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Reduction In Tariffs Ruinous To American Industry

From The American Horologist magazine, June, 1945

Reduction In Tariffs Ruinous To American Industry

Warning against further reduction in tariffs protecting the American watchmaking industry from uncontrolled importation of cheaply made foreign watches, T. Albert Potter, president of the Elgin National Watch Company, told members of the House Ways and Means Committee at a recent hearing on H. R. 2652 that passage of the bill undoubtedly would force the industry to its knees.

In making a strong plea that the bill be killed in committee, Potter spoke both for manufacturers of jewelled and non-jewelled watches.

H. R. 2652 would reduce duties on imports of foreign-made watches to one-third of the 1930 tariff rate. By a reciprocal trade treaty concluded with Switzerland in 1936, the rate was reduced to two-thirds of the 1930 rate.

During the first three years of the treaty with Switzerland, importers of jewelled watches increased their share in the American market to 35 per cent above what it had been before the treaty went into effect, Potter pointed out. By 1938, they had 60 per cent of the market, holding these gains until 1942 when American watchmakers went out of production for civilians to concentrate 100 per cent on production for war needs.

"Since then, foreign watchmakers have had the whole market to themselves," Potter declared. "The situation facing American watchmakers is bleak. In 1943, nearly three times more foreign-made watches entered this country than in any pre-war year.

"For three years, our foreign competitors have been flooding the domestic market, while we have been at war. There will be no backlog of demand for our product in the postwar period, as a result. The American-made watch has lost its domestic market. Its channels of distribution have been taken over by importers of Swiss watches.

"The number of firms importing foreign-made watches has more than doubled in the last three years. All of them have had large wartime profits which have not been touched .by renegotiation. They have spent millions in advertising. In short, when American watchmakers get back into production for civilians, their position will be infinitely worse than it was when the war started.

"Reconversion will deepen this disadvantage. The Swiss have never been out of substantial civilian production, whereas American watchmakers have not had a chance to plan new products, let alone prepare for putting them into production. Furthermore, they have lost many skilled workers to the armed forces. Do you wonder that we say this is no time to be granting further tariff reductions?"

Importance of the American watchmaking industry, both in war and in peace, was cited by Potter as being perhaps the strongest argument for adequate protection from ,ruinous foreign competition.

When the isolation of Switzerland by the progress of the war enabled the Germans in 1940 to clamp down on export of precision timing instruments, it fell to the United States to meet the full need of the United Nations, since Switzerland and the United States are the only sources of supply, Potter explained.

"American watchmakers were not able to do their war job as fast as it should have been done, because they were too small at the outset," he continued. "Steady expansion of production facilities during the '30's, which otherwise could have been expected, was prevented by the effects of the 1936 reciprocal trade treaty with Switzerland. To that extent, the treaty did a disservice to the country.

"As it turned out, limited manufacturing facilities, which have had to meet as best they could the full I military demands of the United Nations at a time when no other source of supply was available, were saved by the struggle of American watchmakers during the last decade. We did not realize it then, but we are proud of it now."

A strong, competitive American watchmaking industry is the only thing that can protect the American public against monopoly practices. Potter stated. "The Swiss industry is completely government dominated, he observed. "Prices are established and export of machines controlled. At one time. even migration of workers was prohibited.

"The full effect of this monopolistic control has been felt by the American public in recent years. Prices of Swiss watches have skyrocketed, despite OP A control, and the public has been victimized through merchandising of nondescript brands.

"American watchmakers have well known trade names in this country. If Congress makes it possible for the clouds of importations that have been hanging over our heads to get too black, a part of the industry may have to transplant itself in order to survive. That, in my opinion, would be a military disaster."·

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