(Information referred to is as follows:)

TABLE 1.-Imports of organic chemicals competitive with those produced by Otto B. May, Inc.

Source: Import data, U. S. Tariff Commission, Imports of Coal-Tar Products, 1952, 1953.

Mr. MAY. Again the conclusion which I draw from these data is that at present duty levels there is ample opportunity for an expansion in imports of dyes competitive with those which we manufacture. Table 1 sets forth the identity of our intermediate and dye products which are affected by these imports together with the data on the volume of imports in 1952 and 1953.

Without laboring the point, I wish to call your attention to the fact that our plant is operated with equipment and technology basically similar to that used in the manufacture of a great variety of synthetic organic chemicals.

Our firm during World War II produced dyes for uniforms, and again in the Korean emergency we converted our facilities to making entirely different dyes which were required at this time. This we did without coming to Washington for certificates of necessity since this would have delayed our program by months and we wished to be in production as soon as possible.

These efforts of ours and other companies were responsible for the production of a rather great variety of urgently needed chemicals, including sulfa drugs and nerve-gas components.

The significance of the figures in table 1 is that they reflect imports of products which have come into the United States at landed, duty paid, delivered prices below the prices we must maintain to insure our staying in business.

I would like to cite the instance of another firm of approximately our own size which manufactures intermediates for the pigment and dye industry. This firm is a resourceful one like ours and when the emergency in World War II came, quickly converted from making these intermediates to the manufacture of napalm for jelly gasoline. As a matter of fact, it was 1 of the 3 firms in this country chosen to manufacture napalm and it manufactured 10 percent of the entire United States output.

When the Korean emergency came, it again was pressed into service at the time when the Chinese crossed the Yalu River and we had to destroy our supplies. Large-scale production facilities in the United States were behind schedule and again this firm came through to produce much needed napalm which was so urgently needed that it was flown to Korea.

In 1951, the duties on the principal product which this firm manufactures were cut in half, from 40 percent to 20 percent plus 312 cents per pound. As a result of this cut, this firm is now manufacturing this intermediate with no profit. The price has dropped from $1.46 per pound to $1.18 per pound, and material of Italian origin is offered delivered, duty paid, in New York at $1.05 per pound, which is below his cost of manufacture.

Because of our size we are vulnerable to shifts in Government policy which affects business operations. As the president of our company, I took particular comfort in the statement contained in President Eisenhower's economic report to the Congress just a week ago. In it he stated:

The need of our times is for economic policies that, in the first place, recognize the proven sources of sustained economic growth and betterment, and in the second place, respect the need of people for a sense of security as well as opportunity in our complex, industrialized society.

There should be no doubt in your minds that the chemical industry is a proven source of sustained economic growth. You would also agree, I am sure, that our industry plays a rather big role in providing opportunities to our young people for professional careers as chemists and engineers in our complex industrial society.

I would also like to point out respectfully to the committee that only in the United States is the climate such that small chemical firms can find a place in the sun. In every other principal manufacturing nation in the world the great bulk of chemical manufacturing is done by 1 or 2-at the most, 3-firms.

Now the position of our firm today, competitively speaking, versus foreign imports is that the tariff protection which we enjoy at this moment enables us to compete. Should the envisaged tariff reduction program go through, we feel that we would be injured and, indeed, if the trend continues, would finally be driven out of business because, gentlemen, there is no way in the world that we can compete with 50-cents-an-hour labor and $2,500 a year Ph.D.'s, which is what the current scale in Europe is.

We can't do as some of our giant brothers do set up research programs in Belgium and other countries and actually set up manufac

turing subsidiaries abroad as a hedge so that in case the national policy should slash our tariffs to the bone, they will have foreign facilities and will be able to import chemicals into this country. We will simply have to shut our doors because we will be unable to compete.

We do not have the power to set up our manufacturing facilities abroad, particularly since we do not believe the large cartelized firms which dominate the chemical manufacturing scene in Europe would ever allow us to have the chemicals which would be necessary to allow us to engage in competition with them.

We hear much about the need for further tariff reduction as a means of making our foreign friends feel more secure. I have been unable to understand why the same concern is not felt for the need for American businessmen, such as myself, to receive some sense of security in anticipation of stable policies which affect their operations. We have the right, it seems to me, to expect the kind of security from stable policies which many are so anxious to extend to our foreign competitors. In this industry we are not advocating rolling back the tariff to pretrade agreement levels. We are also calling attention to steadily increasing imports at present tariff levels and we are asking that you not authorize the executive to embark on a new program of tariff cutting without insisting upon the adherence to dependable procedures which preserve the splendid vigor of our industry with its great importance to both our national security and the national welfare.

I believe the figures for 1954, when available, will show an increase over 1953.

In this connection, a problem of particular importance to small producers such as our company is that the present escape-clause and perilpoint procedure are keyed solely to the concept of serious injury to a domestic industry. A lot of producers such as my company could be seriously hurt before an industry as large as ours could be said to be seriously injured itself. Yet we have the right, it seems to me, to expect the Government's trade program to be carried out in such a way that our operations are not seriously injured.

For this reason I believe that these trade-agreement procedures should be amended to make them apply whenever there is serious injury suffered or threatened by domestic producers or segments of an industry. We should not wait until the industry itself is seriously injured before making adjustments in our trade concessions.

Obviously I am not an expert on foreign trade economics. Not many people are. As a businessman I have some definite views on what the foreign-trade policy of our country should be if we are going to adhere at all to the concept that our government is obliged to work for the general welfare and not merely the welfare of a particular group, such as export industries.

It seems to me that an important factor has been overlooked in most discussions of our tariff policy. Experience shows that with a 1 percent increase in our gross national product, the physical volume of finished manufactured imports increases by 1 percent. Many groups predict a doubling of our gross national product by 1975 compared with 1950. If this occurs as past trends seem to indicate, our imports of finishel manufactures will double without any adjustment of the tariff while imports of raw materials increase in only a slightly smaller degree.

One needs only to glance at the text and tables in the President's economic report of a week ago to note that most of the countries of the free world continued to improve their financial position in 1954 for the third year in a row. Most of the countries of Western Europe experienced a decided improvement in the balance of payments situation last year, and the gold and dollar reserves of the free world continued their upward climb. Rather significantly, the industrial nations of Western Europe did not experience a recession during 1953-54 as we did here in the United States.

I think it a strange policy which fails to take account of the strength and vigor of the economies of Western Europe, for example, in the consideration of any real need for further tariff reduction. If you are convinced that further gestures are needed to encourage our strong and prosperous allies, you should at least give equal deference to our home producers as you feel impelled to give the producers of other nations. If you would offer them encouragement, you should at a minimum offer equal encouragement to the producers in this cvountry. Reduce tariffs further if you must, but require that the items subject to reduction be carefully selected so as to avoid injury to companies like mine who are doing their part in supporting the expanding economy of the locality and State and Nation.

Thank you for letting a small businessman present his views on the important topic which you have before you.

The CHAIRMAN. We appreciate your appearance and the information given the committee. We also appreciate your cooperation in presenting your statement promptly. I hope others will follow your very fine example.

Are there any questions? If not, we thank you again for your appearance and the information given the committee.

The next witness is Mr. D. G. Rogers. Is Mr. Rogers here?

STATEMENT OF D. G. ROGERS, PRESIDENT, NATIONAL ANILINE DIVISION, ALLIED CHEMICAL & DYE CORP.

Mr. ROGERS. In the interest of saving time, I have shortened my paper and it will be somewhat shorter than the one you have.

The CHAIRMAN. We appreciate that. We have quite a number to hear today.

Mr. ROGERS. My name is D. G. Rogers. I am president of National Aniline Division, Allied Chemical & Dye Corp.

Allied was formed in 1920 because our experience in the First World War proved the folly of relying upon foreign sources of supply for many vital chemicals. It was nurtured and grew because a wise tariff policy adopted in 1922 equalized the great disparity between costs of production at home and abroad.

Allied is both a pioneer and one of the largest domestic producers of intermediates. It enjoys the advantages of large-scale production and integrated operations.

During World War II, the company was able to fulfill the goal of its founders by responding to all the demands made upon it by the war production program. In addition to its all-out production of industrial war materials, intermediates and dyestuffs for miltiary uses, the company developed and produced highly essential military products

and successfully completed a number of important research projects. for various agencies of the Government. These things the company was ready, willing, and able to do because it had an ample reservoir of skilled labor, technologists, and management actively working at their specialties.

Today, Allied makes over 3,000 different chemical products in 26 States. But I am going to direct my testimony primarily to the organic chemical field, with which I have been associated for over 39 years. National Aniline Division is a producer of over 2,000 distinct chemical compounds. It has plants in Buffalo, N. Y.; Hopewell, Va.; and Moundsville, W. Va.; and employs over 2,500 employees.

We support the views expressed here by the Synthetic Organic Chemical Manufacturers Association. We hope to help you understand the nature of the organic chemical industry's problem in relation to foreign competition, and the reasons for its position on H. R. 1.

Our industry produces over 7,000 finished organic chemicals in commercial quantities. Amazingly, these all stem from a handful of duty-free crude organic chemicals. By complicated processing steps, these crudes are combined with still other elements, such as oxygen, nitrogen, chlorine, or sulfur to make new and more complex compounds. Such compounds, known as "intermediates," become in turn the starting materials or steppingstones to hundreds of other "intermediates" and ultimately to thousands of finished products, such as dyes, medicinals, pharmaceuticals, explosives, synthetic rubbers, plastics, resin materials, agricultural chemicals, detergents, flavor and perfume materials and miscellaneous chemicals.

Our operations quickly cease to bear any resemblance to mass-production methods. Most of our chemicals are made in relatively small quantities requiring the prior and successive production of as many as 20 intermediates. All but a few are made by "batch" processing.

Each is produced in a series of processing steps which may include oxidation reduction, chlorination, hydrolysis, halogenation, caustic fusion, alkylation, carboxylation, nitration, sulfonation, condensation, liming, diazotizing and coupling.

Close attention and expert manipulation by highly trained chemists, engineers, and skilled workmen are required. The processing of a single finished chemical may take weeks or even months, and a final product may weigh as little as one-eightieth as much as the materials used in making it.

The synthesis of organic compounds inevitably yields isomers, coproducts and byproducts, in addition to the specific intermediate or finished chemical under production. It is therefore necessary for the organic chemical producer to give very careful consideration to the chemicals he wishes to include in his product line. Unless he has a market or a use for each, his entire operation may prove uneconomical. For the most part, the 1,200-odd intermediates made commercially in this country are produced by dyestuff manufacturers. For example, our own company makes more than 700 different dyes, each a distinct compound. We produce over 300 intermediates required in their production-and several hundred other products. Our dye manufacturing operations would be uneconomical if we were unable to sell or use all of them.