigation that only partial information had been sub- 
mitted in support of complaints, either for the purpose of avoiding 
statistical or clerical expense, or for the reason that other or more 
complete -data would have tended to weaken the case. The absence of ade- 
quate industrial statistics occasioned delay in almost all cases by 
reason of the necessity of initially gathering and later supplementing 
information, often from widely scattered business units. However, apart 
from delay and loss of time, and in spite of the difficulties;, the ef- 
forts to obtain sufficient information to make clear the nature and seri- 
ousness of each problem were reasonably successful in most cases, largely 
because of the cooperation of representatives of the industries concerned. 

II. PHOBLEUS INVOLVED If DETEELilimiG THE NAT02E AHD EXTEfT 
Of C01.ZPETITI0K 

A. "."iv.t Part of Impo rts : .nci " : :i;.t Part of Domes tic production 
re Competitive? 



The question as to what imports compete directly enough with products 
of domestic industry to definitely affect the volume of domestic sales or 
production seems to be a simple one to persons inexperienced in tariff 
and foreign trade problems. In actual practice it is almost always 
difficult to answer. In many cases, both imports and domestic production 
are composed of a. \7ide variety of types, grades, and qualities, of pro- 
ducts, which sell at an equally wide variety of prices in the domestic 
market. The broad, generalization that imports, by and large, are defi- 
nitely higher in quality and price or definitely lower than the bulk of 
domestic production is not without' considerable justification. The ad- 
ministrative problem arises where it is necessary to delimit the area.s of 
competition in those cases involving considerable overlapping in the 
qualities, r.ses and prices of the products concerned. 

3. b'bat is a. "Substantial" Importation? 



9829 



-161- 

In Section 3 (e) cases it was necessary, after reaching a decision 
as to what imports were competitive with domestic production, to deter- 
mine whether imports were "substantial in quantity. " This problem is 
indicated by Table 2 in which is listed cases of formal complaint where 
the imports were less than 5 per cent of domestic production. Obviously 
the problem could be solved in particular cases only by comparing the 
volume of imports with the volume of domestic production or consumption 
for a sufficient period to establish what might be described as the 
"normal" relationship, if any. For example, an import of 10,000 units 
might be regarded as substantial if domestic production were 100,000 
units, but not if it were 10,000,000 tinits. The problem of reaching an 
administrative conclusion was often complics.ted by sharply opposing con- 
tentions on the part of importers and representatives of industry. The 
argument was often advanced that any imports were substantial, particu- 
larly during the operation of a program designed to increase domestic 
employment, production, and prices. 

III. PROBLEMS INVOLVED IN DETER.IING THE RATIO OE IMPORTS TO PRODUCTION 

Another major problem was that of determining to what extent the 
ratio of imports to domestic production should increase in order to justi- 
fy a formal investigation, and possibly restrictive action. The rule of 
reason would obviously require a significant increase in the relative 
importance of imports. Eor example, an increase from one-tenth to one 
per cent of domestic production could hardly be considered significant, 
but an increase from 5 to 10 per cent could, without question, be so con- 
sidered. Decision in particular cases could usually be reached only by 
careful study of the extent to which the relationship had fluctuated 
during a representative past period. 

Certain other problems which varied in importance from one complaint 
to another, but which need not be discussed in detail, were as follows: 

(a) What periods should be used as a basis for comparison in those 
cases v/here the factor of seasonality had an important influence, and 
where foreign and domestic seasons do not coincide? 

(b) How much effort should be devoted to determining whether an 
increase in the ratio of imports was the result of temporary or sporadic 
fluctuations, that is, whether it might be the accidental result of the 
sudden appearance or disappearance of a style demand, or a temporary sur- 
plus stock of available goods resulting from a favorable crop or temporary 
and perhaps injudicious overproduction? 

During 1S33, when the exchange value of the dollar was declining, 
there were sudden and sharp increases in the imports of particular com- 
modities, which resulted from the efforts of particular traders to antici- 
pate rising prices and the effects of that depreciation on the cost of 
importation. Uhen the exchange uncertainty diminished or disappeared the 
imports usually declined, with the result that the annual volume did not 
greatly exceed the normal importation. Obviously the increases represent- 
ed in part the efforts of importers to anticipate their demands and in 
effect to hedge the rising cost of foreign exchange. 



9829 



-162- 

(c) In making the comparison, should only current domestic produc- 
tion be used, or that production plus stocks on hand; or should the com- 
parison be made on the basis of the volume of domestic sales? After 
these questions were answered, should quantity or value data be used, 
and if value, whether at mill or wholesale? The importance of these 
questions was apparent when it was considered that during a period of 
rapid changes in production and prices, such as occurred during the Re- 
covery Program, the volume of output in particular cases might be in- 
creasing but its total value declining, or the value of output might be 
increasing and the volume declining. 

IV. PROBLEMS KVOLVED I1T MEASURING THE EFFECT OP CODES OR AGREEMENTS 
UPOIT COMPETITIVE RELATIONSHIPS 

The difficulties encountered in attempting to determine, even rough- 
ly, what part of imports and domestic production were competitive, what 
types of statistical data should be used, what periods were properly 
representative, and what consideration should be given to such factors 
as style, seasonality, and extraordinary and non-recurring conditions, 
constituted only a part of the problem of measuring the constantly chang- 
ing competitive relationships between imports and domestic production. 
But the problem could not be avoided if the action finally taken, whether 
favorable or unfavorable, was to be even approximately adequate and 
equitable in particular cases. 

A. Problems Invol v ed in Determining Costs or Cost Changes 

An effort to measure changing competitive relations obviously re- 
quired a study of costs of production and prices, since the effects of 
numerous competitive influences were reflected in them. In fact, costs, 
when determined with reasonable accuracy, were themselves the best avail- 
able measure of changing competitive relationships. 

The difficulty was inherent in the problem of computing costs. Por 
example, every industry which involved several companies or producing 
units was usually composed of high cost and low cost plants. The low 
cost units might be relatively new and efficient and the high cost units 
might involve obsolescent equipment or processes, or the differences in 
costs might be the result of other factors, such as size or financial 
strength, which might enable some companies to purchase raw materials in 
large quantities and on relatively favorable terms. 

In other cases, the problem of competition was limited roughly to a 
particular area, but which was difficult to delimit precisely. In such 
cases, and \7hen the costs varied from one plant to another, the problem 
was whether the cost comparison should include only those plants located 
in the center of the market area, or include some of those located on, 
near, or beyond the periphery of that area. 

One of the serious cost problems encountered during the Recovery 
Program was the effect of wide variations in the inventories of raw 
materials or stocks on hand, which, because of fluctuating prices, were 
often purchased at widely varying prices. The problem of cost determina- 
tion was further complicated by serious differences in the inventory 

9829 



-163- 

position of different companies within each industry or within each com- 
peting area. Under such conditions one company might he producing entire- 
ly from inventor;' - purchased at low prices, while a part or all of the 
stocks of other companies v/ere "being purchased on a rising market, result- 
ing in part from operations under other codes. 

Other factors involved in cost finding which were often encountered 
in the analysis of Section 3 (e) problems ere described in the following 
quotation from the present Vice Chairman of the United States Tariff 
Commission. 

11 * * * A multitude of Questions arise in regard to 
the items which should he allowed as component ele- 
ments of cost, and to these the answers are different 
in different plants and also for different purposes. 
Shall the owner's salary, for instance, he considered 
a, part of the cost of production; and if so shall he 
he allowed a salary at an arbitrary rate or shall the 
particular amount be allowed which he sees fit to claim? 
Shall the materials used be valued at their market 
price, or at what it actually cost to procure them? 
Shall interest be allowed on the value of plant end 
equipment; and if so, is it proper to take the value of 
the plant as a "going concern, " or is it better to take 
as the value for estimating cost the outlay of the own- 
ers in acquiring and improving it? Such questions sug- 
gest that costs can be made to seem either high or low 
''oy the system of accounting which is followed. It might 
be possible in time to standardize the system and thus 
in a somewhat arbitrary way to reach a cost per unit of 
product in some industries that consist of simple and 
independent processes resulting in a single product. 
But such industries are relatively few. Lodern indus- 
trial processes are commonly so organized and integrated 
that they contribute jointly to the completion of a num- 
ber of different commodities. The accountant is usually 
faced, therefore, with the problem of joint costs, and 
the solution accepted are purely arbitrary and differ 
widely from one plant to another. 

"In many branches of manufacturing the problem of 
joint costs is even more confusing than in agriculture. 
In its study of the dye industry in 1919 the Tariff 
Commission found that different producers used five 
separate bases for distributing expenses, namely, the 
amount of labor directly used on a given product, the 
cost of the raw material going into it, the amount of 
superintendence chargeable to it, and the sales value 
of the product, and the capital investment imputed to 
it. .naturally the costs showed great diversity * * * *. 
It is true that the dye industry furnishes an extreme 
illustration of the difficulties involved in cost find- 
ing. But after all it is only a question of degree * * *. 



"Very often costs vary because of unequal climatic 



9829 



-164- 

conditions, qualities of soil, advantages of loca- 
tion, or availability' of fuel or water power. Quite 
obviously they are strongly affected by the efficiency 
of management, which differs widely from -olant to olant. 
Sometimes also the variation is caused by what appears 
to be a mere element of chance. Two cloth manufactur- 
ers, for example, may be equally well situated and 
equally efficient, using the same materials and prac- 
tically the same processes so that their products show 
no appreciable difference in texture or quality. Yet 
the fabrics turned out 1>-j o*ie of them happen to please 
the public fancy by reason of some peculiarity of color 
or design, and the mill producing them runs throughout 
the season at full capacity. The fabrics of the other 
fail to meet the whim of prevailing fashion; orders for 
them ere small and the mill's output is corresponding- 
ly reduced. At the end of the season the cost per mill 
might approach equality, but the cost per yard of these 
similar fabrics would show a wide divergence. * * * * . 

"There is, in fact, no such thing as a single 
"domestic cost of production" for any commodity. There 
are almost as many different costs as there are produc- 
ers; end the question arises: which should be taken for 
comparison with a foreign cost to find a standard for 
measuring duties? It is obvious that the higher the 
f igure taken the greater will be the proportion of the 
industry protected. But no one would advocate duties 
high enough to protect producers whose high costs are 
due to unwise location, inadequate equipment, extrava- 
gant methods, or poor management. On the other hand, 
if the lowest cost be taken it might well result in no 
■ duty at all, for the lowest domestic costs are some- 
times less than are the lowest costs abroad. "(*) 

V. THE PHOBLBLi OP DEEEHLilHIHG THE EFFECT OF SUCH FACTORS AS 

THOSE INVOLVED III THE TRADE PRACTICE PROVISIONS OF CODES 

One aspect of the changing competitive relationships between im- 
ports and domestic production during the code program which received 
relatively minor attention in connection with the administration of Sec- 
tion 3 (e) was that of the effect of code provisions officially estab- 
lishing a definite pattern of "fair" trade practices or prohibiting 
certain types of "unfair" practices. In this connection it was practical- 
ly impossible to develop a coherent picture of the extent to which such 
provisions affected the operations of trades or industries, because of 
the lack of information regarding the trade practices which prevailed 
prior to the codes, and because of the varying degree of compliance with 
such provisions as between trades and industries or among the business 
firms of which particular trades or industries were composed. The prob- 
lems which arose in this field may be summarized as follows: 

(*)■ Page, Thomas Walker, Li nking the Tariff in the United State s, 
(Hew York, McGraw-Hill Book Company, Inc., 1S24) pp. 33-95. 

982S 



-165- 

A- Provisions Affecting Price Relationships 

One of the principal problems which arose under the code program 
was the result of provisions for the regulation of prices in the domestic 
market. These had the effect of introducing considerable rigidity with 
respect to domestic prices as compared with imports which were not so 
regulated. As a consequence, there were numerous instances of complaint 
by particular business firms to the effect that they were losing sales 
or contracts to importers who were in a position to make quotations, or 
change their quotations to figures less than the minima prescribed under 
the codes or those filed under code provisions which prohibited their 
change for a specified period. 

In a few cases importers, where it was to their advantage to do so, 
cooperated with the domestic code program to the extent of complying 
with the price provisions. 

< 

3. Other Unfair l.Iethods of Competition 

Other complaints received were related chiefly to such matters as 
design piracy, commercial bribery, and misrepresentation of merchandise. 
In these cases it was impossible to determine whether the practices com- 
plained of were more prevalent in import or domestic trade, or to deter- 
mine the- extent to which they affected the competitive position of 
domestic industry in relation to imports. 



9829 



-166- 



PART C: IMPORTS AND IMPORTING- UNDER NRA CODES 



9829 



-167- 

C HAPTER 1. 

PROVISIONS OF THE ACT RELATING TO IMPORT REGULATION 

The regulation of importing "by means of codes was clearly within 
the purview of the National Industrial Recovery Act. The declaration 
of policy begins with the statement that "a national emergency* * * 
which burdens interstate and foreign commerce * * * is hereby declared 
to exist" and that "it is hereby declared to be the policy of Congress 
to remove obstructions to the free flow of interstate and foreign com- 
merce which tend to diminish the amount thereof". It was provided in 
Section 3 (a) that "upon the application to the President by one or 
more trade * * * groups, the President may approve a code or codes of 
fair competition for the trade * * * represented by the applicant or 
applicants" and in Section 3 (b) that "after the President shall have 
approved any such code * * * * any violation * * * in any transaction in 
or affecting interstate or foreign commerce shall be deemed an unfair 
method of competition in commerce within the meaning of the Federal 
Trade Commission Act, as amended * * *" . 

Any doubt about the application of the terms of the Act to 
foreign trade is clearly dispelled by the language of Section 7 (d) 
which provided that "as used in this title * * * * the terms 'inter- 
state and foreign commerce' and 'interstate or foreign commerce' in- 
clude * * * trade or commerce among the several States and with foreign 
nations , or between the District of Columbia or any Territory of the 
United States and any State, Territory, or foreign nation , or between 
any insular possessions or other places under the jurisdiction of the 
United States, or between any such possession or place and any State 
or Territory of the United States or the District of Columbia or any 
foreign nation , * * *" . 

The necessity of establishing effective control of imports was 
the subject of extended debate during consideration of the Act in Con- 
gress. However, the discussion related chiefly to the question of im- 
port restriction*, which had only recently been discussed at length in 
hearings on the Black-Connery 30-hour week bill, as distinguished from 
import regulation. Mr. Connery expressed the opinion that the 30-hour 
week bill was rejected "because it applied to foreign manufacturers as 
well as the American manufacturer, forcing the foreigner to work a 5- 
day week 6-hour day if he wanted to ship his goods to us in commerce." 
After adding the statement that "it would be obviously unfair to force 
our workers and manufacturers to work only 5 days and 6 hours daily 
and then allow the foreigners to work any number of hours at low wages 

* See Part E of this report, "The Administration of Section 3 (e) of 
the National Industrial Recovery Act, " for more complete discussion. 



3829 



-168- 



and then compete in our markets * * *":, he (Mr. Connery) called at- 
tention to Section 3 (b) which, in his opinion, carried "the same 
proposition" as did the 30-hour week bill. "The Cramers of this bill," 
he said, "probably thought they were getting away from the foreign-im- 
■oort problem * * * but it is in this bill * * *" . * 






1 



*R 4261. See quotation from Section 3(b) above, 



9829 



-169- 

On the question regarding the application of the Act to trades, 
e.g., wholesale or retail trades, Mr. Richberg made the following 
statement before the Ways and Means Committee: 

"As far as I can understand the definitions, it appears to me 
to cover all forms of trade and industry. May I say in the 
broadest way, industry may be regarded as the productive side 
and trade as the distributive side." 

Importing is clearly a trade or a part of "trade" considered 
as the "distributive side" of economic activity. 

The exception from the provisions of the anti-trust laws, provided 
in Section 5 of the National Industrial Recovery Act, of any ap-oroved 
code and of any action complying with the provisions thereof, had the 
effect of exempting imports and importing, when officially codified, 
from the provisions of the Wilson Tariff Act of August 27, 1894, 
amended February 12, 1913, prohibiting any importing combination having 
as its object an increase in the price of any imported article, or any 
domestic manufactured article into which such import might enter. 
Doubtless as a result of the long period of declining raw material 
prices, the matter of importing combinations, having as their -purpose 
the increase of the prices of imported articles, seemed in 1933 
relatively less important than it had in former years. Attention was 
largely focused on the opposite question of competition from low import 
prices resulting from depreciated currencies and from lower standards 
of production in foreign countries. 

The important question remained whether the authorized regulation 
of importing by means of codes was sufficient to protect domestic industry 
from competition of products manufactured or processed in foreign coun- 
tries under conditions not comparable with those contemplated in the 
domestic field. It may be argued that authority sufficient for this 
purpose was provided for in the following language of Section 3 (a): 

"The President may, as a condition of his approval of any such 
code, impose such conditions * * * for the protection of con- 
sumers, competitors, employees, and others * * * as the President 
in his discretion deems necessary to effectuate the policy herein 
declared." 

However, the fact that Congress was not satisfied that regulation 
of importing by means of codes was sufficient protection against inroort 
competition is indicated by the subsequent incorporation of a special 
provision in the Act (Section 3(e)) authorizing the President, after 
the finding of certain facts, to direct that imports "be permitted 
entry into the United States only upon such terms and conditions and 
subject to the payment of such fees and to such limitations in the 
total quantity * * * as he shall find it necessary to prescribe in order 
that the entry thereof shall not render or tend to render ineffective 
any code or agreement * * * " and that "in order to enforce anj' limita- 
tions imposed on the total quantity of imports * * * the President may 
forbid the importation * * * unless the importer shall have first obtained 
from the Secretary of the Treasury a license pursuant to such regulations 
as the President may prescribe * * * ". As a result of this provision, 

QR9Q 



and of efforts by domestic groups to set up restrictive measures under 
codes, tlie national Recovery Administration subsequently adopted the 
policy that code pro v isi ons, the purposes of which were directly or 
indirectly to restrict or handicap i po-tations, should be avoided. 
This policy was defined in an 1TPA Office Memorandum dated November 
17, 1933, as follows: 

"This does not mean that a provision is to be condemned merely 
because it may possibly affect imports, regardless of whether 
or not such is its purpose.. However, even if a provision 
does not have such purpose and is otherwise justifiable, 
yet if, in effect, it does restrict or handicap imports, 
it should not be approved unless the importers have been 
notified and given an opportunity to a.ttend the hearings 
and present their views and objections. In all cases, if 
there is any doubt as to the propriety or purpose of the 
provision in view of its effect on imports, that portion of 
the provision should be eliminated and the industry advised to 
seek the direct remedy, provided for by Section 3(e) of the Act. 

This Part C is limited to the regulation of imports and importing 
under KRA codes, and the effect thereof. Chapter II presents a brief 
survey of the importance of imports in the commerce of the United States, 
the commodity composition of inroorts, and a statistical account of 
those aspects of imports and importing which form the basic pattern of 
the problem of regulation by means of code provisions. In Chapter 
III an effort has been made to analyze the functional characteristics 
of importing, to indicate the operations which distinguish it from 
the broader field of domestic distribution, and to delimit the area of 
importing from the general field of industrial operations. 

Against the background of information concerning the importance 
and composition of imports; and the characteristics of the importing 
business, there is presented in Chapter IV an analytical review of the 
place of importers in the system of KEA codes, the results of scattered , 
coverage in various industry codes, and the acconvclishments of importers 
under codes set up for them exclusively. The final chapter of this 
part of the study constitutes a cross-secuion analysis of provisions 
affecting importers in various industry codes and a summary account 
of HEA experience in dealing with particular and significant import 
problems in connection with codes and code provisions. 



9829 



-171- 

CHAPTER II 
I1IP0RTA1TCE AND COMPOSITION 0? I". PORTS 



I. IMPORTANCE OP IMPORTS IN TIM I TED STATES COMMERCE 

In a survey of the "broad subject of imports and importing under 
NRA codes, it is desirable at the outset to form some idea of what 
inroorts are, their importance in the national economy, and of those 
aspects of the "behavior of imports which are significant in connection 
with the problem of their regulation by means of codes. 

A. Imports in Relation to Domestic Production and Wholesale Trade 

The ratio of the total value of imports, not including customs duty 
or transportation costs, to the total net value of domestic production 
of movable goods, not including transportation costs, amounted to 9.1 
per cent in 1929 and 4.8 per cent in 1933. 

In the wide sampling of wholesale business covered by the Census 
of American Business for 1933, gross aggregate sales of firms in the 
"importer" and "import agent" categories represented collectively about 
2.5 per cent of the total sales for all types of wholesale operation. 
The corresponding ratio in the 1929 Census of Wholesale Distribution 
was 2.7 per cent. 

B. Inroorts as a Source of Raw Materials and of Consumer Goods 

Approximately one-fifth of the raw materials utilized by domestic 
industry are obtained from foreign sources. The Department of Commerce 
has worked out detailed calculations which show 20.5 per cent for 1929, 
21 per cent for 1931, and 17.2 per cent for 1933. The rubber industry 
depends entirely upon imports and the steel industry imports numerous 
metals such as manganese, nickel, chromium, tin, vanadium, and graphite 
for its special alloys. The electrical industry depends upon imports 
almost exclusively for tin, tungsten, silk, mica, shellac, rubber, feld- 
spar and oriental gums. The leather industry imports a good share of its 
cattle hides and calfskins, and a predominant share of its sheepskins 
and goatskins. The pottery and glass industries depend largely upon 
imports for certain grades of clay, and for such materials as metal 
oxides, aluminum, antimony, and lac. Other industries which draw heavily 
upon foreign sources for materials, include paint and varnish, drug, 
photographic, vegetable oil, ink, textiles, and millinery. American 
agriculture is considerably dependent on foreign sources for such fert- 
ilizer ingredients as nitrate of soda, sulphate of, ammonia, bone dust, 
and muriate and sulphate of potash, as well as for binder twine and burlap, 

A number of important foodstuffs, such as coffee, bananas, cocoa, 
tea, and spices, come exclusively from abroad, and are not directly 
competitive with domestic foods; they either are not adapted to growth 
in our climate or are cultivated at such high costs as to fail to justify 
domestic production ample for the national needs. 



-172- 

The balance of importations, comprising products of foreign manu- 
facture - competitive to a greater or less degree with those of domestic 
manufacture - represents about 3 per cent of the aggregate value of 
the domestic out out of finished products, as reported by the Census of 
Manufacturers. Calculations similar to those made by the Department of 
Commerce, give 2.5 per cent for the ratio of imported finished products 
(value) to all domestic finished manufactures in 1929, 2.9 per cent for 
1931, and 3 per cent for 1953. 

The larger competitive classes of manufactured or processed con- 
sumer goods in the import list comprise liquors and wines, textile 
fabrics, cheese, paper, pottery, and olive oil. Among foreign products 
imported for domestic industrial consumption, but which are competitive 
with similar products available from domestic sources, are woodpulo, 
newsprint, vegetable oils, sausage casing, industrial chemicals, and 
pig iron. 

C . Imports as a Source of Federal Revenue 

Customs receipts yielded well over 40 per cent of total Federal 
revenue(*) in pre-war years, running usually somewhat ahead of internal 
revenue collections. As a result primarily of the introduction of taxes 
on income and profits, and consequent sharp rise in aggregate revenue, 
the ratio of customs receipts to total federal revenue has been somewhat 
below 15 per cent in recent years. After rising from an annual average 
of approximately $300 million in 1911-15, customs revenues rose to an 
all-time high of $605 million in 1927. Subsequently, they declined 
more or less steadily to $250 million for 1933. 

D . Comparison of Imports and Exports 

In the past, United States imports have been exceeded regularly by 
exports in total annual value. After mounting to an abnormal average of 
$3 billion for the period 1915-1920 including the war years, the 
"favorable" trade balance (**) averaged roughly $900 million in 1921- 
1925 and $700 million in 1926-1930. Daring these successive intervals, 
the value of exports was larger than imports by 95 per cent in the first, 
26 per cent in the second, and 17 per cent in the third. The percentage 
excess of exports remained within the range of 14 to 21 per cent from 
1929 through 1933, while the absolute amount of the "favorable" trado 
balance was dropping from $800 million to $200 million. 

The excess rose to 28 per cent in .1934, and the absolute "favorable" 
balance to $465 million. However, when expressed in dollars of pre- 
devaluation gold content, imports declined from $1,119 million for 1933 
to $975 million for 1934 and exports from $1,280 million in 1933 to 
$1,253 million in 1934, the "favorable 1 ' balance (in gold) amounting 
to onl3 r $161 million and $278 million, respectively, in those years. 



(*) See Table I in Appendix to Part C. 
(**) See Table II in Appendix to Part C. 



9829 



-173- 
E. Course of impo rts 

Tattle 1 indicates the manner in which United States imports have 
increasod almost 100-fold since 1800, to a peak of $4,431 million in 
1926, After exceeding the $4 "billion level each year from 1925 through 
1929, they dronped steadily to the low of $1.3 billion in 1932 and then 
recovered to $1.65 "billion in 1934. 

The indices of trend sho T m in Table I indicate that the drop in value 
was more precipitous than the drop in quantity, the value index reaching 
43 in 1934 as compared to 86 for the quantity index based on 1923-25 
as 100; in fact, the quantity index stood higher in that year than the 
Federal Reserve Board index of industrial production (79). Similar 
indexes for the unit value of imports stood at 50 in 1934 as compared to 
75 for domestic wholesale prices. 

II. FOREIGN CONTROL OVER IMPORTS 

The market supply of a number of commodities on which domestic 
industries are considerably dependent, is subject to some degree of 
control either by the foreign producers, or by the governments of the 
dominating country of source. Sisal , for binder twine, is controlled 
through a combination of producers, reinforced by legislative action 
of the Yu caftan government, potash is controlled by combinations of 
German and French producers. Crude Rubber is controlled in part by 
legislation and partly by voluntary combinations of producers in the 
British and Dutch colonies. Q uinine is. controlled by a combination of 
Dutch producers. ' Tin is controlled by an international combination of 
producers. Quebracho extract is now controlled ^y the Argentine govern- 
ment; an earlier control had been exercised by a combination of producers. 

III. COMPOSITION OF IMPORTS • 

A. Economic Classes and Principal Commodities 

In 1934, 28 per cent of our imports (in value) comprised crude 
materials, 15 per cent were crude foodstuffs, and 19 per cent were semi- 
finished products; thus an aggregate of 62 per cent may be considered 
to have been brought in to meet the needs of domestic industry. Finished 
products made up the balance of our imports (38 per cent), including 17 
per cent in the form of prepared foods and 21 per cent as finished products. 

Table 2 tra.ces the course of our imports in each of the five economic 
classes since the period 1910-14, and shows also the degree of shift 
from one class to another since that period. It shows that imports, 
classes according to degree of manufacture, have followed a comparatively 
uniform trend. While the total values have, of course, varied from 
year to year, the relative importance of each class has remained fairly 
constant. The only shift of real significance is an increase in imports 
of foodstuffs, both crude and prepared, at the expense of other crude 
materials. The crude materials group doubtless will revert to its former 
relative importance with further recovery of domestic industrial production. 



982? 



-1?-; 



TABLE I. 



TREND IN UNITED STATES IMPORTS (VALUE); INDICES OF QUANTITY, 
VALUE, USD UNIT VALUE, AND OF I7HOLE3ALE PRICES, FOR 
SELECTED PERIODS SINCE 1.793 AND FOR YEARS SINCE 

1923 







Ind 


Lees of Trends based on 1923-25 ^100 


Yearly- 






: General 


Average 


Imoort 






: Domestic 


or year 


Value 


: GenEral Imports 


: Wholesale 




C$1000) 


: Value 


: Quantity, 


• Unit Valu 


s Prices a/ 


1791-1800 


! 59,185 










1841-1850 


121,123 


: 3 


: - ! 


: 


1891-1900 


763,328 


: 20 




51 


1901-1910 


•1,158,500 


30 


— 


_ 


62 


1913 


: 1,313, 008 


47 


62 : 


75 


69 


1919-1922 


•3,701,180 


95 


84 : 


115 


121 


1923 


3,792,056 


98 


100 : 


98 


100 


1924 


3,609,963 


93 


97 : 


96 


97 


1925 


4,226,589 


109 : 


103 : 


106 : 


103 


1926 


•4,430,888 


114 : 


110 : 


104 : 


99 


1927 


'A, 184,742 


108 : 


112 : 


96 : 


95 


1928 


•4,091,444 


106 : 


113 : 


94 : 


96 


l? n 9 


4,399,351 • 


114 : 


129 : 


88 : 


95 


1930 


3,060,908 : 


79 : 


109 : 


72 : 


86 


1931 


:2, 090, 635 : 


54 : 


98 : 


55 : 


72 


1932 


•1,322,774 : 


34 : 


79 : 


43 . : 


64 


1933 


•1,449,55^ J 


37 : 


86 : 


43 : 


66 


1934 


:1, 655,049 : 


43 : 


86 : 


50 : 


. 75 



Source of Absolute Data: Statistical Abstract, 1934. 

a/ Bureau of Labor Statistics indices shifted from 1926 



9829 



-175- 



Table 2 Trend in imports (value) by economic classes, and 
and trend in percentage ratio of each group to 
total, for selected periods from 1913 to 1924, 
and for years since 1926 



Period 



Crude 
Materials 



Crude 
Foodstuffs 



prepared : Other Manufactures 
Foodstuffs ; Sem i ; pinishe d 



Average 

1910-1914 
1915-1919 
1921-1924 

Year 

1926 
1927 
1928 
1929 
i930 
1931 
1932 
1933 
1934 



Average 

191J-1914 
1915-1919 
1921-1924 

Year 

1926 

1927 

1928 

1929 

193J 

1931 ' 

1932 

1933 

1934 



595 
1,309 
1,176 



1,792 

1.6C1 

1,467 

1,559 

1,002 

642 

358 

418 

460 



35 

41 
36 



40 
38 
36 
35 
33 
31 
27 
29 
28 



Value in millions of dollars 



203 
312 

354 



540 
505 
550 
539 
400 
305 
233 
212 
■246 



194 
355 
452 



418 

451 

406 

424 

293 

222 

774 

205 . 

271 



307 
444 
573 



804 
750 
763 
885 
608 
372 
217 
2'J2 
307 



380 
364 
701 



877 
879 
906 
994 
757 
549 
341 
322 
350 



Percentage ratio of each group to total 



12 

12 

11 



12 
12 
13 
12 
13 
15 
18 
15 
15 



11 
14 

14' 



9 
11 

10 
10 
10 
11 
13 
14 
17 



18 
18 
18 



18 
18 
19 

20 
20 
18 
16 
20 
19 



23 
14 
22 



20 
21 
22 
23 
25 
26 
26 
22 
21 



Source; Absolute figures from Statistical Abstract, 1934. 



9829 



-176- 

The trend in quantity and unit value of imports of each of these 
five economic classes is shown in Table 3, in the form of indices based 
on 1923-25. In 1929 quantity indices were highest for finished products 
(141) followed by prepared foodstuffs (137) and crude materials (133), 
while crude foodstuffs had risen only to 112. Considering the quantity 
trends from 1929 to 1934, crude foodstuffs had dropped only 8 points 
to 104, and prepared foods only 12 points to 125, while sharp drops 
occurred in crude materials (133 to 83), in semi-manufactures (127 to 60) 
and in other finished products (141 to 82). 

Comparison of the separate indices of trend in unit value shows a 
fairly steady rise in the crude foodstuffs group from the base period 
to 1929 (100 to 113) while the other classes were declining from 2 to 
37 points. However, from 1929 through 1934, the extent of decline in 
the unit value of crude foodstuffs (113 to 57) was sufficiently great 
to bring that index down near the others; the crude materials index 
was lowest (37), and that for semi-finished products was highest (67), 

Table 4 indicates the relative importance of the twenty leading 
items of crude materials and raw foodstuffs, the twelve leading semi- 
manufactures, and the nineteen leading finished manufactures in 1934 in- 
ports, accounting respectively for 98 per cent, 68 per cent, 7C per 
cent of the total value of all imports in these three larger groups. 

Coffee led the list of individual items of import in 1934 on value 
basis, accounting for over 8 per cent of the general aggregate. Cane 
sugar and crude rubber followed, at 7 and 6 per cent respectively. 
After newsprint (4.7$) and raw silk (4.4$) the following items ranged 
downward from 2.7 to 1.2 per cent of total import value: tin semi-manu- 
factures; wood pulp; furs, undressed; distilled liquors; hides and skins; 
unmanufactured copper; burlaps; vegetable oils and fats, inedible, ex- 
pressed; crude petroleum; tobacco, unmanufactured; bananas; fish and. fish 
products; cotton cloth, wearing apparel and laces. The five outstanding 
import items (coffee, sugar, rubber, newsprint, and silk), represented 
over 30 per ^cent of total import value', and the first 18 items accounted 
for practically 55 per cent. 

For the reason that certain commodities bulk heavily in United 
States imports, wide fluctuations in the volume of their importation 
appreciably' affect s the activity of importers specializing in those 
lines. Based on the annual average volume of imports during the 
period. 1922-26 as 100, index numbers stood in 1910-14 at .9 for news- 
print and crude petroleum, 13 for crude rubber, 42 for raw silk, 50 
for cane sugar, 54 for rubber, 65 for coffee, 68 for tin, and 122 for 
hides and skins. The peak year in volume of importation of all of these 
commodities was 1929, with the exception of coffee (1931). Similar index 
numbers stood in 1929 at 260 for crude rubber, 173 for newsprint, 154 
for raw silk, 143 for copper, 125 for tin, 118 for hides and skins, and 
112 for cane sugar. In 1934 these indexes had declined to 158 for news- 
print, 130 for crude rubber, 111 for coffee, 100 for raw silk, 68 for 
cane sugar, 58 for tin and copper, 46 for hides and skins, and 44 for' 
crude petroleum. 



9829 



-177- 



Table 3. Indices of Trend in Quantity and Unit Value of Imports, 
"by economic classes, 1913 and 1923-1934. (1923-25=100) 









Semi- 




: Other 




Crude 


: Crude : 


munu- 


: prepared 


: Finished 


Period 


: Materials 


: Foodstuffs: 


Factures 


: Poods 


: Products 



I 





• 58 


indices_pf Quality 




1913 


67 ;'. 


64 


74 


84 


1923-25 


• 100 


100 :. 


100 


100 


100 


1926 


109 


107 


112 


122 


114 


1927 


: 106 


107 : . 


105 


111 


120 


1928 


116 


108 :. 


113 


112 


118 


1929 


133 


112 : '. 


127 


137 


141 


1937 


108 


113 : '. 


102 


114 


121 


1931 


102 


109 : ' 


79 


97 


103 


1932 


81 


99 : ' 


57 


92 


79 


1933 


91 


100 : 


73 


102 


79 


1934 


83 


104 : 


65 


125 


G2 


• ■ * 




Indice. 


s of Unit Value 




1913 


72 


77 : . 


75 


; 54 


: 64 


1923-25 


• 100 


100 : . 


100 


100 . 


100 


1926 


: 112 


119 : 


101 


: 69 


29 


1927 


94 


111 : 


ioo 


82 


! 95 


1928 


86 


120 : 


95 


: 73 


100 


1929 


80 


113 : 


98 


: 63 


! 931 


1930 


: 63 


83 : 


84 


: 52 


: 81 


1931 


: 43 


65 : 


67 


; 46 


- 69 


1932 


30 


55 : 


53 


: 38 


: 56 


1933 


: 31 


50 : 


57 


: 40 


: 53 


1934 


37 


57 : 


67 


45 


I 56 



Source: "Summary of United States Trade with the World, 1934." 
Department of Commerce. 



9829 



-173- 



IABLE IV. Rating of chief import commodities within each 

economic class, on the basis of 1934 import value. 



■ , 


Hi 11 ion 


: Million 


Item 


Dollars 


: Item Dollars 


Crude 


materials and raw foodstuffs 




Coffee 


133.2 


: Tea 


16.3 


Rubber, crude 


101.5 


: Flaxseed 


15.0 


Silk,: raw 


71.8 


: Wheat 


14.5 


Furs, undressed 


36.2 


; Nuts 


10.9 


Hides and shins 


35.3 


: Spices 


10.7 


Copper, unmanufactured 


27.7 


: Raw cotton 


9.5 


Petroleum, crude 


.- O • J 


: Oilseeds, except flax 


8.2 


Tobacco,, unmanufactured 


24.9 


: Pilp wood 


7.3 


Bananas 


24.1 


: Herbs, roots drugs, f. 


6.6 


Cacao beans 


19.4 


: All other items 




Wool, unmanufactured 


16.8 


! in class. 


14.4 




Semi-manuJ 


?actures 




Tin bars, blocks, etc. 


44.8 


! Sausage ce.sings 


8.9 


Wood pulp 


41.9 


Bristles 


4.7 


Vegetable oils and fats, 




Vegetable oils, essent- 




inedible 


26.2 


ial or distilled 


4.5 


Fertilizer materials 


24.9 


Steel semi-manufacture 


s 4.2 


Industrial chemicals 


17.5 - 


Cork Shapes 


4.1 


Precious stones, unset 


16.8 


All other items 




Nickel semi-manufactures 


11.6 


in class 


97.2 




Manufacture? 


L products 




Sugar 


117.6 


Paper( except newsprint' 


9.2 


Newsprint 


76.3 - 


Wool fabrics & apparel 


8.8 


Liquors. and wines : 


49.1 : 


Pottery- 


7.2 


Jute burlaps 


27.5 : 


Olive oil, edible 


7.0 


Pish and products 


23.1 : 


Molasses, not for food 


6.2 


Cotton fabrics & Products 


20.3 : 


Steel mill products 


6.1 


Linen products 


17.5 : 


Hat s , of st raw, gras s , <? : 


6.1 


Artworks & antiques 


16.2 : 


Published material 


5.9 


Sawmill products 


11.8 : 






Cheese 


10.7 : 






Petroleum 


10.6 j 


All other items in 








class 133.9 



Source: Based on Forei.-cn Commerce and Navigation. Imports for con- 
sumption 

Note: Total Imports for 1934 amounted to 1,636 million dollars. 



5829 



-179- 

B. Sources of Import s 

Due primarily to the fact that American manufacturers and merchants 
have been gradually developing direct connections with original sources 
of supply for raw materials, and depending less upon entrepot centers; 
in Europe, the percentage of our total imports which is now .drawn from 
Europe has declined form 51 per cent for the period 1896-1914 to '30 per 
cent in 1930-34. North America increased its percentage from 19 to 25 
per cent; South America, from 12 to 14 per cent; and Asia, from 16 to 28 
per cent. The increased imports of . grain and forest products from North 
America and direct receipts of rubber and other tropical products have 
teen important factors in this decided shift away from Europe. During 
the same period the percentage of imports from the United Kingdom has 
dropped from 17 to 7; Germany, from 11 :to 6; France, from .8 to 4; Brazil, 
from 7 to 5; and Cuba, from 6 to 4. In contrast, Canada increased its 
percentage from 6 to 13; Japan, from 5 to 9; and British far eastern 
possessions-, from 5 to 7.(*) 

Table. 5 shows, the shifts of imports of each economic class from one 

source to another during the -past 30 years. It will he noted that Asia 

and Oceania now supply over 55 per cent of our imports of crude materials 

as against 26 per cent at the start of the period. South America has 

maintained its position- at around 13 per cent. in crude materials, hut 

Europe has dropped from 39 to 18 per cent and North America, from 18 

to 10 per cent. --*'''... 

i 

The shifts in sources of foodstuffs are much less pronounced, al- 
though Asia and Oceania have moved up from 13 to 21 per cent s almost 
entirely at the expense of Europe. 

Europe supplied almost two-thirds of the imports of. semi-manu- 
factures at the start of the period, but its share has declined to 43 
percent while North America moved up from 18 to 24 per cent and the Ear 
East from 11 to 22 per cent. South America advanced from 8 to 13 per 
cent in the middle of the period but moved back to 8 per cent. 

In finished manufactures Europe has dropped from 82 per cent to 49 
per cent, while outstanding increases were registered by North America, 
from 6 to 29 per cent, and the Ear East, from 12 to 21 per cent. 

C. Seasonality in -Imports 

Seasonality is a very important factor in the importation of many 
commodities. Imports of hides and skins usually bulk large in the second 
quarter of the year, and of undressed furs between February and May. 
Imports of fruit usually rise to a peak in May, taper off in the summer 
months, and then rise again in the fall. Raw wool enters in greatest 
volume during the early months of the year, while raw silk imports are 
at their peak in September. (**)' 

(*) See Table III in Appendix to Part C. 
(**) See Table IV in Appendix to Part C. 



9829 



-180- 



Tahle 5. Trends in percent each continent has furnished of total 
United States Imports in each economic class; selected 
periods since 1905. 



J 



Yearly 


Northa/ 


South : 












Avera.ge 


America ■ 


America : 


Europe ; 


Asia & : 








or Year 








Oceania : 


Africa : 


World 


$ 








Crude Material: 


3 






1905-09 


17.9 


13.4 : 


38.9 : 


26.4 : 


3.4 : 


100 




1910-14 


19.2 : 


• 13.3 ; 


38.6 


25.4 


3.6 


100 




1921-25 ■: 


■ 15.9 


10.2 : 


19.6 


50.7 


3.6 


100 




1926-30 ; 


12.1 : 


11.5 ! 


17.3 


55.9 


3.2 


100 




1933 j 


10.3 : 


13.8 : 


21.0 


51.6 


3.2 


100 




1934 


9.8 j 


12. 9 : 


18.4 


55.2 


3.7 


100 










Foodstuffs 








1905-09 


36.5 


24.4 


25.5 


13.4 


' . .1 


100 




191J-14 


39.4 


24.9 


25.4 


10.2 


: .1 


100 




1921-25 


48.8 


24.8 


12.9 


12.1 


1.3 


100 




1926-30 


38.4 


31.5 


14.2 


13.8 


2.0 


100 




:l933 


28*3 ' 


30.6 


14.3 


24.7 


' 2.1 


100 




1934 


33.1 


26.6 « 


17.4 
Semi ; _^_ 


21.0 
■nanufactur 


2.0 
= s 


100 




1905-09 


18.2 


' 7.7 


63.3 


10.7 


■ '"y 


: 100 




1910-14 


15.1 


8.7 


63.0 


: 12". 1 


' r 1 


: 100 




1921-25 


23.5 


12.9 


43.5 


17.9 


• 2.2 


• 100 




1926-30 


24.6 


11.1 


42.7 


• -Ld.9 


: 3.2 


: 100 




1933 


22.1 


5.0 


49.8 


: 21.2 


l, 1.9 


: 100 




1934 


24.2 


8.3 


43. 5 
Finished 


: 22.1 
manufactu 


: 1.7 
res 


: 100 




1905-09 


5.8 


: 13 


: 82.2 


: 111 7 


: 11 


: 100 




1910-14 


: 7.7 


: .6 


: 79.5. 


: 12.1 


: .1 


: 100 




1921-25 


: 21.8 


: .7 


: 59.0 


: 18.3 


: .2 


: 100 




1926-30 


; 25.9 


: .6 


: 56.7 


: 16.7 


: .2 


: 100 




1933 


: 28.5 


: .6 


; 52.6 


: 18.1 


: .2 


: 100 




1934 


: 28.9 


: 1.2 


: 49.3 


: 20.7 


: .2 


: l'vi 





E 

Source; Statistical Abstract, 1934. 

^J Includes Central America and West Indies 
VBelow l/lOth of 1 per cent 



9829 



-181- 

D. Port Activity in Imports 

Compared to 83 per cent in the period 1891-1900, ports along the 
Atlantic Coast handled in 1931-33 hardly 70 per cent of the total na- 
tional inroort clearance. The ratio of imports through the Gulf ports 
to total imports increased from 2.6 per cent for 1891-1900, to almost 
7 per cent in the period 1931-33, and the comparahle ratio of imports 
through Pacific ports rose from 6.3 per cent to 9.2 per cent, and 
imports across the Canadian Border rose from 6.5 per c t to 12.5 per 
cent. Prom the earlier periou to the latter, the Port of Hew York dropped 
in relative importance, in total imports, from 64 per cent to 51 per 
cent, Boston dropped form 9 per cent to 5.6 per cent, and Philadelphia 
moved off from 6.6 per cent to 5.9 per cent. On the other hand, the 
Customs districts of Maryland, Hew Orleans, Buffalo, Michigan and 
Washington State have all increased their percentage share of the total. (*) 



(*) See Tpble V in Appendix to Part 



982? 



-182- 

CHAPTER III 

THE IMPORTANT BUSINESS 

From the standpoint of the purposes and methods of code regular 
tion, the significant aspect of the importing trade is the functional 
procedure involved in those distinctive operations which must "be per- 
formed in connection with the acquisition and movement of products 
from foreign points of origin to points of sale within the domestia 
jurisdiction. Importing is a subdivision of the broader field of 
distribution but differs from purely domestic distribution to the 
extent that it involves processes outside the area of domestic juris- 
diction and transactions not necessary in the domestic field, such 
as, for example, financial payments in terms of foreign currencies, 
and customs formalities incident to customs clearance at ports of 
origin and destination. In connection with any scheme designed to 
regularize competitive relationships, these distinctive character- 
istics of importing are important insofar as they introduce more or 
less variability in the competitive factors as coijparcd with the 
competitive aspects of the processes incident to the movement of 
merchandise from domestic sources to the same consuming markets. 

The treatment of importirg in NBA code administration was con- 
fused largely as a resixlt of the complexity of the problem, variations 
in the formal integration of importing functions with other functions 
in various commodity lines, and of the absence of a clear concep- 
tion of the distinctive functional aspects of importing operations. 
The confusion and lack of understanding was shared alike by members 
of the import trades and the Administration, attention never before 
having been focused on the problem of differentiating between func- 
tional aspects. NBA file materials indicate that the importing func- 
tion received consideration in connection with numerous codes, and 
in such manner as to indicate widely varying definitions of "importer" 
and conflicting views of importing operations. In this chapter an 
effort has been made to determine who is an importer, to establish 
his place in the field of commerce, and more particularly in the 
merchandising chain, to determine the extent to which importation 
is an incidental operation of manufacturers and processors of var- 
ious commodities, and the extent to 'Which it is a technical service 
or a subsidiary operationin wholesaling. 

I. DEFINITIONS 

A. The Object and Act of Importation ; Imports 

In general terms, importation can be defined as the act or prac- 
tice of bringing goods into a country from a foreign country, and 
imports arc the goods thus brought, in. More exact definitions are 
offered in legal opinions, Federal statutes, and administrative 
measures, but these vary considerably in accordance with the legal 
points involved or objectives sought. It is essential that each be 
considered in its own background. 



9829 



•185- 



For example, in reversing a Maryland court decision which had 
upheld a State sales levy on imported merchandise, the U. S. Supreme 
Court's opinion in Brown v. Maryland (12 V/heaton 419) construed 
"imports", as it appears in Article I, Section 10 of the Constitu- 
tion, (*) to cover not only the act of importation but also the 
article imported until its first wholesale disposition. In later 
cases, courts have held that this opinion may be taken to imply 
that, after first wholesale disposition, or after the packages are 
broken up and the contents -appropriated to private use or purchased 
for second domestic sale, ^he goods cease to be imports within the 
meaning of Article 10 of the Constitution, (80 U.S. 29, 34- 167 OT 
852, 854; IS HC 19, 23). 

In cases growing out of the eighteenth Amendment, court opinion 
has held that importation consists in bringing goods into the country 
from outside, regardless of the manner in which it is affected, and 
that entry through customs is not the essence of the Act, (43 S. Ct. 
504). Federal Courts have held that the term imports covers nothing 
not actually brought within the limits of a country, thus not cover- 
ing goods which may have been properly shipped from a foreign point 
and brought into a domestic port of entry with intent to discharge 
but Y/hich were not unloaded on the dock, (142 Fed. 683, 685). 

Importation is held by Federal courts to occur at the time the 
goods are brought into port, rather than at the time of entry at 
the customs house, and the time of importation is the date of arrival 
of the merchandise in a port and not the date of entry through cus- 
toms, (178 Fed. 743, 747; 26 Fed, C a s. 1024, 1028; 54 Fed. . 367, 368). 

To constitute an import within the meaning of United States 
customs laws , it is necessary that the goods be brought voluntarily 
into a proper port of entry 'with an intent to unload, and they may 
come either from a foreign country or from possessions of the United 
States whose products are" specially made subject to our tariff laws. 
In the event of customs clearance at an internal point, after bonded 
entry thru a port or frontier station, the Customs Bureau recognizes 
two points of importation, i. e. , the point of first entry and the 
point of clearance, (l 7 "Corpus Juris 536, 538). 

In the past the Department of Commerce has maintained separate 
records of general imports and imports for consumption , both based 
on customs house records. The former includes all imported goods 
arriving and entered at customs houses either for storage in bonded 
warehouses, for through shipment in bond to internal points, or for 
immediate clearance through customs'. The latter classification 
includes all goods cleared through the customs house, i. e., those 



(*) I T o State shall, without the consent of Congress, lay any imposts 

or duties on imports or exports except what may be absolutely 

necessary for executing its inspection laws,* * *." See also 

Appendix to Part C, pp. 6-8. 



9829 



-184- 



just arriving and cleared, and those withdrawn from "bonded ware- 
houses and cleared. In the gene ral impo rt classification all 
merchandise is treated as imports from the moment it arrives in 
the country and is recorded by customs officials, regardless of 
the fact that it may not be cleared until some time later, and of the 
further possibility that it may be re-exported, and, consequently, 
never be cleared through customs. 

B« Identity of the Importer 

It would be natural to define the import sr as the person who 
performs the act of importation. In every-day trade parlance there 
is a. tendency to interpret the term importer rather broadly, to 
cover not only the person who causes the goods to be brought in 
for sale, but also the one or more persons who may figure in the 
transaction as sales or service intermediaries without taking over 
tital to the goods; indeed the term is sometimes appropriated by 
persons who conduct a retail business in goods acquired by purchase 
from a primary importer. There is no general law or precedent 
definitely establishing the proper use of the term, except for 
specific administrative purposes. 

It is not unnatural that State courts should have given rela- 
tively narrow interpretations of the term importer in connection 
with persons who claimed exemption from State sales taxes by virtue 
of Article I, Section 10 of the Constitution. State courts have held 
that the term does not include person X who purchases foreign goods 
from person Y after Y had caused the goods to be cleared through cus- 
toms and offered them for sale, (Vt. St. (1894) Sec. 4347). In a 
Massachusetts case wherein person A who placed an order for goods 
from England, entered them in bonded warehouse upon arrival, and 
mortgaged his warehouse receipt to person B who later foreclosed 
on the mortgage, the court held that A was the importer, and that B 
was not an importer even though he paid duty and cleared the goods 
through customs, (4 Allen (Mass.) 110, 112). 

However, on at least two occasions, the United States Supreme 
Court has reversed State court decisions to the extent of ruling 
that persons who placed foreign orders, handled clearance through 
customs, and offered the foreign goods for wholesale sale, were true 
importers within the meaning of Article I, Section 10 of the Con- 
stitution, (12 Wheaton 419; 30 U. S. 29). 

Ho court opinions with respect to imports have been found which 
acknowledge the right of second title holders or importation service 
intermediaries, to the app elation of importer . 

Several circumstances combine to indicate that customs law 
considers the term importer in a broader sense; firstly, neither the 
tariff act, nor the corpus juris of customs law, attempts to define 
importer ; secondly, legal counsel for the Customs Bureau reports that, 
so far as customs law is concerned, several persons may figure as 



T oc_ 

• ■— XcsE>" 

inroorter in connection with the imoorta.tion, customs clearance, and 
disposal of a given shipment; thirdly, in administering Section 483 of the 
Tariff Act of 1930, which r>rovi<ies that "All merchandise inroorted into 
the United States shall be held to he the orooerty of the person to 
whom it is consigned", the Customs Bureau labels this -person as the 
invoorter of record, inf erentially a more restrictive term than inroorter. 
This inroorter of record may, in some cases, have taken only a -passive 
■cart in the act of imoortation; he may be an import dealer, a rare- 
house comoany, a bank, the sales agent for a foreign shirrper, or some 
other consignee. 

The phraseology of Section 509 of the Tariff Act, i.e., "The 
holder, inroorter, consignee, agent, or other -person may be cited to 
appear before customs courts on any matters deemed ma.teria.1 regard- 
ing inroorted merchandise", has two implications; either that Congress 
visualized the importer in an unusually restricted field, or that 
Congress deliberately employed this verbose sentence to cover all the 
various shades of meaning accorded the term importer. 

Thus, while the customs service deals with one -person or his 
agent, i.e., the owner of the merchandise at the time of clearance 
through customs (however, using its own arbitrary interpretation of 
ownershi-p) the construction given the term importe r by other 
authorities is so loose and lacking in uniformity that several com- 
panies may "-fall within the classification of inroorter in connection 
with the arrival and dis/oosal of a given import shipment. As an ex- 
ample of the loose use of the term importer one can cite the case of 
retail establishments in lines such as art goods, rugs, and literature, 
which freouently take no -part in foreign acquisition or in customs 
clearance, but merely olace orders for foreign merchandise with -pro- 
fessional irrroorters and dealers in i T ew Yor:. 

A stricter interpretation of the term importer would relate to 
the -person in the United States who initiated the transaction result- 
ing in shipment of merchandise. Under this interpretation, the in- 
dustrial user of foreign raw materials would be the importer, and the 
domestic firm (if any) through whom the manufacturer -placed his order 
would be an intermediary in inmortation but not the importer. This 
interpretation of inroorter would, of course, also cover domestic 
merchandisers who -place import orders to be billed direct to them, 
with the intention of disoosing of these imported goods by one or 
another form of domestic merchandising. If a manufacturer should 
draw on stocks of raw materials brought in by these import merchants, 
they, and. not he, would fit this interpretation of inroorter. 

Persons engaging in one or another importing function within the 
general area of wholesaling, are recognized and identified in four 
■places in the "type of operation" classification used by the Census 
Bureau in the 1929 and 1933 censuses of wholesale business. These 
■places are indicated in the skeletonized classification below, by 
means of underscoring: 

I. Wholesalers oro-oer 

1. Wholesale merchants 

2. Exporters 

9823 



-186- 

3. Importers 

4. Limited function wholesalers 
II. Bulk tank stations 

III. Chain store warehouses 
IV. Manuf . cturcr- ' sales branches 
V. Assemblers and country buyers 
VI. Agents and .brokers 

1. Brokers 

2. Commission merchants £ factors 

3. Export igents 

4. Import agents 

a. Import commission merchants 

b. Import manufacturers' agents 

c. Import selling agents 

In describing these classifications, the Census. .Bureau states 
that firms in the importer category buy foreign merchandise, im- 
port and sell for their own account, carry stocks in warehouses, and 
redistribute more generally to wholesalers and industrial consumers, 
than to retailers. The other import classifications are explained 
as follows: (l) commission merchants are functional middlemen trans- 
acting business in their own name, having direct physical control 
over goods consigned to them for sale on a commission basis; (2) manu- 
facturers' agents differ from brokers primarily in the respect that 
they maintain continuous relations with their clients, operate 
usually in limited territories, and are restricted somewhat as to 
prices and terms of rale; and (3) selling agents differ from the 
others chiefly in the respect that the;, handle the entire domestic 
distribution for on*- or more foreign producers, whome they may 
finance. 

Analysis of 1929 Census returns for these four classifications 
suggests that many firms failed to place themselves properly in this 
Census schedule, owing to the loose trade use of the term "importer". 
It is difficult to accept the relative numerical showing of the four 
classes, and to account for the fact that two of the import agent 
groups show decidedly higher average payroll ratios to net sales than 
the importer-wholesalers. (*) 

In view of the varied interpretations of the term imp orter by 
these several administrative agencies, it appears unwise to attempt 
here to delimit the area properly covered by that term. If areas 
were to be prescribed, a narrow definition would embrace persons who 
bring in foreign goods, clear them through Customs, and either use 
them in farther manufacture, or offer them for sale in original pack- 
ages, corresponding more cr les to the Supreme Court interpretations 



(*) See Table VI in Appendix to Part C, for comparative analyses of 
Census returns. 



9829 



-127- 



in State tax Crs.es. A broader concept would embrace all parties 
figuring in the act of importation and/or in the disposal of imported 
goods 

II. STRUCTURE OF TELL IUPOBIIHG BUSINESS 

A* Pr oduction- Involved - In Importation 

The character of the import transaction varies with the de- 
gree to which tl:e domestic consumer handles the import operations 
himself, entrusts them to intermediaries of his selection or leave-- 
them to the foreign producer or shipper. Imported goods may be ac- 
quired directly by the consumer in the foreign markets; or they may 
be secured indirectly through locrl branch sales offices or agents 
for foreign producers or merchants; or they Can be purchased in 
this market through merchants who arc, organized as importing whole- 
salers or jobbers; or the acquisition can be entrusted to brokers. 

Th& industrial consumer and the retailer mho import direct ma; 
perform all the technical functions involved in bringing foreign 
goods into the country through their own organization, or they may 
delegate one or more of these tat.::, to specialized service agencies. 

In 'placing foreign merchandise in the hands of the domestic 
consumer, 'the foil owing procedure is-, typical: 

(1) Purchase of goods in foreign country, or alternatively, 
arrangements by the foreign owner for domestic offering 
for sale. 

(2) Arrangements for transportation and insurace. 

( 3) Financial arrangements in connection with payments, col- 
lections, ana credits. 

(<.) Claiming the goods upon arrival, clearance through Customs, 
and inspection. 

(l) Sale of the imported goods, except in cares of importation 
by the domestic consumer. 

(6) Drayage, warehousing and forwarding to internal des- 
tination. 

While domestic distribution of imported goods is similar to 
that of domestic goods, problems of acquisition differ in many funda- 
mental respects. Importers usually require a longer time between 
original purchase and ultimate sales, and must frequently make com- 
mittments far ahead, necessitating longer credit terms; they must 
resort to cable expense in keeping posted on the supply and price 
situation and in transmitting rush orders. Problems of trans >ort- 
ation and insurance are more complex. They must be informed on 
currency exchange values and tariff regulations. Finally, they have 

9329 



•-•loc*-* 
more difficulty in securing redress on claims. 

B. -Types of -Import ers 

The term professional importers has been used "by one authority (*) 
to describe those wholesale dealers, commission houses, and brokers, 
who are organized especially to purchase and to import foreign goods 
for the account of others or for sale to domestic merchants or con- 
sumers, or who specialize in the technical servicer of importing. A 
discussion of principal types of importers necessarily leaves out of 
account other persons or firms who might with some propriety speak 
of themselves as importers, i. e. , those who import goods to be used 
as personal effects, manufacturers who import their own materials, 
and retail dealers who acquire foreign goods through professional 
importers. However, limitations of space and time necessitate re- 
stricting this discussion to those classed as professional importers . 

The import dealer buys his products in foreign countries and 
imports them on his own account for resale to purchasers in the 
domestic market. He buys wherever he wishes, and while at liberty 
to deal regularly with particular producers or dealers abroad, he is 
not bound by contract to pass orders to them exclusively, and may 
be successful in binding the foreign shipper to refrain from supply- 
ing comparable goods to other domestic importers. The import dealer 
may do a general import business in numerous commodities, or may 
specialize in certain products. Again, he may place regular orders 
and sell out of stock or may place import orders only as he is able 
to make firm sa.les to his domestic clientele for future delivery. 
The import dealers who do a wholesale business out of imported stocks 
obviously must have considerable working capital, since they assume 
the whole merchandising risk. 

The impor t cemmi-g sion a : ?;ent represents one or more foreign pro- 
ducers or exporters. The agency contract customarily defines the 
domestic territory in which the import house is to have exclusive 
sales rights, and it usually opecifies the commission to accrue on 
all sales booked. The commission agent works on instructions from 
his principals as to prices and terms to be quoted, and is expected 
to keep them posted on the market situation. He is usually enjoined 
by terms of the contract from canvassing the domestic market with 
competitive lines. It is not unusual for the foreign principal to 
forward goods to his agent on consignment. 

In some commodity lines there are professional importers who 
represent foreign exporters on a basis of remuneration other than com- 
mission. In these cases, the agent is supplied with quotations, and 
he forwards orders to his principal in the event of domestic sales at 
a premium over the quoted price sufficient to compensate his services, 

.Branch sales offices are maintained in the United States market 
by numerous prominent fore ign producers and merchants , or by combi- 
nations of foreign producers. The branch offices have a limited 

(*) Eoorbach, G. B. , " Import Purchasing " McGraw-Hill Book Company (1927) 

9829 



-139- 

degree of independence, although many of then are incorporated -under 
domestic laws. Since maintenance of a branch office entails heavy 
overhead which can be a.voided by operating through a commission agent, 
foreign firms do not maintain their own offices in the United States 
unless their product meets, with considerable and regular demand. 
These branch sales offices usually meet competition of independent im- 
port dealers to the extent of offering quotations in United States 
currency, thereby assuming the exchange risk. They usually maintain 
stocks to permit spot sales. It is probable that for certain products 
the domestic industrial consumer of raw materials reaps benefits 
from being able to deal directly with the foreign supplier through 
his branch office, but it may be a limiting factor to the extent that 
it restricts the range of the consumer's choice of materials, in 
instances where the branch sales office has virtual monopoly con- 
trol of the material supply. 

Import brokers perform special services in numerous raw 
commodities for industrial consumers, but they are not, in the 
strict sense of the word, importers. Some import brokers act for 
the foreign seller, while others act for the buyer, collecting their 
brokerage accordingly. The buyer and seller having been brought to- 
gether, the contract is arranged between the two, and the buyer 
thereupon brings in the goods in bis own name and arranges for their 
payment directly to the seller. The import broker operates usually 
in commodities where a high degree of technical knowledge is concerned. 

Auxiliary importing agencies are entrusted frequently with 
the technical formalities of clearing merchandise through customs 
and forwarding it to domestic destination. They include customs 
house broicers who work on" a fee and are required by customs regu- 
lations to be bonded, for the reason that they handle the documents 
representing title to the merchandise. To label the e agencies "im- 
porters" involves unwarranted stretching of that term, although they 
are party to the act of importation. Other auxiliary agencies in- 
clude freight forwarders and traffic repre sent at i ves of ocean 
carriers. 

The difficulty in classifying individual firms on the basis of 
the functional character of their import operations, arises from the 
fact that numerous import firms handle several commodities' and 
several foreign accounts, each on a different basis. They are 
being solicited constantly by foreign merchants and the functional 
relationships of many to their foreign connections are in a con- 
stant state of flux. There are comparatively few lines of business 
in which functional relationships are so varied and are -subject to 
such rapid shifts as in the business of importing. 

C. §ption Channels for acquiring Foreign i.;erchandisc- 



In an effort to dispel the confusion inevitably resulting from 
consideration of the conflicting definitions, overlapping types of 
importers, and the varied character of importing functions, and to 
place the various types of import agencies in their proper relation- 



9829 



-190- 

ship to one another, Diagram I, dealing with the importation of raw 
materials for domestic industry, and Diagram II, dealing with finished 
products brought into the country for sale through one or more channels 
to the cons"umer, have been prepared. 

!• Import Channels far Industrial' Raw Mater-ials- 

Diagram I on the following page indicates the relationship be- 
tween the principal types of firms which figure in the flow of foreign 
raw materials to domestic manufactxirers. Zach vertical line represents 
a fairly distinct channel which is, at least potentially, available to 
the domestic manufacturer in securing these materials. In actual 
practice, these alternative channels vary widely in importance from 
one commodity line to another. 

As the chart is set up, the domestic industrial consumer plays 
a comparatively less important part as one studies the vertical 
lines from left to right. Thus, the first vertical line at the left 
illustrates a case where the domestic manufactiuer operates foreign 
mines or plantations yielding the materials needed in his manufacture. 

One step short of this complete control is pictured in the second 
vertical line where the manuf acturer maintains a branch purchasing 
office in the foreign country of supply. The next option, in order, 
shows him delegating his purchases to a commission agency in the 
country of supply. The three optional methods discussed so far all 
come under the general heading of direct importing. 

Different types of lines are used in this diagram to indicate 
at points of juncture, where changes in ownership generally occur. 
It will be noted that in a general way, the s*lid vertical lines a.re 
shorter as one moves from left to right on the cha.rt, indicating that 
the manufacturer is drawing his supplies from closer intermediaries, 
securing prompter deliveries from the tine of placing the order, and 
taking less part in financing the importation. 

From the standpoint of domestic merchandising methods, there 
is little distinction between the United States selling agency for the 
foreign dealer and the United States selling agency for the foreign 
processor. The import dealer, whose field of operations is shown in 
jagged lines, answer* the description, given on page 35; he also 
corresponds closely to the definition cited by the Census Bureau 
for importers within the wholesale field. The space the import 
dealer occupies on the diagram sho\ilcl not be taken to indicate his 
relative importance. Actually, import dealers in numerous commodity 
lines far over-shadow domestic commission selling agencies. 

The import broker is an outstanding intermediary in the im- 
port of certain raw materials, while he figures rarely, if at all, in 
the importation of other materials. He usually teams up with ex- 
port brokers in foreign markets although he may meanwhile be watch- 
ing prices quoted by foreign dealers and have facilities for closing a 
transaction without passing the order through a foreign export 

9828 



191 



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-192- 

brolccr. Deviations from normal v. rtical channels shown in the diagram 
ere comparatively rare in most commodity 1 incs for the reason that 
selling agents, either in this market or the foreign market, arc 
usually protected by contract in the matter of commissions. That is 
to say, s direct sale in a given territory, other than through the in- 
termediary of the exclusive selling agent for that territory, does 
not deprive the agent of the commission he would receive if he had 
served as intermediary. 

Diagram I is useful also in settling upon a workable basis for 
differentiating importers from import agents, and also in segregating 
those types of firms which can be grouped effectively in a code. It 
appears logical to consider that, in connection with these optional 
channels, the true importer in each case can be identified by noting 
the type of vertical line immediately below the United States boundary 
line, and then by seeking the rectangle not only bordered in that 
type bat also containing a designation underscored with that type of 
line. This interpretation would agree fairly well with that used by 
the Census in that it would label selling agencies of foreign shippers 
as "import agents," rather than as "importers." However, in most 
trades, these agencies are spiken of customarily as importers. 

Although import dealers occasionally supplement their stock by 
drawing from domestic -elling agents of foreign shippers, they acquire 
the preponderant share of their supplies by direct purchases abroad. 
Consequently, import dealers and foreign shippers' domestic selling 
agents work on a fairly parallel basis in the selling field, except 
to the extent that commission agencies are more prone to quote in 
foreign currencies. Grouping these two cl£ sses in a trade code docs 
not present major difficulties, although it means that domestic firms 
are grouped with firms of foreign control. On the ouher hand, the 
customary functioning of import brokers is distinct in fundamental 
respects from that of import dealers and foreign shippers' domestic 
sales agents. (*) Despite this fact, the active membership of the 
coded general importing trade included import brokers in many com- 
modity groupings. 

There are a number of instance.' where American companies have 
gone beyond establishing d-ominion over foreign sources of supply for 
purposes of direct importation, to the extent of controlling trans- 
portation as well. Por instance, an important American steel pro- 
ducer owns and mines ore deposits in Brazil, Chile and elsewhere, owns 
railway facilities connecting there foreign mines with nearby ports, 
and operates a fleet of vessels to bring the ore to its domestic 
plants; several prominent oil companies control oil fields in foreign 
countries and operate transport facilities from the wells to foreign 
ports, and from the ports to their domestic refineries; and a large 
fru.it importer owns extensive banana plantations in Central America, 
built and operates railways to shipping ports, and operates its own 



(*) See pp. 54 - 55 supra) 



-193- 



SSiw P S- y const ™cted vessels to tr.nsp.rt bananas to its 
distribution offices in the principal C-ulf and Atlantic ports. An 
w^ a V ! MP paS3en S er Hne plying between Worth and South 

America has actively promoted commercial relations between the two 

sorting ill T "-I ^^^ alm ° St aS P ro ^ntly in the general im- 
porting field as it does in the ocean transport field. 

2 ' Import Channels fo r Consumer Gcods 

_ The most important optional channels employed in the ac- 
quisition of foreign consumer goods by domestic retailers, are 

nf Srf ?J ^ ff gram n on th& Allowing page. The significance 
o± the aiflerent types of lines used has the sane basis as in the 

H^t „ S Chart ' \' e " to indicate points where changes in ownership 
generally occur, the main difference being the placement of depart- 

co™ ? r ° S ? retailers as fin al destination, as against industrial 
consumer m Diagram I. Another point of difference is that here we 
xina the import dealer carrying his operations abroad to the extent 
hi fr ^f-^ a JJUrchf ' sin S agency. Here again the true importer may 
oe identified m the same manner as in the previous chart. 

are mnr. * f^f 1 !f 7 ' J* C?n be Saifl that lar « e retail establishments 
bv c TfL I 11 hG Channels iH^tr a ted at the extreme left, there- 
by cutting down the number of intermediaries, while the smaller re- 

w£lsealers ^ ^ *° ^ "^ im ^° rtcd articles from regional 

, n ., tn .i: in the C f e of r ^ w materipls importation, the relative im- 
iZlfZt 0I im - >0 deSlCrF md domestic sales agencies of foreign 
Tn t; , n CrS VariSS " 7ldely fr ° m ° n6 co ^o^it.y line to another. 
l^Z\ ™ "? likGly t0 bS relatively more important in con- 

JZ!I f 1 J ae 1 B than in raw materials for the reason that in the latter 
import dealers are forced to share the business with import brokers. 

D. PI STEI-3UTI Oil CHAUEEL S FOH IMPOB3?5 

ninrnort^ip t ^dicates the relative degree to which "importers" and 
wS ^ ' fn " Ur ° ln various link " ° f «ie merchandising chain 
based on the 1933 Census sampling. I t should be pointed ouf that 

SIf nf tf ^V'f TCtlolesale Ce — w« actually only about one- 

S" • r ?^? ta J 19G3 imp ° rtr5 ' ° n the basis of ^1^. Consid- 
ering that this Census did not take into account the importing 

ZfZlltt ° f manufac ^ r ^ s ^ retailers, its coverage of import dealers 
and import agents would appear to represent a high percentage. 

.„„. " i 11 be nnt " d that in ^ aggregate value of sales re- 
ported by "importers" , 56 per cent were made to manufacturers, 12 
Silt *° Wh0lesa l er s. 31 per cent to retailers, and 1 per cent to 
woul ' h COnS1 ^ e f ! Percentages reported by import agents were, as 
would be expected, relatively higher to manufacturers and to whole- 
s. ieis. Tne importer compete;, of course, with domestic raw 
SS ^ol eS alers ( if any ) in sales to manufacturers, with 
domestic wholesalers of finished products in sales to retailers, and with 

9829 



194 



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domestic retailers in sales to consumers, while he serves to buildup 
tue domestic wholesalers' turnover in those -.ales which he makes to 
wholesalers. 



The data in table 6 also indicate bhe degree to which the 
several channels of distribution vary in importance among importers-' 
from one commodity, group to another. Haw materials sales are made 
almost entirely direct to manufacturers;' This" shows' up in the- table 
principally in the groupin of "general merchandise 11 , (which covers 
miscellaneous raw materials) , chemicals, agricultural materials for 
industry, and paper mat eri-aLs*- Wholesalers.. were, utilised to a 
greater extent in foodstuffs, drugs, and hardware. Among the lines 
in wrich "importers" do business directly with retailers are house 
furnishings, jewelry, tobacco products, electrical goods, and toys. 
The lines in which "importers" deal directly with ultimate con- 
sumers are tobacco products,- foods, and hardware 

On the basis of 1933 Census of Distribution, sales of 
import agents" were predominately in the group of agricultural raw 
materials for industry.;; In; total sales, -of groceries and foods by 
"impart agdl.ts"' 34 percent was wholesalers. 

S * Instability In ^the Busi^ Pg ^Arrangements *dl Importers. 

Difficulties in classification of individual firms on basis 
ol functional character nf their import operations result from the 
iact that numerous impart firms handle several commodities and 
several foreign accounts, each on a' different basis'. Tor instance, 
a firm may hold an exclusive sales agency for- a Brithish linen 
manufacturer, booking c.i.f. orders on commission, and at the same 
time hL may be wholesaling several lines *f .Belgian. linens which he 
makes a practice of purchasing outright. Another firm may be jobbing- 
miscellaneous imported tyi.es of gloss-are and may assume the task ~ 
on commission - of disposing of a special shipment for.varded on consign- 
ment. A hide broker may accept the sales agency for a foreign pro- 
oucer of tanning -extract. Hot only is the importer constantly 
solicited by foreign merchants, but in making the rounds of his trade, 
an importer may learn of a demand for a new type or grade of article 
which prompts him to make inquiries of foreign connections in the hope 
of developing a source to' meet this special demand. T h us, the business 
dealings of many import firms are in constant state of flux. 

Contractual relations involve considerable bargaining on the 
matter of functional arrangements. If the domestic party is to be 
called on to do pioneer work in merchandising a new product in this 
market, he will probably insist upon terms which will minimise his 
share of the risk. On the other hand, if he has reason to know that 
the new product will meet with favor among his cus tamers, he may 
agree to finance the importation »f -the new line. Other facts which 
influence the policies of an importer in connection with functional 
relationship to his foreign connections comprise the amount of his 
li quid- funds, the views he may have as to the future course of foreign 
exchange, and the cooperation he is in a -position to receive from 
bancs. In short, the functional relationships prevailing in the im- 
porting business are subject to unusually rapid shifts. 

9829 







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9G29 



-197- 



•F. Office Set-up Of Impo rt F irms According To Type 

Owing to the wide range in size and scope of import firms in each 
functional class, it is hazardous to attempt to describe a typical firm 
in a given class. .Vithin the general classification of import dealers, 
it is by no means always the case that general dealers employ a larger 
staff than specialized dealers. On the other hand, and for obvious 
reasons, import wholesalers customarily maintain a considerably larger 
staff than import merchants operating on a "to-order" basis, even though 
many of the latter may secure more rapid turnover. The size of import 
merchant organizations depends primarily upon the number of outlets 
solicited, .and frequency of solicitation, and upon the character of 
commodities handled. It depends also on the degree to which the domestic 
purchase of these materials is concentrated in a given center. 

The author of a leading textbook on importing (*) charts the organ- 
ization of a wholesale import house which maintains separate departments 
for accounting, legal matters, purchasing, traffic, customs clearance, 
and sales. Its purchasing department includes branch offices in Germany, 
France, and Japan. Its traffic department is listed to handle matters 
relating to packing, storage, freight rates, and 'transportation. Its 
customs department handles the -ork which otherwise would be delegated to 
a customs broker. Its sales department includes branch offices in San 
Francisco, Chicago, and Boston. This particular firm is considered to 
be one of the best organized and largest in the importint business. 

In the event that the "importers" sampling in the 1989 Census of 
Distribution is truly representative of import dealers, the average 
import dealer would have maintained at that time a staff of 7 male 
and 3 female employees to handle an annual turnover of $8 n O,<~inn, 

Domestic sales agencies; of foreign manufacturers and merchants exen 
extend over an even greater range, from the standpoint of organization 
size, At one extreme are the lar/re branch sales offices maintained in 
Hew York by Amtorg Trading Corporation and by Mitsui & Company; at the 
other extreme are the thousands of commission sales agencies conducted 
by individuals with the assistance cf from one to three employees and 
with comparatively insignificant capital. Amtorg, with a' staff of 130 
in its import department, is the official agency of the Russian Govern- 
ment to foster commercial relations between the two. countries, both 
export and import, Mitsui, with a staff of 170 in its imoorting de- 
partments, lo^ks after the domestic interests of that tremendously 
important Japanese merchantile family, embracing practically all Japanese 
export commodities. 

There are a number of import brokerage houses which maintain staffs 
of 20 or more, but these are exceptional. A typical import brokerage 
organization in many commodity lines would comprise little more than an 
experiences trader enjoying the confidence of manufacturers and intimately 
acquainted with foreign sources. His working equipment would be market 
reports, a comfortable chair for any mill purchasing agent who might 



(*) Butterbaugh, </.E. " Principles of Importing " p. 18, D. Appleton & 

Company (1924) 

9829 



-198- 

drop in, scratch pad, a code "book, and a batch, of cable forms. He 

might - or lie might not - be assisted by a clerk charged with such 

duties as cable coding, office accounts, market-letter mimeograph- 
ing, and so fcrth. 

G. Basic Heed For Functional Analysis Of Import Trades 

In connection with any effort to fit import trades into a code 
framework, there is basic need for knowledge concerning the place 
which importers of a particular commodity may occupy in the merchan- 
dising chain, and for knowledge as to the proportional extent to 
which importers are identical with manufacturers or processors, and 
the extent to which they function also as retailers and wholesalers. 
Fairly complete knowledge of these matters is essential before it 
is possible to set up code jurisdiction for importers distinct from 
retailers' or industrial users of the commodity. The confusion of 
functional setup within import trades was responsible for most of 
the difficulties encountered by the Importing Trade Code Authority 
over matters of code jurisdiction which are discussed elsewhere in 
this Part C. Hot only is HRA file information woefully deficient 
in this respect, but reliable up-to-date published information is 
scarce and inadequate. ;• ... 

Certain of the overlapping functional situations in the im- 
portation of particular commodities are indicated in the following 
excerpts from HEA file materials: 

it* * * * there arc ton wholesalers in Hew York City, 
all of whom are wholesalers and importers of marble in 
block form.' Four of those concerns operate saw mills 
and in addition one concern, who are not wholesalers, 
saw marble for the trade. There are only three finishers 
in the Hew York district who operate their own saw mills." 
(Letter of Marble Industry Employers' Association, 
January 17, 1935). 

"The following ten houses * * * * report total business 
of $7,229,164 of which 10$ * * * is domestic (including 
export). Of this domestic business one third * * * is 
exported; therefore, 3$> ****** "is export and 7p is in 
the sale of domestic goods in this market. Out of the 
total * * business done, 30$ * * is in waste. Out of this 
total of $2,129,153 waste business, 57^ * * is in import, 
11 $ * * is export and 22$ * * is domestic, * * *.» " (Report 
of Importing Trade Cods Authority on questionnaire addressed 
to waste material importers.) 

" * * * * The undersigned member of the importing trade 
handles over 80$ of the potash and potash salts imported 
into the U.S. These importations are the source of one- 
half of the total potash marketed in the U.S. Potash, 
whether of domestic or foreign origin, is sold almost en- 
tirely to manufacturers of mixed fertilizer, who resell ' 
it, to combination with other fertilizer raw materials 
or unmixed, to dealers and to farmer consumers of the 



9829 



-199- 

product. The importers of potash distribute to the same 
class of trade and frequently to the same customers as 
the domestic producers of potash. The domestic producers 
and importers of potash are therefore in every active 
competition." (Letter of N. V. Potash Sxport My, Inc., 
May 15, 1934.) 

,i* * * * We have made a number of inquiries in the trade, and 
finally determined to bring this matter up at a meeting of 
these importers. Such a meeting was held on March 26th and 
developed information to the effect that practically 100$ of 
the imports of Frozen Tuna Fish are handled by general 
importers and are sold to canners and further that approxi- 
mately 100>o of the imports of Frozen Sword Fish are imported 
by general importers who sell approximately 95$ to wholesale 
dealers and 5$ to chain stores." (Letter of Importing Trade 
Code Authority, April 4, 1935.) 

In order to present a fairly representative picture of the over- 
lapping functional situation, further information concerning certain 
outstanding import trades is presented from, other sources. (*) 

Twenty firms accounted for 82$ of coffee imports through the 
port of New York, in 1934. Analyzing this 82$ sampling, we find that 
on the basis of import volume 39$ was imported by firms which roast and 
wholesale their own branded coffee, 28$ was imported by foodstuff chain 
stores which not only roast but retail coffee under their own brand, and 
the remaining 33$ was brought in by import dealers for sale to 
roasters. In the total volume represented by the sample, the importers 
of 58/o are known to maintain branch purchasing offices in Brazil; the 
other importers purchased in Brazil through brokers and/ or commission 
exporters, over whom the American importers exercised considerable 
control in many cases. The 18$ not covered in this sampling was im- 
ported by 50 concerns, some of whom were wholesalers of coffee 
roasted and packed under their own brand, some wore importers and some 
wore brokers acting as intermediaries for roasters. All of these types 
of importers were covered by the coffee code. 

Almost 70$ of the raw silk which has been brought in from Japan 
during recent years, has been handled by three Japanese companied 
which maintain branch sales offices in New York. The balance has been 
handled partly by smaller Japanese and other foreign companies with 
branches in New York, and partly by American import dealers and brokers 
having contractual relations with Japanese export merchants. 

In the case of raw sugar, over 40$ of all imports in New York 
in 1934 was entered by American firms who operate domestic refineries 
and most of whom own foreign plantations. Most of these firms sell 
refined sugar direct to the foodstuffs chain stores and to other large 
retailers. The other raw sugar importations were divided between 
domestic selling agents of foreign plantations or merchants, and 
sugar brokers operating on the New York Exchange. 

(*) Conversations with importers and customs officials. 

9829 



-200- 



In the merchandising of import cd\cocoa, "brokers play an important 
part. They are reported to, serve as intermediaries in practically 
all transactions in the Hew' York market, which is the largest cocoa 
market in the world. While they close occasional cable orders with 
foreign merchants and shippers, ..the.yj do. 4 aioe1rrjf j ' their business wi-th 
general importers in Hew York, who import cocoa beans along with, 
numerous other raw products. These importers receive consignments 
from their foreign connections and make samples available to brokers. 

Quebracho, an essential tanning material imported almost entirely 
from Argentina and Paraguay, is offered to domestic tanners by 
numerous hide brokers, who quote prices in Argentine currency on the 
basis of advices from their connections in that country. A predominate 
share of our quebracho extract supply, however, is handled by the 
Hew York branch sales office of the British company which operates 
extensively in Argentina and which accounts for over 50'; of total 
Argentine production. The firm second in importance as an importer of 
quebracho operates large properties in Paraguay and produces its own 
extract. Tnese two principal importers operated under the code for 
the Tanning Extract Industry, while the other importers presumably 
were covered by the General Importing Trade Code. 

Several of the outstanding importers of jeweled watch movements 
own or control factories in Switzerland; in fact, at least two of them 
operated first in Switzerland and set up domestic corporations later 
to handle sales in this market. Most of the other domestic companies 
which assemble Swiss watches purchase the movements in Switzerland, 
import these movements, purchase watch cases from domestic case manu- 
facturers, and vfholesale the assembled articles. Those firms are, 
relatively, much more important that the few Hew York companies which 
solicit orders for imported watches as agent for the foreign producer. 
All of these firms fall within the definition set up for membership 
within the Assembled Watch Code. 

III. COMMODITY SPECIALIZATION IN TEE IMPORTIHG BUSIiTSSS 

For the reason that importers mast be keen students of markets and 
judges of quality, importing is organized on a specialized basis, with 
a tendency toward increased specialization. Among : raw materials, 
rubber, and bristles are imported by firms which handle just one of 
these lines. In textile fibers importation, specialization is frequently 
carried even further to the point where only one grade or type is 
handled by an importer. Certain food products such as coffee, spices, 
and sugar are sometimes handled exclusively, but it is more common 
for foodstuff importers to handle several related lines. In manu- 
factured goods, there are numerous importers dealing exclusively in 
chinaware, linen piece goods, wollens, toys, and cutlery. Many of 
the larger importing house's handle a number of commodities which are 
not closely related, but they usually set up distinct departments to 
look after each line. 

An analysis of the Importing Trade Code Authority commodity lists (*) 



(*) See Table VII in Appendix to Part C 
9829 



-201- 



gives some indication of the degree of specialization in varous commodity 
lines of .importation, although the sample is deficient for the reason 
that it is based 'on records of the General Importing Trade Code, which 
did not, cover all importers. In -this sample, specialization was most 
marked in the importation of oriental nigs, linen, chinaware and glass- 
ware and fertilizers. The lines which importers were most prone to 
handle in conjunction with a few. other related commodities included 
chemicals, cheese, burlap, olive' oil, drugs; and canned fruits. 

Table 7, based on the 1533 Census"' of - American Business sampling 

of importers, (*)_ compares the activities' of Importers- in varous. . . , 

commodity lines.- It shows that import firms were most numerous in 
food and grocery specialities, jewelry and optical goods, textile 
piece goods, and notions. Pood and grocery -specialti-os .dominated . . , 
:the other groups from the standpoint of 'aggregate not -sales value, 
followed by raw .silk, fruits and vegetables,- textile piece .goods, 
fertilizer, crude rubber, jewelry and optical goods. Average .sales ... . 
per establishment were relatively high iri 'raw ■ silky fertilizer and 
crude rubber. The turnover 'was .'most rapid in 'the fruits -and vegetables, 
bagging;and cotton; and ' relatively slow' in 'hardware, jewelry, paper, 
tobacco; books, .and periodicals. 

A relatively high average ratio of expenses- to not sales occurred 
in. bricks* arid tiles, drugs, ' dundries,' musical instruments,- papea-. ..specialty 
lines, and published material; it was; relatively low for metals, general 
merchandise, cotton, cordage, crude rubber',' hides, skins-,, and. furs. 

* I * t f 

Horizontal, analysis of these data might yield -some .clues concern- 
ing the customary functional basis of importing in each -of these lines 
but the attempts at interpretations would be hazardous on account of the 
limited sampling in some trades and on 'account -of -lack of knowledge 
concerning the .range within the individual groupings. 



) Se 



e Table VII in Apnendix to Part C 



-202- 
Table 7. Comparative Aspects of Principal Import Trades, 



Trade Designation 

• 


[Re- 
port- 
ting 

.Firms 


Net 
, Trade 
Total 
($1000) 


: Year 
: end 
Sales : Stock 
: Average -per 
, establishment 


Ratio 

of ex- 
penses 
to sale 


.Average 
: sales 
Iper em- 
ployee 




.(No.) 


:($1000) 


I ($1000) 


Percent 


($1000) 


Faints and varnishes 


57 

6 , 

37 

3 

46 

24 

113 

192 

11 . 

rr 
O 

60 

13.: 

11 

23 

58 ! 

17 

15 

55 

53 

5 

6 
14 ! 
442 
19 
195 
10 ■ 
10 

5 
33 
22 
11 
13 

8 

4 

3 

3 . 

9 
15 
13 - 
10 
59 


6,618 

1,761 

. 11,247 

434 

5,772 

11,531 

17,581 

38,643 

737 

1,430 

2^,283 

69,123 

6,694 

1,703 

41 , 605 

5,199 

25,898 

8,596 

7,360 

1,281 

76,179 

2,691 

226,352 

1 , 503 

17,888 

1,636 

473. 

469 

8,816 

4,011 

20,306 

587 

2,066 

617 

54 

1,537 

1,438 

2,359 

3,746 

17,651 

9,741 


: 116 
294 

: 304 
145 
125 

: 480 

: 156 

201 

67 

477 

;218 

5,317 

609 

74 

717 

306 

1,727' 

156 

148 

256 

12,697 

192 

513 

79 

: 92 

163 

47 

: 94 

267 

182 

: 190 

45 

258: 

154 

18 

512 

160 

157 

288 

1,765 

! 165 


19 

30 

117 

34 

! 26 

114 

42 

66 

5 

. 11 

: 57 

572 

: 72 

62 

a/ 

44 

147 

37 

77 

88 

1,602 . 

50 : 

54 
30 
48 
74 

7 
27 
44 : 
27 
36 
29 
60 . 

5 
13 
16 
30 : 
30 
53 
223 
22 


' 18.9 

10.2 

11.2 

6.9 

34.7 

14.7 

21.5 

18.9 

22.5 : 

2.4 . 

6.9 

3.0 

4.9 

17.7 

3.7 

R 3 

7.4 
24.0 

23.5 , 

31.6 : 
2.7 • 

14.5 . 

11.3 i 
26.1 . 
20.6 
27.3 
38.9 
15.8 
12.2 
12.9 

1.1 
34.9 
15.9 : 
13.0 
37.0 

3.0 : 

11.4 : 
14.8 
14.5 

3.o : 

15.2 


! 20 

: 48 

! 40 

72 




: 13 




: 25 

13 




24 




16 




179 




89 f( 
331 
: 108 






: 26 

68 

104 




182 




16 
35 


Musical instruments and sheet music. 


21 
180 




39 


Other food and grocery . specialties. . . 


35 

17 




23 




26 




23 




17 ( 


Industrial machinery 


40 
46 


Other metal and metal works 

Paper and its prods. (specialty lines) 
Tobacco & its -products (except leaf). . 


383 
11 
34 
69 




14 




220 




55 




34 


Oils & greases (animal & vegetable).. 


' 52 
294 




27 



Source: Based on Sample covered by Census of American Business: 
Distribution, Vol. I. 



1933, Wholesale 



a/ 
9829 



Less than $500. 



-203- 

IV. IA30E ASPECTS OF THE IMPORTIUG BUSINESS 
A. Number of Employees 

The 2,262 firms which filed returns in the 1929 Census of Whole- 
sale Distribution, under the designation of "importer", gave employment 
in that year to 23,310 persons, of whom 16,880 were male, *nd 6^30 
were female. "Import agents" filing returns in this same Census (1929) 
gave employment to 925 persons, of whom 618 were male and 307 female. 

, . ThG 2il l 6 fims f iling returns as "importers" in the 1933 Census 
ol American Business, g ? .ve employment in that year to 18,437 persons. 
Jo separate data were given for male and female workers. The 179 
"import agents" gave employment to 423 workers. In this case it must 
he borne m mind that the Wholesale Census did not cover employees 
nandling import procedure for manufacturers and retailers who imoort 
l0r their own account. This Census did, however, cover a high percent- 
age sampling of professional importers. 

The IIEA Deputy who conducted hearings on the Importing Trade Code 
was given to_ understand by proponents of the Code, that emSloytes wUhin 

tZ Z i UriS t C \ 10 ^ W ° UM am ° tmt to approximately 23,000*. Later when 
the Importing Trade Code Authority had made partial canvass of the 

SowVooo^ t0 ^a ^^ that " ^icipated final returns would 
been ntT. l^T*. A ^ arent ^ *"*■ figure was found later to have 
lut^r~r atGd ' f ° r the Labor Ad ^sory Board quoted the Code 

Autnority Chairman m March, 1935 as stating that employment coverage 
was about 15,000. The Code Authority was instructed^ send oula 
w"f actS^n!^ the HRA WaS inValidated * ef °- ^ese instructions 

1. Ilumber of Employees Per Company. 

import in * h b.S-^ nCG ° f an % bettGr me ^ s to gauge employment in the 
porting business, or analysis was made of receipts from the 835 

S^ScS^ofS r^ *? !*"?**»». ^5 code asse°ss^t ^rom 
are sZTftcItT f "porting Trade Code Authority. The results 

bai ? nn f ° r "» "a*" * that assessments were, called for on the 
sampling llfstlTf'lfi^^ " ™ S f °^ d that in the total 
three persons S^firl'r' 13 J"" 6 *? ^ f ° ll0WS: S43 tirms frora «*> to 
to tendons 177 fTlf 7 *"? t0 * ±X perS ° nS; 148 firas f ™ seven 

one to fifty and iVi i 7 ^^ t0 tW ° nty; ?2 firras frora twenty- 
mo ixtty, and 13 employed over fifty persons. 

.hich^s^u^ J « "- following page 

the number of qta'f L J T J " °~ flmS in Slze groups based on 

this Chart being cased n7*' " "^^ * e P ° inted ° Ut « Wver , that 
as well as employees Obvf *TT ^^ r6C ° rd ' Covers employers 
functioned as I Lm " thG fimS Sh ° wing one staf f member 

known lot Zvcz?efll7'^ dCr ** ** ° f ?* OTOer ' There are 

two partners^ather ?Ln 1! mS & T 8< * d at $2 ' act ^Hy comprised 

ratner than one owner and one employee. 



< 



204 



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£ . Hours, V/ryes, ^r.d. Duties o f Bum Joyces 

Practically nc thing has "been discovered in the NBA files bearing 
on hours of employment or on wage levels in the importing business. 
In the absence of any definite figures, the import trade sponsors 
suggested use of labor provisions as set up in the then-pending code 
for the wholesale trade. The import code sponsors contended that the 
labor aspects of their business were similar to the wholesale business. 
The representative of the Labor Advisory Board protested that the pro- 
visions concerning labor were inadequate because they would not re- 
duce hours sufficiently to create employment, and because wages of 
workers presumably would not be increased. He insisted that code 
sponsors submit data relating to wages for various types of employees 
and to their hours of employment. The sponsors agreed to report 
further on these matters but apparently neglected to do so. The Labor 
Advisory Board drew up a questionnaire which was to be mailed by the 
Code Authority and which was designed to develop facts concerning 
wages and hours as of' June, 1933, Ar»ril 1934, and April, 1935. No 
record has been found of this questionnaire having "aeon mailed to the 
code members. 

The evidence available from NBA files indicates that the more 
common types of employees in the importing trade are: managers, foreign 
exchange employees, language specialists, cable employees, shipping 
clerks and packers, typist-stenographers, stockroom and warehouse em- 
ployees, delivery boys, office boys, and messengers. The Labor Advisory 
Board g?ve the opinion that the diversified character - of the work 
assigned to members in the small import firms should entitle them to 
comparatively high wages. The code sponsors did not look kindly upon 
the suggestion of differentiating between rm.il tipie-duty employees and 
single-duty employees, and expressed the hope that the Labor Advisory 
Board would not insist upon separate grouping of wage scales. One 
witness at the hearing referred to warehouse employees and, on being 
questioned expressed the belief that they did not represent as much 
as one per cent of the total employees and stated that at least 99 
per cent of employees w ere office workers. 

The only specific reference in NBA files- to wages in the importing 
business was contained in statements of a Nevr York export-import house 
in connection with a denied petition for exemption from wage provisions. 
This company stated that salaries o'f its two stenographers were $160 and 
$150 per month in 1931; that the salaries were reduced to $144 and $135 
respectively, on Jan. 1, 1932, and that they were reduced further to 
$115 each on January 1, 1934; and that an additional stenographer was 
engaged in early 1934, at a salary of $87 per month. In transmitting ■ 
this petition, the Importing Trade Code Authority stated that the 
salary of $115 was relatively high for work of this sort in the trade. 



9829 



( 



* 



-207- 
iTable 8. Labor Aspects of Principal Imnort Tra.des. 



• 


nmloyees : 


Aver: : 
age : 

salary; 


Average: 


■Ratio of Payroll t< 


:No. of I 


sales : 
per em-: 
tiloyee : 


ITet : 
Sales : 

* 


: Total 


Trade Designation : Tra.de : 

>-Total : 


. irv per: 
Firm : 


Expenses 


• * 




(*) : 


( $1000) : 


(in percentage) 


Paints and varnishes : 37 : 

Millinery and millinery sunolies.} 282 : 
Coal : 6 : 


5.9 : 

6.2 : 

7.6 : 
2.0 : 

9.7 : 

19.0 : 
12.4 : 

8.3 : 
'4.2 : 

2.7 : 

3.8 ! 

16.1 ! 
5.6 ! 

28.3 
10.5 

2.9 

9.5 

9.9 

4.3 
12.2 
70.7 
! 4.9 
14.6 
: 4.8 
: 4.1 
. 6.4 : 
: 2.1 
: 5.4 
: 6.6 
: 4.0 
: 4.8 
: 4.1 
: 7.6 
: 2.3 
: 1.3 
: 2.3 
: 2.0 
: 4.3 
: 5. -5 
: 6.0 
: 6.2 


1,497: 

2,730: 

1,904: 

1,833: 

1,812: 

2,221: 

1,298: 

2,202: 

1,739: 

2,875: 

2,614: 

4,220 

2,129. 

2,154 

1,579 

: 2,780 

3,479 

1,991 

: 2,133 

: 1,984 

: 2,922 

: 2,725 

: 1,762 

: 2,240 

: 1,950 

: 2,060 

: 3,240 

: 1,556 

: 2,390 

: 2,953 

: 2,150 

: 1,832 

: 2,640 

: 4,670 

: 1,000 

: 2,285 

: 2,151 

: 2,019 

: 2,110 

: 3,650 

: 1,695 


■20 : 

48 : 
40 : 
72 ': 
13 : 
25 : 
13- : 
24 : 
16 : 
179 

87 : 
331 
108 
26 
68 
104 
182 

: 16 

: 35 

: 21 

: 180 

! 39 

: 35 

: 17 

: 23 

: 26 

: 23 

: 17 

: 40 

: 46 

: 383 

: 11 

: 34 

: 69 

: 14 

: 220 

: 55 

: 34 

: 52 

: 294 

: 27 


7.6 : 

5.7 : 

4.8 : 

2.5 : 
14.0 : 

8.8 : 
10.0 : 

9.1 : 
10.9 : 

1.6 : 

2.9 : 
1.3 : 
2.0 : 

8.2 : 
2.3 

: 2.7 
: 1.9 
: 12.6 
: 6,1 
: 9.4 
: 1.6 
: 7.0 
: 5.0 
: 13.5: 
: 8.7 
: 8.1 
: 14.4 
: 9.0 
: 0.6 
: 0.7 
: 0.6 
: 16.5 
: 7.8 
: 6.8 
: 7.3 
: 1.4 
: 3.9 
: 5.9 
: 4.1 
: 1.2 
: 6.2 


40.4 
56.4 
42.3 
36.7 




40.3 


Notions : 1,404 : 


60.0 
48.1 




48.4 




48.1 




65.7 


> rj Tides , skins and furs : 228 : 


42.8 
42.6 
40.6 


Thina, glassware and crockery : 543 


46.5 
63.0 
51.5 
25.7 
52.5 
• 25.9 


Musical Instruments&Sheet./iMusic. . : '61 
G-eneral merchandise : 424 


: 29.9 

60.8 

: 48.9 


Other food and grocery specialties6,449 


: 44.2 
: 52.0 


Jewelry and optical goods : 795 


: 42.0 
: 38.3 




: 37.0 


|^lass : 27 


: 57.0 




: 48.5 
: 50.4 


Paper & its pr^ds.( Specialty lines) 53 
Tobacco & its prods. ( except leaf): 61' 


: 53.0 
: 41.3 
: 49.8 
: 52.6 
: 20.0 




: 34.8 




: 34.1 




: 40.1 


Oils and gre^ses(a.nimal&vegetable: 72 


: 27.9 
: 40.8 


Wines and spiritcus liquors : 357 


: 40.8 



Source: Based on Samole covered by Cemsus of American Business; 1933, Wholesale 
Distribution, Vol* I 



9829 



-203- 

V. G30G3APHIC DISTRIBJTIOH 07 II-jPOHT FIRMS 

In Chapter II it was stated that in the period 1931-33 roughly 51 
per cent of. imports (value) cleared in Hew York, 5.9 r>er cent in 
Philadelphia, 5.6 per cent in Massachusetts, ; and 4.9 per cent in New 
Orleans, (See also Table V in Appendix to Part C) . The Census and the 
Code. Authority data: place Hew York City in a position of . even greater 
relative importance. The Census sanr>lii"Lg is undoubtedly more represen- 
tative of uniform national coverage. The Importing Trade Code. Authority. . 
held' its meetings in Hew York City and the code membership from Hew 
York probably developed beyond its true proportion of the national field. 



: Returns in the' 1933 Census (*) indicate: that Hew York City 
accounted for 67,5 per cent of the total number of import firms, 75 
per cent of. total sales, and 72 per cent of total sales, and 72 per 
cent of. the total number of employees. Second, and third positions 
went, to Illinois and California on the basis: of number of firms, and 
tc Illinois and Massachusetts on the basis of number of employees. 
In total net sales,: Illinois, i.iassachusetts, , and Pennsylvania rated in 
the order named, af.ter Hew York and California. . 

In, the total assessi.ient-iayiiig membership of the General Importing' 
Trade Code, 90',j (or 733 firms) were located in Hew York. Contributing 
. members, from other important center^- included 22. from. San Francisco, 
. 14 from Philadelphia, 12 from Boston, and 10 jfrom Los Angeles. 

■ The unusual concentration of import firms in the. Hew York City 
area. is. accounted for by a : number of: factors. For one things it is 
. the largest- center of population, in the- Bast^ . and the most important 
. general, industrial and commercial re; ion. Many, oroducers and distri- 
butors make it their headquarters, and the constant inflow of buyers 

has contributed to quick and easy coverage of . many trades. An importer 
. located near the numerous How York ncadquarters of transportation 
. companies can personally look after the many traffic details. The 
, Government headquarters for the Board of General Appraisers and the 
. Court of Customs Appeals is in Hew York, so tnat an importer located 
there is in; an advantageous position to secure prompt adjustments of 
customs matters. Furthermore, "the lrrge banks in Hew York are import- 
. conscious, and are more apt to keep -..breast of the constantly changing 

■ fiscal regulations in foreign countries. They, maintain extensive 

■ foreign, credit files and can finance forei, n- transactions with- a 
minimum of risk, : . ... 



Among the import' trades which are not concentrated primarily in 
.Hew York, the import commodities- are 'usually raw materials • for an. 
■ industry located at. other points. The outstanding examples are the 
clusters of import firms located in Boston and in Philadelphia to 
supply the wool and leather industries, in Hew Orleans for sisal, in 
St. Louis for certain furs, in Akron for rubber, and in Tacoma for 
copper ore. 

(*) See Table IX in Appendix to Part C 



9329 



■~: 19- 

VI. CAPITAL REQUIREMENTS OF IMPORT FIRMS 

Capital requirements in the importing "business extend over a wide 
range and depend primarily, of course, upon the functions assumed. 
Firms operating on a commission agency or brokerage basis require 
comparatively little capital, although it. is rare 'that an agent can 
operate successfully without incurring a sizeable expense for travel 
and cables prior to the receipt of his first commission. 

Where the importer is buying and selling on his own account, 
funds must be sufficient to cover the lag between due-date on import 
drafts and collections from his domestic customers. Furthermore, 
losses due to fluctuating prices, unstable exchange, refused merchan- 
dise, ..or to claims arising from deficiencies in quality have to be 
absorbed. Commodities of relatively small value and rapid turnover 
have been handled successfully by importers operating on small 
capital, but many firms have been forced out of business by being 
confronted suddenly and unexpectedly with the necessity of posting 
funds for such emergencies as disputes over customs classification 
and over quality. The mortality rate appears to be highest among 
those firms which, after operating with reasonable success as com- 
mission agents, have attempted to function as import dealers. 

VII. ORGANIZATION OF IMPORTERS III TRADE ASSOC IATICIIS 

There are three associations of general character and of national 
scope which have a considerable following among importers, namely the. 
National Council of American Importers and Traders, the American 
Exporters and Importers Association, and the National Foreign Trade 
Council. All of these maintain headquarters in Hew York. As.. the :,;■ 
names indicate, the activities of the second and third cover problems 
of export as well as of import. 

The national Council of American Importers and Traders was 
organized in 1921. It has a present (1975) membership of 359 firms, 
practically all of which engage in importation. A considerable 
number, but not all, of the outstanding ■ importers of finished products 
figure in the membership list, along with some importers of industrial 
raw materials, and numerous importing retailers and department stores. 

The object of this Association, as set out in Article II of its 
constitution, is to unite American importers and dealers in imported 
merchandise, and other Americans interested in the customs tariff. It 
undertakes to make a careful study of, and to present carefully con- 
sidered opinions on government measures affecting- the import trade. 

American Exporters and Import e rs Association is an unincorporated 
body organized in 1907 and grouping 32 active members and 13 associate 
members. The active membership is composed primarily of export and/or 
import commission houses dealing in crude or semi-finished materials, 
some of them on a brokerage basis. Most of the associate members are 
banks. Its principal activities relate to arbitration and to the safe- 
guarding of importers' interests in tariff legislation and customs 
court action. Its membership is reported to have taken part in the ex- 
portation of goods in 1928 to the aggregate value of $350 million. 



932< 



-210- 

The rational Foreign Trade Council was fonncd in 1914 for the de- 
clared pxiroose of developing a national policy of foreign trade encour- 
agement. Its principal function is to investigate foreign trade problems 
and to -advise on how these can best be met. The Council undertakes to 
educate public opinion on the importance of foreign trade in the 
national economy. National expression of the results of this education- 
al work is given at the annual national Foreign Trade Convention, 
which is sponsored by the Council and which draws together a good 
following of prominent foreign trade personalities. Its importation 
committee fosters' the thesis that proposals for mitigating trade re- 
strictions must offer mutual benefits to the other countries as well 
as to ourselves. Emphasis had been placed by this committee on the long 
term solution of the exchange restriction problems by means of increas- 
ing those imports not seriously competitive with American products. The 
national Foreign Trade Council is not an incorporated body, and it has 
no constitution or by-laws, nevertheless, its memkrship list 
resembles in many respects a "Yfho's Who" of the foreign traders' 
fraternity, packed somewhat with large industrial concerns engaging in 
exports of their finished products as well as in some importation of raw 
materials. 

Import Commodity Associations . Along with the three general asso- 
ciations cited above which invite membership of importers, there are a 
number of associations grouping importers of specific commodities. These 
associations vary widely in practical force and in trade coverage. Those 
which were functioning actively for some years before 1IHA were usually 
set up for the specific purpose, such as facilitation of adjustments 
and standardization of import contracts. Breif summaries are given below 
covering those associations about which information is available from 
the NBA files. 

The American Association of F c lts and Straw Godds Importers was 
incorporated in 1928 for the purpose of organizing importers, jobbers, 
and dealers in these and affilitated lines,' to establish a credit bureau, 
to adjust disputes between members and to promulgate proper rules and 
regulations for arbitrating these disputes. 

The Jute and Gunnies Importers' Association was founded in 1922 
(and reorganized some years later as the Burlaps Association) primarily 
for the purpose of arbitrating disputes and of setting up standard 
contracts. It has a membership of 28 firms which collectively handle 
the bulk of imports of this product. 

The linen Trade Association constitutes a reorganization in 1932 of 
the Linen Association which had functioned for many years. Its present 
membership of about 100 is reported to handle at least 70 per cent of 
all linen imports. It advises members concerning traiff legislation, 
customs decisions, and other matters. 

The Lace and Embroidery Association of America,. Inc., was set up 
in 1909 to promote the interest of firms engaged in the importation, and 
wholesale distribution of these products, to regulate and correct abuses 
in the trade, to compile credit information and to bring about uni- . 
formity of the administration of the tariff law. No information is 
available as to its membership. 

9829 



-211- 

A number of other commodity importers' associations are reported to 
exist, about which details are lacking. These include: 

American Gum Importers Association 

American Watch Importers Association 

Associated Importers of Food Products 

Mahogany Association, Inc 

national Association of Importers of Hides and Skins 

Hubber Trade Association of New York 

The Association of. American Wood Pulp Importers 

The Importers Leather Association, Inc. 

U. S. Hemp Brokers Association 

U. S. Shellac Importers Association 

wines & Spirits Importers Association 

Importers are also reported to play a prominent part in the follow- 
ing associations, memberships in .which presumably are not restricted 
exclusively to importers: 

American Babbit Skin Dealers Association 

American Spice T r ade Association 

American Tin Trade Association 

Association of Food Distributors, Inc 

Boston Wool Trade Association 

Cocoa Merchants Association 

Bssential Oil Association 

Fur Brokers. Association of New York 

Green Coffee Association of Hew York City 

national Association of Waste Material Dealers 

Tea Association of the U.S.A. 

Tapioca Products Association 

The Linseed Association of Hew York 

The Hational Sugar Brokers Association 

Importers located in centers other than Hew York are frequently 
included in the membership of Local Chambers of Commerce and other 
similar organizations. - Humerous importers also belong to the 
associations grouping firms interested in trade with a particular 
foreign country, such as the American-Brazilian Association, Board 
of Trade for German-American Commerce, Italian Chamber of Commerce 
in New York, Spanish Chamber of Commerce, etc. 



9829 



-213- 

CHAPTT.3 IV 

IMPORT .glS T:: THE N.R.A. CODE SET-UP 

I. SVQLUTIOi: OP POLICY TO GOVERN CODE COVERAGE OP IMPORTERS 

A. The Emphasis on "Product" In Early Code Organizati on 

In the early days of code formulation, the speedy improvement of con- 
ditions of employment and competition' in major industries was the dominant 
objective. In attacking the problems of major industries, the National 
Recovery Administration invited the cooper.' tion of existing associations. 
Among the first organizations to sponsor codes, were the Cotton Textile 
Institute, the National Lumbermen's Association, and the Iron and Steel 
Institute, all powerful trade associations organized on a vertical 
basis, and covering many divergent fv.net ions. Por example, the member- 
ship of the Cotton Textile Institute included spinners, weavers, convert- 
ers, bleachers, printers, and finishers, all separate steps in the 
production of finished fabrics. 

Inasmuch as no standard pattern had been set uo as a guide in decid- 
ing upon limits to code jurisdiction from the standpoint of industry and 
trade integration, the Deputy Administrators usually followed the practice 
of settling first upon the product or group of related products to be 
covered by the code, and then of deciding uoon the labor and trade prac- 
tices which were to be safeguarded or eliminated. These factors were 
usually considered in prescribing the functional fields to be embraced 
within the code. 

Owing to the technical difficulties and inevitable delay in form- 
ulating satisfactory codes, the wise policy in the early days appeared to 
be to embrace within each code as large a. field as was practicable; in 
fact, there was a tendency to give precedence to the industries showing 
the largest number of emplovees. In most of these early codes, juris- 
diction from standpoints both of product and functions corresponded to 
the field covered by the sponsoring trade association. With discretion- 
ary powers and. without guidance of precedent or declaration of policj' - 
the Deputies were agreeable to extending the code area beyond manufacture 
peruse to embrace one or more functions in the field of distribution, on 
the representations of the sponsors. A common and usually successful 
plea on the part of the sponsors was that trade practices could be made 
effective only if they were extended to all parties concerned. 

Gradually, however, it became apparent that function would have to be 
a primary consideration in fixing cod*-- area. In fact, Section 3 (a),which 
authorized the President to approve "a code or codes of fair competition, 
for the trade or, industry or subdivision thereof" (rather than trade and 
industry), was cited as implying a purpose to stress function over product. 
Attention wa.s also called to the fact that the codes were concerned chief- 
ly with the methods of doing business and with standards of competition, 
and that their purpose was to prevent a resort to improper methods or 
illegal exercise of function* 



9829 



-213- 

B . JAVAction Rec ognized in. Horizontal Code s for Distribution Trades 

In late September 1933, a decision was reached that function should 
be recogr.iz d to the extent of setting up a horizontal code to take 
care of similar features of wholesale distribution, permitting, however, 
such wholesalers as were already grouped with manufacturers in codes 
already approved, to remain in those jurisdictions. An import associa- 
tion was advised by a Deputy Administrator under date of October 2, 
1933, that, "after consultation with members of the Executive staff, 
it has been decided that there will be a horizontal code for all whole- 
saling..... Supplementary codes or addenda, will be set up for each 
particular group and provide for a separate code authority anci also for 
the various trade practices, etc." By Office Order (iTo. 39, dated 
October 25, 1933), the distributing trades we,re assigned to a Division 
Administrator as a proper subject for coding,- and several wholesale 
associations appeared as sponsors for distribution codes. 

C. Consideration of Specia l C odes For Importers 

Recognition of the title of; wholesalers to a separate horizontal 
code prompted import trade associations to surest a separate horizontal 
code for importers. An indication of the initial official reaction to 
this suggestion is found in the Deputy Administrator 1 s letter of October 
2, 1933, which contained the statement that, "It has been finally decided 
that inroorters, as such, will have no Code but will join with the whole- 
salers sir.ee, in effect, their business is importing for wholesale and 
wholesaling distribution." However, despite this announced decision, 
a group of inroorters, organized loosely as the Central N.R.A. Committee 
for. Import Trade Codes ,. continued- to prevail on the .Recovery Administration 
to sanction a general code for-' professional inroorters. Finally, on 
January 9, 1934, the Administration granted this Committee a preliminary 
conference to discuss the ■ necessity and feasibility of a separate code. 
On April 7, 1934, the Committee was granted a public hearing to consider 
code proposals* The Deputy in charge stated in his opening remarks 
that when the problem of an importer's code was first considered by the 
Administration, there were two proposals made - (l) that the importers 
of the various products avail themselves of allied producers codes, and 
(2)_ since the importers were primarily distributors, the principal dif- 
ference being in source of supply, that the importers came under the 
General wholesaling Code. The hearing in April indicated willingness of 
the Administration to consider a. separate code for importers. 

ii. i:iolusioi t or importers withi:- industry codes 

A . Industry Codes In Which Impor ter s Were Embraced Specifically 
By Definition 

Importers were cited in the specific terms of definitions of 21 
industry codes, as well as in certain divisions or supplements of 4 
other industry codes, as listed below. Importers were assigned a 
separa.te division in the draft of the Mica Industry Code forwarded to 
the Administrator for approval. It was ruled, however, that this di- 
vision should be eliminated from the code until such time as proper 
representation was better established. 

9829 



-214— 



Code No . 
506 



67 
361 

403 
430 
529 
545 



139 



Code 



72 
250 
257 
315 
547 



265 , 
308 



450 



554 



130 
175 

254 
501 



29 
335 



BASIC MATERIALS 
Certain DiviDior.s and Subdivisions 

t 

of the Lumber, and Timber Products Ind. 
Mica. Industry 

CHE-ICALS 

Fertilizer Industry 
Perfume, Cosmetic and other 
.Toilet Preparations 
Bleached Shellac 
Package Medicine 
Pharmaceutical and Biological 
Katural Organic Products 

DISTRIBUTING TRADES 

Machine Tool and Equipment 
Distributing Trade 

EQUIPUENT 

Electrical Manufacturing - 

Supplement 3-Wiring Device 
packaging Machinery Ind. and Trade 
Wire, Rod and Tube Die Industry 
Printing Equipment Ind. and Trade 
Industrial Safety Equipment Ind & Trade 
Machinery and Allied Products - 
Supplement 44 - Cereal Machinery 

FOOD 

Coffee Industry 

Fisheries Industry - Supplement 10, 

Middle Atlantic Preparing and 

Wholesaling 

Dog Food 

GRAPHIC ARTS 



Approval date 



June 11,1S34 
February 24,1934 



October 31, 1953 

March 23, 1954 
Auril 21, 1954 
Tay 15, 1934 
October 25, 1934 
January 25, 1955, 



November 27, 1955 



January 15, 1955 
October 51, 1955 
February 1, 1934 
February 2, 1954 
March 1, 1954 

March 17, 1954 



February 6, 1954 
March 8, 1955 
May 51, 1954 



Music Publishing Industry 

MFJFAC TURING 

Precious Jewelry .Producing Industry 

Medium and Lot? Priced Jewelry Mfg. 

Athletic Goods 

Manufacturing and Wholesale Surgical 

Industry 

TEXTILES 
Artificial Flower and Feather Indxxstry 
Art Needlework Industry 



March 4, 1954 



November 27, 1955 
December 25, 1953 
February 2, 1934 

August 9, 1954 

September 7, 1955 
March 16, 1954 



9829 



-215- 
1, Motives For. Specific Inclusion of Iroorters. 

The motives which -oromoted soecific mention of importers in these 
25 codes are rarely indicated in ERA file materials. In the case of 
codes for the Coffee Industry, Packaging Machinery Industry, Machine 
Tool and Hquioment Distributing Trade, Wire, Hod and Tube Die Industry, 
and Printing nauipment Industry and Trade, it -ordbably can he attributed 
to the fact that some importers belonged to the associations which spon- 
sored the codes. Importers were mentioned in the definitions of codes 
for the Artificial Flower and Feather Industry, the Jewelry Manufactur- 
ing Industries, the Art Needlework Industry, the Perfume Industry, and 
the Bleached Shellac Industry, for the reason, one may smyoose, that the 
manufacturers in these lines were considerably dependent upon imports 
for certain materials which they made a pra.cti.ce 'of importing either 
direct or through the intsrmediary of -orofes.sional importers. In cer- 
tain other codes in the above list, notably "those for the lumber and 
Timber Products Industry, the Fertiliz er Industry, the Athletic Goods 
Industry, and the Manufacturing and Wholesale Surgical Industry, the 
code s-oonsors appeared to .have been impressed by the need of including 
importers in order to be in a position to effectively regulate selling 
nractices. In addition, there is considerable basis for the belief that 
importers were included, particularly in t e' third group cited above, 
also for the puroose of giving the industry some control over the volume 
of competitive imports. Ci 

The Mahogany Division of the Lumber and Timber Products Code 
specifically provided a system for controlling -competitve imports. 
Importers were granted reoresentation on the code authority of only 
one industry code, i. e., Io» 29, Artificial Flower and Feather Industry. 
Their functions were described specifically in only one code',.'.iie. , No. 
139, Machine Tool and Distributing Tirade, with the statement that, 
"Importer of machine tools is one who inroorts machine teals and equip- 
ment for sale and sells to industrial users... .and other trade utili- 
ties." 

There does not anpear to have been any standard functional basis for 
including importers in these 25 codes. Importers were grouped with manu- 
facturers and other sellers in 8 codes, i.e., Artificial Flower and 
Feather, Fertilizer, Packaging Machinery, Medium and Low Priced Jewelry, 
Printing Equipment, Industrial Safety Ecruipment, Manufacturing and Whole- 
sale Surgical., and Bleached Shellac. On the other hand, without any 
apparent explanation, importers were grouped with manufacturers and* or 
processors in numerous codes which did not cover wholesalers. As in- 
stances,- the Wire Rod and Tube Die Industry embraced importation, 
manufacture for sale, and sale by manufacturers or importers; the Ath- 
letic Goods Industry Code grouped manufacturers who produced, and whole- 
salers who import; the codes for Perfumes, Cosmetics and other Toilet 
Preparations, Package Medicine, and Dog Food, included manufacturers, 
packagers, and importers for resale; the Art Meedlework Industry incl- 
uded the functions of importing, processing, and- original selling; and 
the Cereal Machinery Division of the Machinery and Allied Products In- 
dustry embraced manufacturing, importing, and assembling for sale. 



9829 



-216- 

B • Ir.roorters In Industry Codes By Broad Construction of Definition 

By virtue of the fact that orof essional importers customarily 
merchandise the goods imported, it can be contended logically that they 
are included within th;; jurisdiction of all codes, the functional area 
for which vras defined in such loose terms as "manufacture and sale", to 
say nothing of "wholesale" • Regardless' of whether the cooe sponsors 
had importers in mind, "broad interpretation of these code definitions 
made it possible theoretically, and in many cases actually, for the code 
authorities of 7S manufacture-and-sale codes to claim jurisdiction over 
importers in those lines, a.nd for the code authorities of 31 wholesale 
trades to follow suit. It was possible also for 22 authorities governing 
manufacture-and— rriginal-sale codes to make similar claims. Among the 
manufa.cture--and~sale codes, professional inroorters were known to he active 
in such lines as tottery supplies^ nickel alloy, waste materials, scien- 
tific aroaratus, surgical apparatus, and nunberous made-up textile products. 

Among the separately coded" wholesale lines in which importers were 
active cr.n "be cited the Paner Distributing Trade, the Builders Supply 
Trade, Bitxuninous Road Materials, Used Textile Bag, Wholesale Food and Go 
Grocery, Wool, Fur Dealing, and Critical Wholesaling. 

C» Industry Codes In Which Importers Were Excluded by Iirrplication 

One or another provision of certain codes which, by virtue of broad 
construction of definition, might have included inroorters, contained some 
provision or wording which inferred that the code sponsors had no inten- 
sion of including inroorters. Under this heading can be cited the Atlan- 
tic Mackerel Division of the Fishery Industry, certain divisions of the 
Fabricated lletals Froducts Industry, and -the. Leather and Wool Knit Clove 
Industry, Similar inference might be drawn from the fact that 56 code 
authorities were specifically authorized to \7atch the competitive 
situation anc initiate action against importers under the terms of 
Section 3 (e) of the Act. It is obvious th t a move toward import re- 
striction or control under that Section might be conrolicated if import- 
ers were lined upwi tii -domestic manufacturers in code jurisdiction 

D . Code Coverage of Incidental Imp or ters 

Quite independent of specific definition and of adrinistrative in- 
terpretation of broad definitions, the -problem of uniform treatment of. 
all importers in a given line was furthsr confused t'hrough the fact that 
manufacturers, processors, and wholesalers engaged in direct importing. 
Thus, refiners of -oetroleum, and manufacturers of 'steel, copper, mica, 
and paper are so dependent upon imported materials that many of them 
control foreign sources of suo-oly, and in some cases, operate transport 
facilities as well. They maintain special departments to deal with form- 
alities of importation, thereby reducing resort to -professional inter- 
mediaries to a Minimum. 

In a number of other coe'es for -that functional tyoe of industrial 
activity .ivich could better be described as )rocessing or assembling, 
rather than as manufacturing, the industry members were almost entirely 
dependent upon imports for their materials, and most of them -performed 

9829 






-217- 

the functions of importing as well as processing or assembling. Codes of 
this tyoe included those for natural Organic Products, Imported Green 
Olive' - . Imported Date Packing, Spice Grinding, Licorice, Cocoa and 
Chocolate, Dressed Horsehair, end Tanning Extracts, from the standpoint 
of processing, and also the Assembled Hatch Industry, from the stand- 
point of assembling. As rapidly as codes '-ere approved 1 - for these in- 
dustries, all importers of the materials to be processed were auto- 
matically covered, with the exception of any professional importers 
of these materials for sale to the processors, actually a rare occur- 
rence. 

Incidental importing by wholesalers who dealt primarily in domes- 
tic products, and by department stores and other retail establishments, 
was treated in the light of its incidental character, and the firms 
so engaged were governed by wholesale or retail codes. 

3. He-presentation of Impo r ters In Formulation of Industry Codes 

Very few references have been found, in transcripts of industry 
code he- rings to the active participation of professional importers. 
Obviously, however, in cases where importers were identical with pro- 
cessors, and where codes were formulated and approved for the processing 
phase of these industries, the active sponsors included importers as 
well as 2^rocessors. Incidental importers of raw materials similarly 
took an active part in formulation of codes for industries including 
iron and steel, petroleum, coffee, etc., as did also such incidental 
importers as department stores. As a result of the fact that a number 
of professional importers belonged to trade associations which sponsored 
certain industry codes, such, for instance, as the Associated Coffee 
Industries of America, Inc., these importers were represented, at least 
passively, in code sponsorship for those industries. For that matter, 
when activities of incidental importers were compared in volume with 
the activities of professional importers in certain lines, there was 
reasonable basis for the contention of the industry code sponsors that 
importers were truly represented. This line of reasoning was the basis 
for numerous conflicts in later code administration. . . . 

However, stich professional importers as went on record in N.H.A. 
hearings or in subsequent correspondence were almost unanimously adverse 
to operating under industry codes. The basis for this attitude appears 
to have been a fear that they might be submerged as a minority group 
and subjected, by officially sanctioned authority, to undesirable con- 
trol or ineoui table treatment. Many contended that they had been treat- 
ed as "foreignera" in such matters as tariff legislation, and -expressed 
strong preference for being grouped with other imoorters having similar 
special problems, such as purchasing at a distance and in terms of for— 
.eign currencies, and peculiar types of employment. 

Import trade associations filed objections to a number of pro- 
visions in industry codes which they contended would unduly penalize 
the interests of importers, and they registered a. plea for strict in- 
terpretation of those part of Sections 3(a) and 6 (b), which were des- 
igned to insure that trade organizations be truly representative of the 
trades or_ subdivisions thereof represented by such organizations. 

9829 



-218- 

They contended that the use of the term "subdivision" in the test of 

Section 6 (b) should be interpreted in the light of functional subdivision. 

The usual iTHA. administrative interoretation was subdivision of industry 
t ■ 

product, rather than of function. If the import trade association con- 
tention had been upheld, there is good reason to believe that importers 
embraced in the jurisdiction of many industry codes could have made. a 
strong showing of lack of time representation of importers in the formu- 
lation of these industry codes. The administration apparently considered 
that importers were amply protected by their right to appeal to the 
Administrator in the event that relief from harmful provisions could not 
be obtained through code authorities. 

III. THE GEBEBAL IUPOHTIKG TMDE CODE 

A. Backgroun d of Code Formulation 

The move for a horizontal code exclusively for importers uas launch- 
ed some time in July 1933, and gained considerable momentum at a meeting 
held on August 18 of that year, a.t the Chamber of Commerce of the State 
of l~ew York. This meeting, to which all importers had been invited by 
press announcements, resulted in the setting up of a so-called Central 
ITRA Committee for Importing Trade Codes. The Chairman of this Committee 
made formal application to the Administrator for a general importing 
trade code on December 12, 1933, and cited 26 associations and/or groups 
of importers as supporting the new proposed code. The proposal was re- 
ferred to a Deputy Administrator who invited the Committee to submit 
copies of the proposed code, as well as data showing the representative 
character of the groups figuring in sponsorship. Preliminary conferences 
between administration officials and members of the Committee were held 
in Washington on January 9, and again on January 30, 1934. 

Owing to the loose organization of the Central IHIA. Committee for 
Importing Trade Codes, the Legal Division held that it would be necessary 
to consider the representative character, within each import trade, of 
the group speaking for that trade. This required considerable corre- 
spondence, owing to the fact that only a few of the import groups were 
formally organized as associations operating under constitutions and by- 
laws. .Delay was also occasioned by the feeling on the part of some 
administration officials that this, horizontal code would conflict in 
fundamental respects with the vertical codes already approved and in 
operation. A number of these vertical code authorities had also registered 
their opposition. 

T71i en it became evident, in the soring of 1934, that the Administration 
had decided in favor of granting a horizontal code for importers, a num- 
ber of these vertical code authorities filed briefs in an effort to 
restrict its jurisdiction. Eor instance, the Textile Machinery Code Au- 
thority proposed that the horizontal code should, contain a provision 
to the effect that "any import trade, bjr a majority vote of its members, 
ma3^ elect to operate under any other approved code which covers its 
trade", also that "agents and/or importers of textile machinery should 
be' -subject to the trade practice provisions of the Textile Machinery Code." 
The Code Authority of the Lace Manufacturing Industry proposed that 
the Importers Code include a provision that "merchandise shall not 



9829 



-219- 

be sole 1 at more favorable terms, nor undsr more favorable conditions 
than those of the manufacturers of the -oarticular product" on the 
ground that trade practice provisions of industry codes would be 
nullified unless importers of like products were required to resell 
the imported goods on t he same terms as domestically produced merchandise. 

The ITational Wholesalers Association registered strong- opposition 
to the G-eneral Importing Trade Code, contending that codes are designed 
primarily to regulate selling and that the selling practices of importers 
are practically identical with those of domestic wholesalers. Members 
of the cordage industry suggested a provision that "products when 
imported into the United States or sold for delivery in the United 
States, shall be sold at a price not lower than the current price for 
domestic competitive products"; and that "import sales shall be subject 
to trade practice provisions of the code for the related domestic indus- 
try." . 

■I 

B. The Public Hearing i 

The firs/t public hearing on the code was held in Washington April 
7, 1934. The Deputy Administrator in charge indicated that the hearing, 
was designed primarily to cdevelop testimony to assist the Administration 
in three basic problems. The first vas the .que.stion as to exactly who 
would be covered by the Code; and second the problem of administration, 
inasmuch as the sponsors were presenting a framework "of rather cumber- 
some and complex structure." The third problem was determination of the 
re-ore sentative character of the various groups or trades which were 
combining- in presentation of "a. more or less skeleton or general codel" 

The Chairman of the sponsoring committee, stated that the definition 
had been drawn in a manner to include not only import dealers, but import 
agents, and import brokers. In answering a query as to -.Thy importers 
could not merge their interests with wholesalers and operate under the 
general Wholesaling Code, he stated: 

"We do have similar problems of labor and hours, instead of 
the totally different hours that exist between any distributor 
and any manufacturer, but whereas wo do have similar problems 
as to labor and hours, we have entirely different problems 
as to our general source of supply and as to our outlets. 
We have the problem of bringing things in from abroad, 
negotiating with foreign buyers, the handling of cables, 
which is a technical problem all in itself, the problem of 
dealing with the tariff, which is a tremendously technical 
problem entirely foreign to that of the domestic wholesalers; 
the problem of dealing with the various departments of agri- 
culture, who have further regulations governing the importa- 
tion of foodstuffs." 

In answer to a question as to whether this code did not overlap 
the jurisdiction of numerous other codes, and thereby encourage companies 
to shop around and give their allegiance to that particular code offer- 
ing them most freedom, the Chairman of the Code Committee stated: 



9829 



-220- 

"It has "been my understanding that every house, every employer ( 
should cone under the code that represents his principal 
line of "business, and he is also liable to the provisions of 
other codes that represent his minority lines of business, 
so far as trade practices are concerned, and no other associa- 
tion or no other code should attenrot to claim jurisdiction over 
those not principally engaged in their respective lines of in- 
dustry , n 

The Labor Advisory Board representative pointed out that the code 
sponsors were proposing labor provisions identical to those under consid- 
eration for the General Wholesaling Code, and that there was no eveidence 
that the sponsors had analyzed their opn labor problems, he demanded that 
they gather statistics relating to wages and hours of labor in the import- 
ing trades. 

1 • Analysis of Sp r nsorship 

The preponderant share of questioning by NBA officials during rithe cours^^ 
of " the heading dwelled upon the authority of the representatives to seeak 
for particular trades, and the representative character of the sponsoring 
groups. Testimony developed the fact that two of the three national 
associations of foreign traders, i.e., the National Council of American 
Importers and Traders, and the National Foreign Trade Council, were en- 
dorsing the code. The third national association, I.e., the American 
Exporters and Importers Association, did not go on record officially, 
but several of its members took an active part in fostering the code, 
notably the President of the Association, who pas chairman of the Code 
Committee. 

In addition to these national associations, sever, associations of im- 
porters in particular lines appeared at the hearing in favor of the code, 
and two oth >rs had previously signified their endoresement to the Code 
Committee. These ere listed below! 

Lace and Embroidery Association * 

Kapok Association of Hep York City 

Burl ap As s o c'ia t i on 

Importers and Selling Ag'ensts of Imported hale Wearing Apoarrel 

Tuna Pish Importers Association 

China, Glass and Earthenware Importers Association 

Linen Trade Association 

Bug and Mats Importers of Food Products 

Endorsement of the Code was also given verbally at the hearing by four 
individuals who indicated that they were speaking on behalf of groups of . 
importers in particular trades. One person testified that about a dozen 
importers of paper had authorized him to endorse the code in their behalf. 
Another person stated that he had been authorized by 24 importers of mill- 
inery materials (out of about 30 importers in that trade) to endorse the code. 
Similar statements v *ere made by persons speaking for four importers of to- 
bacco machinery, and for importers of china clay. 

9829 



-221- ■ 

The Code Committee Chairman testified that numerous other import 
groups had indicated favorable interest in the code, "but the testimony and 
NRA files do not disclose the importance of theee favoring parties in 
their respective import trades. An official of the National Council of. 
American Importers and Traders testified that all its members had been 
posted regularly on plans for the code, and that comments of its members 
had been favorable in every case. Inasmuch as the National Council mem- 
bership embraced importers in oyer 50 recorded trades, representatives 
of these trades may be considered to have beer either not opposed to the 
code or actively in favor of it„ In an affidavit submitted by the Chair- 
man of the Code Committfie it was stated th.-t the import trade associations 
and croups who were to become subject to the definition of the proposed, 
code, were "estimated to comprise 1,725 out of a total of 2,700 houses 
in the import trade, and to transact an annual business of $750,000,000. 
out of a total of $1,100', 000, 000." 

2. The Code Area of Jurisdiction 

Testimony of the Code Committee Chairman indicated that the code 
sponsors were ready to concede that importers already covered in indus- 
try codes should remain under those jurisdictions. He made an affirm- 
ative answer to the question as to whether the. code committee was willing 
that the code should be a general one only for those trades desiring to 
come under it, and replied in the negative to the question: »*****if a 
trade is covered by a production code, or if a trade feels it wants to 
present a separate code, you people are not interested in stretching out 
and saying 'you should come under this code*"?" 

In the form presented, the code defined an importer as any indivi- 
dual, partnership, corporation or association principally engaged in 
importing merchandise and/or principally engaged in the sale thereof 
to wholesalers, retailers and/or to institutional, commercial and/or 
industrial users. Article IX stated' that any import trade, by a major- 
ity vote of the members of the industry, may be left to operate under 
any other approved code which covers their trade. This definition, by 
inference, excluded importation by retailers. Insertion of the word 
"principally" was designed to limit membership to professional import- 
ers, and to exclude • importation by manufacturers, processors, etc., 
incidental to their industrial operations. 

C . The Code as Ap proved on July 20. 3:954 

As approved on July 20, the code d.iffered from the proposed draft 
mainly as a result of re-writing of the administrative set-up of the 
code authority, some tightening of the labor provisions, and the re- 
phrasing of certain trade practice provisons to harmonize with those 
previously approved in the general Wholesaling Code. 

The approved definition followed the wording of the proposed 
draft, but added clauses providing that the code should not govern the 
importation of merchandise which is solely for the consumption of the 
importer and not for ro»sale; and prividing also that modifications of 
or extensions to this definition could be made for specific dirisions 
when embodied in any appropriate supplemental code, or when recommended 

9829 



-222- 

"by the appropriate divisional cede authority and approved "by the Admin- 
istrator. The effect of the first added clause was to definitely ex- 
clude irroortation performed by manufacturers, processors and other con— ■ 
sumers. The area of jurisdiction was further clarified by Sect nns of 
Article VIII of the aoproved code worded as followes: 

"Section 1, Any import trade, by mr jority vote of its members nay 
make ap-oli'c&tion to the Administrator to operate under any other 
arj-orovod Code of Fair Competition which covers its trade, and upon 
approval of the Administrator shall become subject to such other 
approved Code and shall no longer be governed by this General 
Importers Code with resnect to such of their activities as shall 
be covered by the Code to which they shall be so transferred.- 

"Section 2. Every Importer, except those who* on the effective date 
of this Code are governed, or hereafter become gqf 3rned, as to 
all or part of their activities, by any other Code of Fair 
Competition under the administration of the National Recovery 
Administration or the Agricultural Adjustment Administration, 
shall be bound by all of the provisions of this General Import- 
ers Code and by all of the provisions' of each and. every Supplemental 
Code applicable to him, when such General Importers Code and./ 
or such Suvroleinental Code or Codes shall have been approved, 
'"wli'th respect to all of nis activities, which are not covered, by 
ahotl'. r approved code, except those Importers, '"ho file with the 
Adiiinistratidr aopli cation's for exemption to this Code_ or any 
portion thereof, which after due consideration by the Adminis- 
trator are sustained." 

The labor provisions (closely paralleling those already approved 
for the general Wholesale Code) set up a work week of 40 hours, with nro- 
vision for ar. additional 8 hours if compensated at the rate of time and 
one-third. The pay rates were fixed at $15 per week of 40 hours in or 
near cities of over 500,000 oopulation, and$14 in all other places, ex- 
cept in the South where' the rate was $1,00 less than otherwise applica- 
ble. Part-tine emoloyses were to receive a minimum of 40 cents per iiotir* 
Exceptions from maximum working hours were provided for cable clerks, 
shinning document clerks, porters, electricians, watchmen, and outside 
installation a.r_e repair men, r -1 siyrceutions to the nay rates -'ere 
allowed, for learners and junior employees. 

The Cod.e listed, the following as unfair trade practices: 

inaccurate labelling, inaccurate advertising, false billing, commercial 
bribery, interfere, ce With another's contracts, rebates and concessions, 
giving of premiums, defamation, threats of litigation, espionage, and 
subterfuge. 

Compared to conditions already prevailing, the labor and trade 
practice provisions of the Code we're such as to have little effect in 
the importing trade. 



9829 



-223- 
D. Extent of Code Allegiance 

Of a total of 2, COO firms employing somewhat over 20,000 workers 
estimated at one time to come within the scope of the Importing Trade 
Code, only 440 "ballots were cast in the Code Authority election on 
January 31, 1935 (on the "basis of one hallo t per company assenting to 
the Code and agreeing to hear, a share in the costs of administration). 
Assessment collections amounting to $9,293 for the period August 1934 
through January 1935 (on the "basis of $1.00 per capita for employers 
and employees), indicated active participation hy firms having a total 
of 9,293 employees and employers. Incomplete assessment colections 
totaling $7,767 for 'the period February- June 1935 covered 835 memher 
firms and total employees probably approximating 7,000. 

An analysis of .code assessment payments for the Fehruary-June 1935 
period (See Table 9, following page), made in conjunction with a study 
of the solicitation lists of 'the Code Authority for various import trades, 
indicates that active code allegiance was high relative to the known 
membership in the trades devoted to linen, oriental rugs, china and 
glassware, chemicals, burlap, cotton fabrics, miscellaneous fibers, hides 
and skins, miscellaneous metal products, paper products, and woodpulp. 

Table 9 indicates the interest manifested in the Importing Trade 
Code in various trades and in different commercial centers. The Code 
Authority gave consideration to the advisability of decentralizing ad- 
ministration, and invited suggestions from regional groups as to the 
proper method of administering a code in their areas. 



9829 



-224- 



Table 9 Coverage of selected importing trades by- the Importing 
Trade Code (and supplements), as indicated by records 
of code assessment payments, for first half of 1935. 



Commodity Line 


• 

• 
• 


umber, of 


Firms : 


Ceographic Distribution 
of firms solicited; i.e., 
percentage of all firms in 




New York; 


San ' Fran- 
cisco 






tolicited 


: Paid 


Other 


Antiques, art goods, 

Brush and broom materials 
Brushes, combs and toilet 


• 


49 
50 

24 
51 

54 

20 

156 

84 

119 

11 

36 

5 

28 

7 

18 

22 

11 

65 

33 

104 

39 

12 

45 

44 

8 

33 

13 

19 

67 

15 

5 

53 

15 

'22 

134 

11 

34 

188 


16 

25 . 

: 11 
: 35 
: 30 
: 13 
48 • 

: 50 
: 64 
: 4 
: 20 
: 4 
: 17 
: 1 
: 6 
: 13 
: 4 
: 41 
14 
: 49 
: 18 
: 6 
: 27 
: 34 
: 4 
: 21 
: 6 
: 8 
: 37 
: 9 
: 4 
: 37 
: 3 
: 11 
: 46 
: 2 
: 12 
: 88 


100 
74 

: 84 

86 

! 93 

: 85 

61 : 

76 : 
! 74 

50 

: 70 
: 60 
: 85 
: 80 
: 85 
: 31 
: 50 
: 94 
: 31 
: &0 
: 90 
: 85 
: 58 
: 84 
: 63 
: 69 
: 50 
; 85 
: 89 
: 50 
: 80 
: 81 
: 70 
: 88 
: 97 
: 100 
: 76 
: 80 


6 

8 
6 

5 
3 

19 
9 

10 
! 30 
! 40 
: 15 

: 20 

: 69 

: 20 : 

: 9 
6 
: 7 
: 15 
: 20 
: 20 
: 37 
: 26 

: 10 
: 2 
! 10 

: 6 
: 12 
: 4 

: 9 
: 7 


20 
8 




• 


8 


Canned fruits and vegetables: 
Casings and meat products : 
Cheese and allied products : 
Chemicals, dyes, colors, : 


: 5 
10 
36 

5 


China, glass, earthenware 


• 


. 17 

: 40 


Building materials (n.o.c.) 
Coal and other fuel prdduct 


• 

s: 






• 






, 


: 15 




• 
» • 

• 


30 


Hardware and electrical goo 


is 


: 10 
: 14 




, 


i 3 


Fertilizer and glue stock 


• 
• 


: 22 




# 


» —>• 




, 


l 5 




• 


: 50 


Fresh fruits and vegetables 


• 


: 5 

: 9 




• 


: 40 




, 


: 20 




, 


: 13 


Jewelry, watches and clocks 
Swiss lace curtins, etc. 


* 


: 18 
: 8 

: 15 




• 


: 13 



(Continued on next page) 



r~» r\ r\r\ 



-225- 

Table 9 Coverage of selected importing trades by the Importing 
Trade Code (and supplements), as indicated by records 
of code assessment payments, for first half of 1935. 
(continued). 



Commodity Line 


: Number of 
: Solicited: 


Firms 
Paid : 


Geographic Distribution 
of firms solicited; i.e., 
percentage of all firms in: 




New York: 


San Fran-: 
Cisco : 


nth fir 




. : 66 : 


3 
23 
29 

2 : 

15 • 
13 : 

7 ; 
7 : 

25 : 
40 : 

26 : 
62 

12 : 
29 

3 ' 
2 : 

42 ! 

7 
49 
22 
20 | 

: .7 

. 10 

9 

6 . 
: 11 
: 7 
26 
: 27 
: 10 
! 4 
: 12 
1 18 
, 18 

16 i 


60 : 
78 : 

93 : 
33 : 
35 : 
12 

90 : 
70 : 
60 : 
85 : 
78 : 

94 : 
100 : 

88 : 
75 ! 
30 : 
100 
98 : 
78 ! 
! 94 
98 

92 : 

75 

81 

70 
! 80 
: 50 

66 

: 66 
: 50 
: 75 
: 88 
: 50 
: 94 - 

91 ; 


40 
5 : 

33 
50 
86 

10 

10 : 

20 : 

9 

7 

30 

10 
2 

20 

! 10 
: 20 
: 25 
: 20 

: 17 
: 12 

: 8 
30 


17 


Miscellaneous food product 
Miscellaneous general 


15 
s: 65 : 

. : 143 : 


33 

15 

2 




. : 11 : 


20 




. : 89 : 


20 
15 




. : 34 : 


13 




. : 122 : 




Paper and paper products.. 


, : 17 

. : 44 : 

. : 11 : 


5 
25 
40 




. : 78 ! 






. : 46 i 






. : 96 ! 


12 


Si Ik fabrics 


. : 36 










Stationery, drawing, 


. : 13 




Steel, fine 


. : 24 
. : 16 : 


: 5 
. 19 




. : 15 


: 20 


Tapipca. and 1 -, sage. ., 


. : 13 


: 25 

: 14 


15&X ..'....,. . ,^.:., 

faring apparoL ..:>.. J. -•- . 

ItfU-low, r.^amboo and .osier.. . 


•: 8 
•: 22 

. : 40 


: 17 

: 38 
: 25 

: 4 
: 20 



a/ in importer handling several commodity lines is considered in 

with each of his lines. Consequently, he will figure in the 
v + ^ r 6aCh ° f those Particular commodity lines. 
Note: The ratio of solicited firms to full national coverage in 
another of these commodity importer groups is believed to 
widely. 

98a9... 



connection 
total 

one or 
vary 



-226- 



Table 9 is somewhat misleading for the reason that it shows groups 
of importers in certain commodity classifications, where the commodities 
are known to be imported customarily by manufacturers making use of 
them, or the importation of which was generally recognized to be within 
the scope of industry codes. The probable explanation is that a good 
share of the firms which initiated the import transactions in these 
particular commodities were operating under industry codes, and that 
a number of the firms indicated in the table were acting as service 
agencies in connection with the importation of these materials, for 
the account of manufacturers. 



Considering all imports during the period of code operation, it 
is estimated that roughly 35 per cent was handled by firms within the 
prescribed field of the Importing Trade Code, about one-half of which 
was imported by these firms on a merchant basis and about one-half on 
a commission agent or broker basis. Another 40 per cent was handled 
by firms functioning under other codes, including those for Coffee, 
Daily Newspaper Publishing, Newsprint, Alcoholic Beverages, Petroleum, 
Shellac, Spices, Natural Organic Products, Spice Grinding, Tanning 
Extracts, Licorice, Assembled Watch, Imported Date Packing, and Im- 
ported Green Olive; and the balance of 25 per cent was imported by 



special departments or branch purchas 
retailers, including instances .where 



ing offices of manufacturers and 
these persons dealt through brokers. 



9829 



-227- 



E. Administration of the General Importing Trade Code 



By the Wms of Administrative Order 487-4 of August 11, 1934, rec- 
ognition was given. to an acting General Importers Code Autnority composed 
of 17 members, each representing a particular , import trade, to serve until 
election of the permanent code authority. . . 

The Chairman of the Acting Code Authority gave practically all of 
his time during the next two months to building up membership and to the 
proper classification of members by 1 trades. Replies received from pro- 
spective candidates for membership heralded the probability that code over- 
lapping would-present a serious problem, despite careful efforts of the 
Administration- in drafting the code definition. 

Article VI', Section 4 provided that any trade could qualify to elect 
a representative on the code authority by submitting evidence of compliance 
with certain minimum requirements- to be determined by the Administrator. 
These requirements- gave imp">r"t trades the privilege, .of qualifying for rep- 
resentation on the code authority, on any one of the following bases: 

(1) 25 importers in the trade, or 

(2) 250 employers and employees, or 

(3) $5,000,000 annual gross turnover, or 

(4) $10,000,00^ invested capital and surplus 

The election of the permanent code authority was held on January 31, 
1935, in which 440 ballots (i. e., one ballot per company assenting to 
the terms of the code and agreeing to bear its share in the cost of ad- 
ministration) were received, of which 8 were declared void. The ballots 
on which members of the General Importing Trade were invited to cast votes 
contained an enumeration of import trades. Members were instructed to 
vote for a representative for that trade in which they were most active 
and in which they had been classed for election purposes. Members of 
those trades which did not qualify under Article VI, Section 4, for re- 
presentation were privileged to vote for a representative in the appli- 
cable major section of importing. The following list shows the numfeer 
of ballots cast for each division for which a representative was elected 
to the permanent code authority. 

Major Sections . Vntes Cast 

General crude and semi-finished materials 26 

General Food Products 10 

General manufactured goods ready for re-sale..* 31 

Commodi-ty Divisions 

Bristle , orusn and broom materials 6 

Burlap & burlap bag . 11 

Fertilizer & glue stock 3 

Hides and skins 8 

Millinery materials 11 

■ Raw silk 8 

Fine steel -4 



9829 



-228- 

Commodity Divisions (cont.) Votes Cast (cont.) 

General steel.. •-'• • 4 

Wood oulp 9 

Cheese and allied product s 34 

Dried fruits and nuts 8 

Preserved sea food 16 

Seeds and spice 5 

Antiques, art goods, furniture, etc 4 

China, glass & earthenware 38 

Floor coverings 9 

Gloves, hosiery, underwear, sweater & knit goods 14 

Lace and embroidery 14 

Linen 67 

Machinery 7 

Oriental rugs 63 

Paper and paper products 7 

Chemical, dye, color, and shellac 9 

Cotton fabrics > 6 

Administrative Order No. 487-8 aooroved the budget for the code author- 
ity, amounting to >s31,500. and a basis of contribution representing $1.00 
per member of personnel. Administrative Order No. 487-18 established a 
National Industrial Relations Committee for the General Importing Trade, 
composed of a labor member, a trade member, and an impartial Chairman. No 
evidence has been fontnd in NRA files of nny subsequent activity by this com- 
mittee. 

1-. Adjustmentsof Conflicts in Code Jurisdiction 

A : study- of NRA files and th° minutes of code authority meetings, in- 
dicates clearly that the preponderant share of code authority activity came 
under the 'general heading of efforts to iron out conflicts of code jurisdic- 
tion as a result of ov"rlaDT)ing in either functional or trade areas with , 
other cod<=s. During the term of office of the Provisional Code Authority, 
i. e., August, 1934, through January, 1935, the Cnairman made a practice of _ 
referring all dis ~ut<=d cases to the Deputy administrator wno took them up ^ 
informally with whatever Deputy was handling th» coce for the opposing group. 
A number of incipient conflicts were settled by this procedure, principally 
by the rule of reason bas^-d on interpretation of definition and evidence as 
to representation. 

Gradually, however, the various code authorities manifested more un- 
willingness 'tu yield in cases of conflict, and it became necessary to refer 
them to the Administrative Officer for an official ruling. An indication of 
the thought of the Administrative Officer on the subject is shown by the fol- 
lowing quotation from a memorandum of July 31, 1934. 

"While I agree with the principle thnt it is undoubtedly 
'advantageous .to group all of these importers for admininistration 
purooses, probably regionally, I anticipate that there will be 
clashes with some manufacturing Code Authorities. The trouble 
is not likely to be from the larger groups such as, the one for 



9829 



~229~" 

the Linen Importing Trade now supplemental to the General Im- 
porting Code but rather from the smaller groups of specialized 
industries such as Packaging Machinery wnerein the manufacturers 
in this country and the importers have worked in close contact 
and frequently belong to the same trade association. Possibly 
the solution of this is to have tnem understand that they will 
he under the General Importing Code for Administrative purposes 
and that e^>ch group must abide by the trade practices of the 
manufacturing code where the code so specifies." 

The position taken by the Provisional Code Authority is indicated by 
a letter circulatsd _ to the trade membership in September, 1934. 

"All importers are covered by the definition of the Importing 
Code. Some importers are also covered by the definition of other 
codes and some have been assumed to be under other codes although 
not covered by specific definition. 

The General Importers Code Authority takes, as a cardinal princi- 
ple, the RIGHT of any Import Trade Division to choose for itself 
whether to be governed by the Importing Code or by any other .ap- 
proved code appropriate to its interests. 

The Importing Code itself provides that any Import Trade, by a 
majority vote of its members, may elect, subject to approval of 
the Administrator, to operate under anotner approved code, even 
though such other code does not claim jurisdiction. 

'where other codes do not specifically include Importing in their 
definition, importers of such articles will be held as being 
subject to the Importing Code and not to such other code, unless 
the majority of such members do definitely express their choice 
of such other code. 

Yv'here other codes approved prior to the Importing Code do speci- 
fically define importing, and Importers are considered to be op- 
erating under such codes, but desire to be transferred to the 
jurisdiction of the Importing' Code , a petition signed by the . 
majority of such Importers should be addressed to the Administra- 
tor, asking for such transfer and setting forth reasons therefor. 
This petition should then be forwarded to V/ashington with the 
endorsement of the General Importers Code Authority, who will 
support such endorsement with such further assistance as they 
can render in urging a favorable decision." 

A somewhat more militant stand was decided upon in the Code Authority 
Meeting of Feoruary 5, 1935, as indicated by the recorded minutes: 

"a. i7e will "go the limit" to protect any group of Im- 
porters who want our help against domestic interests who 
try to force them under Domestic Codes or who take or 
threaten to take, against the Importers, any other action 
which is susceptible to appropriate remedy thru Cod action. 



9829 



b. We will immediately release from our Code- any Importing 
Group who express (by majority of their trades) a desire to 
onerate under any otht r Code, or .7'nere . ; e are satisfied 
that they participated in thp formation of such oth j r Code 
and are content to continue und e r it. 

c. In some cnses we will relinquish jurisdiction of our 
Code over houses who handle tne sale of imported goods but 
who are not the direct importers thereof, '.mere the direct 
importers remain subject to our Code, where such arrangement 
is .acceptable to such indirect Importers tnemselves and 
where such arrangement appears necessary to promote effective 
administration of such other Code to which they will then 
become subject. 

d. No action affecting any branch of the Importing Trade 
shall be taken without first consulting the members thereof 
and allowing ample opportunity for them to express their 
wishes." 

The ourden placed unon the D-nuty Administrator in his endeavors to 
adjust the conflicts became so great that it was found nedessary to ad- 
vise the Code Authority early in May, 1935, that "it is not the province 
of this office to intercede in behalf of members of the trade. This is 
a task for either the' company affected or the General Importers Code 
Authority, and I trust that you will be guided by this information in this 
and in future cases" . 

NRA files show evidence of 33 jurisdictional controversies which 
reached proportions of sufficient seriousness to prompt the Code Author- 
ity to apply for assistance of the Deputy Administrator. Five of these 
cases involved controversies with manufacturing codes, four involved 
controversies with manufacture-and-sale-by -manufacturer codes, ten were 
controversies- with manufacture-and-sale codes, while 14 were with whole- 
sale codes. The outcome or final status of these controversies is dis- 
cussed in the paragraphs wnich follow. 

In four jurisdictional conflicts, the Importing Trade Code Authority 
renounced claims after evidence had been submitted that the majority of 
importers gave allegiance to the other code. In the case of the Fur Dealing 
Industry Code (No. 381), and of the .ool Trade Code (No. 213), the in- 
dustry code autnorities furnished evidence not only that a majority of im- 
porters of those commodities belonged to the sponsoring trade association, 
but also that these importers preferred to remain in those jurisdictions. 
Similarly, Sponge and Chamois import-rs subscribed' to the Fishery Code 
(No. 308), and import-rs of uouolstery materials chose jurisdiction of 
the Upnolstery Wholesaling Code, a supplement to the General Wholesaling 
Code (No. 201). The Importing Trade Code- Authority also was ruled against 
in *wo controversies which were referred to the Administrative .Officer re- 
lating to Scientific Apparatus (No. 114), and Surgical Distributors Trade 
(No. 507). These rulings were based principally on interpretation of def- 
initions. 

The Importing Trade Code Authority won out in a controversy with the 
9829 



w 



-231- 

Textile Machinery Industry (No. 35), on failure to show that importers 
were represented in formulation of the industry code. The Importing 
Trade Code Autnority also won a controversy with the Wholesale Confection- 
ers Code (No. 458), as a result of a ruling based on indicated; preference 
of some importers and on the inability of the other Code Authority to show 
assent of importers. The Importing Trade Code Autnority was given juris- 
diction over importers of gloves on the understanding that it would set up 
trade practices for these particular inrocrters identical to those in the 
Code for the Leathpr and Wool Knit Gloves Indus try (No. 87). 

Four jurisdictional conflicts were settled by Deputy Administrators 
on the basis of a compromise wnereby firms were to be under the jurisdiction 
of the Importing Trade Code if they imported raw materials for sale, but 
under the related Industry Code if tht- imoorter -oerformed any processing 
on his imported materials. The codes involved in these controversies were 
Cocoa and Chocolate Industry (No. 464), Ladies Handb- g (No. 332), Marble 
(No. 421), and Snice Grinding (No. 424). 

In controversies with the Handkerchief Industry (No. 53), and the 
Wnolesple Embroidery Trade (No. 201), the cases were lost to the Importing 
Trade Code by action of the Industry Code Authorities in amending their 
definitions in such manner as to more clearly embrace the function of 
importing.. 

During the early months of 1935, when the Importing Trade Code 
Authority was becoming embroiled in an eyer-growing number of jurisdiction- 
al conflicts, it adopted the policy of suggesting that the domestic code 
autnorities should be required, in cases of conflict, to submit affirma- 
tive evidence showing that the majority of importers did participate di- 
rectly in the formulation of the domestic code, thereafter operated di- 
rectly under the domestic code -^rior to the approval of the Importing 
Cede, and that the language of 6uch domestic codes was broad enough to 
permit such inclusion. It was also suggested that these matters be settled 
by referendum and that uniform trade practices be adopted in cases of over- 
lapping. This is illustrated by the following quotation from a letter of 
February 4, 1935, to the Code Authority for the Pharmaceutical and Biolog- 
ical Industry. 

"....Would it not be most equitable, under the. circumstances, 
to submit a questionnaire to all of the Pharmaceutical Importers 
appearing either on your list or our list and determine, - 1. 
whether they did assent either directly or by delegated authority 
to come under your Code, cr - 2. whether, even though not 
originally consenting, they would now prefer to be governed Dy 
your Code rather than by our Code. We would be very glad to 
be guided by the result of such questionnaire which we trust 
would be equally acceptable to you." 

"....It is quite likely that from time to time you may find 
occasion to adopt Fair Trade Practice Provisions particularly 
for such matters as Terms of Sale, Discount, etc. If you should 
do so, we would be glad to cooperate with you to try to have 
similar Provisions adopted applicable to the Importers of Jiour 
products (in the event that these Importers remain under our C»de) 

so as to maintain a uniformity of trade terms and conditions 
between the two groups." 

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The conflict with the ■ Pharmaceutical and Biological Code was also 
the subject of a. letter to the Deputy Administrator which sets forth the 
views of the Importing Trade Code Authority on the status of importers 
under other cedes approved prior to and following the effective date of 
the Importing Code. 

"The Package Medecine Industry Code refers to ".entifrices, 
mnith washes .and medicinal preparations, for sale to the gen- 
eral public. 

The Pharmaceutical & biological Industry Code refers to 
p' armaceutical and biological (i.e., medicinal) products for 
direct use by or upon prescription of physicians, veterinaries 
or dentists. (it includes exclusive distributors or agents of 
members but does not include wholesalers which distribute 
. principally a general line of products included under tiieir 
c : de . ) 

3y definition, importers of Irags and medicines might be leld 
as subject to either one or both of these codes. Thes ; im- 
porters were subject to the Importing Code orior to the ap- 
proval of the Pharmaceutical & Biological Industry Code and 
sh:uld net he held to nave become governei by it on its aT>- 
prcval . 

The Package Medicine Industry Code, however, was approved prior 
to the Importing Code and might be supposed to have a. prior 
claim, ^aving defined jurisdiction over importing before the 
Importing Code was approved. Nevertheless, if such coverage 
was effected without the participation and approval of the 
i.vpcrters, it would net appear that they were properly governed 
By th; t Cole at any time and were therefore available for cover- 
age under the Importing Code when this latter was approved " 

The W.:A files disclose jurisdictional controversies between th 
Importing Trade Code and the following 14 other codes, which' had been 
referred tc the Administration, but which remained unsettled when the 
NrU was invalidated. 



Code No. 



;o •• e 



508 
201 
134 
139 

175 
69 

72 

4. 

4-8 
330 
196 
286 
201 



( Supplement) 



( Sup pi emen t ) 



(Supplement) 



Fi shery 

Flat Glass -V Jobbing Trade 

Gas Appliance & Apparatus 

La.chine To :1 & Equipment 

Medium & Low Priced Jewelry 

Millinery 

Packaged jaiedicine 

Portable Electric Lamp & Shade 

Silk Textile 

j'aste Materials Trade 

Pood &•■ Grocery Tholesals 

Beauty ft Barbershop Houipment 

"Tholesale Furniture 



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Code ITo. (cont.) Code 

201 (Supplement) "7o:lens : n : Trimmings 

These examples of jurisdictional controversy >re an eloouent com- 
mentary on tie system of vertical cedes involving iniustrial groupings 
basod largely upon products rather than upon functional activities. 

hie of the most serious conflicts of jurisdiction involved a functional 
controversy between the Importers and a group of Wholesalers under the 
Wholesale Pood and Grocery Code (196), precipitated by the problem of 
assessments. In this connection the Importing Trade Code Authority found 
occasion to express its views (inter alia) on (a) the general scope of 
the Importing Trade Code, (b) the status of import agents and broker:', 
(c) the relation between importers and retailers, (d) the difference be- 
tween importers and wholesalers, (e) the status of importers who also pro- 
cess t'eir goods, (f) the st tus of houses who do incidental importing, 
and (g) tha important question of the necessity for separate jurisdiction 
for importers. The following, then, is a summary of these views which 
were set forth in a letter from the Chairman o~f the jode Authority dated 
September A, 193A. 

(a) The General Scope of the Importing Trade Code 

"Generally speaking we hold that houses which, as their 
principal line of business, import foreign goods and re- 
sell same in original condition are clearly importers." 

(b) The status of import agents and brokers 

"The Importing Jhie claims jurisdicti .n only over taose 
who are principally importers or \.io mrve organized de- 
partments principally engaged in import, ui-i those import 
agents and brokers who are engaged in the sale of imported 
goods to or on behalf of such importers. 

The Importing Code define s jurisdiction not only over parties 
principally engaged in importing but also those principally 
engaged in the sale of imported merchandise. The record of 
various hearings and conferences held prior to the approval 
of the code should show that this reference to those en- 
gaged in the sale of imported merchandise was intended to 
provide a place for the import agents and brokers who are 
a part of the import trade but who may not themselves ap- 
pear as importers of record, nor participate directly in 
the importation of the goods. It is not intended to cover 
general wholesalers who may be engaged in the purchase and 
sale of imported products but who are not themselves con- 
cerned in the importation of these products. 

(c) The relation between importers a nd retailers. 

"In the case of such importers who sell principally at 
retail, the Importing Code excludes such retailers from 
its jurisdiction, leaving them to the jurisdiction of 
their respective retail codes; this distinction being 



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made inasmuch as importing as a whole is a wholesale trade." 

(d) The difference between impor ters ,;nd wholesalers 

"I auite a ree * * * that .icases who ire primarily whole- 
sale grocers and not primarily i. porters should pay assess- 
ments to the proper code covering the wholesale grocers 
rather than to the Importing Dole. 

Vihere there may be some Tiff orence of opinion * * * * is 
in the matter of definition as to what constitutes an im- 
porter as distinct from what constitutes a wholesale grocer. 

Applying the definition of the Code as we understand it 
to the members of the United Ziholesale G-ro ers hoard of 
Trade, we would understand that our Code woul'd take juris- 
diction over such of these mouses as are principally en- 
gaged in the importing of goods and the re-sale of same in whole- 
salequantities and in original condition, and ; that the Im- 
porting Code would cover further any organized departments 
so engaged. ******** 
'Je understand that we would not have jurisdiction over 
members of the United '.Tiiolesale Grocery Board of Trade 
who are principally engaged in the purchase and sale of 
domestic goods and v;hose importing constitutes a minority 
of their ousiness, nor over members who dispose of their 
products principally at retail, nor over memoers who are 
engaged in domestic processing of their poods, and are 
covered under domestic processing codes, as for example 
the Imported Pate Packing Industry Code, the Irmorted 
Preen Cdive Industry Code, trie Spice^ G-riniing Industry 
Code, etc." 

(e) The status of importers v;ho also process their goods 

"Importers who also process their goods would also still 
come under the .Importing Cole unless the processing function 
constitutes the principal part of their business ,nl is 
covered by a lomestic code for such processing. In the 
absence of an appropriate domestic code for the processing 
function we assume that the Administration would wish us 
to exercise jurisdiction over such importers out unless 
their actual importing constitutes their m=gor business 
or is conducted by an organized department for import, we 
are not sure that we could wxeroise such jurisdiction un- 
less by direct Executive Order placing such parties under 
our Code. " 

(f) The status of houses who lo incidental importing • ■• ..•"' 

"Houses not principally importers and generally subject to 
other Codes, who nevertheless do some incidental importing, 
are of course subject for their importations to the Fair 
Trade Practice Provisions of the Importing Code, although 



98^9 



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not subject to the laoor and hour and assessment pro- 
visions of this code." 

(g) The important question ox' the necessity for separate 
jurisdiction for ijjorters 

"The necessity for separate jurisdiction for Importers 
lies in the fact that there is a difference of interest, 
end very often an antagonism of interest, "between the im- 
porters of foreign products and the domestic dealers who 
handle competing domestic products. This difference of 
interest makes it necessary, for the fair protection of 
both groups, that each must have its own code jurisdiction 
and must not be subject to control or dictation by the 
other. This principle was recognized by the Administra- 
tion in approving the Importing Code. 

It is recognized however that in the fair protection of 
domestic as well as importing interests, it is necessary 
to have a coordination of fair trade practices between 
the various importing groups and the related competing 
domestic groups. It is therefore provided in the Im- 
porting Code, as in most codes, that Committees shall be 
■rppcinted, as necessary, to represent 'the Importers in 
any branch of the trade, who shall meet with similar 
Committees representing domestic interests in order to 
work out adjustment of difference in Pair Trade Practice 
and the recommendation of such joint Committees, with the 
approval of the Administrator, may then be incorporated 
as amendments, if necessary, in the respective codes con- 
cerned. " 

2. Other Code Administration Problems 

(a) Sales Volume as a .oasis of Assessment 

On J nuary 8, 1935, the Importing Trade Code Authority considered 
the "izestion whether other code authorities had legal sanction to assess 
importers on the basis of sales, owing to the Supreme Court decision in 
the ca.se of '"Brown vs. Marylanl" (12 Wheaton 419) which held that the 
taxing of imports is exclusively reserved to the Federal Government by 
virtue of Article I, Section 10 of the Constitution, and that imports 
covered not only the act of importation but the article imported until 
its first wholesale disposition. This matter was referred to the Deputy, 
who obtained a ruling from the Legal Division that in connection with 
codes covering importers the NRA found no objection to the practice of 
assessing cntributions, if equitable, were considered constitutional*. 



(*) .setter from the Assistant Deputy Administr. .tor, to the Chairman, 
The General Importers Code Authority, (Nov. 17, 1934) 



9829 



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(b) Total Value vs. Value added by Processing, as 3a.ses of Assess* 
ment 

It was re .orted tliat the Portable Dlectric La.no end Shade Code, 
Authority was claiming the right to assess importers under that code en 
the totrl value of the finished article, while the importers were con- 
tending .that such assessment should be only on the basis of the added 
value resulting from the processing performed on the imported materials. 
It was explained that most of these importers made a practice of brin in;., 
in the Ir-.ips^dcf adding electrical units after importation. The Importing 
Trade Code Authority adopted a motion instructing its Executive Officer 
to protest against the decision of the Deputy Administrator for the In- 
dustry Code upholding the Inlustry Code Authority. 

(c) Provisions Covering Design Piracy 

In a Code Autnority Meeting December 4, 1934, cognizance was taken 
of the move on the part of several industry code authorities to convince 
the Administration that the design piracy provisions of the Importing 
Trade Code should be tightened by amendment. The Code Authority went 
on record as approving the general policy of providing in the Importing 
Code, as applied to any particular branch of the trade, for the protection 
of domestic design, on condition, however, that similar reciprocal pro- 
tection of imported designs be included in the respective domestic code. 

(d) NRA Lables on Imported Merchandise 

The question arose in the Cigar Importing Trad° as to the power of 
members of that trade to place labels on their imnorted cigars indicating 
that the product was imported by a member of the Importing Crde and dis- 
tributed in accordance with the terms of that Oode and distributed in 
accordance with the terms *f thatCode. This project was given up, after 
the Administration registered opposition on the grounds that the use of 
labels should be reserved to domestic produces.* 

3. Compliance Under the Importing Trade Code 

Compliance presented comparatively little difficulty under the Im- 
porting Trade Code. One New York firm petitioned to reduce the wages ef 
its employees contrary to Article IV, section 2, which provided that wages 
snuuld be maintained desoite reduction in the number, of hours worked. 
The Code Authority reported favorably on this petition, out it was denied 
by the Administration, (Administrative Order 487-14). 

A refining Company petitioned for exemption from th° limitation on 
hours, to apply during emergency periods when it was pumping oil from 
tank vessels. This exemption was granted but a limit was placed upon the 
number of workers permitted to work longer hours and the applicant company 
was required to nay such workers at higher hourly r^tes than wer? provided 
for work under normal conditions, '(Administrative Order 487-17). 

(*)l>tter from Mr. J. Wayne Ley, Assistant Counsel, NP.A Legal Division, 
to Mr. A. A. Kimball, Assistant Deputy Administrator, Div. IV. (Jan. 25, 
1935) 



9829 



-237- 

Innorters of potash and potash salts, and importers of inorganic 
nitrogen were granted exemptions from the trade practice provisions in 
Article VI.I of the Code on the ground that domestic producers of like 
chemicals were not governed by similar trade practices in domestec codes. 
The original 50 -day exemption was extended without limitation after the 
domestic producers manifested no intention of subjecting themselves t«j 
comparable trace practice provisions. 

Importers of crude rubber were granted an automatic stay of provisions 
of the Importing Trade Code to permit them to justify their contention 
that t.ney snould be placed under the jurisdiction of the basic Rubber 
Code, (Executive Order S20ID-B, d* ted. July 15, 1934). These crude rubber 
importers were given a hearing, but did not make a satisfactory case where- 
upon they filed notice that, if they- were to be placed under the jurisdic- 
tion of th° Importing Trade Code, they would wish to draft and submit a 
supplemental code. The stay was terminated on February 7, 1935., and they 
again became subject to the Importing Trade Code. 

4. Public Hearing on. Proposed Amendments, March 11, 1935 

In an effort to m^et the arguments of various domestic Code Autnor- 
ities that trade practice compliance would break down unless importers 
.were under jurisdiction of those codes, the Importing Trade Code Author- 
ity set up. a number of divisional trade practice committees for individual 
import trades. These committees were instructed to confer witn domestic 
code authorities and work out a plan for setting up uniform provisions to 
apply in the separate code jurisdictions. Divisional committees were ap- 
proved for the following trades within the jurisdiction of the Importing 
Trade Code, (Administrative Order No. 487-24). 

1. Bristle Brush and Broom 

2. China, Clay and Earthenware 

3. Cotton Fabrics 

4. Gloves 

5. Paper and Paper Products 

A public hearing was held in Washington on March 11, 1935, to consider 
three basic amendments proposed by the Administration and certain additions 
to the trade practice provisions (Article VII ) to bring about uniformity 
in the trade practices governing importers and domestic producers of the 
following lines: 

1. Swiss Lace Curtains and Bedspreads 

2. Fine Steel 

3. .Machine-made Lace and Embroidery 

4. English Earthenware, Chinaware and kindred lines 

5. Leather and Wool Knit Gloves 

6. Hat 3odies and Millinery Supplies 

The trade practice provisions did not receive particularly strong 
support at the hearing; in fact, no proponents, appeared for. several of 
the import lines affected. The inference to be drawn is that the Importing 
Trade Code Authority officers were taking the initiative in presenting 
these amendments, perhaps chiefly as a means of staving off further efforts 



9829 



-238- 

of the industry code authorities to obtain jurisdiction over importers, 
and that the import firms engaged in those particular lines either did not 
consider the proposed provisions rf vital importance to them, or were re- 
luctant to agree to be governed by them. The record is not clear as to 
which of tnese considerations was most important. 

The first two amendments proposed by the Administration at the March 
11th hearing, were designed to clarify the jurisdiction of the Code, and 
to eliminate the differences which had appeared in the interpretation of 
this jurisdiction by the Code Authority and the strict legal construction 
of the Code definition. The Code Authority had jeen interpreting the Code :. 
in a manner to re^d into its definition,, the requirement of all importers 
- whether principally importers or incidental importers - to ooserve the 
trade practices of the Importing Trade Code in their import operations. 
Further, the Code Authority had gone on the theory that inclusion of the 
word "principally" in the definition was solely for the nurnose of re- 
assuring other code autnorities that the Importing Trade Code Authority 
would not attempt to collect assessments form any incident''! importers 
who uere irincipally subject to otner codes. 

These amendments called for revision of the definition of the word 
"importer", (Article II) by deletion of the word "principally", wherever 
it appeared in the definition, and, as a corollary, appropriate revision 
of th» phraseology of Section 2 of Article VIII to extend. the scope of 
the code to cover import operations of all ; importers , including incidental 
importers. 

The third amendment suggested by the Administration called for the 
addition of a Paragraph 15 to Article VI (code authority organization 
and powers), authorizing the Code Authority to'appoint an Executive Com- , 
mittee of 7 members of the Cod<= Authority, to act in the interim between 
meetings of the Code Authority, and to have all of : vhe povers and duties 
granted the Code Autnority; provided, however, that the. Code Authority 
retain veto powers over acts of the Executive Committee, This amendment 
was designed to simplify administrative procedure of-' the larger and un- 
wieldly Code Autnority consisting of almost 30 members.. ■ 

These proposed amendments, although not off icially , approved by the 
time of the Supreme Court's decision in the Scnechter. : case, would have 
broadened the scope of the code to conform to the interpretations which 
the Code Authority had insisted upon, extending its scope "to cover any 
one, whether it be a minor or major part of the business, handling a type 
of im prting * * * under the jurisdiction of the code, "* the principal 
exception being those activities which were already governed or which 
thereafter should become governed by any other approved, .-code , and im- 
porters who might obtain an exemption approved by the Administration. 
Apart from the exception of importing which nad or should become governed 
by other codes through approved procedure, the adoption of the proposed 
amendments, in general, would have 'made . the importing trade code applicable 
to all imports flowing to domestic consumers, except those imported by 
manufacturers or processors for their own use or processing and -except 
those imported oy retailers for sale .direct; Jfco final consumer.** 

(*)Assistant Deputy, Hearing on Application for Amendment to Importing 
Trade Code, .age 147 (March 11, 1935) ; ■ '■ 
(**)See Diagrams I and II. 

9829 



-239- 
¥ . S ummary of Code Operation 

The difficulty of th? task of organization among widely divergent 
trades represented in the importing group is indicated by the report 
dated December 6, 1934, of the Administration Member of the Provisional 
Code Authority. 

" * * * Arrangements for a permanent Code Authority have necess- 
arily taken much time, due to perhaps lack of organization or 
association among the importers of the country and the necessity 
of starting practically from scratch to locatp and d=-limit the 
proper boundaries of the importing trade. There is still much 
to be done in this direction, out I believe this work is suf- 
ficiently advanced to assure th° election of a very representa- 
tive permanent Code Authority * * *."■ 

The operation of the code and the achievements under it were sum- 
marized in a letter dated June 7, 1935, addressed to all members of the 
coded trade and signed by officers of the Code Authority. 

" * * * The Importers Code accomplished some definite results. 
At a small expenditure - much smaller than any other similar 
codes of which we have knowledge - Importers, Import Agents and 
Brokers of imported products, have be-n protected from the pos- 
siole. jurisdiction of inappropriate codes which would have been 
both harmful and expensive. 

We also feel that we have gained greatly in th° creation of 
gcod will. Negotiations with domestic Code Authorities have 
been conducted in a friendly manner and have succeeded in re- 
moving misunderstandings. Furthermore, we have aided in es- 
tablishing the business of importing as a recognized major in- 
dustry in the eyes of several government departments. Lastly, 
our efforts have resulted in cooperation and the creation cf 
good will between many import trades that previously did not 
know each other and therefore had neither interest nor under- 
standing of their kindred problems. * * *" 

Review of NBA. file materials clearly reveals that the Executive 
Officer of the General Importers Code Authority, wh« had served previously 
as Chairman of the Temporary NBA Committpp for Import Codes, and Chairman 
of the Temporary Code Authority, was a tireless worker and an effective 
guardian of the importers' interests.' He gained complete oonfidenee of 
the large codp authority membership and was privileged to exercis° his 
own judgment in coping promptly with the many problems which arose. 

In appraising accomplishments of the Code Authority, it is impor- 
tant to bear in mind that the Importing Trnde Code was primarily a de- 
fensive move on the part of the sponsoring committee to set up independent 
group jurisdiction for importers in order to forestall the inclusion of 
import trades, as minority groups, in the jurisdiction of industry codes 
largely dominated by their competitors. In order to gain this objective, 
the code sponsors agreed to most of the recommendations made by advisory 
boards of the Administration as to labor practices, and they voiced n-> 



9829 



-240- 

objection to incorporation of general trad^ practice provisions modeled 
upon those under consideration for the General Wholesale Code. These 
were general in character and, althougn specific labor data wer° never 
gathered for the Importing Trades, ic a/ot) Q ars that the minimum wage pro- 
visions were set so low as to have -oractically no effect. As a consequence, 
the Code Autnority was free to d°vote the preponderant share of its time 
to ironing out conflicts of overlaoning jurisdiction with other codes. 

As a result of the increasing number of jurisdictional conflicts, 
the Assistant Administrative Officer in charge of classification, at the 
Importing Trade Code Hearing of March 1\ , 1935, questioned the code spon- 
sors in terms wnich imoli^d that he had s<-rious doubts as to the wisdom 
of a separate code for importers; in fact h» expressed tne Belief that 
importers should b & under the manufacturing codes or th° wholesalers' 
codes for their commodities. The conflicting views which were h°ld re- 
garding the proper grouping of functions for code purposes was indicated 
by the testimony of a representative of the importing trade that "it is 
inconceivable that the buyer and seller should be under the same code" , 
and the retort by the Assisstant Administrative Officer that "it is not 
inconceivable because practically --very code we nave is that way."* 

If the suggestion that various v iaport trades •' bo. placed-undor . related in- 
dustry or wholesale codes had been adopted, it seems clear that the pe- 
culiar functional characteristics of importing operations and the con- 
flicting interests of importers woulci have necessitated setting up a 
special administrative office, thoroughly conversant with the business 
of importing in ootn its technical and administrative aspects, to safe- 
guard their interests, and particularly to protect them', as minority 
groups, from Peing suojected to inequitable treatment by dominant domestic 
interests . 

A situation of widely scattered code jurisdiction for importers and 
of overlapping with other codes was inevitable until such time as the 
Administration might reorganize the general. N codo structure in such manner as 
to eliminate conflicting functional and product areas of jurisdiction 
under the same codes. 

As a result of the special survey of all distributing trade codes 
in the spring of 1935, the Distributing Trades Division, in a renort to 
the National Industrial Recovery 3oard, dated June 18, 1935, recommended 
consolidation of all distribution codes into a broader series of seven 
codes, in which an Importing Trade Code w^s to represent one of the 
series. It w s further suggested that the definition in this code for 
"member of the trade", cover any individual, partn°i shin , cerp«ration or 
other form of enterprise engaged wholly or -oartially in the trade as de- 
fined, to .he extent that he or it engages in the trade, but shall include 
only such operations and/or facilities as are required in engaging in that 
trade. This suggested definition would obviously have given the proposed 
code much wider jurisdiction than the Importing Trade Code, since it would 
have embraced all firms who engage in importing, at least to the extent 

(*) Transcript of Hearing on Application for Amendments to Importing Trade 
Code (March 11, 1935) - page 74. 

9829 



-241- 

of covering their importing operations. Under it labor and trade practice 
provisions could have been set up to apply ■uniformly to all importers, but 
the oroblem of overla-OTdng definitions with industry cod^s would still 
have remained until such time as the industry code definitions were modi- 
fied accordingly. 



♦ 



9829 



-242- 



CHAPTER V. 



ERA EXPERIENCE IiT DEALI1X' WITH ILPORT PROBLEMS IN 



COlTKECTICi: V/ITE CODES 



I. BACKGROUND OP OTHER I i TORT CONTROL LEGISLATION 

Before discussing i T RA experience in dealing with import problems 
by code procedure, it is desirable to consider the framework of other 
legislation designed to regulate imports, into which any regulation 
set up by code procedure must necessarily fit. 

Every description of article of foreign growth and/or manufacture 
may be imported free of any restriction, unless excluded by one or 
amother of the following special provisions of the Tariff Act of 1930: 

Section 304 - marhin requirements; 

Section 305 - immoral a.rticles; 

Section 306 - diseased live-stock unfit for human consumption; 

Section 307 - convict-made goods; 

Section 337 - unfair trade practices in inroort trade; 

Section 593(b) - importation contrary to Ira/; 

provided that all articles or commodities covered in the dutiable list 
shall be permitted entry only upon payment of the duty therein prescribed. 

Section 303 of the Tariff Act provides, with respect to articles 
on the dutiable list, for the imposition of an additional count ervai ling- 
duty on imports upon which the country of origin bestows any bounty or 
grant upon the manufacture or production or export of such article. 

Section 336 assigns to the Tariff Commission the duty of studying 
.production costs in this market and in foreign markets, and authorizes 
the President to proclaim a change in import duty rates - within a 
range of 50 per cent above or below the prevailing rate - if in his 
judgment such change is shown by the Tariff Commission investigation to 
be necessary to equalize differences in production costs. 

Section 337 declares unlawful unfair acts in die importation of 
merchandise, the effect or tendency of which is to destroy or substant- 
ially injure an industry efficiently --:-X. economically operated in the 
United States, or to prevent the establishment of such an industry, or 
to restrict or monopolise tra.de and commerce in "the United States. 

Section 593(b) provides that, if any person fraudulently or knowing- 
ly imports into the United States any merchandise contrary to lav/, such- 
merchandise shall be forfeited and the offender fined or imprisoned or 
both. 



98?,9 



—245— 

She amendment to the Tariff Act of 1930*, approved by the Pres- 
ident on June 12, 1934, delegated authority to the President to enter 
into foreign trr.de agreements with foreign governments ard to pro- 
claim such modifications of the e:;istin u duties - up to a : maximum of 
50 per cent - and other import restrictions as ere necessary to carry 
out any foreign trade agreement havi:\. for its purpose the expansion of 
foreign mcrkets for the products of the United States. 

II. PROVISIONS 01' THE ACT RELATING TO THE REGULATIOl" OF IMPORTS 

The exception from the provisions of the anti-trust laws provided 
in Section 5 of the National Industrial Recovery Act, of any approved 
code and of any action complying with the provisions thereof, had the 
effect of enemptinj imports and importing, vhen officially codified, from 
the provisions of the Uilson Tariff Act of August 27, 1894, amended 
February 12, 1912, which prohibited any importing combination having as 
its object an increase in the price of any imported article or of any 
domestic manufactured article into which such iimort might enter. 

At the time the Recovery Act was passed, the attention of Congress 
was largely focused on the question of competition from low cor.t imports 
resulting from lower standards of production in foreign countries. As 
3, result of doubts by uembers of Congress concerning the ability of 
coded industries to cone with the 'oroblem of competitive imoorts Qy 
means of code provisions, Section 3 (e) was incorporated in the Act, 
authorising the President to impose special terms and conditions or 
quantitative limitations or fees on the importation of any commodities 
which w ere entering in substantia quantities or in.crea.sing in ratio to 
domestic production and were bein;.. offered in the domestic market on such 
terms and conditions: as to seriously endanger maintenance of the code. 
USA experience in the administr- tior. of Section 3 (e) is reviewed in 
Part 3 of this study. This charter is confined to e discussion of the 
regulation of imports in connection with the administration of provisions 
incor por: ted in ore or another of the many 1TRA codes under authority 
of Section 3 (?) of the Act. Proposals were made from time to time by 
domestic interests and, in some coses, were considered by the Administ- 
ration, for invoking other provisions of the national Industrial Recovery Act 
. e : ...o.ns of coping T ith.' import problems -here powers of. Sect ion 0(e) and 

3 (a) were not considered sufficient to accomplish certain desired ends. 
One such proposal sua jested that powers of Section 2 (d) should be inter- 
preted to include "importers", and to cuthorize the President, after 
public notice and hearing, to -nr<:'scribe the terms of a code to govern 
any import trrde, if it were found that abuses inimical to the public 
interest were prevalent in that trade. Another suggestion was made that 
Section a (a) and 4 (b) should be used oj the President for the nurpose 
of requiring importers in certain tr. des to apply for a license, revoc- 
able upon non-com?limce with the terms end conditions prescribed in a 

4 (a) agreement. 

(*) Public Statute I'o. 316 of the 73rd Congress. 



9829 



„ r >4-4.». 

A pro. jo sal was aLso made that, after certain imorters would have been 
subjected to licensing, the President exercise the powers in Section 10 
(a) in.e manner to fix a license fee so high as to discourage applications 
of innorters. I 1 RA. experience doer, not include any resort to powers pro- 
vided in Sections 3 (d), 4 (a), 4 (b), or 10 (a) for the purpose of reg- 
ulating imorts. 

III. IMPORT REGULATION SOUGHT 37 IitDUSIRY GROUPS 

A. Regulation Sought U nder the h.^ortiy Trade Code 

After having obtained administrative approval of the inclusion ox 
importers i: the scope of sever;! industry codes,* the code authorities 
viewed with displeasure the efforts of import trade associations to 
obtain official sanction of a general horizontal code to embrace impor- 
ters exclusively. These industry code authorities took ste;->s to oppose 
any move on the part of the Importing Trade Code sponsors to gain jur- 
isdiction over the import groups already covered by their codes. Per 
example, the Textile hachiner-- Manufacturing Industry Code Authority 
su ;gested that the definition of the General Importing Trade should 
provide that "nc importing tr e already orga i r :ecl under an accepted code 
shall be disturbed in its relati nshi^ by the -Top die:- of this cede, ex- 
cept by approval of the Administrator after a hearing." A similar sug- 
gestion in different ten s i ._ also j - - d e Code Authority for the 
Package Machinery idanufacturin/; Industry. 

Action of the Administration on the u-o^osed code for the General 
Importing Trade w s alsc follow* 1 closely b officials of r number of 
industry codes v/hich did not embra.ee i- 's within their scope bub, 
vhcre nonetheless, there was cc netiti r ith inserters in the sellir 
field. The Code Authority for the Lace and Embroidery Industry suggested 
that ( /.revision be incorporate, i the I . ortinr Trade Code that "(in- 
ported) merchandise should not be sold • t more favorable terns or under 
more favorable conditions than those of tin manufa.cturers of that part- 
icular product." 1 The Pishin; Tackle Industry Code Authority suggested ;. 
provision to specify that "importers shr.ll con 1;- with the trade pract- 
ice provisions of the Industry Code already covering similar domestic 
products" The Cord- ;e ami Twine Code Aut; rit; suggested a provision that 
no import sales be >ermitted to be v de below the domestic price, and 
that import sales be sul ject '..< the br d.e practice provisions of "code 
for their respective industries." Le -1 counsel for the Earthenware 
iiaraifacturing Industry suggested in An ust, I'd-*, that the wording of 
the !, i.'_; ccurate Labelh.v " provision in the Im orting Trade Code should 
be amended to prohibit the cu >yi . :>r imit; tion of any "domestic" pattern 
or desi . Ste s "ere taker by the Toy Manufacturers Association to 
foster the citin. of importers for noncompliance with the Importin;. Tr de 
Code provision dealing with inaccurate labeling'. 

(*) See Section I\\ infra, page 247. 



9C?9 



-245- 

The provisions which were incorporated in the Importing Trade 
Code did not follow to the letter £.11 of the suggestions made by 
industry code authorities, but a good share of the requests were met in 
large measure, firstly, the area set up for the Importing 'Trade Code 
was defined in such manner as to leave undisturbed the import trades 
which were already embraced in the scope of industry codes. Secondly, 
provision was aoe.de in the Importing Trade Code for the appointment of 
special committees of importers to meet with the code authorities 
covering domestic manufacture of similar commodities for the purpose of 
formulating uniform trf ).e practices to govern domestic manufacturers in 
the industry codes and importers in the general importing code. In anti- 
cipation of a move in this direction, the Leather and Uoolen Knit Glove 
Code provided in Article VII that three members of the Clove Importers 
Association would -be ;_iven membership in the fair trr.de practice agency 
of that code, despite the fact that the code did not embrace importers 
by definition. 

B . Imoort ?.e gulation Sought Un der Section 3 (e) of the Act 

1. Code Provisions for Filing Complaints, 

In 56 codes, the Code Authorities were either directed or specifi- 
cally authorized to collect and maintain current information regarding 
competition from imports, and to file complaints under Section 3 (e), 
should a; propriate conditions arise. Five of the codes which contained 
this general provision, namely, Lumber and Timber, Mica, Fertilizer, Dog 
Food, and Handkerchief, embraced importers within their own jurisdiction. 
In the Horseshoe and Allied Products Code the provision was set off sep- 
arately in an. Article IX, with the caption, "United States Customs Tariffs, 1 
However, the following provision, in the Code for the Mica Industry is 
typical of the form, employed in many codes in the enumeration of code 
authority powers and duties: 

"(g) To investigate the importation of competitive articles into the 
United States, which endanger the purposes of this Code and to act 
as the agency to make complaint to the President, pursuant to the 
provisions of Section 3 (e), of the Act, on behalf of this. Iiidustry. " 

The phraseology employed in the Pyrotechnic Manufacturing Industry 
code, departed from the usual for;.; in order to more closely follow the 
wording of Section 3 (e): 

"(c) The Code Authority 3oard shall investigate and report to the 
Administrator as to the importation of competitive articles into the United 
States of America, in substantial quantities or increasing ratio to dom- 
estic production, or under such terms or conditions as to render ineffec- 
tive or seriously endanger the maintenance and enforcement of this Code, 
and shall make complaint on behalf of the Pyrotechnic Industry, under the 
provisions of Section 3 (e) oi the Act with respect thereto." 

The provision empowering the Code Authority to maintain current in- 
formation regarding competition from imports and to file complaints under 
Section 3 (e), was employed most frequently in. the Textile Codes ( .34 
instances) . 



9829 



' -246- 

It appeared also i~ nine coder, oi the 3asic ilateriels Group, in 11 codes 
of the Chemical Group, in 5 codes of the Manufacturing Group, and in ■!- 
codes of the Equipment Group. It appeared i"n only 3 codes of the Food- 
stuffs Croup, in one Distributing Code, and in no code^ of the Construc- 
tion and Graphic Arts Groups-. 

Heview of the early correspondence of the committee which sponsored 
the Importing Trade Code, indicates that one of the major activities 
anticipated for Die Importing Trade Cor! e Authority would be to defend 
the interests of importers in co'uection with any complaints which night 
be filed by industry ..roans under Section 3 (e). In Article VI, Section 
2, Paragr&ph 9 of the approved code, the Code Authority was empowered to: 

"Take any necessary action on formal request of r.:y trc.de, group, 
or individual , overned by this Code to protect bhera from actions 
filed under Title I, Section 3 (e) of the Act, or to represent them 
in enp negotiations nelev.nt to the Importing Trade, entered into 
•■' "■ with a: y Department of the Government, or with domestic producers, 

m anufa.cturers or associations of the same, expenses incurred there- 
by to lie for account of tie parties directly interested." 

In practice the case in defe: se of importers under Section 3 (e) 
was presented almost invariably b;r individual firms which were active 
in ir.riorta.tion of the commodity concerned and the Code Authority tool: 
little, if any, direct or active part. . 

.?,. Typos of Action Su; gested by Section Z (e) Petitioners. 

ERA Office Order Ao. "7, issued for bhe purpose of guiding compl- 
a-inants as to the form of complaints under Section 3 (e) and t he data 
v;hich they should file in support invited suggestions concerninp the type 
of action conside tost apprc >ri; be to safeguard maintenance of the 
complainant ' s codes. Although it is v_..lik -1 ' that an impartial •agency 
would set dowr the needs of all of the co.-nlr.inaat industries in terns 
comparable to tho^e which they used, review of the recommendations offered 
indicates the temper of these adversely-affected industries. Por example, 
the groups filing complaints against imports of table damask, bread, fiber 
board, woolen knit gloves, menthol, dressed horsehair, arid horseshoes, 
indicated thai, the import problem confronting them, could best be met by 
am increase in duty rates. (Dresr.ed horsehair is non-dutiable in the 
Tariff Act of 1930). In the ca.se of table da; r.sh, comila.ina.uts suggested 
changes in the duty classification provided in the Tariff Act to permit 
increases in the rates specified in certain portions of the Tariff 
par- graph; and in the case of cigars, complainants suggested that Phili- 
ppine cigars he given specific mention in the Tariff paragraph. 

In only four instances did complainant s suggest the extreme measure 

of licensing importers. Complainants in the Quebracho case asked tint 
importers be licensed as c. means of enforcing a ->ro-.oscd stipulation 
against selling below a. fined minimum price. 



9G29 



-?47- 

Complainants in the '.Tool Felt Hat Body cr.se suggested that importers bs 

in restricting the volume of iimorts. 



Quantitative restrictions were proposed by 2? complainants. Com- 
plainants suggested in the Binder Twine case that imports be limited to 
a rec-jonrble percentage of their volume averaged over the period 1922- 
1932; in the case oi I'leached Cotton Cloth a quota for innorts based on 
the average volume during: the period 1930-1932 was suggested; in the 
Wood-Cased Lead Pencil comlaint a quota based on average imports dur- 
ing the first six months of the years 1229-1953 was proposed; the 
Horseshoe Code Authority reconnended a quota based on the volume of 
imports in 1929. 

The imposition of a fee was suggested by complainants in nine cases 
including antimony, hemp halibut fishing lines, and wool felt hat bodies. 
Temporary embargoes were requested by complainants against binder twine, 
bread, sun goggles, handkerchiefs, and ice, sunflower oil, quicksilver, 
cotton rugs, umbrellas, rubber v/atef bottles and rubber toys. 

:'- c o alternatives to other suggestions, complainants against woolen 
knit gloves and wood-cased lead pencils, rubber water bottles, fly 
catchers, grass and fiber rugs, rubber erasers and shoe laces, suggested 
that American value ticn be used as the basis for duty assessment. The 
complainants with respect to handkerchiefs and rubber erasers expressed 
the opinion.' that costs could be equalised with greater facility if the 
duty assessment wa.s changed from its ad valorem base to a specific one. 

IV. ILEPCPT HEGUL.ilCP PROVIDED I" iWDUSTP.Y COICS 

A. Cr oss-Section Analysis of Pr ovision s Affect in: Lnortcr s 
In 37 Industry Co des which Embraced Importers 

1. Scope of Code Provisions Affecting Imports 

Importers were cited in the specific terms of the definitions of 
21 industry codes, as well as in certain divisions or supplements of 4 
other industry codes.* Importers were embraced also in the scope of the 
Petroleum Code, al though they were not cited specifically in its defin- 
ition. Importers were blanketed under the Wholesale Embroidery Code and 
the Handkerchief Code by amendment?, subsequent to original approval of 
those codes. They were made subject to the trade practice provisions of 
the Leather and Woolen Knit Glove Code, although in all other respects 
they were excluded. While importers were not cited in the code definitions 
for the Surgical Wholesale Trade, Fur Dealing Trade, Wool Trade, Wholesale 
Upholstery, and the Scientific Apparatus Industry, importers were placed 
under their Jurisdictions by later administrative .interpretation of the 
general terms of the respective definitions. For practical purposes, the 
codes for Imported Date Packing, Imported Green Olive, and A.ssembled Watch 
may be considered to have embraced importers, inasmuch as these codes 
governed the processing of materials imported usually by the processor. 

(*) See pp. 215-216 for discussion and a list oi these 25 codes. 
9G29 



-248- 

This sampling of 37 codes embracing importers, comprises 25 man- 
ufacturing codes end two supplements, 4 wholesale codec- and 3 supplemen- 
ts, and 3 codes for processors dependent upon importation for their N >> 
basic materials. 

2. ERA. Policy Tith Respect to Code Provisions Affecting Imports 

In the trr.de practice provisions which were incorporated in industry 
codes embracing im-iorters, inevitably there were instances of provisic ns 
which operated in a manner to require modifications in the existing 
practices of the effected importers. In most cases, of course, the nec- 
essity of establishing uniformity in sales practices was paramount, and 
justified incororr- tion of these provisions, even though they may have 
involved relatively more hardship for importers than for domestic man- 
ufacturers. 

A general ERA policy with respect to code provisions affecting 
imports was outlined in a:i Office i.Ienqrindun dated hovemuer 17, 1933, 
as follows: 

"Section 3 (e) of the Act provides a remedy and method of 
procedure for the correction of evils in any industr^r arising 
out of the importation of sods with rhich any such industry 
is concerned. Code provisions, the purposes of which are 
directly or indirectly to restrict ov handicap importations, 
-. ■•should, therefore, be avoided. 

"This docs not mean that a - rovision is to be condemned merely 
Decause it may possibly affect imports, regardless of whebher or 
not such is its purpose. However, even if a pro vis ion. does not 
huve such purpose and is oth rwise justifiable, yet if, in 
effect, it doc:, restrict or handicap imports, it should not be 
ap; roved unless the inroorters have been notified and given an 
opportunity to attend bhe hearings arc i' ent their views and 
objections. In all cases, if there is any doubt as to the pro- 
priety or purpose of the provisions i: view of its effect on 
iia orts, that portion of the rovision should be eliminated and 
the industry advised to see'.- the direct remedy, provided for by 
Section 3 (e) of the Act,." 

3. Control of Production ;>:,-/. Importation 

Two codes, namely, Lumber and Timber Products, and Petroleum, 
provided for control of production rnd importation. The Petroleum 
administrative agency was authorized to limit the volume of imports, 
and to fi;- minimum prices for their sale. The Lumber Code provided that 
control of production could be in terns of im ort' in Division or 
subdivisions, the raw material of which is imoorted. 

4 Eesign Pirs cy 

Pour codes, namely, Artificial Plover and Peather, "..holesale 

Upholstery, Precious Jewelry, rnd Medium arid Low Priced Jewelry, 

9829 



-249- 

provided for registration of designs with a central agency end for the 
treating of piracy of these registered designs as an unfair trade practice. 
Two codes, namely, Scientific Apparatus, and Leather and Uoolen Knit 
Gloves, provided for registration of styles with a central agency and 
for the outlaw of style piracy. Similrr treatment of design piracy was 
contemplated by the Code Authorities for the Handker chief, and Art 
IT e e dl ewo rk I n dus t r i e s . 

On the allegationn that foreign manufacturers of numerous 
products were pirating domestic designs and ship dug their copies to the 
domestic market, the code authorities for several industry codes which 
did not embrace importers, urged the Administration to prevail u :on t he 
sponsors of the Importing Trade Cede t,o accent a provision "branding design 
piracy as an unfair trade nracticc. The Importing Trade Code Author it - 
registered its approval of the general policy of providing protection of 
domestic designs in the Importing Code on condition that similar recipro- 
cal protection of imort designs be included in the domestic industry 
codes, ho evidor.ee is available to indicate whether any such reciprocal 
provisions •..•ere ever adopted or even proposed. However, Article VII, 
Section 1, was incorporated in the Importing Trade Code, providing among 
other things thi t » * * * nor shall any importer knowingly imitate or 
sell or offer for sale any imported merchandise bearing a device which 
shall imitate a trade-mark, trade name, slogan, or any other mark of 
identification of a product of domestic manufacture, * * * " 

On the initiative of the Code Authority for the Toy and Playthings 
Industry, the Hew York State Compliance Office cited three import firms 
for noncompliance with this section of Article VII of the Importing 
Trade Code, and it was announced in Bulletin ho. 38 of '.he Toy Manufact- 
urers of the U. S. A., Inc., that these three importers had agreed to 
refrain from further imports of the pirated products. In making this 
announcement, it w: s suggested that individual toy manufacturers avail 
themselves of this means to cope with the problem of design piracy. 
However, the Deputy Administrator for the Importing Trade Code called 
attention to the fact that the Importing Trade Code hrd no provision 
dealiiifc with design piracy and that the cases which ted been taken u> 
with the Compliance Director in Hew York were not strictly within the 
province of the inaccurate labeling provision of that cede. 

In writing to the Deputy on December 4, 1934, the Executive Officer 
of the Importing Trade Code Authority expressed the opinion that efforts 
to curb design piracy would not be furthered greatly by insertion of a 
design piracy outlaw revision in the Importing Trade Cede. In explanation, 
he gave it as his opinion that department and variety chain .stores were 
the worst offenders in -file copying of designs. He claimed that these 
establishments make a practice of sending domestic articles to their 
foreign sources of s.i >ly to be ceded, and that copied articles v. ere 
subsequently imported in quantity fo* domestic consumption. 



Of 37 codes embracing importers, four set up standards of quality 
or measure, and 8 ethers raa.de general -orovision for the later establish- 
ment of such sts ndards . 

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-250- 

The Code for the Athletic Goods Manufacturing Industry prescribed 
standards for materials; the Coffee Code prescribed st; ndards for 
ingredients; the Code for the Dog Pood Industry prescribed standards 
for the net weight contents of canned dor food; and the Code for the 
Precious Je'. elry Faiufrcturing Industry set up standards for fineness. 
The Cede Authority for the Imported C-reen Olive Industry was charged 
with the duty of setting up standards for size and for quality, and th« 
Code for the Bleached Shellrc Manfacturin .; Industry provided f or setting 
up standards for ingredients. 

Standards of identity in markin , labclin^, or grading, were set up 
in si;: codes, namely, Lumber and Timber Products, Athletic Goods, Coffee, 
Leather and Woolen Knit Gloves, Precious Jewelry, and Medium and Low 
Priced Jewelry. Code provisions indie- ted also that similar standards 
were contemplated in four other industries, namely Fertilizer, Dog Pood, 
Imported Date Packing and Imported Green Olive. 

6. Consignment Sales 

Consignment sales were definitely prohibited by provisions in 
four codes, and were allowed only on consent of the Code Authority in 
two other codes. Definite prohibition of consignment sales is found 
in the codes for Lumber and Timber Products, Artificial Flower and 
Feather, Precious Jewelry, ad Medium a: d Low Priced Jewelry. The 
provision a .ainst consignment salts in t he Leather r.nd Wool Knit Clove 
Industr; Code was limited in application in a manner to except trans- 
actions pursuant to hona fide contracts or orders. 

7. Price Provisions 

In connection with industry codes embracing importers, sever codes, 
namely, Artificial Flower and Feather, Coffee, J Mid-Atlantic Division of 
the Fishery Industry, Dog Food, Music Publishing, Iimorted Date Packing, 
and. Imported Green Olive, contained provisions • ainst destructive price- 
cutting. Eleven codes contained a prohibition against scllin below co t, 
namely, the Wiring Device Division of the Electrical Industry, Fertil- 
izer, Scientific Apparatus, Coffee, Mica, Art Needlework, Bleached 
Shellac, Dog Food, Leather and Fool Knit Gloves, Precious Jewelry, and 
Medium and Low Priced Jewelry. 

line codes contained provision f or t he establishment of a specific 
minimum price during periods of emergency, the ririce to be cormuted by 
an impartial agency after investigation of costs. The codes containing 
this provision comprise Lumber and Timber Products, Artificial Flower 
r.nd Feather, Handkerchief, Fishery,' Cereal Machinery, Music Publishing, 
Imported Date Packing, Imported Green Olive, and Assembled 'Jatch. 

Fifteen codes contained provisions for open price filing, namely, 
Wiring Device, Fertilizer, Scientific Apparatus, Fire Pod, and Tube 
Die, Printing Equipment, Coffee, Machine Tool and Equipment, Mica, 
Industrial Safety Equipment, Perfume^ Cosmetic and other Toilet Pre- 
parations, Bleached Shellac, Package Medicine, Dog Food, Imported Date 
Packing, Precious Jewelry, Medium and Lovr Priced Jewelry. 



9829 



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In six of those codes, there was a provision permitting industry 
members to file revised prices for immediate application if found 
necessary to meet the price quoted "by a competitor; these were, 
Wiring Device, Fertilizer, Wire Rod and Tube Die, Mica, Industrial 
Safety Equipment, and SLeached Shellac. The Importing Trade Code 
Authority pleaded the case, on several occasions, for importers who 
were affected by provisions in industry codes calling for the filing 
of prices. The following quotation from a letter on the subject ad- 
dressed to a Deputy Administrator by its Executive Officer on March 
27, 1935, summarizes the problem involved in price filing for raw 
materials and finished products, 
i * : 

ii * * * I note in particular the argument raised by the Elec- 
trical Code that fluctuation of prices only applies to raw material, 
such as Coffee, Rubber and Copp-er, and that the average importer of 
manufacturing products purchases his exchange at the- time each trans- 
action is completed. The covering of exchange or speculation in 
exchange depends on the policy of each house and differs among houses 
handling raw products as well as it does among houses handling manu- 
factured products. Whether exchange is normally covered at the time 
purchase contract is booked or whether exchange is normally covered 
when the goods arrive, or the invoice becomes due, there is just as 
much likelihood of fluctuation in exchange between the bookings on 
each successive contract. Generally speaking, I would say that it 
would be easier to file prices on raw products than on manufactured 
products, for three reasons: 

1. In any raw producft there is more likely to be a general world 
market level so that' the price will be about the 'same at any one time 
in various countries of origin. On the other hand, manufactured 
products, being more diversified and less standard, are likely -to have 
a different price or cost level in each producing country. Thus, an 
importer of manufactured products may purchase on successive days from 
different producing countries and have a different cost in each case, 
even though there has been no change in costs or exchange with any of 
such countries during the period of purchase. 

2. 'Raw products usually have a limited number of specifications or are 
quoted on a basis price for one specification with fixed differentials 
to apply on other specifications so that prices for a limited number 

of items only would have to be filed. On the 1 other hand, manufactured 
goods usually involve a wide variety of specifications so that prices 
would have to be filed on a long list of items. 

3. Imported manufactured articles vary so greatly in style, design, 
material, and workmanship that it would be practically necessary to 
furnish a drawing and list of specification with each price filed, if 
price is to have any intelligent meaning. 

Thus, price filing for importers or ra\7 products might mean 
daily, or even in some cases, hourly filing of a short list of prices. 
Price filing for manufactured goods would be likely to mean almost 
daily filing of a long list of items and would be quite impractical. 
The clerical work involved would be out of all proportion to any bene- 
fit to be expected. Price information would not be of great value due 
to the fact that prices filed would probably be already changed before 

competitors could receive advice. 
9R5q 



Price filing on raw products is entirely unnecessary as the 
fluctuating market levels are well-known to all in the trade, 
through the medium of exchanges, "brokers, or other similar means. 
price filing on manufactured goods would, in my judgment, "be more 
likely to "bring down prices of imported goods to a low level 
which would not be desirable from the standpoint of domestic com- 
petition and would "be more likely to harm imported and domestic 
trade, than to help either. " 

Sixteen codes embracing importers made provision for the estab- 
lishir/cnt of a uniform system of cost accounting, namely, Wiring De- 
vice, Lumber and Timber Products, Handkerchief, Fertilizer, Scientific 
Apparatus, Printing Equipment, Coffee, Mica, Industrial Safety Equip- 
ment, Bleached Shellac, Dog Food, Imported Date Packing, Imported 
Green Olive, Leather and Wool Knit Glove, -Frecious Jewelry, and Medium 
and Low Priced Jewelry, Definite cost accounting systems were approved 
to apply in three codes, namely, Fertilizer, Coffee, and Imported Date 
Packing. 

0. Terms of Sale 

Thirteen codes specified discounts and credit terms (in most 
cases prescribing 2 per cent for payment within 10 days), namely, 
Artificial Flower and Feather, Handkerchief, Wholesale Upholstery, 
Wholesale Embroidery, Mica, Industrial Safety Equipment, Art Needle- 
work, Fur Dealing, Bleached Shellac, Package Medicine, Natural Organic 
Products, Assembled Watch, Leather and Wool Knit Glove, 

9. Exceptions from Industry Code Provisions to Meet Import 
Competition 
In a considerable number of the many codes in which the selling 
of products below cost or below published prices filed in accordance 
with open price agreements was listed as an unfair trade practice, a 
provision was incorporated permitting individual members to sell below 
costs of production in order to meet competition from lower prices 
which had been filed in accordance with these agreements. In addition, 
25 codes, of which 22 were supplements for divisions of the Fabrica- 
ted Metal Products Industry, made provision for exceptions from such 
price maintenance "in order to meet existing competition. " Of this 
number, 17, of which 15 were divisional supplements to the Fabricated 
Metal Products Code, specifically referred to competition from 
"products of equivalent design, character, quality, or specification, 
manufactured outside of the United States." 

B, Miscellaneous Industry Code Provisions which Affected Importers 

In addition to the trade practice provisions in the 37 codes 
which embraced importers, special provisions were incorporated"' in a 
number of codes which had a direct effect on importers. While the 
scope of some of these codes clearly embraced importers, provisions 
directly affecting importers were incorporated in a number of other ■ 
codes which, ostensibly, were not intended to include importers in the 
membership of coded industries. In these later cases, regulation of 
importers was attempted indirectly. 
9829 



— o*J«J— 

Among the miscellaneous provisions, affecting importers note- 
worthy cases included: (l) a provision; in the code for the Tool and 
Implement Division of the Fabricated L'etal Products Industry, listing 
as an unfair trade practice the selling of articles containing imported 
materials, without clearly labeling the product "partly foreign made." ; 
(2) provision in the Fertilizer Code listing as an unfair trade practice 
the act of selling through commissioned traveling men or through "brok- 
ers; (3) a provision in the Precious Jewelry Code that members must 
keep records and be prepared to submit copies of consular invoices to 
the Administration, if called for; (4) a provision carried in the codes 
for Fabricated Metal Products and for Slide Fasteners, stating that in 
the determination of cost, code rates must be considered for labor 
costs, regardless of whether the materials were manufactured in the 
United States or elsewhere; (5) a provision in the Wholesale Lobster 
Supplement to the Fishery Code, listing as an unfair trade practice 
the act of dealing in lobsters which measured less than 9 inches in 
over-all length, or which measured over 12j? inches. A spokesman for 
the Canadian Lobster Industry claimed that this provision excluded 
the prime size of Canadian lobsters, inasmuch as such lobsters, 
growing in colder waters, reached maturity at a size lower than the 
minimal. 1 , specified in the code. 

The Pyrotechnic Code Authority proposed an amendment for insertion 
in their code which would prohibit the sale of "flash" firecrackers, 
on the ground that these were more dangerous than the usual type of 
domestic manufacture. Importers of firecrackers protested strongly 
against this proposed amendment, and offered to present proof that -the 
contention was without foundation in fact. The importers charged tha.t 
the proposed provision was a subterfuge designed to get official c,.\c- 
tion to the embargoing of a type of firecracker, all supplies of which 
were imported. 

Sponsors of the Wood-Cased Lead Pencil Code suggested a provision 
for their code which would have provided that no member of the industry 
could sell to a person handling imported pencils; and the sponsors of 
the Cordage and Twine Code suggested a provision for that code which 
would have prohibited members from selling to a person engaged in hand- 
ling similar imported products. The effect which these provisions 
would have had on importers is obvious. Legal counsel for the National 
Council of American Importers and Traders filled a brief in opposition, 
and these provisions were not carried in the codes as approved. 

C. Provisions and Proposals for Uniformity in Trade Practices 

In the Textile Machinery Code, Article X, Section 3 provided 
that imports of textile machinery sold in the United States in competi- 
tion with the domestic production, would be subject to -Articles VIII 
(Administration) and X (Trade practice) of the Code, Article VIII, 
. among other things, gave the Code Authority power, with the approved, 
of the Administrator, to issue and enforce such rules and regulations 
upon members of the industry as might be necessary or convenient to 
effectuate the purposes of the code, and to make such further recommen- 
dations as might develop from time to time. Article X, Section 1, 
provided (inter alia) that "no builder of textile machinery shall sell 



-254- 



or exchange in the United States market, except in fulfillment of 
contracts formed "before the effective date, any product (not second- 
hand) of its manufacture at a price, or upon terms or conditions, that 
will result in the customer paying therefor less than the seller's 
cost, as determined in accordance with standard accounting practices* * *" 

The Leather and Wool Knit Clove Industry Code provided in its 
Article VII that importers would "be bound "by the fair trade practice pro- 
visions (Article VI II) of the Code, "but that 3 members of the Glove Im- 
porters Association of the United States would be members of the Pair 
Trade practice Agency which was set up under Article VI, Section 3. Im- 
porters were to be bound by no other provisions of the Code, and further, 
any modification in the fair trade practice provisions were to be bind- 
ing upon importers only on mutual agreement and approval by the Adminis- 
trator. 

Article VI. Section 2, paragraph (7), of the General Importing 
Trade Code, empowered the Code Authority to appoint Trade Practice Com- 
mittees "which shall meet with the Trade" practice Committees appointed 
under such other Codes of Fair Competition as may be related to the im- 
port trades, for the purpose of formulating fair trade practices to gov- 
ern the relationship between employers under this Code and such others, 
to the end that ch fair trade practices may be proposed to the Admin- 
istrator as amendments to this code and such other codes. "(*) 

V. OUTSTANDING EXAMPLES OF CODE PECULATION OF IMPOSTS 

In Chapter I (Part C) it was pointed out that Section 3 (a) of the 
Act was intended to and did include within its scope authority to regu- 
late imports by means of Codes and that such authority was consistent 
with Section 5 of the Act which had the effect of exempting imports and 
importing, when officially codified, from the operation of the Wilson 
Tariff Act which had prohibited importing combinations. 

Considering all industry codes, the most complete regulation of ,| 
imports was afforded by the provisions of the codes covering Petroleum, 
Alcoholic Beverage Importing, and Lumber and Timber Products. Only 
brief mention will be made of the first two for the reason that they 
were not, strictly speaking, under the National Recovery Administration. 
The Lumber Code will be discussed in detail because of its significance 
as th only instance of quantitative regulation administered by a Code 
Authority, 



(*) The special Trade practice Committees set up by the General Import- 
ing Trade Code Authority, and the public hearing held in Washington 
to consider additions to its Article VII to bring about uniformity 
in trade practices governing importers and those governing related 
domestic industries, are discussed on Pages 114-115. 



9829 



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A. The Pe t roleusi Code 

As approved on August 19 and modified on September 13, 1933, 
the Code for the petroleum Industry provided for designation by the 
President of a Federal agency charged, among other things, with the 
estimation of petroleum requirements and with control of production 
and importation. The President delegated these responsibilities to 
the Secretary of the Interior, who was appointed as the Administrator 
of the Code. 

An Order issued by the Administrator September 2, 1933 sti- 
pulated that, in accordance with Section 1 of Article HI of the Code, 
imports of crude petroleum and petroleum products were to be limited 
to an amount not exceeding the average daily imports during the last 
six months of 1933. This quota was fixed by the Petroleum Administra- 
tion Board (an advisory board appointed ~cy the Administrator) , at 
98,0C0 barrels a day, average. This quota was observed throughout the 
period of code enforcement, and relations of importing, refining and 
marketing companies with the Petroleum Administration Board, were such 
that the problem of keeping within quota limits did not necessitate 
specific allocations to individual members of the industry. The ration 
of this import quota to total domestic requirements, as determined for 
successive internals by the Administrator, was approximately 4.5 per 
cent. 

• - 

Other pertinent provisions of the Petroleum Code included 
filing of prices, prohibition against selling at prices below recovery 
costs calculated by the Administration Board, the prescribing of credit 
terms, and authority for the Administration Board to inspect books. 



9829 



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B. The Alcoholic Beverage Importing Code 

The Alcoholic Beverage Import Industry was coded by the A. A. A. in 
December 1933, but control of alcoholic beverage importers was trans- 
ferred later to the Federal Alcohol Control Administration, which was 
set up under authority' of the rational Industrial Recovery Act. The 
Secretary of Agriculture was empowered to establish quotas to govern 
importation of alcoholic beverages from individual countries. The FACA, 
in turn, required alcoholic beverage importers to apply for a permit to 
operate, and it allocated each national quota among the permit holders. 
The FACA granted individual import allotments which were determined by 
established administrative standards and on the basis of import needs 
enumerated by individual applicants. This control was lifted on April 1, 
1934, to the extent of discontinuing the use of quotas. 

C. The Lumber and Timber Products Code 

1. General Provisions Affecting Imports 

The general definition in the Code of the Lumber and Timber 
Products Industries does not specifically state that imports, importers, 
or importing are included within the scope of the Code. It simply pro- 
vided, that "Person" as used in the Code, included "any individual, firm, 
partnership, corporation, association, trust, trustee, or receiver sub- 
.ject to the jur isdiction of this Code," and that "divisions' , and 'Sub- 
divisions' as used ,* refer to the several administrative xmits of the 
lumber and timber products industries which are established and are de- 
fined in Schedule A *".' However, the application of the provisions of 
the Code to the Divisions and Subdivisions which were defined in Schedule 
A, was made specific by Article XIV, which reads as follows: 

"Code provisions affecting or pertaining to Divisions and Subdivi- 
sions of the lumber and timber products industries are contained 
in Schedule "A" attached hereto, which is specifically made a part 
of this Code, in so far as they relate to description of the respect- 
ive Divisions and Subdivisions, identification of persons and pro- 
ducts subject to their jurisdiction, and designation of administra- 
tive agencies. Additional Code provisions affecting or pertaining 
to Divisions and Subdivisions may be filed ^ith the Authority and 
if not inconsistent with the provisions of this Code may be recom- 
mended by it to the President. "hen approved by the President such 
provisions shall have the same force and effect as any other pro- 
visions of this Code." 

The Lumber .and -Timber Products "Code is "the Outstanding -.example of 
codes containing provisions affecting foreign trade, by reason of the 
fact (inter alia) that Article VIII, which empowered the Code Authority 
to establish, and from tine to time to revise, production quotas, con- 
tained the provision that: 

"In case of Divisions or Subdivisions, the raw material of which 
is imported, the quotas and allotments may be in terms of imports, 
so far as may be consistent with the provisions of Section 3 (e) of 
the National Industrial Recovery Act." 

9829 



> 



-v3DY- 

In addition, and as an e- :nMple of its vride scope, the Code also con- 
tained the following provision in Paragraph (h) of Article IX: 

"The Authoritj 7, shall seeur-j current information concerning; the com- 
petition in domestic m-vrkets of imported lumber arid timber products, 
and if it shall find that such oroducts are being imported into the 
United States in substantial quantities or increasing ratio to do- 
mestic production and on such terms or under such conditions as to 
render ineffective or seriously to endanger the maintenance o:f this 
Code, it shall comolain to the President pursuant to the provisions 
of Section S(e) of the hational Industrial Recovery Act and petition 
for suitable restrictions on the importation of such lumber and tim- 
ber products. " 

That the Code was clearly intended to control, and even to restrict, 
imports is indicated, in addition to the provisions of Articles VIII, IX, 
and XIV quoted above, by the following: provisions of Article XV with re- 
spect to violations, and Paragraphs (e) and (g) of Article IX with respect 
to minimum prices: 

Hi'>rticle_Xy_._ _ Violations . - Violation by any person of any provisions 
of this Code * * * * or "by an importer of any agreement entered into, 
by; h im with t he said Authority for__the restriction of importation of 
lumber and timber products * * * * shall constitute an unfair method 
of competition, and the offender shall be subject to the penalties 
imposed by the National Industrial Recovery Act." 

"Article IX. Po st_Prq tection. - (e) ITo -oerson shall sell or offer 

for sale lumber or timber products upon which minimum prices have 
been established at prices less than those so established." 

"(g) In the Case of ir.ro orted. lumber and, ,ti Liber products, minimum 
prices for domestic sale shall be determined by the Authority, and 
such minimum trices shall be ecxiivalent to the minimum rjrices deter- 
mined and approved for the sane or similar or competing items, grades, 
sises, and snecies of lumber and timber products of domestic production. 

The intended scope of the Code with respect to import regulation is 
indicated also by the broad definition of an importer found in Paragraph 
(h) of Schedule B: 

"A -oerson of any nationality who brings goods, or causes them to be 
brought, into the United States from any foreign country, whether in 
bond or not, and whether he is already the owner of the goods before 
they arrive, or purchases them on delivered terms." 

The exact scope of the provision in Article VIII that "in the case 
of Divisions or Subdivisions, the raw material of which is imported, the 
quotas and allotments may be in terms of i rports" is not clear from the 
information available. Schedule A defined the Hardwood Division as con- 
sisting of producers, manufacturers, importers and distributors of hard- 
wood logs, timber and lumber, lath, dimensions cut from the log, and pro- 
ducts of planing mills operated in conjunction with sa'7 mills, and such 
additional hardwood timber products as the definition of any Subdivision 
might enumerate. Similar definitions appear for the Veneer, aid the Pole 

9829 



n 



-258- 

and Piling Divisions (See Subsection 2, below). But no evidence is 
available of any principle of distinction on which was based the incl- 
usion of importers, for example, of iiahogany and Philippine Mahogany, 
and failure to include importers under other Divisions which cover 
products in which there is regularly a substantial importation. It is 
true that mahogany logs or lumber are raw materials for mahogany manu- 
facturers who were grouped with importers in the same Subdivision of 
the Code, but it is likewise true that imported fir, hemlock, spruce, 

etc., are raw materials for domestic manufacturers of lumber and tim- 
ber products, but the importers of these products are not specif ically 
included with the domestic manufacturers in the Code. As a matter of 
fact, there does not appear to be any basic distinction between the 
pattern of operations involved in the movement of hardwoods from sources 
of supply to manufacturers and/or consumers and the operations involved 
in the like movement of other lumber products. Such operations vary 
from time to time and from one product to another but in most, if not 
all, instances of products coming from both domestic and foreign sources, 
they involve importers, and wholesalers who sell to domestic manufacturers 
and/or to other domestic distributors or consumers, manuf a.cturers who 
import a part or all of their raw material requirements from foreign 
owned mills or mills owned by them in foreign countries, and manufacturers 
who obtain all of their raw materials from domestic sources. 

The reason for the system of import control set up under certain 
Divisions and Subdivisions and not under others probably lies in the 
practical consideration of the relative importance of the import 
problem and difficulties of administration in particular cases, and 
.in the reliance of the administrative authorities on the provisions 
of Paragraph (h) of Article IX of the Code which authorized the Code 
Authority to secure current information concerning competition in 
domestic markets of imported, lumber and timber products and to make 
complaint to the President with a view to obtaining restrictive or 
regulatory action under the provisions of Section 3 (e) of the' Act. 

The extent of the application of the provisions of Article IX 
(minimum prices) to imports is likewise obscure by reason of the 
absence of any general provision in the code clearly indicating its t \ 
applicability to imports, importers, or importing. Presumably it 
was intended' to apply to importers specifically included in parti- 
cular Divisions or Subdivisions originally included in the Code or 
subsequently set up under Paragraph (d) of Article - III which author- 
ized the Code Authority to establish Divisions and Subdivisions , or 
under Paragraph (g) of Article III which authorized the admission of 
any person to participate in any Division or Subdivision to which he 
belonged, on. terms of equality with all other persons participating 
therein, and presumably also, subject to the provisions of paragraph 
(b) of the same Article authorizing the Code Authority to issue and 
enforce such rules, regulations, and interpretations, and impose 
upon pers ons subj ect to t he .jur isdiction of the Code such restrict- 
ions as might be necessary to effectuate the purposes and enforce the 
provisions of the Code. 

2. Divisions Which Specifically Included Importers 

In Schedule A of the Code, the Hardwood Division and most of its 

9829 



-yoy- 

Sub&i visions, and the Veneer Division, were defined to include -oroducers, 
manufa.ctn.rerr--, irnort' r:: , and distributors of the products enumerated 
for these divisions. The definitions of the Pole and piling Division 
and Subdivisions were the same except that they also included exporters. 
The definition of the mahogany Subdivision want oven further, including 
11 al 1 menuf ac turer s , inport er s r>nd .6. i s t r ibut o r s , including pr inc ipal s , 
brokers, and agents, of mahogany and foreign broods." The Philippine 
Mahogany Subdivision was defined as consisting "of manufacturers of 
lumber and timber products of Philippine I.ahongany and other Philippine 
hardwoods, persons exclusively representing the United States manu- 
facturers of such lumber and timber products in the Philippine Islands, 
and all importers of such lumber and timber products." 

No detailed provisions for import control were adopted for the 
Veneer, and Pole and Filing Divisions. An amendment to the hahogany 
Subdivision of Schedule A was approved April 13, 1934, specifically 
providing for the establishment of import quotas based on shipments 
and for periods greater than three months. Under this provision an 
attempt was ma.de to establish ,and administer quotas for manogany im- 
ports but the effort was unsuccessful chiefly because of administrative 
difficulties and the difficulty in. obtaining information regarding the 
volume and nature of the operations of a number of relatively small 
importers. . .• 

3. • Quota Regulation of Imports in the Philippine -mahogany 
Subdivision 

The detailed scheme of import quotas established under the Phili- 
ppine Mahogany Subdivision by the approve! of a code amendment April 13, 
1934, is significant as the outstanding instance under ERA codes of an 
actually operating system of quantitative import regulation under the 
authority of the National Industrial Recovery Act administered by a 
Code Authority. For this reason the amendment is quoted in full: 

"(a) The Executive Committee of the Fhilippine Mahogany Subdivision 
is empowered, with the approval of the Authority and within the 
limits of the total subdivision quota, to assign a maximum import 
allotment to each eligible person registered with the Philippine 
Mahogany Subdivision and subject to its jurisdiction. The Sub- 
division quota anc? individual allotments shall be made for periods 
of six months and as provided in tiiis Article. 

(b) Any person complying with the labor and other provisions 
of this Code applicable to this Subdivision, who brings Philippine 
Mahogany or Philippine hardwood into the United States from the 
Philippine Islands in quantities sufficient to amount to wholesale 
distribution for resale to wholesalers, retailers, or industrials 
as defined in this Code, shall be deemed an eligible person for 
purposes of allotment. 

(c) Any eligible person may obtain an allotment by making 
application to the said Executive Committee designating the 
Philippine mill or mills from which he hp.s arranged to obtain his 
supplies. The allotment to said eligible person shall be determined 
by the following formula: 

9889 



-260- 

I .ill ing cap acity 60$ of Subdivision Quota 
Total capacity, 

PLUS 

liill shi-oments to_U_.J3. 40fS of Subdivision Quota 
?o t al shipment s to U.S. 

"'mill Capacity 1 means the actual capacity at the time of the 
application for allotment of the Philippine mill or mills designated 
by an eligible person. 

"'Total Capacity 1 means the actual total capacity of all 
Philippine mills designated "by eligible persons. 

'"hill shipments to U.S.' mean the average yearly shipments 
to the United States from the Philippine mill or mills designated 
by eligible -oerson, calculated upon any tnree calendar years since 
1924. 

11 'Total shipments, to U.S.' mean the average yearly shipments 
to the United States from all mills in the Philippine Islands, cal- 
culated, on calendar years since 1924. 

"'In respect to mills which have not "been in operation for as 
much as three calendar -errs since 1024, the 'Kill shipments to the 
United States' shall be the yearly average of actual shipments. 

"In the case of logging operations in which the logs were sold 
and shipped as logs and not manufactured into luiber or timber pro- 
ducts by the logger the actual production of such logs during any 
calendar year shall he considered the 'mill capacity' of such 
operator. 

"(d) If t r 'o eligible persons designate the same mill as their 
source of supoly the total shipments to the United States therefrom 
shall not exceed the amount determined by the application of the 
formula prescribe:" in this article and the said -oerson shall divide 
the said totsl in such proportions as they are able to effect pur- 
chases from such mill. 

"(e) If cn-r eligible person to whom an allotment has been 
made advises the Subdivision agency that he will not use all or part 
of his allotment within the allotment period, or if in three months 
after the date of the allotment any such person fails to use a sub- 
stantial portion of his allotment, and fails to show to the satis- 
faction of the 'Executive Committee that he has ordered shipment of 
a substantial portion of his allotment the said Committee may, after 
public hearing on all the facts and circumstances, and subject to 
the supervision of the Authority, reduce the allotment of such per- 
son for the balance of the existing ^uota period by such ■amount as 
may be f ,ir and equitable in order to save to the Subdivision as a 
whole the privilege of bringing into the United States the whole 
of the Subdivision quota. In the event of such reduction of allot- 
ment the amount thereof shall be divided, among other eligible per- 
sons in proportion to their existing allotments upon application to 



9829 



-261- 

the said Executive Committee. 

"(f) In determining compliance with individual allotments, 
date of loading on shipboard in the Philippine Islands for ship- 
ment to the United States shall be deemed arrival of shipment in 
the United States. 

"(g) Ho person subject to the jurisdiction of this Subdivision 
shall import products without an import allotment, or in excess 
of such allotment, as herein provided." 

Since Article VIII of the Code had provided that "the allotment for 
each eligible person shall be determined from time to time for a specified 
period not exceeding three months," Section (a) of the above amendment 
had the effect of amending the Cede to provide quotas and individual 
allotments for periods of six months for the Philippine Mahogany Sub- 
division. This amendment was considered necessary because of the relat- 
ively long period recuired for the movement of mahogany from interior 
mills in the Philippine Islands to the United States. 

Section (b) of the amendment apparently was intended to limit im- 
port allotments to persons complying with the labor and other provisions 
of the Code applicable to this Subdivision (although it is not clear 
whether the- importers were expected to comply with respect to all of 
their operations or only that part of them which might be described as 
"domestic" operations) and bringing in quantities sufficient to amount 
to wholesale distribution. This definition of eligibility for allotments 
should be compared with Paragraph (b) of Article VIII, which provided 
that "each person in operation shall be entitled to an allotment," and 
that u sny person desiring to operate who shall give the agency written 
notice of such desire 10 days before the allotment date, supported by 
acceptable evidence of ability to operate, sha.ll be registered by the 
agency and assigned an allotment. Any person so registered shall be 
deemed pn eligible person for the purposes of this Article." 

Paragraph (c) of the amendment is significant for the reason that: 
(l) it adds a further requirement for eligibility, namely, the design- 
ation of the Philippine mill or mills from which the otherwise eligible 
person had arranged to obtain his supplies, and (2) it provided 'a solu- 
tion for the problem of" determining individual mill allotments from a 
fixed total quota. The formula, in brief, provided for individual mill 
allotments based upon individual mill capacity in relation to the feaifcal 
capacity of all Philippine mills and individual mill shipments during 
a representative period in relation to total shipments of all Philippine 
mills during a representative period. 

Paragraph (d) provided a method of allocation of the capacity of 
particular mills when more than one eligible person designated the same 
mill as a source of supply. The administrative agency (The Philippine 
Mahogany manufacturers "import Association. Inc.) sent notice to importers 
on April 18, 1934, advising them that applications must be executed and 
on file with the administrative agency by May 1st. This notice also 
contained the following statement which, apparently, was presumed to be 
under authority of Paragraph (d) of the amendments 



9829 



-262- 

"It is to be remembered that not more than t ,T o importers may desig- 
nate the sa.e mill. If you are one o^ t'7o applicants designating 
the same mill as a source of supply, please have indicated in the 
cable from the mill the proportion of that mill's quota you are to 
have as your quota." 

This statement was overruled by the ERA on the ground that it ex- 
ceeded the authority conferred in the Code and the administrative agency 
was required to inform members of the Subdivision that this statement 
would not be enforced. 

The establishment of import control provoked a number of protests 
from import firms most of which alleged that the formula adopted for 
determination of individual allotments would unduly restrict their share 
of the import business. Detailed information is not available with refer- 
ence to most of these protests. 

In November, 1934 the administrative agency of the Philippine 
Mahogany Subdivision was notified that a shipment had moved from the 
Philippines consigned to an importing firm which had already brought in 
the full amount of its alloted quota. The agency reported the matter to 
the NBA and the Litigation Division instructed one of its staff members 
in the field to initiate injunction proceedings.. In order to avoid court 
action the Collector of Customs at the port of entry was requested to de- 
lay release o: r the shipment until the possibilities o n action under 
Sections 337 and/or 593 (b) of the Tariff Act of 1930 could be explored. 
Consultation with the Commissioner of Customs regarding the propriety of 
action under Section 337 resulted in release of the lumber shipment under 
bond and an expression of opinion by the Commissioner to the effect that 
Section 337 could not be considered applicable. Thereafter the Liti- 
gation Section, in cooperation with the Philippine Mahogany Subdivision, 
entered into negotiations with the offending firm with the result that 
the cargo was reassigned to other importers who had unfilled quotas. 

Section 5,£S (b) of the Tariff Act of 1930 which provides, that "if any 
person fraudulently or knowingly imports or brings into the United States 
* * any merchandise contrary to law * * * * such merchandise shall be 
forfeited and the offender shall be fined * * or oe imprisoned * * or 
both" was relied upon as authority for the action taken. In connection 
with the adjustment it was reported that the offending firm promised in 
the future to comply fully with Code rules and regulations as well as 
the rules and regulations of the Philippine Mahogany Subdivision. This 
case, and particularly the procedure involved, is significant in connection 
with Section (k) (l) of Article VIII of the Code which provided that: 
"If any person shall exceed his allotment the Division or Subdivision 
agency shall diminish the subsequent allotment or allotments of the of- 
fender in an amount equal to such excess." 

In Pebruary, 1935, an importing firm, represented as having been 
an importer of various hardwoods for many ye rs, but not having imported 
Philippine Mahogany, reported that it had made a reliable connection in 
Manila and that it expected to import several million feet during the 
year. Its request, for an import allotment was met with a reply from the 
administrative agency suggesting that its requirements be procurred from 
local retailers and through other importers, and stating that the company 

9829 



_-<3.:- 



would be p.dvised prior to the next allocation date so that an application 
for an allotment could be filed. In response to protest the company was 
further informed by the Executive Committee of the Lumber Code Author- 
ity as follow; : 

"Please also be advised that the Lumber Code Authority fixed the 
present quota period running from December 1st last through June 
30th, and also fixed the total amount of Philippine lumber which 
could be imported into the United States during that period at 
16,400,000 board feet. The Executive Committee of this Subdivision 
was required under the Code to distribute this quantity in strict 
accordance with the formula set forth in the Code. At the end of 
the first three months of any quota period, the Executive Committee 
can require the surrender of quota allocations in those cases where 
individual allotments are not being used, and redistribute to ap- 
plicants in accordance with the provisions in the Code. V."e have no 
present idee of the amount that may be available for redistribution 
but whatever it is you may share in it." 

The record of this case ends with information to the effect that 
application forms were sent to the applicant firm with the suggestion 
that its request for an allotment be submitted in connection with the 
expected redistribution of unused quotas. 

The problem in this case should be compared with the provision in 
Paragraph (b) of Article VIII that: "Any person desiring to operate who 
shall give the agency written notice of such desire ten days before the 
allotment date, supported by acceptable evidence of ability to operate, 
shall be registered by the agency and assigned an allotment" and with 
Paragraph (d) (l) which provided that: "Exceptions to or changes in any 
allotment thus established shall be made only :"or special, accidental, 
or extraordinary circumstances * * *. Exception may be made only on 
application to the designated Division or Subdivision agency by an 
el igible^ -pe rson who must submit evidence in support of his application, 
and the exception may be granted only upon a published finding and state- 
ment of reasons therefor." 

Compared with problems of code administration in other areas, and 
in view of the relatively small number of complaints, it may be said that 
the regulation of imports "oy means of quotas in the Philippine Mahogany 
Subdivision was generally successful. In addition to the thoroughness 
with which the scheme was set up, its success- may be attributed to - (l) 
the relatively small number of firms involved in the ownership and opera- 
tion of mills in the Philippine Islands, and in the importation and sale 
of the products in the United States market, (2) the arrangement by which 
the Philippine Government cooperated in furnishing information regarding 
the capacity and volume of output of the Philippine mills and the amounts 
and dates of shipments from the Philippine Islands to the United States, 
and (3) the success of the administrative agency, with assumed legal 
authority, in obtaining conroliance with the rule against importation in 
excess of official allotments. 

VI. C01TSR0L 0'J Ii.iPOIiTS III CCH1TECTICJB b'lTH BUT HOT UEDEB ERA CODES 

In addition to the various instances previously described of import 

9829 



«» 



-264- 

regulation specifically provided in BRA codes, three other schemes were 
proposed or set up for the control of the prices and volume of imoorts 
of particular commodities in connection with codes; two "ere submitted to 
but not approve:" by the Administration, and one was set up by formal 
agreement subject to administrative approval but never submitted for ap- 
proval. The record of imports and importing under NRA codes would not be 
complete without a brief account of these cases of attempted or de facto 
import regulation. 

Apart from the legal argument that other provisions of the National 
Industrial Recovery Act could not oe utilized as a basis for approving 
agreements to restrict or regulate inroorts on account of the fact that 
Congress had provided specific .authority and a definite procedure for that 
purpose in Section 3 ( e) , the proponents of the systems of control consid- 
ered here, pointed for their authority to Section 4 (a) of the Act which 
provided: 

"The President is authorized to enter into agreements with, end. to 
approve voluntary agreements between and among, persons engaged in 
a trade or industry, labor organizations, and trade or industrial 
organizations, associations, or groups, relating to any trade or 
industry, if in his judgment such agreements will aid in effectuating 
the policy of this title with respect to transactions in or affect- 
ing interstate or foreign commerce, and will be consistent with the 
requirements of clause (2) of subsection (a) of section 3 for a code 
of fair competition." 

A* The Northwest Lo ggi ng Agreement 

The Associated Logging Company agreement is unique as a method of 
controlling imports by reason of the fact that it involved the organization 
of a domestic corporation which was accorded. membership in the Pacific 
Northwest Loggers Association, a coordinate agency with the '.'est Coast 
Lumbermen's Association for the administration of , the "..'est Coast Logging * 
and Lumber Division of the Code. 

General authority for the agreement presumably was provided in 
Article XI of the Code which reads as follo\?s: 

"Special Agreements. — Voluntary agreements, or proposed voluntary 
agreements, between and among persons engaged in the logging of 
timber or the production and distribution of lumber and timber 
products, or between and among organizations or groups in the lum- 
ber and timber products industries, or in which such persons, or- 
ganizations, or groups mirpose to participate, -oroposed to be sub- 
mitted to the President for approval under Sec. 4 (a) of the Nat- 
ional Industrial Recovery Act, shall not be in conflict with the 
provisions of this Code, or with any ap-oroved rule issued thereunder. 
Such agreements or proposed agreements shell be submitted to the 
Authority and if not disapproved by it within thirty days as being 
.in conflict with./ifae provisions of this Code, they may thereafter 
be submitted to the President for approval; but no person engaged 
in the production and distribution of lumber and timber products 
• shall participate in eny such agreement which has been determined 

9829 



-265- 

~by the Authority to be in conflict vr ith the provisions of this Code. 1 ' 

Since the agreement itself orovio.es a concise description of the plan 
of control and indie tea the details vf its operation it is quoted in full 
as follows: 

"T7HEESAS, the Associated Logging Company, hereinafter called the 
'Importing Company' , has been organized and incorporated under the laws 
of the State of 'Washington for the purpose of receiving the total allac- 
ation of logs imported from British Columbia, Canada, to the United States, 
and is receiving a log allocation as a member of the Pacific Northwest 
Loggers Assiciation, under the plan as provided in Article VIII, of the 
Code of Pair Competition for the Lumber and Timber Products Industries, 
ana has undertaken to distribute such allocation equitably among all log 
producers in British Columbia desiring to export logs to the United States, 
and is organized to act as the exclusive agency to handle and control the 
sale of imported logs, and 

"".IfSRSiS, the Lumber Code Authority approves and adopts the following 
resolution, as passed by the pacific Northwest Loggers Association on 
September 12, 1933, as amended November 6, 1933: 

'Resolved: That the Associated Logging Co. be granted a member- 
ship" in the Pacific Northwest Loggers Association; that it be given 
the total production allocation for log imports from British Columbia 
into "est era Washington, "estera Oregon and Alaska based on previous 
total imports under the plan as -provided in Article VIII, of the Code 
of Pair Competition for the lumber and timber products industries; 
that it be subject to all dues and assessments on all o' said log 
imports that may be levied, ; nd subject to the rules and regulations 
imposed by the trustees of saio Pacific Northwest Loggers Association. 

'Under the authority granted by Schedule A., Section 16, Article III 
of the Code of Pair Competition for the lumber and timber products 
industries, the Associated Logging Co., is hereby designated as the 
exclusive agency to handle and control the sale of logs imported 
from British Columbia, Canada. ' 

»iifHEREA§, the Lumber Code Authority, a Delaware corporation, herein- 
after called the 'Authority', is empowered by the President of the United . 
States to enforce the provisions of the Code of Pair Competition for the 
Lumber and Timber Products Industries, hereinafter called the "Code", and 

'UTHEREAS, the parties hereto recognize that such limitation of im- 
ports and the regulation of the sales of logs imported from British Col- 
umbia, as is necessary to make effective the purposes of the National 
Recovery Act, can best be secured through the Lumber Code Authority, act- 
ing through its duly constituted agencies, as hereinafter provided. 

"IIOU, THEREFORE, it is agreed by and between the Importing Company 
and the Authority as follows: 

1. The Importing Company agrees that it will conform to all orders, 
rules and regulations of the Authority, or its designated agencies, as a 

9829 



member of the pacific Northwest Loggers Association. The Importing Company 
agrees with the Lumber Code Authority to "be bound by all the terms and 
conditions contained in the Articles of Incorporation and By-Laws and 
amendments thereto of the Pacific Northwest Loggers Association, and agrees 
to be bound by all the agreements and instruments of the officers of the 
Pacific Horthwest Loggers Association, as duly authorized by its Board 
of Trustees. 

"The Importing Company agrees that it will abide by such Limitations 
upon the quantity of log imports from British Columbia as may be placed 
from time to time by the pacific Northwest Loggers Association, as pro- 
vided in the recitals hereinabove set forth, subject to such rights of 
appeal as are provided by the Code. 

The Importing Company further agrees to allocate equitably the im- 
port quota granted to it for each period among its members. 

2. The Authority hereby approves the plan as outlined in the 
recitals herein. The Importing Company, upon receiving the quota al- 
lotted for log imports from British Columbia, is to establish rules and 
regulations covering the allocation of log imports among the log pro- 
ducers of British Columbia. Under such rules and regulations all log 
producers in British Columbia desiring to export logs to the United 
States shall be recognized and given on opportunity to share equitably 
in any quota, received by the Importing Company. 

The Authority agrees that the Importing Company shall act as the 
exclusive agency of the Authority, in establishing rules and regulations 
covering the importation and sale of all logs imported from British Col- 
umbia, and in making effective the provisions and purposes of this agree- 
ment; provided that rules and regulations as established shall not con- 
flict with regulations of the Authority or its agencies as provided for 
in paragraph one (l) hereof. 

3. The Importing Company, on its part, agrees to carry out the 
provisions of this undertaking, and -will use every effort to regulate 
importations and sales of logs from British Columbia, in such manner as 
to effectuate the purposes of the Code and the national Industrial Re- 
covery Act. 

4. It is agreed by the parties hereto that in order to limit log 
imports to the quota which may be fixed hereunder, in order to maintain 
cost protection under the Code, and in order to prevent violation .of the 
Rules of Pair Trade Practice, established under the Code, the manufacturer 
purchasing or repurchasing logs imported, or to be imported, shall be re- 
quired to make certain that all rulings governing imported logs have been 
or will be complied with through a certification of the Associated Logging 
Company. 

5. This agreement shall become effective when signed by the parties 
hereto, and shall remain in effect until the Code terminates or this agree- 
ment is terminated as provided in -paragraph six (6) hereof. 

6. The parties hereto understand and recognize the right of the 
President of the United States and the Administrator from time to time to 

9829 



-rSV- 
cancel or modify this agreement and/or any order, approval, license, rule 
or regulation, as provided in Article XII, of the Lumber Code. 

7. This agreement shall be binding upon the heirs, successors and 
assigns of the parties hereto. 

"IN VITEESS THEREOF, the parties hereto have caused this instrument 
to be executed the 30th day of December 1933. 

LUi/EER CODE AUTHORITY 

By Pacific Northwest Loggers Association 
(Designated Agency of the Lumber Code Authority) 

ASSOCIATED LOGGING COMPANY'! 

Broadly speaking, the plan was based on the provisions of Article VIII 
of the Code that "in care of Divisions or Subdivisions, the raw material 
of which is imported, the quotas and allotments may be in terms of imports." 

It specifically relied for authority to designate the Associated Log- 
ging Company to handle and control the sale of logs imported from British 
Columbia, Canada, on the following provision of Schedule A of the Code 
with reference to the .'est Coast Logging and Lumber Division: 

"Administrative Agencies (Art. III). — The "."est Coast Lumberman's 
Association and the pacific F rtlT"est Loggers Association are de- 
signated as the agencies of the Authority for the administration 
of the Code in this Division. Said Associations, tnrough their 
respective Boards of Trustees, are autnorized to make rules and re- 
gulations necessary to administer the Code in this Division and shall 
designate and authorize such agencies as may be required for this 
purpose. " 

Apart from the fact that the agreement was never submitted to the 
USA for approval, (*) it is interesting to note that the definition of 
the './est Coa t Logging and Lumber Division under the Code did not speci- 
fically include i. porters as did the definitions of other divisions and 
subdivisions under which import regulation was instituted or contemplated. 

The plan is reported to have operated successfully except for one 
attempted evasion in October 1934 which led to a proposal that the matter 
be made the subject of a complaint and request for investigation under 
the provisions of Section 3 (e) of the Act. The threat of this action 
was sufficient to clear up the difficulty and the plan continued in 
operation until the abandonment of the Code in iiay 1935. 

The success of the agreement is largely attributable to the system 
of export permits established by the British Columbia Government. In 

(*) The agreement as finally drawn was submitted to the Lumber Code Author- 
ity but as a result of disagreement, approval was delayed and doubtless 
this explains why it was not submitted to the ERA for approval before the 
Supreme Court's decision in the Schechter case. 

9829 



-D68- 

British Columbia, with the e::ception of certain Crown granted lands from 
which timber is e ^portable on a flat rate basis of 50 cents per M Board 
feet, practically all timber lands are held in leasehold or through tim- 
ber license under which the govern lent retains title to the land and the 
right to a severance tax when the timber is cut. Timber cut from such 
holdings is non-ercpor table except with an export permit issued by en ex- 
port committee established by the British Columbia Government. 

Since the Associated Logging Agreement was never officially con- 
sidered by the HRA, it is appropriate to record here certain observations 
which were advanced in connection with a similar proposal which was sub- 
mitted for official approval. This was a plan proposed for the control 
of imports of shingles from Canada, involving the organization of a 
domestic corporation to be called the Amalgamated Shingle Company, to be 
given power to control imports, similar to that delegated by the Code 
Autority to the Associated logging Company. It was anticipated that such 
a plan of control would be successful, in vie rr of the fact that the 
shingle industry was confined to a limited area in '.'estern Washington 
and Oregon, and British Columbia. To indicate the need for such control, 
its proponents pointed to the keen competition which prevailed between 
Canadian and domestic -producers, and the inequality of standards of pro- 
duction anticipated as a result of the operation of the Lumber Code in 
the domestic industry. (*) 

The following legal considerations were advanced in connection with 
the official cons rieracion of the plan for control of imports of shingles 
by means of an agreement under authority of Section 4 (a) of the Act: 

(1) It is an elementary rule of statutory construction that statutes 
must be read as a whole. Therefore, when an act contains general and 
specific provisions relating to a particular subject, the specif ic pro- 
visions control, even though the broader provisions standing alone may 

be read to include the subject to which the more particular provision 
relates. 

(2) Applying the rules set forth in (l), the terms of Section 3 
(e) of the Act, which is a specific provision, must prevail over the 
broad terms used in Section 4 (a) . The procedure proposed amounts to 
converting Section 4 (a) into a tariff act, in spite of the fact that 
Congress definitely set up the procedure to be followed in such cases 
in 3 (e). 

(3) Reduced to its simplest terms, the instant case is a suggestion 
that the President enter into a contract with an American corporation 

in order to restrict the imports of foreign goods. The President's 
power over imports is specifically defined in Section 3 (e) of the Re- 
covery Act. To control imports under 4 (a) would be to evade the provision 
of Section 3 (e), including its specific requirements, as, for example, 

(*) See Part B of this report entitled "Section 3 (e) of the national 
Industrial Recovery Act and its Administration" for a. discussion of the 
control of shiagle imports by means of pn informal agreement between 
Canadian and domestic producers, arrived at after a complaint and investi- 
gation under Section 3 (e) of the Act. 

9329 



s 



-269- 
inveptigation by the Tariff Coronission, etc. 

This sane reasoning was applied in other cases "here proposals were 
made for licensing importers under authority of Section 4 (b) , which 
authorized the President t'o license business enterprises in order to make 
effective a code of fair conroetition or an agreement under Title I of the 

Act. 

B* ?il^i"pYisprint^&' - e_enTent - .. 

The Code Authority of thel.Newsrirint Industry made two general pro- 
posals for the stabilization of the Newsprint Industry at a public code 
hearing on February 1, 1934, the Code having been approved on November 17, 
1933. The first proposal included a series of recommendations covering 
minimum prices, trade loractices, and trade- customs. The second was a 
proposed agreement between the Association o c Newsprint Manufacturers of 
the United States and the Export l-.ianuf acturers Association of Canada, 
providing and setting up machinery for the uniform administration and/or 
enforcement of the -oro'oosed trade practices in both the United States and 
Canada. 

The principal feature of the proposed trade practices is a provision 
for the maintenance of a fixed minimum price for newsprint marketed in 
the United States. This is set out in the recommendations in the follow- 
ing terms: Except in the fulfillment of contracts signed before October 24, 
1933, "no paper shall be sold or offered for sale directly or indirectly 
in any manner whatsoever "oy any member of the industry for delivery dur- 
ing the years 1933 and 1S34 at less than a base price of $41.00 per ton, 
subject to the zone and other differentials"; these price differentials 
range from $l.CO below the base price to $6.00 above, depending upon the 
zone or territory a.s determined by the Newsprint Code. 

It is further provided in the trade practices that the Code Author- 
ity, upon its own motion or upon application by any member of the industry 
or group of consumers, might adjust or modify such minimum prices to the 
extent that it should find such adjustment or modification justified by 
general chonges in the cost of manufacturing or in the value of the 
dollar and by conditions in the newspaper publishing industry. moreover, 
the agreement with the Export manufacturers Association of Canada to 
comply with the reoAiirements of the recommendations included an agreement 
to comply with the adjustments and modifications which might be made from 
time to time by the Code Authority. 

The proposed agreement further provided for a joint committee com- 
posed of four representatives of the American and four representatives of 
the Canadian association, selected in such manner and for such terms as 
the associations respectively should from time to time determine. It 
provided that the joint committee should have power to call joint meetings 
of the associations and to confer with members of the associations, other 
manufacturers, importers, distributors, and consumers, with respect to 
stabilization of the industry and the elimination of' unfair practices and 
destructive competitive prices, and to report the results of such confer- 
ences, with their recommendations to the associations. 



9829 



-270- 



Other principal provisions of the proposed agreement "T 1 ?! 

(1) methods of enforcing compliance with the trade practices, i.e., 
machinery for investigating, stimulation of legal r o n°dios and 
penalties for violation of the agreement, including application for 
restriction or regulation of imports under Section 3 (e) of the Act; 

(2) th<= interchange of statistics of plant capacity, production, ship- 
ments to the United States, and stocks on hand, for each member of the 
industry; (3) agreement "between the parties no't to sell, lease or 
otherwise dispose of any -paper mill or pa.rt ^Inless the transferee or 
lessee thereof or, other c°rspn to "-hom such, disposal is made, or, to 
whom possession is given, if not already a. party to th° agreement, 
should first "become a party to the agreement; (4) agreement by the , 
parties to exercise such powers as they might have as shareholders or 
stocldnolders in other corporations or companies for the purpose of 
causing such other corporation or company to become parties to and to 
fulfill the obligations of membership in the association; and (5) the._. 
agreement could be terminated a.t any time by a majority vote of either 
of the associations and could terminate upon the termination of the 
recommendations or upon the termination of the act. 

The Newsprint Agreement differed from the Northwestern Logging 
Agreement and the plan proposed for the control of shingle imports in 
that it provided, by agreement, for a plan of cooperative activity by 
and between an association of foreign manufacturers and a corresponding 
association of domestic manufacturers for the administration of the 
proposals drawn tip for the mutual benefit of the Canadian and American 
newsprint industries. 

After disapproval of this plan, another proposal was brought 
forward for a Stabilization Board composed of representatives of the 
industry, of labor, and of newspaper publishers, but it too failed of 
approval . 



9829 



-271- 



♦ 



APPENDIX TO PART C 



9829 



—27 2~« 

Table I Import Duty Collections: Trends in amount, and in 
comparison with other principal sources of Federal 
revenue for selected intervals since 1890. 





; United 










! States 


Hatio to ' 


rotal United 


States Revenues 




Customs 


Customs 


Internal 


Income and 


Period 


Receipts 


Receipts 


Revenue 


Profit Taxes 




(Dollars) 




(in percen 


tage) 


Average 










1891-1900 


180,975,200 


46 


45 


— 


1901-1910 


285,357,700 


48 


43 


- 


1911-1915 ! 


289,363,000 


41 


43 


7 


1916-1919 


200,901,000 


7 


28 


54 


1921-1928 


509,256,000 


12 


2.*2 


50 


Year 










1929 


602,263,000 


15 


15 


58 


1930 : 


587,001,000 


14 


15 


58 


1931 : 


378,354,000 


11 


17 


56 


IS 32 : 


327,755,000 


15 


24 


50 


1933 : 


250,750,000 


11 


38 


33 



Source: U. S. Bureau of Foreign and Domestic Commerce, Statistical 
Abstract of the United States, 1931. 



9829 



-273- 



Table II Relationship of United States Imports to Exports; periods 

since 1911, and years since 1929. 











Ratio of Favor- 




Domestic 


Imports for 


Favorable 


able Balance 


Period 


Exports 


Consumption 


Trade Balance 


to Imports 




(in 


millions of dollars) 


(percentage 


Yearly Average 


2,332 


1,698 


634 




1911-1915 


-37 


1915-1920 


6,417 


3,239 


3,128 


95 ■•..■■■ 


1921-1925 
1926-1930 


4,310 
' 4,688 


3,423 
i 4,020 


837 • ■ ■ ■ 


• ■ -26 ■ • 

. . .17. » 






Year 






! 




1929 


5,157 


4,339 


819 


i is 


1930 


3,781 


3,114 


667 


: 21 


1931 


2,378 


2,088 


! 290 


14 


1932 


1,576 


1,325 


251 ■■ • • 


, 19 


1933 


1,647 


1,433 


214 


. . . . 15 • • ■ • 


1934 


2,101 


1,636 


465 


28 • • • • 


Source: Based 


on data from U 


, S. Bureau of Foreign and Domestic Commerce 


— Stati 


stical Abstract 


of the United States, and Fo'rei'gn Commerce 


and m 


wigation of th< 


3 United States. 







9829 



-274- 



TABLE III. TRENDS III RATIO OP UNITED STATES IMPORTS PROII GREAT 
TRADE AREAS AND FROM PRINCIPAL COUNTRIES TO TOTAL U1IITED 
STATES IMPORTS: SELECTED PERIODS SINCE 1896 a/ 



Areas' 




1896-1914 


: 1915-1922 : 


1925-1929 


: 1930-1934 


Continental Ratios 






Percentage o 


f total inr 


iorts 






51 
19 
12 
16 
1 
: 1 

100 

17 
11 
8 
: 6 
6 
4 
7 
2 

:5 

5 
2 


24 
30 
16 
26 

1 

3 

100 : 

8 • 
1 

4 : 
12 : 
1 

4 • 
5 
5 
4 
4 
9 
4 


30 

24 

13 

'. ' 29 

2 

' 2 

100 

9 
5 
4 
11 
7 
4 
5 
2 
6 
1 
9 
4 




30 






25 
14 






28 






1 






2 


Total U. S. Inroorts * 
Country Ratios 




100 
7 






6 






4 






13 
4 










3 






5 






2 

4 




.. ..) 




) 


3 






9 
3 












Source: Based on U. 
Commerce and 


S. Bureau of Foreign and Domestic 
navigation of United States. 


Commerce, 


Porei 


gn 



a/ Includes Central America and West Indies. 



9829 



-275- 



TABLE IV. SEASONALITY III IMPORTATION OF SELECTED COMMODITIES 
INTO THE UNITED STATES; RATIO OE -EACH MONTH'S IMPORTS 
TO AVERAGE MONTHLY IMPORTATION IN 1934. 











: Veget- 


'Fruits 










Raw 




ables 


' c': 










Hides 


• Furs 


:.& Prep- 


Prepara- 










and 


: Un- 


ara- 


" ara~ 


:Raw 


Raw 


1934 : 


Fish a/: 


Skins a/ 


dressed b/ 


tions b/ 


jtions b/ 


Wool a/ 


Silk a/ 




113 : 


112 


PER CE! 


T T 


63 


106 




January : 


94 


I 125 


73 


February : 


71 : 


106 


.180 


126 


67 


138 


86 


March . : 


100 : 


124 


190 


164 


94 


186 


117 


April . : 


72 : 


135 ~ 


141 • 


91 


108 


82 


101 


May : 


79 ': 


127 


' 113 ' 


31 


132 ' 


149 


93 


June \ : 


101 : 


133 ' : 


: 80 ' 


59 


108 


83 


100 


July . : 


95: : 


119 : 


35 


56 


99 


84 


94 


August : 


99 ': 


77 : 


; 66- 


68 


99 


77 


98 


September: 


* 125 : 


65 ' • 


74 


74 


108 


83 


138 


October •: 


' 140 : 


.60 ■ 


; 59' 


96 


125 


97 


102 


November : 


' 129 : 


66 : 


67 


122 


110 


54 


145 


December : 


' 112 : 


76 " : 


52 


101 


37 . 


56 


53 


SOURCE: B 


ased on 


U. S. Bureau of Foreign and 


Domestic 


Commerce 


& 



Monthly Summary of Foreign Commerce, 1934. 



a/ Based on Quantity, 
b/ Based on value. 



9829. 



-276- 

TABLE V. TREND III RATIO OF UNITED STATES IMPORTS VIA EACH 
COAST OR BORDER, AND BY PRINCIPAL CUSTOMS DISTRICTS, 
TO TOTAL IMPORTS, FOR SELECTED PERIODS 1890-1933. 



By Groups of Customs District 

Atlantic Coast 
Gulf Coast 
Mexican Border 
Pacific Coast 
Canadian Border 
(interior clearance) 

Total Imports 

By principal Customs District 

New York 

Massachusetts 

Philadelphia 

Maryland 

Nei? Orleans 

Buffalo • 

Chicago 

Michigan 

San Francisco 

Washington (state) 

Other districts 



1891-1900: 1901-15: 1915-20: 1921-50: 1931-33 



82.7 
2.6 
.9 
6.3 
6.5 
1.0 

100. 



64.2 
9.0 
6.6 
1.8 
2.1 

.9 
1.9 

.8 
5.5 

.5 
6.7 



(in percentage) 



: 77 


1: 


: 4, 


9: 


: 1. 


4: 


: 6. 


.6: 


: 8, 


7: 


: 1. 


3: 


: 100, 


0: 


: 53. 


8: 


: 8. 


3: 


: 5. 


5: 


o 


1: 


: 3. 


8: 


: 1. 


1: 


: 1. 


9: 


: 1. 


1: 


: 3. 


8: 


: 2. 


1: 


: 11. 


7: 



66.9 


66.4 : 


5.5 


' 6.8 : 


1.2 


.6 : 


12.8 


12.1 : 


12.9 


13.3 : 


0.7 


0.3.: 


100.0 


100.0 : 


50.7 


48.7 : 


8.1 


7.0 : 


4.3 


5.2 : 


1.3 


2.5 : 


4.4' 


4.9 : 


2.6 


2.9 : 


1.2 


1.3 : 


1.3 


2.3 : 


5.9 ! 


4.7 : 


6.2 : 


5.7 : 


13.5 : 


14.8 : 



70.2 

6.9 

.5 

9.2 

12.5 

.7 

100.0 



50.7 
5.6 
5.9 
3.5 
4.9 
2.9 
1.6 
2.8 
4.1 
2.4 

15.6 



Sources.: Based on U. S. Bureau of Foreign and Domestic Commerce, 
Foreign Commerce and Navigation of the United States. 



9829 



-277- 



Table VI. Comparative analysis of the various functional classes 
of importers, 1929 



"I mport Agents" functioning as; 

Commission : Manufactures Selling 

Merchent :ers' agents: Agents 




Fumber of fi.rms . 
Employees (total) 
Employees (male). 
Employees (female) 

Payroll 

Net sales .... 
Expenses 



ITumber of employees 
,t of which were male 
Av. number per firm, 

male 

Av. numbep per firm, 

female 

Av. number per firm, 

total 



Average annual salary 
Average net -sales per 

employee ($1,000) . 
Payroll ratio to net 

sales {'Jo) 

Payroll ratio to all 

expenses ($) . . . 
Average sales per firm 

($1,000) -.".... 
Average expense per 

firm ($1,000) . . . 
Average annual payroll 

per firm ($1,000) . 
Ratio of expenses to 

sales (fo) 



Percentage of aggregate sampling 



96.4 
96.2 
96.5 
95.4 
93.2 
96.9 
96.0 



1.1 
.8 
1.3 
1.0 
1.2 
.9 



1.2 
.6 



.7 

,5 
.8 



72.0 
7.5 
2.8 



10.3 
$2,610 
77 

3.36 
48.0 • 
800 
56 
27 
6.97 



Other horizontal comparisons 

55.0 ' 

8.0 

5.6 

14.6 

$<o, 280 

90 

2.53 
51.0 ' 
1,317 



56 _ 
33" 

5.0 



1.6 
2.1 

2'. 2 
2.0 
2.1 
1.3 
2.3 



60.0 


74.0 


3.1 ' 


' 9.9 


2.0 


3.4 


5.1 


13.3 


$3,230 


$2, 540 


61 


47 


5. '28 


5.34 


43.0 


44.0 


311 


644 


38 


73 


16 


34 


12.3 


12.24 



Source: U. . S. Bureau of the Census, Census of Distribution, 1^29 
(representing a total sampling of 2,347 firms) 



9829 



578- • 



Table VII. Evidences of commodity specialization in selected 

commodity lines, which were considered to be within 
the jurisdiction of the Improting Trade Code. 



Commodity Line 



lumber of Firms 
handling this line and: 



Uo other 



i"ew related 



tumorous a/ 



Antiques, art goods, silverware, etc. . : 

Brush and broom 'materials : 

Burlap 'and : burlap bags ' : 

Canned Fruits and begetables ... . . ". : 
Casings and meat products .......: 

Cheese and allied products : 

Chemicals, dyes, colors, shellac . . . : 

China, glass, earthenware . : 

Cocoa : 

Copra and cocoanut : 

Cordage : 

Drugs a.nd medicine : 

Fertilizer and C-lue Stocks : 

Fibres : 

Floor covering •...'.: 

Fresh fruit and vegetables : 

Hides and shins .". . . . . . .'- . . . ■• : 

Kapok . . . .' : 

Linen -....: '.. : 

Manufactures :of metal : 

Liillinery . .: : 

Mi scellaneous crude . : 

Uotions, trimmings, etc : 

Olive oil . : 

Oriental rugs : 

Preserved sea food : 

Rubber ..;.... ■...'.: 

Seeds and spices : 

Silk fabrics- : 

Silk, raw . , , . . . : 

Steel (General trade) : 

Steel, fine i ; : 

Sugar • . : 

Tanning materials . : 

Toys, sporting goods, etc : 

Waste .......... : 

Wood pulp : 

Woolens ..... : 



3 

12 

16 





7 

11 

36 

2 



3 
13 

6 

7 


14 

2 
58 

4 
19 





59 

3 
1 

10 
5 

13 
6 
9 


8 
2 
9 
7 



12 
.4, 

13 
23 

5 
35 
23 
24 

3 

5 

1 
10 

7 
13 

.7 

6 
13 

7 
29. 
14 

6 


17 
37 

0. 
31 
.5 
28 
14 

3 

1 

5 



6 
15 

6 

6 



1 
9 
6 
4 
7 

.6 

11 
4 
7 
8 

5 
7 

10 
7 
2 

10 
2 
1 
5 
.4 
2 



1 

11 
3 
4 
3 
4 
1 
5 
3 
2 
3 

r 



a/ General Importers 

Source: Based on an analysis of Code Authority trade lists, and 
confined to firms nhich paid assessment. 



9829 



Table VIII. Size of importing firms in selected commodity lines, as 
indicated "by size of staffs. 













Size of individual staffs, as 




indicated ^oy paid assessment 




for first hr 


.If of 1935 


a/ 








• 
• 


For Gen- 




For firms handling one: 


eral Im- 


Commodity Line : 


or a few related lines: 


porters 




Size range: 




(aggre- 
gate -2/ 




from : 


to : 


Average : 




(number 


of staff members) 


Antiques, art goods, silverware, etc. . : 


3 


80 : 


16.3 : 


132 


Brush and "broom materials 






1 : 


26 : 


7.5 : 


414 


Burlap and "burlap "bags 










1 ! 


57 : 


6.5 : 


283 


Canned fruits and vegetables . . 










2 : 


10 : 


4.9 : 


225 


Casings and meat products .... 










3 


11 : 


7.0 : 


299 


Cheese and allied products . . 












15 : 


5.7 : 


326 


Chemicals, dyes, colors, shellac 










1 


64 : 


9.5 : 


428 


China, glass, earthenware .... 










2 


80 : 


17.5 : 


342 


L/OCOci ••••♦•»••••••« 










p 


64 : 


8 • o ! 


117 


Copra and cocoanut 










1 


19 : 


6.4 : 


124 


Cordage .-. 










Q 


7 


5.5 : 





Drugs and medicine 










1 


54 . 


11.4 : 


340 


Fertilizer and glue stocks . . . 










p 


79 : 


11.8 


462 


Fibres 










l : 


57 


8.1 : 


422 


Floor covering 










2 


28 


10.9 


430 


Fresh fruits and vegetables . . 










2 


7 


4.1 


77 


Hides and skins 










1 


57 


9.5 


436 


Kapok 










2 


25 ! 


10.3 


175 


Linen 










1 


35 


10.3 


132 


Manufactures of metal 










p 


30 ! 


9.8 


246 


Milliner;'- 










1 


29 


8.0 


99 


Miscellaneous crude ...... 










3 


•132 


67.5 


135 


ITotions, trimmings, etc. . . . 










1 


52 


12.6 


312 


Olive oil 










1 


' 15 


5.9 


69 


Oriental rugs 










1 


• 15 


3.5 


■ 231 


Preserved sea food 










: 2 


29 


8.6 


464 


Rubber 










3 


9 


4.6 


69 


Seeds and spices 










1 


50 


6.7 


413 


Silk fabrics 










: 1 


■ 28 


9.5 


249 


Silk, raw 










: 1 


43 


11.8 


375 


Steel (General trade) 










5 


: 13 


r 6.8 


97 


Steel, fine 










- 3 


: 19 


9.5 


: 


Sugar 










2 


: 26 


10.5 


: 69 


Tanning materials 










: 2 


: 13 


! 6.6 


• 104 


Toys, sporting goods, etc. . . 










: 3 


: 30 


: 14.5 


: 312 


'/asue ....*•■...... 










: 1 


: 9 


3.6 


: 302 


Wood pulp 










: 1 


: 22 


! 9.5 


215 


Woolens 










: 1 


: 12 


: 4.9 


: 170 



(footnotes on following page) 



9829 



-230- 



Table VIII. (Continued) 



Source: Based on Analysis of Code Authority records covering firms 

which paid assessment to Import Trade Code (Hence incomplete 
and not necessarily, representative of the trade) 

a/ Code assessment one dollar per staff member, whether employer or 
employee. 

b/ Owing to diversified operations of general importers, the size of 
their staff is of no particular significance in connection with a 
given commodity line. Therefore the average size is not shown for 
general importers. The figure given is the aggregate of staff 
members for .such general importers as handle this commodity along 
with other commodities. 



9829 



-n3l- 
Table IX. Comparative activity of Importers in selected Areas, 1933 











Ratio : 
















of ei-: 


Number of : 






No. : 
of : 


Net Sales : 


oenses: 
to net: 


Employees : 


Average 


Geographic Area a/ : 




Av. per : 




Av.per: 


annual 




Firms: 


Total : 


Firm : 


sal e s : 


Total : 


Firm : 


Salary 






($1000): 


( $1,000 V 


<*) • 








Total National . . . 


2,176. 


776,354: 


357 : 


10.5 ' 


13,847 


8.66 


1,898 


New York City . . 


1,468 


583,829: 


398 


10.7 


13,565 


9.24 


1,998 


Upper New York Statf 


3 13 


3,072: 


236 : 


- 


77 


5.92 


1,520 


Pennsylvania . . . 


60' 


17,707: 


295 : 


11.8 


463. 


7.72 


• 1,838 


Massachusetts . . 


7.5: 


21,595 


288 


12.8 


667 


3.89 


1,931 


Connecticut . . . 


n 
t 


943 


135 


5.5 


8 


- 1.14 


: 1,500 




113 


28,425 


251 


11.9 


1,067 


9.44 


: 1,579 




: 22 


5,701 


259 


10.2 


: 131 


: 5.95 


: 2,244 




: 15 


! 2, 074 


• 138 


9.9 


- 80 


: 5.33 


• 1,438 




: 15 


1,708 


: 114 


10.5 


: 63 


: 4.20 


: 1,333 


California .... 


: 106 


: 42,239 


398 


: 6.5 


! 494 


: 4.66 


: 2,103 


Ratio of New York 
















City to total (>) 


: 67.5 


! 75.2 






: 72.0 







Source: Based on U. S. Bureau of the Census, Census of American 
Business: 1933, Volumes I to VII. 

a/ Areas shown comprise all for which "Importer" data are published 
in Census of American Business: 1933, Volumes I to VII. 



-ooOoo — 



-280- 
-282- 



PART D: EXPORT? AED EXPORTING UNDER ItiRA CODES 



9829 



-283- .. 

ci-iapit r T. ' --■■ 

PROVISIONS OF THE ACT AND OTSr.ll LAWS 
RELATING TO, EXPOET.S 



I. THE AUTHORITY TO EEOTIA!EE EXPORTS 

The authority to regulate exports and. exporitng by means of codes 
was implied in Title I of the National Industrial Recovery Act. Section 
1 declared that a. state of national emergency existed which "burdened 
inter-state and foreign commerce, and that it was therefore the policy 
of Congress to remove- obstructions to the free flow of interstate and 
foreign commerce which tended towards widespread unemployment and dis- 
organization of industry. 

Section 7 (d) defined interstate and foreign commerce to include 
trade or commerce among the sever?„l states and with foreign nations, 
or "between territories and insular possessions or other places under the 
jurisdicition of the United States and foreign nations. 

Section 3 (a) empowered the President to approve codes of fair com- 
petition for trades or industries or subdivisions thereof, and in the 
last clause authorized exemptions and exceptions in the following terms: 

" * * * the President * * * may provide such exceptions to and ex- 
emptions (for exports implied) from the provisions of such code* 
* * as in his discretion (he) deems necessary to effect the policy 
herein declared." 

Section 3 ("b) provided that any violation of the standards of fair 
competition established in any code in transactions in or affecting inter- 
state or foreign commerce should "be deemed "unfair" within the meaning of 
the Federal Trade Commission Act, as amended. This signified that the 
Commission 'was empowered to investigate alleged violations, and in cases 
where they were found to exist, it could issue orders to cease and desist 
from such practices. If the violator did not comply with these orders, 
the Commission was authorized to ref r its findings and recommendations 
to the Attorney General for such action thereon as he might deem proper. 

II. THE ANTI-TRUST LA'TS 

Prior to the Export Trade Act, 1913, and the national Industrial 
Recovery Act, 1933, operations in hot": domestic and foreign commerce 
were subject to the provisions of the anti-trust laws. 

A. The Sherman Act 

The Sherman Act of July 2, 1890 defined "trade or commerce" as that 
"between the United States and any of its territories or the District of 
Columbia, and foreign nations. It prohibited (l) combinations or monop- 
olies in restraint of trade, and (2) monopolies and conspiracies or attempts 
to monopolize any part of interstate or foreign commerce. 

9829 



- -230- 

-284- 

3. The Federal Trade Commission Act 

The Federal Trade Commission Act of September 26, 1914, likewise 
defined interstate- and foreign commerce as that between the various states 
and territories and foreign nations. It provided for the organization 
of the Commission as both a quasi- judicial and administrative body, (l) 
to prevent unfair methods of competition, (2) to make investigations 
of such unfair methods of competition at the request of the President, 
Congress, the Attorney General, or upon its own initiative, (3) to make 
findings of fact in regard to alleged violations of the anti-trust laws, 
and unfair methods of competition, and (4) if an alleged violator of the 
anti-trust laws or fair methods of competition fails to comply with its 
findings and recommendations with respect to the cessation of such acts, 
to refer its findings and recommendations to the Attorney General for 
such action thereon as he may deem proper. 

C. The Clayton Act 

The Clayton Act (October 15, 1914) defined "commerce" to include 
trade within the United States or any territory thereof or the District 
of Columbia or any insular possession or other place under the juris- 
diction of the United States, but it specifically provided that nothing 
in the Act contained should apply to the Philippine Islands. In supple- 
menting the Sherman Act against unlawful restraints and monopolies, it 
prohibited the? acquisition or ownership by any corporation of the whole 
or any part of the stock or other capital of any other corporation which 
had the effect of restraining or monopolising trade. 

III. THE EXPORT TRADE ACT 

A. Scope and Intent 

The Export Trade Act or Webb-Pome rene Law, enacted April 10, 1918, 
exempted duly organized and registered associations engaged in the export 
trade from the provisions of „ the anti-trust laws. Its intent was to allow 
these associations to engage in competition in foreign countries with the 
traders of other nationalities who were not hampered by their own laws 
with respect to monopoliew, restraints of trade and unfair methods of 
competition as prohibited in the anti-trust laws of the United States. 

B . I ts Relation to the Ant i- trust Laws 

Section 2 of the Export Trade Act provided- that nothing in the Sherman 
Act was to be construed as declaring to be illegal an association entered 
into for the sole purpose of engaging in export trade, provided. " * * * 
such association * .* * is not in restraint of the export trade of any 
domestic competitor of such association; and provided further , that such 
association dees not, either in the _ United States or elsewhere, enter 
into an agreement * * * Or do any act * * * which substantially lessens 
competition within the United States or otherwise restrains trade therein." 

Section 3 provided that nothing in the. Clayton Act was to be construed 
to forbid the acquisition or ownership by any corporation of any other 
corporation organized solely for the purpose of engaging in export trade 



n * * * unless the effect of such acquisition or ownership may "be to 
restrain trade or substantially lessen competition within the United 
States." 

Section 4 provided that the prohibition against unfair methods of 
competition in the Federal Trade Commission Act should he construed as 
extending to unfair means of competition used in export trade against com- 
petitors engaged in export trade, even tho the acts constituting such 
unfair methods were done without the territorial jurisdiction of the 
United States, 

Section 5 provided that the Federal Trade Commission shall conduct 
an investigation whenever it shall have reason to believe that an associa- 
tion is in restraint of trade within the United States or in restraint of 
the export trade of any domestic competitor of such domestic association, 
which artificially or intentionally enhances or depresses prices in the 
United States of commodities of the class exported by such association, 
or which substantially lessens competition within the United States. If, 
after investigation, the Commission concludes that the law has been 
violated, it may make recommendations to such violating association for 
the readjustment of its business in order that thereafter it may maintain 
its organization and management and conduct its business in accordance 
with law. If the recommendations of the Commission are not compiled with, 
it shall then refer its findings and recommendations to the Attorney 
General for proper action. 

IV. RELATION OF THE EXPORT TRADE ACT TO THE 1IIRA 

The Export Trade Act and the 1TIRA were both directed to a common 
purpose with respect to exports, but they differed in the scope of 
authority and method provided for achieving that purpose. The Export 
Trade Act was limited exclusively to exports, and provided complete 
exemption from the anti-trust laws for acts, organizations, and methods 
of competition, performed in export trade and relating exclusively to 
competition with traders or trade groups of foreign nationality wholly 
without the United States. . • ■ • 

The 1TIRA, on the other hand, contained no limitations expressly con- 
nected with exports, but it was specifically provided in Section 3 (a) 
that the codes should not be designed to promote monopolies or to eliminate, 
oppress 3i- discriminate against small enterprises , and that they should not 
permit monopolies or monopolistic practices. In practice the prohibition 
against monopolies and monopolistic practices became a standard provision 
in approved codes. The limitations imposed by such a prohibition led 
trades and industries to the conclusion that the codes containing it, in 
addition to other provisions., wouE. operate as a serious handicap in competing 
in foreign markets where traders of .other nationalities were undor no such 
restrictions. This conclusion, in turn, led to applications for an approval 
of provisions specifically, and in most causes generally, excepting or exempt- 
ing exports from the codes. 

Specific differences in the exemptions for exporters in the Export 
Trade Act, on one hand, and the NIPA on the other, concerned (l) the 
degree of exemption from the provisions of the Anti-trust Laws, (2) the 
extent of coverage of manufacture and distribution, and (3) the status 

9829 



-286- 
of territories a.nd possessions of the United States. 

(1) Under the Export Trade Act (Section 2), any act or acts of 
export associations were not exempt from the provisions of the anti-trust 
laws if they tended to restrain or monopolize the export trade of any 
domestic competitor of such an association. The NIRA, and consequently 
the codes approved under its provisions, did not include any such limita- 
tion on the exemption from the anti-trust laws, although presumably it 
was expected that the codes would achieve the same end in the field of 
domestic operations. 

(2) The extent of the coverage of industries and services in the 
Export Trade Act was specifically limited "by the provisions (Section 1) 
to the effect that the words "export trade" should not he deemed to 
include the production, manufacture or selling for consumption or resale,, 
within the United States or any of its territorie* , of roods, wares, or 
merchandise, nor to include any act in the course of such production, ' 
manufacture, or selling for consumption or resale. The codes, on the other 
hand, included in their coverage a wide range of manufacturing industries 
and services, and the definition as to what functions they might or might 
not include was not specifically limited by the provisions of the 1TIRA. 

(3) With respect to the laws of Congress and the jurisdiction of 
Inderal courts, the status of the Philippine Islands was indicated in an 
Act of Congress of August 29, 1916, which provided: "that the statutory 
laws of the United States hereafter enacted shall not ap ly to the 
Philippine Islands, except when they specifically so provide, or it is 
so provided in this Act."* The status of Alaska -' , Havaii 2/ f Puerto 
Rico 2/ f the Virgin Islands */ f and the Canal Zone -' , respectively, was 
determined in the laws relating to their acquisition, basic charter, or 
other legislation. 



(*) 79 Stat. 545, 547;" U.S. C . 48 Sec. 1003. 

2/ Alaska is fully incorporated into the United States. As a part of 
rather than b elongi ng to the United States, there is doubt whether 
Congress could exclude Alaska from the operation of the Recovery Act. 
Raussmussen v. United States, 19.7 U.S. 516. The organic act for 
Alaska (1912.) declares: "The Constitution of the United States, and 
all laws thereof which are not locally inapplicable, shall have the 
same force and effect within the said Territory as elsewhere in the 
United States." (U.S.C. 48 Sect. 23) 

'.£/ The organic act for Hawaii (190^) declares: "The Constitution, and, 
except as is otherwise provided, all laws of the United States,* * * 
which are not locally inapplicable, shall have the same force and 
effect within the Territory of Hawaii as elsewhere in the United 
States." (U.S.C. A. 48 Sec. 495. Hawaii v. Mankichi, 190 U.S. 197. 

&/ The Constitution is not extended over Puerto Rico but statutory laws 
are partially ap ii cable. "The statutory laws of the United States 
not locally inapplicable shall have the same effect in Puerto Rico 
as in the United States, except the internal revenue laws." 

4/ and 5/ , See footnotes following page 



-237- 

The Export Trade Act defined "export trr.de" by implication as 
meaning trade "between the United States or any territory and foreign 
countries. 

Section 7 (d) of the HIRA, also "by implication, defined exports in 
t he f o 1 1 owing t e rms ; 

"As used in this title, the term "person" includes any individual, 
partnership, association, trust, or corporation; and the terms "inter- 
state and foreign commerce" and "interstate or foreign commerce" include, 
except where otherwise indicated, trade or commerce among the several 
Stats and with foreign nations, or between the District of Columbia or ... 
any Territory of the United States and any State, Territory, or foreign 
nation, or between any insular possessions or other places under the juris- 
diction of the United Sta.tes, or between any such possession or place and 
any State or Territory of the United States or the District of Columbia or 
any foreign nation, or within the District of Columbia or any Territory or 
any insular possession or other place under the jurisdiction of the United 
States." 



4/ The Virgin Islands have never been organized ana never incorporated. 
Manv local laws have been allowed to remain in force . While appur- 
tenant to- the United States, the Virgin Islands are not a part thereof, 
within the several meanings, such as citizenship, revenue laws, and 
judicial establishment. (U.S.C.A. 48 Sec. 1309) 

5-/ The President is authorized to operate the Panama Canal and govern 
the Canal Zone through a civil or military governor of the Panama 
Canal and other officials. The Canal Zone is to be treated as an 
adjunct to the Canal. (U.S.A.C. 48 Sec. 1305-1307.) 



J 829 



-288- 

i CHAPTER II 

LiPORTMCE AND COMPOSITIO N OF EXPORTS 

In connection with a study of exports and exporting under the NRA 
codes, it is appropriate to indicate the composition and importance of 
exports to domestic industry and their relation to the problems of in- 
dustrial recovery. 

The shift in the United States from a debtor to a creditor position 
at a time when the competitive relationships between world trading nations 
had changed as a result of war-stimulated overproduction in agriculture and 
industry was, in a large measure, responsible for the "proportionately greater 
decline in its foreign trade as compared with its domestic production. 
The immediate devices by which many nations sought to conserve relative 
economic stability and to solve their fiscal problems included the estab- 
lishment of trade barriers and exchange control regulations. The almost 
uninterrupted decline in the level of world prices during the period of 
depression had an adverse effect on the already overburdened structure ( 
of international credit, and finally resulted in the abandonment of the 
gold standard by many countries, which in turn led to further tiv.de re- 
strictions. 

The rapid decline of the export trade of the United States after 
1929 was in no small degree the result of a practical cessation in the 
relatively large movement of capital goods, which during the -post-war 
period had been supplied to foreign countries engaged in rehabilitation 
and in further and hew industrial expansion. ''(*) 

I. THE IMPORTANCE OF EXPORTS TO UNITED STATES COMMERCE 

Although normally some 10 to 15 per cent of our total production is 
exported, the importance of this proportion of the business is vital to 
many industries. That percentage oftentimes represents the profit margin. 
Table 1 shows the production of exportable goods, and the portion exported 
for decades from 1899 to 1930, and for the years 1931 and 1933. It indicates V 
that the production of exportable goods steadily increased through 1929 and 
that the proportion exported varied from 9 to 16 per cent. After 1929 not 
only did the production of exportable goods decline sharply, but the pro- 
portion destined for exports declined to an even greater extent. 



(*) A more detailed discussion of the events and their consequences will 
be found in Part A, Chapter III. 



?829 



-289- 

TAELE I. 
PRODUCTION 05 ZXPORTA" LE GOODS AND THE PROPORTION EXPORTED 





(in millions of dollars) 






Production of 


Exports of : 


Per cent 


Year 


exportable 


United States 


of 




goods 1/ 


merchandise : 


total 


1899 


9,767 


1,253 


12.8 


1909 


17,662 


1,701 


9.6 


1919 


48.527 


7,750 


16.0 


1929 


52.802 


: 5,157 


9.8 


1931 


: 32,280 


: 2,378 


! 7.4 


1933 


! 25,017 


: 1,647 


6.6 



Source: United States Bureau of Foreign and Domestic Commerce, Foreign 
T rade of the United States, 1934 

1 ' The value of the output of agricultural, mining, and manufacturing 



Industries., plus the co 

II. THE TREND; OP EXPORTS 

Table 2 shows the grov 
reaching its peak of nearly 
level of from .'$4 to $5 bil ' 
declined sharply to a low 
$2.1 billion in 1934. 



st of transportation, 



■th of the expdrt trade sinqe 1791. After 

§6 billion iiil919-1923. f it continued at a 
ion through 1929. After that year, exports 
$1.5 billion in 1932 and- then recovered to 



6f 



The indices of trends; based on 1927-29 as 100, shown in Table. 2, 
indicate that' whereas the Value index reached 31 in 1932, the quantity 
index for that year was 54. The unit value of exports stood at 59, as 
compared with 67 for domestic wholesale prices. In 1934,, the index of 
value recovered to 42; that of quantity to 58; and the indices of unit- 
values and domestic wholesale prices, to 72 and 79, respectively. 



9829 



-290- 

TABLE 2. 
UMTED STATES EXPORTS OP DOMESTIC MERCHANDISE (VALUE): INDICES 
OE QUANTITY, VALUE, AND UNIT VALUES, Ai T D CF WHOLESALE 
PEICES, FOE SELECTEE PERIODS SINCE 1791 AND 
FOR YEARS SINCE 1923 







: Indices of 


trends "based on 1927-29 = 100 


Yearly 


; • Vr.lue of 
: • exports • 


: Exports of domestic 


: merchandise 


: General 


average 








: domestic 


or year 


: (31,000) 


: Value 


: ■ Quantity 


:Unit value 


: wholesale 












: prices ?J 


1791-1800 


: 27,740 










1841-1850 


: 1114,893 


3 


: - 


: - 


; — 


1891-1900 


. 1,006,183 


20 


; — 


• - 


54 


1901-1910 


: 1,589.00. . 


32 


; — 


; — 


65 


1913 


2,428,506 


49 


: 65 


: 75 


72 


1919-1922 


5,993,579 


120 


: 82 


: 142 


137 


1923 ' 


4,090,715 : 


83 


: 71 


: US j 


105 


1924 : 


4,497,649 : 


91 : 


80 


114 ! 


102 


1925 : 


4,818,722 : 


97 


! 84 


115 : 


108 


1926 : 


4,711,721 ! 


95 


! 90 


106 : 


104 


1927 ! 


4,758,864 : 


95 


! 97 


99 : 


100 


1928 : 


5,050,099 : 


102 


100 


101 : 


100 


1929 : 


5,157,083 : 


103 


103 


100 ; 


100 


1930 : 


3,781,172 : 


76 


65 


90 : 


90 


1951 : 


2,377,982 : 


48 


70 


59 : 


75 


1952 : 


1,576,151 : 


31 


54 ! 


59 : 


67 


1933 ! 


1,647,220 : 


33 


54 


62 : 


69 


1934 : 


2,100,135 : 


4 1 : 


58 : 


72 : 


79 



( 



Source of absolute data: Bureau of Foreign and Domestic Commerce, Statistical 
Abstra ct of the Unite d States, 19 5 4 :-.nd ForeijTi Trade of the United 
States, 1934, indices shifted to 1927-29 base 

a/ United States Bureau of Labor Statistics, indices shifted from 1926 base. 



9829 



-291- 

III. EXPOHTS 3Y ICO: T 0!vIIC CLASSES 

Table 3 shows the trend of the dollar value of exports in each of 
the five economic classes since 1910-1911. Throughout the 34-year period, 
finished manufacturers were the predominant group. In 1930 this class 



accounted for 50 per cent of all exports, whereas in l c . 



it represented 



only 37 per cent cf a greatly diminished total. In 1334, 31 per cent of 
the total export values were in crude materials, 16 per cent in semi- 
manufactures , and 42 per cent in finished manufactures. 



> 



* 



J8£9 



EA3LE 3. EEITI I1 T EXFORTS 00 DOMESTIC ! iaCHAEDIS\" IY ECONOMIC 

classes jfjs 00:0:0 in percentage ratio o? sac- group to tot:.l 

JO: SELECTED PERIODS FROM 1913 TO 1924, AMD FOR YEARS SINCE 

1925 



Period 



Aver , ;;;e 
1910-1914 

1915-1913 
1921-1925 



Yea r 
192S 
1927 
1928 
1929 
193C 
1931 
1932 
1933 
1934 



Average 



Percentage Ratio of Each. Group to Total 



1910-1914 


33 


6 


: 14 


1915-1913 


16 


: 10 


: . 18 


1921-1925 


28 : 


: 10 


: 14 


Year 








1926 


! 27 


7 


11 


1937 




9 


10 


1928 


: 26 


6 


o 


1929 


: 22 


: 5 


: 10 


1930 


: 32 


. 5 


: 10 


1931 


: 24 


■ [- 


: 10 


1932 : 


33 


: 6 


: 10 


1933 


36 


r-» 

! O 


• 9 


1934 


! 31 . 


: 3 • 


: 8 


Source of 


absolute dc 


ita: U.S.3ur< 


jau of Foreign 






Statist: 


.cal Ads tract 



Crude 


Crude 


Manufactured 


: Semi- 


: Finished 


mate rials 


Foodstuffs 


Foodstuffs :manufactures 


(Manufactures 




Value in Millions of Dollars 




713 


: 137 


095 : 


342 : 


654 


843 


503 


945 : 


872 j 


2,064 


1 , 107 


: 


! 6C 1 


: 537 


! 1,566 


1,261 


• 


: 


: COG 


: 1,9-57 


1,193 ! 


■ 11 


- 


: 700' : 


1,982 


1,293 


! 295 


: 


: 716 


! 2,260 


1,142 


: 270 


: 484 


: 729 


! 2,551 


829 


: 179 ! 


363 


: 513 


! 1,898 


567 


: 127 : 


247 


: 318 


! 1,120 


.514 


: 39 


15 


: 197 


! 624 


591 


! 48 


: 155 


: 237 


: 617 


653 


: 53 


168 


: 342 


[ 879 



16 


31 


17 


39 


12 


36 


14 


41 


15 


41 


14 


45 


14 


49 


13 


50 


13 ! 


47 


13 


46 


14 


37 


16 


42 



9829 



> 



-293- 
IV. EXPORTS' BY PRINCIPAL COUNTRIES AND TRADING AREAS 

No material change, occurred in. the .distribution of exports by trade 
areas from 1927-29 through 1934, - although the total was greatly re- 
duced. Europe,. North America, and Asia, in. order of importance, continued 
to provide the principal export markets. 

Countries which increased their share in the total dollar value of 
exports were Japan, the United Kingdom, France, and Italy. Not only was 
the level of exports to Japan well maintained through the period, but 
the percentage of. the total, increased.. from 5.3. per cent in 1927-29, to 
almost 10 per cent for 1934. 

Canada's share declined from 17.7 per cent of the total in the 
base period, to. a low-. of 12.6- per .cent in 1933, and then recovered 
slightly to 1*4. 2 per cent in 1934. 

Details with respect to the trend are shown in Table 4. 



* 



9RP.9 



-294- 



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to 



~ 295. - 

V. EXPORTS BY ECUNOHIG CLASSES AND TRADING AREAS 

Table 5 shows in Dercentages the values of exports to principal 
trading areas by economic classes from 1905-1909 through 1934. South 
America, Asia and Oceania, and Africa, have proved to be the areas 
which have taken increasing percentages of the total exports of finish- 
ed manufactures. In the oeriod 1926-1930, the percentages of total 
values in this group shipped to Europe and South America, were maintain- 
ed at about 31.7 ner cent, and 15.8 per cent, respectively. In 1934, 
there was practically no change in the percentages of the total shipped 
to Europe (31.1) and to South America (14.1). The value of exports of 
finished manufactures to North America (chiefly Canada), declined from 

29.3 per cent of the 1926-30 total to 26.4 per cent of the 1934 total. 
The respective shares of Asia and Oceania of the total value of our 
exports in this group in 1926-30 were about the same as for the period 
1905-1909, or a little more than 19 per cent. By 1934, this area had ■ 
increased its share of the total exports of finished manufactures to 
21.2 per cent. From the base period 1926-1930 through 1934 Africa 
increased its share of the total, from 4.2 per cent to 7.3 per cent. 

The increasing importance of Asia, Oceania and Africa in the 
United States exports trade is likewise indicated in the percentage 
distribution of semi-manufactures by trade areas. The proportion of 
the total, shipped to Europe declined from 48.1 per cent in 1926-1930, 
to 44.9 per cent in 1934. The shares of North America declined from 

24.4 per cent to 21.6 per cent, and of South America from 9.9 per cent 
to 7.6 per cent, during the same interval. 

As regards crude materials and foodstuffs, the significance of 
the data shown in Table 5 is that in both groups tne values of our ex- 
ports to Europe, on one hand, have declined, whereas the exports to 
North America have increased. From 1926-1930 to 1934, however, the 
export values of foodstuffs to the countries of the North American con- 
tinent declined from 28.5 per cent to 22.7 per cent of the total. In 
crude materials, the percentage, of tne total supplied to that area con- 
tinued to increase, from 15.4 per cent in 1926-1930, to nearly 17 per 
cent in 1934. 



9829 



-295- 



TABLE 5 . PERCEPT EACH COITTIEEITT HAS TAKE1" 

III EACE ECOrOLIIC CLASS 



OP TOTAL EXPORTS a/ 



Yearly 

aver.-.,' e 



or 



r ear 



North 

America 



South 
America 



Europe 



Asia 
and 
Ocear.i; 



Crude Materials 



1905-09 


: -10.6 


: 0.1 


: £5.8 


: 3.3 


1910-14 


: 13.1 


: 0.4 


: 83.4 


: 5.0 


1931-35 


:" 14.0 


: 0.7 


: 73.5 


: 11.4 


1926-30 


: 15.4 


: 0.6 


: 67.6 


: 15.9 


1933 


: 12.9 


: 0.4 


: 64.4 


: 21.9 


1934 


: 16. C 


: 0.6 


: 56. 8 
Foodstuffs b/ 


: 35.5 


1905-09 


: 12.5 


: 2.0 




: 80.6 


: 3.7 


1910-14 


: 20 . 4 


: 3.1 




: 71.1 


: 4.5 


19 31-35 


: 33.5 


: 3.5 




: G8.1 


: 5.0 


19 35-30 


: 2C.5 


■ S Q 




: 58.4 


: 7. ■' 


1933 


: 30.2 






: 67.4 


! 7.L 


1934 


! ' .7 


! o.l 




: 62.1 


: 10.5 








Semi- Manufactures 




1905-09 


15.1 


4.8 




• 73.4 


!■. 6.0 


1910-14 


20.6 


.6.4 




: 67.3 


5.0 


1921-35 


22.9 j 


C. 6 




- 49.5 


1' .0 


19 36-30 


3-:. 4 : 


9.9 




48.1 


16.4 


1935 - 


23.1 : 


8.0 




47 . 4 : 


' 20 . G 


1934 ; 


?1.6 : 


7.6 




44.9 : 


n»2 








Finished iianufacti 


ires N ' 


1905-09 : 


31.9 : 


11.6 




34.7 : 


19.7 


1910-14 : 


36.8 : 


12.7 




33.0 : 


16.3 


19 31-15 : 


32.0 < 


13.7 




35.5 : 


22.7 


1936-30 : 


39 . 3 : 


15.8 




31.7 : 


19.1 


1933 : 


35.4 : 


13.5 




34.0 j 


21.4 


1934 : 


36.4 : 


14. 1 




31.1 : 


21.3 



Af r i ca 






.3 





3 





5 





5 





4 


0. 


3 


1, 




. 1 


1. 





0. 


ri 


1. 





1, 




1. 


7 


Q. 


7 


0. 


7 


1. 


1 


1. 


"5 


1. 


7 


• 






3.1 

3.4 

5.1 

4. 

5.5 

7.3 



Source: Bureau of Foreign and Domestic Cors.crce, St atistical Abstract 
of the United States 1934 

a/ Does not include re-erports 

b/ If adjustment were made , for .grain shipped via Canadr to Europe, the 
percentage of foodstuffs to Canada would be smaller and to Europe 
le.r .er, . 



9839 



VI 



-297- 
EXPCr.IS BY GHCKPS OF LIAHJTACTlJiCS AND SEMI -LiAFJTAC TITLES 



Table 5 shows the relative importance in terms of value of 41 
leading ex-'orts cf manufactures and semi-manufactures for the years 
1933 and 1*934. It indicates that lumber, iron and steel, and petroleum 
products, were -he most important in the grov.") of semi-manufactures, and 
that machinery and vehicles, refined petroleum products, manufactured 
iron an;, steel products, paper and -Tinted matter, chemicals, and photo- 
graphic supplies' were leading finished manufactures. 



> 



♦ 



9829 



-298- 



TABLE 6 . 
RATING OF CHIEF IHDUSTRIAL EXPORT COMMODITIES - SEMI-MAEUFACTU: 

AND MANUFACTURES , 1933-1954 

(i n thou sands of dollars) 



Item. 



193 



1934 



Item 



193: 



Semi-manufactures 



Leather 

Naval stores, gums, 
and resins 

Boards, planks, and 
scantling 

Timber, sawed 

Wood pulp 

Gas oil an d distil- 
late fuel oil 

Residual fuel oil.... 

Coal tar products.... 

Sodium corn-pounds, n. e. s 



13,779 : 15, 807 

14,714 :14,4C9 

• 

37,244 : 35, 667 

4,980 : 7,037 

3,114 : 7,006 

12,348 :17,8:.3 

5,962 : 10, 459 

12,423 :13,364 

7,739 : 8,974 



Paraffin wax. ... ■ 
Sulphur or brine-: 

stone, crude or . 

in lunns : 

Iron C: steel scrap 
Iron £ svccl ; 

plates, sheets, . 

skelp, & strips. . 
Refined ingots, 
bars, or other 

forms 

Chemical pigments 



6,979 



8,878 
6,874 



16,657 



16,931 
6,969 






9.355 
19,103 



33,489 



39. OCjl 

7,5 ;o 



Manufactures 



Leather nanuf ? c t ur e s 


: 2,962 


3,958 


■ Structural iron 






Wearing apparel 


: 2,634 


3,063: 


and steel 


• 2,182 


3,781 


Other mfrs. of cotton 


: 5,700 


4,568 


, Railway truck ratls 


"',165 


3,387 


Sill: manufactures. . . . 


: 4,000 


4,405 


Tubular iroducts 






Wood mfrs. , n. e. s. . . . 


: 6,517 2 


? 7,436 


and fittings. . . . 


6,095 


• 13,200 


Paper manufactures 


: 15,872 


17,924 


• Wire and mfrs. . . • 


4,108 


- 5, 138 


Gasoline, na^tha, & 


: 57,520 


51 , 333 




5, ] 34 
1,900 


7,6 .:. 


other light products 


Hardware 


' 2,735 


Illuminating oil 






Machinery and 






(kerosene) 


: 19,309 ' 
: 55,575 - 


•20,792 
58,503 




236,739 


435,068 




Chemical specialty 




Lubricating greases. 


: 2,954 
■ 4,306 


3,651 
5, 094 




3,786 


4,159 


Glass & glass products 


Paints, stains, : 




Bricks and tiles 


1,400 : 


3,636 


and enamels 


4,123 


5,787 


Abrasives, n.e.s. 


• 3,595 j 


3,591 


Photographic and 






Carbon and gre kite. 


: 2,081 : 


3,47?. 


projection goods : 


13,536 ! 


15,534 


Firearms and ordinance, 


! 1,331 


1,185 : 


Books, mris, pict- 
ures and other 












printed matter. . . : 


11,380 : 


13,854 


Source: U. S. Bureau c 


>f Foreig;- 


i and Dor 


lestic Commerce, Fore 


dgr. Connie 


iree 


and I'avipatior 


l of the t 


Baited St 


ates. 1934 - Vol. II 


• 





9839 



-299- 

On account of the absence of comparrble statistical data, limited 
information's available with regard 'go the precise relation of exports 
to production of most manufactured and semi-manufactured products. 

Table 7 shows this relationship f 'orpparticular commodities for which 
comparable data are available from 192.7 'through 1933. Of particular 

significance is the high ratio' of exp'orts to production and the almost 
uniform declining trend of both exoorts and production during the period. 



Although, in general, the Values cf both production and exports 
declined, as .did the percentage of production exported, in a number of 
cases the proportion exported materially increased. .In power-driven 
metal working machinery, for example, 23.2 per cent cf the output was 
exported in 1933, as against only 14.7 per cent in 192.9. Other notable 
increases in the ratio of exports to production . during the same -period 
were in sewing machines, aircraft engines 'and Tarts, radio apparatus, 
and electric 'household refrigerators. The outstanding declines in both 
the total values and the percentages exported shown in this table were 
for leather, rubber 1 manufactures, refined mineral oils, medicinal and 
pharmaceutical preparations, perfumes and cosmetics, and industrial machinery. 



9829 



-300- 

TABLE 7. 
TREND IN RATIOS OF UNITED STATES EXPORTS OF CERTAIN COMMODITIES 
TO THEIR PRODUCTION, CENSUS YEARS 1927 - 1933 









: Index of 


: Index of 


: Ratio of 


Commodity 


: Pro duct ion 


: Exports 


Iproduction 


: exoorts 


: exports to 








: 1929 * 


:pro duct ion 










Per cent 




Leather 


: million dollars 


: 99 


: 125 




1927 


: 455 


: 54 


: 11.9 


1929 


: 458 


: 43 


: 100 ' 


: ICO 


: 9.4 


1931 


: 246 


: 26 


: 54 


: 60 


: 10.4 


1933 


217 


14 


47 


: 35 


: 6.4 


Rubber manufactures^/mi'il i or 


i dollars 
71 


! 110 


! 92 




1927 


locb 


: 5.S 


1929. 


1112 


77 


100 


' 100 


S 6.9 


1931 


«09 


37 


55 


: 48 


• 6.9 


1933 


473 


18 
i dollars 


43 


: 23 


i 3.8 


a/ Includes aufcor 
Refined Mineral 


mobile tires 




millior 




Oils 








1927 


2014 


430 


80 


87 


: 21.3 


1929 


2513 


493 


100 


100 


: 19.6 


1931 


1424 


232 


57 


: 47 


: 16.3 


1933 


1271 


151 


50 


31 


: 11.9 


Electrical apparatus 










and Machinery 


millior 


l dollars 


72 


70 




1927 


1662 


89 


: 5.4 


1929 


2322 


128 


100 


100 


: 5.5 


1931 


1275 


84 


55 


: 66 


6.6 


1S33 


7CG 


44 


31 


34 


6.2 


Electric Household 


sands : 








Refrigerators 


Thous 




1927 


456 


3 ! 


69 


5 


0.6 


1929 : 


665 


62 


100 


100 


9.3 


1931 


826 


56 


124 


90 


6.8 


1933 


994 


60 


150 


97 


6.0 


Radio Apparatus 


millior 


l dollars 

9 : 


36 : 


39 




1927 


150 : 


6.1 


1929 : 


412 : 


23 


100 


100 


5.6 


1931 j 


185 


23 ' 


45 


100 


12.3 


1933 


112 


16 : 


27 


70 


14.4 


Cotton Cloth, duck, 










and tire fabric millior 


i yards : 








1927 


7842 : 


560 : 


106 : 


104 : 


7.1 


1929 


7436 ; 


539 ! 


100 : 


100 : 


7.3 


1931 


6331 : 


361 1 


85 : 


67 : 


5.7 


1933 


7256 ! 


300 ! 


97 : 


56 : 


4.1 



9829 



-SUI- 
TABLE 7 (Continued 
TREND IN RATIOS OF UNITED STATES EXPORTS OF CERTAIN COMMODITIES TO 
THEIR PRODUCTION, CENSUS YEARS 1927 - 1933 











: Index of 


Index of : 


Commodity 


Production 


Exports 


•production 


i exports : 










; 1929 


100 : 










j Per cent : 


Industrial Machinery 


million dollars 


♦ 




1927 




1480 


195 


; 74 


74 : 


1929 




1997 


265 


? 100 


100 : 


1931 




887 


142 


: 44 


54 : 


1933 




556 


55 


: 28 


: 21 : 


Power driven 


metal- 






i 




working machinery. 


million dollars 


: 




1927 




138 : 


20 


.: 60 


: 60 : 


1929 




228 


33 


: 100 


: 100 •: 


1931 




91 : 


36 


.: 40 


: 109 : 


1933 




35 


8 


.: 15 , 


: 24 : 


Sewing machines, cabin- 






.: 


| 


ets and parts 


million dollars 


■« 




1927 




35 


11 


,: 85 


: 92 : 


1929 




-41 


12 


.: 100 


: 100 ': 


1931 




17 


5 


.: 41 


: 42 : 


1933 




12 : 


4 


.: 29 


: 33 : 


Office Appli? 


lic es 


million 


dollars 


'.: 93 


: 81 : 


1927 


166 


44 


1929 




178 


54 


100 


: 100 : 


1931 




82 


: 25 


: 46 


46 : 


1933 




58 


: 16 


: 33 


: 30 : 


Agricultural 


Implements 


million 


dollars 


: 




and Machinery 


1927 




*7~ 


: 91 


: n.a. 


: 65 : 


1929 




561 


: 141 


: 100 


: 100 : 


1931 




193 


: 57 


32 


: 40 : 


1933 




; b/ 


: 12 


: n.a. 


: 9 : 



Ratio of 
exports to 
j) ro due tioji 



13.2 

13.2 

16.0 

9.9 



14.7 
14.7 
39.4 
23.2 



30.6 
29.8 
28.3 
35.0 



26.5 
30.2 
30.3 
27.0 



n.a. 
25.1 
29.7 
n.a. 



b/ Data not comparable, n.a. - net available 



Tractors 


million 


dollars 


• 






1927 


137 


38 


70 


51 


27.6 


1929 


197 


62 


100 


100 


31.4 


1931 


58 


31 


29 


50 


54.1 


1933 


18 


4 


9 


7 


21.4 


Aircraft, Engines & 












■parts 


million 


dollars 


30 


22 




1927 


21 


2 


9.1 


1929 


70 


9 


100 


100 


13.0 


1931 


36 


5 


51 


55 


13.4 


1933 


25 


: 9 


36 


100 


37.3 



9829 



(continued) 



-302- 

TABLE 7. (continued) 

TREfH^IN RATIOS OF UNITED STATES EXPORTS OP CERTAIN COMMODITIES TO 
THEIR PRODUCTION, CENSUS YEARS 1927 - 1933 



Commodity 




Exports 



Indust rial Chemical's and 

Nitr ogenous Fertil izer & £/ million dollars 

" 32 
35 
25 
20 



19 

19 

13 

8 



__,, co sine toe s__and 
other. toiJ^et_^^^atipnj.^/millian dollars. 



1927 


: 494 : 


1929 


: 597 : 


1931 


! 429 : 


1933 


: 354 : 


Madn cinal and Pharma- 
ceutical preparation 
* 1927 


3 millic 
r 285" : 


1929 


335 : 


1931 


280 : 


1933 ; 


216 : 

• 
• 



1927 
1929 
1931 
1933 



178 
302 
166 
108 



9 
9 
7 

3 



Index of : Index of :Ratio of 
production: exports : exports to 
-_-,. 192JL_=L- 100 ^ pr oduction 
Per cent 



83 

100 

72 



85 

100 

84 

65 



88 

100 

83 

54 



90 

100 

71 

57 



100 

100 

69 

42 



100 

100 

78 

33 



6.5 
5.8 
5.7 
5.5 



6.6 
5.7 
4.6 
3.7 



5.0 
4.4 
4.2 
3.1 



d/ Excl uding; span 

Source: Data from United States Bureau of Foreign and Domestic Commerce. 



9829 



-303- 

VII. EXPORTS OF DUF:ABLE AND NOF-DURABLE MAITUFACTTRERS 

Table 8 represents an attempt to indicate the respective trends 
of domestic production and exports of a selected group of manufactured 
goods which, over a period of years, have accounted for a substantial 
proportion of the exports of durable and non-durable materials shipped 
from tnis country to overseas markets. For tne purpose of tracing the 
relation between production, exports, and Industrial Recovery, the in- 
dexes of employment and payrolls in the durable and non-durable goods 
industries, have also been included. 

This table indicates that since the base years, 1927-29, the low 
point in the indexes of -oroducticn, employment, payrolls, and exports, 
in the durable goods industries, occured in 1932. In that year, the 
production of durable goods inroortant in the export trade, had declined 
70 per cent from the base, and the exports in tne same group had de- . 
clined 75 per cent. During the same time interval, employment in the 
durable goods industries had declined nearly 50 per cent and payrolls 
nearly 70 per cent. 

In 1932, the domestic production of durable goods had reached only 
24 per cent of the combined production of durables and non-durables, 
whereas the exports of durables were nearly 60 per cent of the combined 
exports of the two groups. 

The production of non-durable items important in the United States 
export trade in 1932, were 22 per cent less than during the base period 
1927-29, but exports of non-durables in that same ysar were 66 per cent 
less tnan the average of the base period. Employment in non-durables 
had declined 25 per cent, but payrolls in those same industries had 
fallen 47 per cent. In 1927-29, non-durables represented 35 per cent 
of combined exports; in 1932 its proportion of the total had increased 
to 41 per cent. 

Table 8 further indicates the extent of the recovery of the durable 
and non-durable goods industries from the low of 1932 through 1935. 
The index of production of durables increased from 30 to 69, and non- 
durables from 78 to 91. The domestic -oroduction of non-durables repre- 
sented 76 per cent of the combined production of the two groups in 1932, 
wnereas by 1935 it had declined to 61 per cent. The index of employment 
in durables rose from- 55 in 1933 to 74 in 1934, - a period during most 
of which domestic industries were operating under approved codes. The 
index of non-durables rose from 83 to 91. The index of payrolls during 
the same interval increased from 35 to 59 for durables, and from 60 to 
77 for non-durables. 

The extent of the recovery in the exports of these two classes of 
goods is indicated by the fact that in 1933 durable goods exports were 
only 29 per cent of the 1927-29 base, while by 1935 tney had increased 
to 46 per cent. The increase in non-durable exports is represented by 
the index 40 for 1935 as against 29 for 1933. 



9829 



-304- 

Durables and non-durables took 65 and 35 per cent, respectively, 
of their combined exports in 19,53; and in 1935 their respective ratios 
to the total were 59 per ce.it for durable and 31 ner cent for non- 
durables . 

Of outstanding interest with respect to the data shown in this 
table, is the fact that from 1927-29 through 1935, the exports of both 
durables and non-durables have declined more than the domestic -produc- 
tion in the same two groans. As regards the respective positions of 
the two classes, however, tne index of production of non-durables in 
1935 was only 9 -per cent less than for the base period 1927-29; it was 
still nearly 30 percent cent less in the durable goods industries. 
The net decline in exnorts of durable goods was less than for non-dur- 
ables, and in 1935 the percentage distribution of the exports in the 
two classes reached nearly tfl the same levels afa for the base period 
1927-29 . 



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-306- 

VIII. WATER-BORNE EXPORT TONNAGE 

From 1901 through 1925, Atlantic Seaboard ports handled from 50 
to 65 per. cent of the total value of the export tonnage, and Pacific 
Coast ports handled from 6 to 9 tier cent. In 1932, Atlantic ports 
accounted for only 41 per cent of the total, and Pacific Coast ports 
increased their share to 13 "oer cent. In 1934, the following was the 
percentage distribution of the total:- Atlantic Coast, 48 per cent; 
Gulf -ports, 24 per cent; the Northern Border, 14 -oer cent; the Pacific 
Coast, 12 per cent; and the Mexican Border, 2 per cent. 



The percentage of total export tonnage shipped- from United States 
ports in vessels sailing under the American flag declined continuously 
from 33 per cent in 1928 to 25 per cent in 1934. Table 9 shows, on 
one hand, tne tonnage snipped in foreign-owned vessels, and on the 
other, both the tonnage and proportions carried in vessels operated by 
the United States Shipping Board and private operators under the 
American flag. The decline in the export tonnage shipped in government 
owned and operated vessels was due mainly to the disposal of ships to 
private operators. 



( 



TABLE 9 
UNITED STATES WATER-BORNE EXPORT TONNAGE 3Y NATIONALITY OF SHIP 

1927-1934 





Total 


Carried 


Carried by American snips 


Ratio tonnage 


borne by 


Years 


experts by 


by foreign 


U.S. Snipping 


Privately own 


American 


to:U 


.S.B.to 




water 


ships 


Board snips 


ed ships 


foreign ships; 
Per cent 


taerican 




1 


In thousand long tons) 






1927 


56,935 


38,239 


6,185 


12,511 


32.8 






49.4 


1928 


58,829 


29,521 


5,071 


14,217 


33.0 






35.7 


1929 


57,475 


29,554 


4,618 


13,303 


33.1 






34.7 


1930 


49,731 


34,618 


3,235 


11,678 


30.0 






27.7 


1931 


40,049 


28,981 


2,605 


8,463 


27.7 






30.8 
26.3 ' 


1932 


31,845 


23,698 


1 ,698 


6,449 


25.6 






1933 


32,386 


24,031 


749 


7,606 


25.8 






9.8 


1934 


37,821 


26,386 


540 


8,895 


25.0 






6.0 


Source: 


Data from Ui 


lited State 


3 Shipping Boa] 


"d Bureau, Div: 


Lsion of 









Ship-rung Research. 

IX. OPERATIONS UNDER THE EXPORT TRADE ACT (WEB 6 - POMERENE LAW) 

The Export Trade Act defining the conditions under which associations 
engaged in export trade and legally constituted under its provision might 
be exempt from the anti-trust laws, has been in operation since 1918. 

In 1920 there were 43 associations in operation, and in 1929, 1930 
and 1931 there were 57 associations in operation. The number dropped to 
45 in 1934 and to 44 in 1935. The last -annual report of the Federal 
Trade Commission (1935) remarked " alt ho exportation has been exceedingly 



9829 



-307- 

difficult during the depression, most of the associations have maintained 
their- organization and continued to operate to some extent." 

The export statistics covering trade under the Export Trade Act are 
reported by the Federal Trade Commission in such broad groupings that com- 
parison can be made only of the total value of goods exported by the Ex- 
port Associations with the total value of all exports from the Unites 
States . 

Table 10 indicates that botn the total value of exports by Export 
Trade Act associations and the percentage that total was of the value of 
all exports declined since 1930. Whereas concerns operating under the 
Export Trade Act exported 17 per cent of the total exports in tnose two 
economic classes in 1930, in 1934 they handled only 7 per cent. It was 
significant that while the value of total exports concerned rose 23 per 
cent from the low of 1932 through 1934, the association exports increased 
less than 1 per cent. 



TABLE 10 
RATIO 0? EXPORTS UNDER THE EXPORT TRADE ACT TO TOTAL GOODS 
EXPORTED FROM THE UNITED STATES, 1926-1934 





Total 


Exports under 


Ratio of exports 


Years 


general 


Export Trade 


under Act to 




exports 


Act 


total exports 




In 


million dollars 


per cent 


1927-1929 


5,073 


524 


10.3 


1930 


3,843 


651 


17.2 


1931 


2,424 


311 


12.8 


1932 


1,611 


144 


8.9 


1933 


1,675 


143 


9.5 


1934 


3,100 


146 


7.2 



Source: United States Bureau of Foreign and Domestic Commerce, Foreign 
Commerce a nd Navigation of the United States, and United States 
Federal Trade Commission, Practice and Procedure under the Ex - 
port Trade Act (Webb-Pomerene Law) , 1935 



9829 



-303- 
CHAPTER III. 

EXPORT ORGANIZATION AilD TECHNIQUE 



I. THE MEANING OF "EXPORT TRADE" 

A« Definition of "Exports" 

The Supreme Court of the United Ststes has held that the words 
"export trade" simply mean the transportation of goods from this to a 
foreign country. (* ) This definition ha.s "been somewhat supplemented by 
an opinion of an Attorney General(**) to the effect that "as the legal 
notion of emigrating is a going abroad with an intention of not return- 
ing, so that of exportation is a severance of goods from the mass of 
things belonging to some foreign country or other." In the first section 
of the Export Trade Act, Congress defined the words "export trade" to 
"mean solely trade or commerce in goods, wares, or merchandise exported, 
or in the course of being exported, from the United States or any 
territory thereof to any foreign nation. " 

B. The Status of Territorie s an d Possessions with Reference 
to Exoorts 

The status of insular possessions of the United States has been in 
doubt on account of numerous conflicting definitions in court decisions 
and, in the legislative acts of the State and Federal Governments. It 
has been repeatedly held that the exportation of goods from certain 
territories belonging to the United States to foreign nations constitutes 
export from the United States. 

The status of Puerto Rico was more clearly defined in the Dingley 
Tariff Act (1397), which particularly specified it to be a part of the 
United States. At least three court decisions involving shipments to 
that Island, upheld this view.(***) Hawaii and Alaska were likewise 
given status as territories of the United States by specific acts of 
Congress. (**** ) 



(*) Swan & luch Co. v. United States, 190 U.S. 143; 23 Sup. Ct. 702. 
"Export means to carry out, and is the opposite of import." 
United States v. Forest, 23 Fed. Cas. 1147, 1152; R. C Oil i.Ifg. 
Co. v. Board, 172 Fed. 706. 

(**) 17 Opinions of Attorney General of United States, 583. 

(***) De Lima v. Bidwell, 182 U.S. 1, 21 Sup. Ct. 743; Dooley v. 

United States, 182 U.S. '222, 21 Sup. Ct. 762; Dooley v. United 
States 132 U.S. 151, 22 Sup. Ct. 2. 

(****) Hawaii, April 30, 1300; Alaska, August 24, 1912. 



9829 



-309- 

™ w f ie legal P osition of the Philippine Islands and. a few other insular 
possessions with respect to export trade, is not clear. TThile the", are 
terrxtorxes of the United States, they are not "incorporated" terrLSxes 
the sxgnxixcance of which was indicated in the Act of August 29 1916 

InactfZlf nof' ^ 1*^°** ^ ° f ** ^^ ^ ^2i 

ssfoSfp^iiSS phiii?pine isiands - e::cept whenever - 

isl^ds'of^pf^ Z °r' H f ail ' GUam ' Wake ' Hidw ^' and certain "«U 
statute, of h P T f f"' * aVe teen s P e "fically incorporated under the 
They IS L 1 United States in the legislation concerning their status. 
Zitl- t le&cll « considered incorporated territories of the United States 

port ?rade Act § °* ^^ ^ "* *"* A ° tS ° f *»««.- «S-£ 

II. THE GE11EPAL CHARACTER OP EXPORT OPERATIONS 

disihfL^fTT^ 1 sinilarit r betwee * tooeetic and export merchan- 
J f S J hat a ^ rchaser has to he found for goods which are for sale 
Sales practices completely satisfactory in one market may be totally 
inadequate in another. Uide variations in the customs, Lit f 

standards ox living, and differences in political, racial and relLious 

p^sr s , ro ^r°v he raa r factors * hich tend to SoSiiSJ.'S* r ■ 

porters' problems. The export organization has to be sufficiently fle-i 

16 *° ada ? t \ tself to the different conditions prevailing in every 
territory in which it proposes to operate. y 

A * ^Port Problems no t Present in llngR ^r^^ 

A manufacturer or merchant engaging in domestic trade is able' with 
mxnxmurn expense and loss of time, to talk over sales prospers with any 

dit I trad" Th r afih WSl1 ° rSaniZed trade associations ^nd w 11 ^ 
velo-nl^ ? ^rnals he xs able to keep in close touch with every de- 
velopment of consequence that is likely to affect his business He 

5S.S "2 Sir m °t ent ^-f aCt m0unt ° f f ^ dS «^rrfUat Ms 

J f , ' aS '' e11 as tne credlt standing of the firms and individuals 
wxth whom he does business. He experiences relatively few difficulties 
in arranging ior the transportation and handling of raw materials or his 
finished product, and with a code of well established busfnes practice 

sai:: and a di:: r ^ti:r alculate any of the vari °- —~ *»*«* 5 

A manufacturer or trader who engages in the export business is first 
of all hanaicapped by the lack of direct contact with his client Even 
though an initial contact may nave been established during a business 
Un Lf st°± s ° r a S r j ng a ™ ° f MS -P— ntative oAlieStT he 

2 tehfng f S s^c rf cabSi^h 011 ,na7 - 0nly ^ S6ttled ^ 
n-i-p-P • ■ «spon-..ence ana cables whxch occasion delav and p—op-n^p 

delivered to a purchaser xn a foreign country may be many times the f.o.b. 
9829 



-310- 

factory cost and several times more than sales price to a purchaser in 
the United States. Ocean freight, marine insurance and special packing 
and handling charges increase the value of the goods delivered in a 
foreign port. Customs duties end landing and consumer taxes, high rail 
and river transportation rates in the country of destination are added 
"burdens. 

Excessive duties, import quotas, and exchange controls have effect- 
ed a virtual embargo against the shipment of goods to many countries 
during recent years. The clearance of merchandise through foreign ports 
and the granting of exchange permits by which the funds resulting from 
a sale can he transferred to the United States, often require the con- 
stant attention of American export shippers. 

Only a careful survey and analysis of the market conditions in 
every country •.here the exporter plans to operate may make it possible 
for him to conclude whether or not he may anticipate a profit. The ex- 
penditure involved in preparing such a survey may easily be entirely 
lost if the indicated outlook is not promising. Among the factors which 
have to be taken into account in such an analysis are the following: (*) 

1. The country 

a. Location in respect to trade routes 

b. Area, climate and topography 

2. Its population 

a. Amount, density, and size of cities 

b. nationality distribution, religion, literacy, and 

living standards 

c. Attitude towards the United States and American 

merchandise 

3. Its industries 

a. Diversity, importance, continuity of employment 

b. The competitive aspect 

4. Its trade and commerce 

a. Toluie, value, destination and origin of exports 

and imports 

b. Credit oosition, merchandise balance, and balance 

of payments 

5. Transportation, shipping and landing 

a,. Customs duties, constimers, luxur-,'- aid other taxes 

b. port, warehousing and handling facilities and charges 

c. Liarine insurance, ocean freight rates, freouency of services 



(*) [Reference: Based on "I nternationa l Trade Pri nciples and Practices ", 
Paul V. Horn, Prentice-Hall, Inc.," 1935. 

98 29 



-311- 

6. Communication 

a. Hail service and postage rates 

b. Sadie- and cable services and tariffs 

7. Finance 

a. Banking facilities, American branch banks 

b. Currency stability arid foreign exchange 

c. Credit reporting terms and conditions 

8. Business customs 

a. Standards and ethics 

b. Channels of distribution 

c. Organization of retail trade 

d. i.iedia of effective advertising 

9. The Government and Lavs ; 

a. Political and financial stability 

b. Attitude towards foreigners and foreign investments 

c. Commercial treaty status of the United States _, 

-d. Commercial laws, salesmen's licenses, patent and trade 
mark protection 

e. Heights and measures. 

B. The Decline in Indirect Export Merchandising 

Keen competition in the domestic market has increased interest in 
new and more efficient merchandising methods and practices, and has been 
responsible for substantial changes in export organization and technique. 
There has been a definite trend away from professional exporters and a 
swing to the employment of direct methods of merchandising exports by 
individual manufacturers. The establishment of branch offices, factories 
and assembly plants has served to eliminate the necessity for the mer- 
chandising services of middlemen working more or less independently for 
their own account. In many trades and industries not requiring foreign 
manufacturing or assembly, the owners have found that in order to escape 
the payment of excessive customs duties, luxury and consumer taxes levied 
exclusively on imported foreign merchandise, they can more economically 
carry on their distributing operations. by establishing branch warehouses 
and offices. In this manner they are able to take advantage of the 
cheaper ocean freights on, heavy shipments in bulk which, once received 
in their foreign warehouses or offices, are repackaged and packed for 
local distribution. 

All the operations incident to exporting have become highly coordin- 
ated. Manufacturers and shippers now find at their disposal well or- 
ganized foreign departments in banks and credit institutions. They are 
able to entrust their financial operations to well established banks and 
credit agencies, and receive expert advice on every phase of exporting. 
The banks and credit reporting agencies have their own branch corres- 
pondents in almost every important country, and are in a position to 

9829 



-312- 

render the service for which exporters and export agents in the past. of ten 
received a commission of 5 per cent or more. 

The facilities made available to individual manufacturers in trans- 
portation and advertising have further contributed to the coordination of 
the services of exporting. Railroads and steamship companies offer 
through bills of lading, which make it possible to ship merchandise from 
the domestic producer's factory to. the establishment of the foreign pur- 
chaser. Advertising agencies, for a small service charge, will undertone 
a survey of the market possibilities for almost any type of merchandise 
and for most any country in the world. Upon the completion of such an 
analysis, these agencies will contract to supply the advertising and, in 
addition to rendering the distinct advertising services necessary for that 
particular country and its population, will agree not to handle, the ad- 
vertising for competing lines. 

It is a known fact that many former exporters and export agents are 
now in charge of the foreign seles departments in many manufacturing in- 
dustries. They have become specialists in exporting the specific products 
of the industry with which they are identified, and in that capacity rend- | 
er efficient service. 

In recent years the technique of exporting has become vastly more 
complicated. Increasing and almost prohibitive duties, import quotas, 
and foreign exchange restrictions have made exporting a costly under- 
talcing. The responsibilities in the matter of effecting payments in 
foreign countries not only require the individual attention of the manu- 
facturer concerned, but the carrying charges incident to the delay in 
obtaining payment are considerable and oftentimes beyond the resources of 
a single individual. On account of the exchange controls in operation in 
many countries, months often elapse before the payment is actually made 
available in dollar exchange. Under the usual terms, an old time export- 
er and export agent would obviously have difficulty waiting such a time 
before receiving payment or commission. 

III. EXPORT ORGANIZATION 

A. Types of Exporters 

Although the functions of the various types of exporters may be 
classified under the general heading of distribution, and the services 
which they render are similar to those made available to manufacturers in 
the domestic market, the technique which they follow is highly specialized, 
and for that reason they usually receive more for their services than do 
the various types of wholesale merchants, brokers and buyers in the domes- 
tic trade. They often expend their own funds in travelling, in order to 
establish contact with foreign clients, and thereafter the outlay in the 
form of cables and correspondence is much greater than if they acted as 
distributors in the home market. 

There are five types of export middlemen: (* ) (1) export merchants, 
(2) export commission houses, (3) manufacturers 1 export agents, (4) buyers 
for export, (5) export brokers. 

(*) Reference - " International Trade Principles and Practices" , Paul V. 

Horn, Prentice-Hall, Inc. , Hew York, 1S35. 
9829 



Export merchants usually purchase merchandise outright from the 
manufacturers or other sources, and sell it for their own account in 
foreign markets. They frequently combine import functions as well, and 
therefore are often termed import and export merchants. 

Exoort commission houses usually receive compensation for their 
services in the form of a stipulated percentage of the sales, which nay 
vary, depending on the number and type of services rendered. The export 
commission hoxise acts in the interest of its principal, and has little 
control over prices, discounts, and terms of payment. 

Manufacturers' export agents act in a capacity similar to export 
commission houses, except that they often have exclusive contracts and 
are not permitted to sell competitive merchandise. Instead of talcing 
orders for the a.ccount of foreign buyers, they intervene more actively 
in establishing contacts with foreign buyers and in sales promotion. Al- 
tho they usually work on a commission basis, they may receive an annual 
retainer 'or obtain compensation for their services in the form of both 
commissions and retainers. 

Buyers for export almost always solicit materials in this country 
for large foreign purchasers,' such as railroads, mining companies, and 
public utilities. In this class are the representatives of foreign con- 
cerns who act as exclusive buying agents for their principals. 

Exoort brokers . This type of middleman usually specializes in one 
or more related staple products, such as cotton, wool, grain, and sugar. 
His chief function is to effect a contact between those who have a 
product to sell and those who wish to buy, and he usually does business on 
a commission basis. 

B. Exporters in the Census of American Business 

In 1S29 and 1933 the Bureau of the Census obtained reports for ex- 
porters and export agents in its census of wholesale distribution. In 
comparing the net combined sales of these groups with the total value of 
export and re-exports in the United States, it appears that in 1929 ex- 
porters and export agents handled 36.4 per cent, and in 1933, 41.4 per 
cent. The small percentage of the total value of exports and re-exports 
which was handled by the two groups is explained by the fact that exports 
by manufacturers were not included in the census of wholesale distribution. 

The total net value of sales reported by the wholesale distributing 
trades for 1929 was about $69,292,000,000; and in 1933, only ^32,151,000,000. 
The total combined net value of sales reported by exporters and exoort 
agents was approximately $1,906,000,000, or 2.8 per cent of the total re- 
ported net wholesale sales in 1929, and about $693,000,000 in 1933 or 2.2 
per cent of total wholesale trade for that year. 

The data in Table 11 describes the channels of distribution employed 
by the sample groups of exporters and export agents, according to general 
commodity headings as reported to the Census for 1933. In point of num- 
ber of establishments and net sales, exporters and export agents were 
both most active in agricultural products, foodstuffs, and raw materials. 

9829 



-314- 

The bulk of the sales were apparently made to foreign industrial 
consumers and large wholesalers. In lumber, industrial machinery, and 
electrical goods, a substantial proportion of the net sales reported was 
also to the same classes of foreign purchasers. In automotive products, 
clothing, and general merchandise, heavy percentages of the total net 
sales of both exporters and export agents were made directly to foreign 
dealers and distributors classified by the Census as retailers. 

In the 1929 Census there were 754 exporters and 2S0 export agents; 
in 1933 the number of exporters had declined to 453 and of export agents 
to 240. The value of the net sales of exporters in 1929 was approximate- 
ly $1,508,000,000 and in 1933 about $558,000,000. Export agents during 
the same two years reported net sales to be $553,685,000 in 1929, and 
$135,126,000 in 1933/ 

Table 12 summarizes the combined reports received from both export- 
ers and export agents in the 1933 Census. In that year the two groups 
employed 5,880 full-time workers who were paid $11,379,000 in wages. (In 
1929 the Census reported 17,107 employees and $34,507,000 in payrolls). 
The average annual per capita wage ranged from a low of $700. for employ- 
ees engaged in the exportation of jewelry and optical goods, to a maxi- 
mum of $3,598 for amusements and sporting goods; the average wage for the 
employees of exporters and export agents for the year was $1,934. 



9829 



-315- 



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CHAPTER IV . 

EXPORTS- UNDER THE CODES 

I. THE GENERAL TREATMENT OP IMPORTS AND EXPORTS UNDER THE CODES 

The numerous urbvisions of existing law tending to restrict imports 
on one hand, and to stimulate exports on the other, indicate that the 
chief motives underlying Congressional legislation affecting foreign trade 
have been protection of the home market, and at the same time direct en- 
couragement, aid,' and even subsidy in developing foreign outlets. (*) 

(*) Among the provisions' of the Tariff Act o f 1930, tending to restrict or 
regulate competition from certain specified types and classes of im- 
ports, are those with respect to the following: (l) The dutiable list 
(Title I); (2) Countervailing duties (Section 303); (3) Marking and 
Labeling (Sec. 304); (4) Immoral articles (Sec. 305); (5) Importation 
of infected livestock and meat (Sec. 306); (S) Convict-made goods (Sec. 
307); and (7) Equalization of costs of production (Sec. 306 (a)). 

The Re venue Acts in recent years have provided special excise and 
processing taxes on- specified imported products (1934, crude petro- 
leum and petroleum products, certain fish, animal and vegetable oils, 
furs, jewelry, matches, and candy.) 

The Anti-dumping' Act provides special dumping duties in case the 
purchase or exporters' sales price is less than the foreign market 
value, when it appears that a domestic industry is being or is likely 
to be injured, or prevented from being- established.,. 

The Export Trade Act of 1918 was designed to promote export trade 
by exempting associations engaged soleljr in that business from the 
provisions of the Anti-trust Laws. 

The laws establishing Po reign Services within the Departments of 
Agriculture and Commerce were likewise for the purpose of promoting the 
industries, trade, and commerce of the United States. 

The Act of 1903 founding the Bureau of Foreign and Domestic Commerce 
states its purpose to be "to further promote and develop the foreign and 
domestic commerce of the United States"; the same act providing, how- 
ever, that it should be eneharged with the determination of differences 
between foreign and domestic costs, comparative wages, living costs, 
etc,, - factors frequently used as bases for calculating the measure 
of protection required by domestic industries in tariff legislation. 

The Agricultural Adjustment Act and its amendments simultaneously 
sought protection from imports and expansion of foreign markets. 
Thirty per cent of the gross customs revenues of the United States was 
to be used in encouraging exports in recognition of the necessity of 
insuring that the adjustment of production and consequent price in- 
creases within the country should not operate to deprive American 
farmers of their share in the foreign trade in agricultural commodities. 
On the import side, the President was authorized, under certain speci- 



( Foot-note continued on next page ) 



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The same pattern of approach was manifested in the framework of code 
provisions relating to foreign trade. Apparently it did not occur to the 
proponents of code provisions specifically designed to exempt exports from 
trade practices recognized as "unfair" in the domestic field, that they were, 
in effect, asking for official approval of practices in foreign markets which 
were prohibited in the domestic market, including the importing trade. 

By obtaining exemption of exports from code provisions fixing minimum 
prices,, prohibiting sales below cost and unfair methods of competition, 
many industries were placed in a position of provoking action by foreign 
governments under anti-dumping laws and laws prohibiting unfair methods 
of competition in their import trade. A case in point was the situation 
which developed in the Douglas Fir Door Subdivision of the Lumber and Timber 
Products Industry Code. In. that case, minimum prices were established for 
the domestic market but not for export, and as a consequence, there was keen 
competition for export business in order to absorb the overproduction which 
occurred through lack of control of pro, duct ion for export, and as a result of 
inability to unload surplus stocks in the domestic market at cut prices. 

The competition which resulted brought about extremely low prices to 
foreign buyers, considerably below those set for the domestic market. An 
important result was that the British Government, in order to protect the 
domestic producer, invoked the anti-dumping laws and, imposed additional dut- 
ies. The industry decided to remedy the situation by applying to the' Lumber 
Code Authority for production control, but the Schechter decision halted this 
attempt to stabilize exports of Douglas Fir Doors, under the Lumber Code. (*) 

II. EXPORT PROVISIONS OF CODES 

A. Model Provision 

An outline for use in code drafting, dated April 3, 1934, suggested the 
following standard provision with respect to export trade: 

"No provision of this Code relating to prices or terms of selling, 
shipping or marketing, shall apply to export trade or sales or ship- 
ments for export trade. "Export Trade" shall be as defined in the Export 
Trade Act adopted April 10, 1918. " 

B. Scope of Exnort Provisions. 

In addition to approved codes, their amendments and supplements, ex- 
ports were often affected in varying degree by administrative orders, and 
temporary stays and exemptions. Analysis of 557 approved codes and their 
amendments and supplements indicated that there were 247 approved provisions 

(*) (Foot-note continued from previous page. 

fied conditions to limit imports of farm products if they rendered in- 
effective or materially interf erred with any operation or program under 
the Act. 

The stated purpose cf the National Industrial Recovery Act was to remove 
obstructions to the free flow of interstate and foreign commerce. Section 
3 (e) provided for the limitation of imports under specified conditions. 

(**) See Work Material No. 32 - "Foreign Trade Study of the Forest Products 
Industries" 
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affecting exports and the export trade. All except one of these appeared 
to exempt exports from the regulations applicable in domestic commerce with 
regard to prices, sales, and merchandising. TThile most of the export pro- 
visions contained blanket exemptions from price and sales regulations, there 
were a large number of such provisions which alone prohibited export sales at 
prices below the cost of production. The confusion with respect to the 
•treatment of exports came mainly from the fact- that they were exempt from 
"fair trade practices" in some cases, and in others from "unfair trade 
practices". Oftentimes there, was no specific mention of the particular 
trade practice provisions from which exports were exempt. 

In most codes "frif" or "unfair" trade practice exemptions, defending 
upon the approach, not only covered regulation of prices and sales, but 
were also extended to credits, discounts, commissions, and a great variety 
of methods, terms, and customs peculiar to certain trades and industries. 
The effect of export exemption provisions was usually to allow a trade or 
industry to conduct its foreign business in a manner which was prohibited 
to it in the domestic trade. The justification for this attitude is in- 
dicated by the following provision which appeared in a number of codes: 
"as trade practices in foreign countries are governed by foreign laws, and 
as foreign manufacturers a.re not subject to this code, it is understood that 
the -provisions of this article do not apply to export trade." 

C. Sales, Prices, T rad e Practices - General 

■The following are examples of exemptions for erroorts from code pro- 
visions with respect to sales, prices, discounts, terms, shipping and mark- 
ing, merchandising, plans, and trade practices. The number, title, and art- 
icle or section of the codes are given: 

24. B ituminous Coal : "Nothing in the foregoing sections of this 
article (unfair practices and minimum prices) shall prevent any American 
producer from creating special prices for overseas exports." (Vol, 16) 

34. Laundry and Dry Cleaning L'acninery Mfg . : "* * * The term 
"export" shall include shipments to foreign countries an<? to such ter- 
ritories and possessions of the United States as may be determined by the 
supervisory agency." (XIX) 

42. Luggage and F a ncy Leather Goods: "The giving of any discount 
contrary to the following trade practices is unfair competition, except 
in contracts for the exoort trade." (VI, 12) 

•56. Heat Srcuange : "The provisions of this code concerning sales 
shall not apply to direct export sales of any product, or to sales of any 
product destined ultimately for export, or to sales of parts used in the 
manufacture of products for export. The term "export" shall include 
shipments to foreign countries and to the territories and possessions of 
the United States. " (XVl) 

77. Crown Kamxfacturin g: "* * * The term "ezrport" shall include, 
in addition to shipments to foreign countries, shipments to such United 
States possessions as may be defined by the Code Authority." (VI) 

85. American Petroleum Equipment : "nothing in the Code contained, 

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except the General Labor Provisions as set forth in Article IV of the Code, 
shall, he deemed to apply to or affect the sale of any product for direct 
shipment, or the sale of any product purchased for direct shipment, in 
export trade hy any member of the Industry and Trade within the meaning of 
the term "export trade" as it is used in the Export Trade Act, or, unless 
and to the extent that the Code Authority shall otherwise determine, the 
sale of any product for direct shipment, or the sale of any product pur- 
chased for direct shipment, by any member, to the Philippines, Hawaii, 
Puerto Rico, the Canal Zone, or other insular possessions of the United 
States of America." (XII, 5) 

156. Rubber Mfg . : '** * * The term "export" shall include, in addition 
to shipments to foreign countries, chipments to territories and possessions 
of the United States, except Alaska." (IX) 

165. N on-Ferrous Foundry : "Articles VI, VII, and VIII of 'this Code ." ' 
(administration, unfair practice) shall not be applicable with respect to 
the products of the Industry sold for use outside of the continental United 
States, which shall be deemed to exclude Alaska and the Canal Zone." (VI, b) 

263. Machine Knife and Allied Steel Products Mfg .: " * * * The term/ 
"export" shall include shipments to foreign countries and to the territories 
and possessions of the United States." (XIV) 

325. Horseshoes and Allied Products Mfg. : "* * * The term "export ' 
shall include, in addition to shipments to foreign countries, shipments to 
Alaska and to all oversea territories or possessions under the jurisdiction 
of the United States." (XIII) 

397. Spray Painting and Finishing Equipment Mfg .: " * * * The terms 
"export" and "export sales" shall include all shipments to outside the 
United States of America and those shipments to the Canal Zone or Alaska. 
Article VIII, and Sections 6, 8, 9, 11, 12, 13, 14, 15, 17, 13, 19, 21, and 
22 of Article X (cost accounting, unfair practices) shall not apply to direct 
export sales of any product or to sales of any product destined ultimately 
for export." (VII) 

D Standards, Quality, Marking, etc . 

A second group of fair trade practices, aside from price and sales 
regulations, which were not to apply to export trade, dealt with design 
piracy, false marking and branding, • guarantees of quality, and the recog- 
nition of established standards. In the codes for certain consumer goods 
industries, particularly in the textile group, it was only in the domestic 
trade that the substitution of inferior material and improperly marked mer- 
chandise was prohibited. The justification in this case, as in the one 
cited above, was that the manufacturers concerned, in their export business 
at least, were forced to compete with the products of manufacturers of other 
nationalities where approved standards of marking, packing and sales methods 
were neither recognized nor in operation. 

E. Production Allocation and Control 

There were only five codes having provisions concerning production 
allocation and control, which at the same time contained reference to ex- 

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ports. Only one, the I/umber and Timber Products In d ustry Code specifically 
provided the authority to control production for export. In Article VIII, the 
Code Authority was authorized to determine and from time to time to revise, 
estimates of expected consumption, including exports, and "based on those 
estimates was empowered to establish production quotas for each division 
and subdivision. In proposing this provision, the committee representing 
the industry stated that, with the domestic market protected by quota 
restrictions and minimum prices, and without some control over exports, 
those mills in a position to export would immediately engage in destructive 
competition at low prices for that class of business, in order to lower 
the overhead costs of all their production. It was recognized that if 
export prices, as a consequence, fell to levels much below the minimum 
set for domestic sales, importing countries might put into effect reprisals 
similar to those provided for in Anti-dumping and Tariff Acts in the United 
States. 

In order to allow a mill to have a sufficiently large allotment to 
fill exoort orders, Article VIII also authorised the divisional or subdivi- 
sional agencies .concerned to grant, in addition .to the regular quota, an 
extra allotment for that purpose. To prevent abuses of the privilege 
accorded to mills manufacturing for both domestic and export, however, 
the same article provided that the excess export allotment should be 
deducted from subsequent quota allocations. A number of attempts were 
made both to amend this provision and to exempt exports entirely from 
production control, but none of these proposals was ever agreed upon by 
the industry as" a whole, and consequently was never approved by the 
Administration. Article IX of this same code laid down the formula by 
means of which code authorities were authorized to establish minimum prices. 
The basis of the formula was "cost protection" or prohibition of sales at 
less than the cost of production. This article specifically exempted ex- 
ports from minimum price control. (*) 

The following are examples of a number of other codes in which gener- 
al reference was made to both some form of production allocation or control, 
and to exports. They did not specifically indicate, however, any direct 
relationship between production control on one hand, and exports on the 
other. 

The Petroleum Industry Code provided a formula for the allocation 
and control of production. The brief mention of exports was as follows: 

"The provisions of this code shall not apply in respect to sales 

made in the United States for export to foreign countries." (V, Rule 30) 

An analysis of the effect on exports of production control under 
that code indicate, however, that the decline in exports was not due to in- 
creasing prices resulting from the regulated out-out in this county, but 
rather to the lower world demand from causes attributable to the depression, 
restrictions imposed by foreign countries, and heavier shipments by American 
companies operating in other parts of the world to markets which were 
formerly supplied by them from wells and refineries located in the United 
States. 



(*) See Uork Materials No. 32 - "Foreign Trade Stud;/ of the Forest Products 

Industries" - . . 

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The Iron and Ste e l Code outlined the conditions under whicn the Board 
of Directors might suomit to the Administrator, for his approval, a system 
of production allocation and control. It likewise provided, however, that 
"nothing in the code contained shall be deemed to apply to or affect the 
sale of any product for direct shipment in export trade " 

The Ceme nt Cod e contained permissive orovisions allowing the Code 
Authority to recommend or establish allocation and control of production, 
subject to the approval of the Administrator. Its export exemption pro- 
vision, likewise, ge.-jrally stated, that nothing in the code contained 
should apply to or affect the sale by any member of the industry for direct 
snipment in export trade. 

The Glass Conta in er Code provided that, with the Administrator' s 
a oroval ajid so long a.s the industry was one rating below 70 per cent of its 
yearly registered caaacit3 r , a system of apportionment or sharing of the 
business could be put into operation by the Code Authority. The same section 
of the Code contained the following general reference to exports: 

"The Code Authority shall so administer the provisions of this Schedule 
"A" as to prevent the loss of export business to the Glass Container 
Industry as the result of the operation of this Schedule "A". " 

The Candle b'anui'.'cturing Code prohibited the manufacture of specified 
products by members of the industry who had not been producers of such 
products for two years prior to the effective date of the code, except by 
permission of the Administrator. The provision exempting exports applied 
only to open prices and sales below costs, but with the specified control 
over all production, production for export would be likewise affected. 

-The Cotton Tex t ile Code did not provide for production control, but 
some form of regulation of exports was clearly contemplated. It made export 
sales exempt from all but the labor provisions, but at the same time it re- 
quired each spinning mill or selling agent to report the amount of export 
sales to the Cotton Textile Institute. It required that documentary proof 
be filed that goods had actually been exported to a foreign country, and 
it provided for sanctions in the event any registered exporter failed to 
submit, within a reasonable time, such documentary proof. 

III. CONFUSION III TEF GEOGRAPHICAL DEFINITION OF EXPORTS 

Exports v/ere not defined in 81 of the 247 export provisions contained 
in codes, supplements, and amendments. The export provisions of 53 codes 
were similar, if not identical, to those suggested in the Recovery Adminis- 
tration's code drafting outline dated April 3, 1934, which defined "export 
trade" in accordance with the terms of the Export Trade Act, of April 10, 
1918. In a number of codes, only additional confusion to the definition 
of exports resulted from such general definitions as the following: "over- 
seas", "to foreign destinations", "outside the United States", "to overseas 
markets", and "sales for domestic consumption." 

Trades and industries were apparently allowed to determine for them- 
selves whether or not specific territories ajid possessions of the United 
States should be considered as "foreign" in order to accomplish the purpose 
intended. That there was no uniform policy or procedure is amply indi- 
cated by the widely varied inclusion or exclusion of certain specifically 
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mentioned territories and insular possessions. The Philippine Islands, 
for example, were usually included in the same category with foreign 
countries; Alaska and the Canal Zone and Puerto Rico were considered 
"domestic" in some codes, and "foreign" in others; and a provision was found 
in a number of codes in which exemptions were alone to apply to "sales for 
domestic consumption", or, quite as indefinitely, to apply simply to "exports". 

In still another grouo, the question as to whether or not particular 
territories and/or possessions should he included, was left unsettled by 
allowing the code authorities or advisors' - agencies to make the decision. 
The Iron and Steel Code, for example, provided that "nothing in the code 
contained shall be deemed to apply to or affect the sale of any product for 
direct shipment in export trade * * * unless and to the extent the board 
of directors shall otherwise determine, the sale of any product * * * to 
the Philippines, Hawaii, or Puerto Rico or other insular possessions of the 
United States of America." Among other industries in which the code author- 
ities were aiithorized to determine the export status of territories and in- 
sular possessions (sometimes with and sometimes without the approval of the 
Administrator), were codes for the following industries: Laundry Machine, 
Crown Manufacturing, Petroleum Equipment, Floor Wall Clay Tile, Wire Reinforce- 
ment, and Chain Manufacturing. 

IV. EXPORT REPRESENTATION IN CODE MAKING 

With American business so well informed with regard to the function 
of exporting, it is not surprising that there was so little uniformity in 
the export provisions of many codes. The absence of a uniform policy with 
respect to exports was mainly due to the fact that the export provisions pro- 
posed by industry and trade representatives were designed to meet the par- 
ticular requirements prevailing in important export markets. 

The labor advisors recognized that it would not be possible to grant 
for exports exceptions to the labor provisions of a code. Altho in a number 
of hearings many reasons were advanced why labor provisions should be exempt, 
it was speedily recognized that it would be futile from almost any standpoint 
to allo\; a trade or industry such exemptions, because labor and production 
for export could not be segregated from that considerable portion of operations 
devoted to the domestic trade. 

The problem which resulted from the distinction between importing as 
a function and as a service related to a particular commodity, did not arise 
in the consideration of exports in code making. At the first hearings held 
in consideration of the wholesale and other distributing service codes, 
there were isolated attempts on the part of a limited number of individuals 
identified with the exportation of particular products, to have their own 
codes. The reasons advanced were similar to those proposed by importers 
seeking separate codes, - namely, that their business was highly specialized, 
that the technique was quite different, and that the qualifications and ex- 
perience of the persons emploj^ed all indicated that they should either have 
a code of their own or be allowed to operate more or less independently under 
a general subdivision of the Wholesale Code. The proposal was sympathetically 
received by certain labor advisors who recognized that the standard maximum 
hour and minimum wage provisions for the white collar class in the wholesale 
trade generally would accomplish but little for those employed in the export 
trades, if for no other reason than that the average wage in the export 



-324- 

trade was much higher. However, the movement faded tinder the pressure 

of time and the need for a solution to more complicated problems with regard 

to other aspects of the wholesale and distributive service codes. 

The principal reason that exporters, either "by commodity or "by function, 
were not separately considered was the close relationship which existed 
between exporting and other trades and industries. The fact that a great 
number of codes for different trades and industries specifically refer to 
exports and exporting, in itself confirms this relationship. A few years 
back, before manufacturers and merchants established their own branch factor- 
ies, assembly plants and foreign offices, a greater volume of business was 
handles by exporters and export agents. Under present day conditions the 
functional service of exporting, as independent from manufacturing and 
merchandising, has greatly diminished, and what is left of exporting as a 
profession has become so intermingled with the function of wholesaling and 
the other distributive trades that there is little basis for according it 
sertsrate consideration. 



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BIBLIOGRAPHY 

United States Depa rtm ent of Commerce 

Bureau of Foreign and Domestic Commerce 

Statistical Abstract of the United States, 1929-1934 

Commerce Yearbook, Vols. I and II, 1929-1932 

Foreign Commerce Yearbook, 1932-1933 

World Economic Review, 1933-1934 

Foreign Trade of the United States, 1929-1934 

Foreign Commerce and Navigation of the United States, 

Vols. I and II, 1927-1934 
Monthly Summary of Foreign Commerce of the United 
States, 1933-1935 

Bureau of the Census 

Census of Manufactures, Vol.11, Reports by Industries, 1929 

(Separate releases for Censuses of 1931 and 1933) 
Census of Wholesale Distribution, 1929 
Census of American Business, 1933 

United States Department of Labor 
Bureau of Labor Statistics 

Monthly Labor Review, 1929-1935 

United States Tariff Commission 

Economic Analysis of Foreign Trade of the United States in 
Relation to the Tariff (1933) 

Federal Reserve Boar d 

Federal Reserve Bulletin, 1929-1935 

Federal Trade Commission 

Practice and Procedure under the Export Trade Act 
(Weob-Pomerene Law) , 1935 

League of Fat ion s 

World Economic Survey, 1932-1934 

Review of World Trade, 1932-1934 

Statistical Yearbook, 1931-32 - 1933-34 

Monthly Bulletin of Statistics, 1933-1935. 

Butterbaugh, W. E. , Principles of Importing, D. Appleton & Co., 

New York, 1924 
Roorback, C-. R. , Import Purchasing, McGraw-Hill Book Co., 

New York, 1927 
Horn, Paul V., International Trade Principles and Practices, 

Prentice-Hall Inc., New York, 1935 
de Haas, J. Anton, The Practice of Foreign Trade, 

McGraw-Hill Book Co., New York, 1935 
Page, Thomas Walker, Mailing the Tariff in the United States, 

McGraw-Hill Book Company, Inc., New York, 1924 



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