August 1, 1972
Page 26254
EQUAL EXPORT OPPORTUNITY ACT
The Senate resumed the consideration of the bill (S. 3726) to extend and amend the Export Administration Act of 1969 to afford more equal export opportunity, to establish a Council on International Economic Policy, and for other purposes.
Mr. MONDALE. Mr. President, what is the agreement on controlled time?
The PRESIDING OFFICER. Under the previous unanimous-consent agreement, the Senator from Nebraska (Mr. CURTIS) will be recognized to offer his amendment, on which debate is limited to 1 hour, to be equally divided between and controlled by the Senator from Nebraska (Mr. CURTIS) and the senior Senator from Minnesota (Mr. MONDALE).
The Senator from Nebraska is now recognized.
AMENDMENT NO. 1371
Mr. CURTIS. Mr. President, I have amendment No. 1371 at the desk, which I offer at this time and ask to have read.
The PRESIDING OFFICER. The clerk will read the amendment.
The legislative clerk proceeded to read the amendment (No. 1371).
Mr. CURTIS. Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendments offered by Mr. CURTIS (for himself, Mr. BELLMON, Mr. DOMINICK, Mr. DOLE, Mr. HANSEN, Mr. HRUSKA, Mr. MCGEE, Mr. MILLER, Mr. TALMADGE, Mr. TOWER, and Mr. YOUNG) are as follows:
On page 2, line 18, after "SEC. 104." insert (a) ".
On page 4" between lines 17 and 18, insert the following:
"(b) (1) Section 4(e) of such Act is amended to read as follows:
"'(e) The authority conferred by this section shall not be exercised with respect to any agricultural commodity, including fats and oils or animal hides or skins, without the approval of the Secretary of Agriculture. The Secretary of Agriculture shall not approve the exercise of such authority with respect to any such commodity during any period for which the supply of such commodity is determined by him to be in excess of the requirements of the domestic economy, except to the extent the President determines that such exercise of authority is required to effectuate the policies set forth in clause (B) or (C) of paragraph (2) of section 3 of this Act.
"(2) Any rule, regulation, proclamation, or order issued after July 1, 1972, under section 4 of the Export Administration Act of 1969, exercising any authority conferred by such section with respect to any agricultural commodity, including fats and oils or animal hides or skins, shall cease to be effective upon the date of enactment of this Act."
Mr. CURTIS. Mr. President, I ask unanimous consent that the distinguished Senator from Oregon (Mr. HATFIELD) be listed as a cosponsor of the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CURTIS. Mr. President, I yield myself 4 minutes.
Mr. MAGNUSON. Mr. President, will the Senator yield to me?
Mr. CURTIS. I yield.
Mr. MAGNUSON. Will the Senator let me be a cosponsor of the amendment?
Mr. CURTIS. Mr. President, I ask unanimous consent to have the Senator from Washington included as a cosponsor.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CURTIS. And the distinguished Senator from New Mexico (Mr. MoNTOYA).
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CURTIS. Mr. President, I yield myself 4 minutes.
I ask for the yeas and nays on the amendment.
The yeas and nays were ordered.
Mr. CURTIS. Mr. President, about the middle of July the Secretary of Commerce issued an order restricting and controlling and regulating the export of cattle hides from this country. Those of us who offer this amendment believe that that is very detrimental to the farmers and ranchers of the country and that it will curtail markets and cause an adverse effect on the price of a steer that may run as much as $7 a head.
We had a similar program–
Mr. President, may we have order?
The PRESIDING OFFICER (Mr. HUMPHREY). The Senate will be in order. Senators will take their seats or hold their conferences in the cloakroom.
The Senator from Nebraska may proceed.
Mr. CURTIS. Mr. President, I spoke at length yesterday on this matter, and set forth in some detail the reasons for it.
In 1966 a similar order was issued. It proved a failure. At that time the price of shoes went up and the price of cattle went down.
The present order is somewhat similar, but it is different. It calls for a complicated system of rationing and the issuing of tickets for export.
The testimony taken by the Committee on Agriculture and Forestry indicates that there will be a black market in export tickets, and this was not denied by any other witness.
I am in sympathy with the problem of the tanners and the shoe manufacturers who find themselves undersold in the American market by foreign manufacturers. But they have applied the wrong remedy. Mr. Robert Anderson, president of the Parsons Tanning Co., said this:
It is our opinion that export controls will result in strengthening the tanning and shoe industries of the United States for it will be a great equalizer. Raw material costs to foreign nations will be higher thereby reducing their labor cost advantage. American tanning and shoe manufacturers will have lower raw material costs offsetting their high labor cost.
Now, is that not something? Because they are paying higher costs, they want to use the power of government to force down the farmers' price to offset their costs.
The PRESIDING OFFICER. The Senator's 4 minutes have expired.
Mr. CURTIS. I yield myself 2 additional minutes.
I proceeded to ask Mr. Anderson this question:
Senator CURTIS. Are Japanese buying hides in this country cheaper than you can buy them?
Mr. ANDERSON. No. They pay a premium for all hides.
So the foreigners have no advantage in buying hides.
Mr. President, here is what this amendment would do: It provides that hereafter authority of this kind with respect to an agricultural commodity, including fats, oils, animal hides, and skins, shall not be issued without the approval of the Secretary of Agriculture. And section 2 of my amendment does away with the order issued last July.
Mr. President, I reserve the remainder of my time.
Mr. DOMINICK. Mr. President, will the Senator yield me 2 minutes?
Mr. CURTIS. I yield the distinguished Senator 3 minutes.
Mr. DOMINICK. Mr. President, I just wanted, as a cosponsor of this amendment, to congratulate the Senator from Nebraska for having introduced it.
Obviously, the cattle industry is of great importance in our State.
Mr. President, as a cosponsor of amendment No. 1371, introduced by Senator CURTIS to the Export Administration Act, I wish to commend my colleague CARL CURTIS for his excellent analysis of the crisis facing the Western cattle producers as a result of the unfortunate decision on July 15, 1972, by the Secretary of Commerce. At that time, the Commerce Department announced that it would take action to impose limitations on the export of cattle hides. Three days of hearings have been held by the Senate Agriculture and Forestry Committee and the action by the Secretary of Commerce has been submitted to close scrutiny by that committee.
This amendment would require that the Secretary of Commerce obtain the prior approval of the Secretary of Agriculture before exercising authority to limit exports on agricultural commodities, including animal hides and skins. Such prior approval by the Secretary of Agriculture is not to be given during any period when the supply of such item exceeds the domestic requirements. This amendment would be retroactively effective to July 1, thereby reversing the July 15 decision of the Commerce Department.
Mr. President, the cattle industry is of enormous importance to the State of Colorado. Colorado ranks 11th nationally with 3,716,000 cattle and calves on Colorado farms and ranches. The value of such cattle on January 1, 1972, was estimated at $762 million.
Mr. President, this amendment merely requires that the Secretary of Commerce be required to go to the expert – the Department of Agriculture – and obtain from that expert the necessary information regarding the agricultural industry before charting a proposed course of action regarding export limitations.
There seems to be little question that a cattle hide at today's prices is worth approximately $17, and that each hide contains enough leather for 20 pair of men's shoes or 40 pair of women's and children's shoes. At $25 per pair, we can conclude that the leather in a pair of men's shoes represents about 3½ percent of the retail price. The reduction in the price of the hide would not reduce the retail price of a pair of shoes.
The action of the Commerce Department would have little effect on the consumer, but the consequences on the cattleman will be significant insofar as the sale of cattle hides is concerned.
Hide producers from western states depend almost entirely upon overseas markets as an outlet for their hides. According to Mr. Roy W. Lennartson of Western States Meat Packers Association, the 11 western states of Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, Nevada, Washington, Oregon, and California produce 22 percent of the total U.S. hide production and no major tanneries are located in the west. The large leather users claim that western hides are not suitable for their requirements. Because of this and high cost of shipping, western hide producers had to develop other markets. Most western hides are exported to markets in the Far East. The limitation on hide exports will have little effect on anyone except the cattle producer. It will destroy markets that have taken years to develop.
The action by the Commerce Department was not justified on the basis of present facts. These facts would have been available through the Department of Agriculture and, for this reason, the amendment before the Senate must be enacted.
Mr. DOLE. Mr. President, as a cosponsor of the amendment offered by the Senator from Nebraska (Mr. CURTIS) I should like to emphasize the need for the Secretary of Agriculture to have the approval of imposition of export control on agricultural commodities as outlined ill the amendment.
During the hearings conducted by the Senate Agriculture and Forestry Committee last week and cited by Senator CURTIS yesterday in presenting his amendment, it was obvious that the Secretary of Agriculture did not have the option to approve the Secretary of Commerce's decision to impose the restriction on hide exports.
If he had this authority, Secretary Butz would recognize that our producers do not receive $32 per hide as was indicated in the testimony; but closer to $18 or $20, and this is twice as much as he had been paid for some time.
Hide prices are not excessive, nor is the price of cattle or beef. Our farmers are entitled to a fair price for their animals and a fair return on their investment: Recently, cattle prices reached an all-time high. I say justly so, and they should be higher. For according to USDA figures, our farmers are still receiving only 75 percent of the income received by nonfarm workers.
Now, when cattle prices have attained the same level as 20 years ago, some have urged actions to lower cattle prices; but this is not the solution to the consumer's problems. The restrictions proposed to control hide exports will not lower the price of shoes materially. The increases for other components in a pair of shoes and costs of labor will maintain shoe prices at nearly the present levels, and blaming farmers for the price of cattle hides and for increased shoe prices is totally unfair.
Mr. President, in addition, I ask unanimous consent that a letter from Mr. Kalo Hineman, president of the Kansas Livestock Association be inserted in the RECORD. Mr. Hineman outlines the farmers' objections to this hide export control very well and his letter will be helpful in considering this amendment.
Senators who cosponsored this amendment have filled the record with the facts, clarifying this misconception.
I ask all other Senators to join in supporting this amendment, which will assure farmers adequate protection in the administration of the Export Administration Act.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
KANSAS LIVESTOCK ASSOCIATION,
Topeka, Kans.,
July 28, 1972.
Senator ROBERT DOLE.
New Senate Office Building,
Washington, D.C.
DEAR SENATOR DOLE: Most cattlemen realize that beef is, as Secretary of Agriculture Butz has pointed out many times, a demand-oriented product. The supply of beef cannot be adjusted overnight. Therefore beef operates well in a fluctuating supply and demand market.
Cattle hides are also demand-oriented. The supply of hides depends on the number of cattle slaughtered for beef. Obviously, this supply is also unable to be adjusted quickly.
People don't consume leather. While fashion trends will increase the demand for leather products to a certain degree, generally Americans are not buying huge quantities of leather. With increased numbers of hides from greater beef production, there has had to be a reliance on foreign countries for trade. Hide buyers, packers and exporters in the seventeen western states, because of the branding laws and customs, have been unable to compete in the domestic hide market.
They have had to promote and hustle to establish world markets for thinner, branded hides. This they have done remarkably well.
If a sudden shift in the world hide situation (Argentina's decision to keep cattle for breeding) has caused greater competition among tanners, it doesn't change the fact that these western exporters still have no export market. As producers, we are glad that hide buyers have developed this market. While the price of hides is very small in comparison to the entire animal, hide prices do have an effect on the cattle market.
The Commerce Department's decision to grant 43% tickets to packers all over the country is, in our opinion, very unfair. Assuming that the plan is workable, which we doubt, western hide buyers will have more than half of their hides ineligible for export. On the other hand, eastern hide handlers, who have had the domestic market to themselves, suddenly will find themselves with an automatic advantage of exporting 43 % of their hides. For the market to continue as it has, western hide people will have to pay eastern hide people for these tickets. The result can only depress our western hide price and, in turn, our western cattle price.
We do not pretend to be experts at the manipulation of commerce. Yet, if – as Secretary Peterson admitted – the effect on shoe prices will be minute at best, there seems to be little reason to go ahead with this awkward, discriminatory plan. We urge a new solution.
Sincerely yours,
KALO A. HINESIAN, President,
Kansas Livestock Association.
Mr. McINTYRE. Mr. President, will the Senator from Minnesota yield me 6 minutes?
Mr. MONDALE. I yield 6 minutes to the Senator from New Hampshire.
Mr. McINTYRE. Mr. President, as a member of the committee which reported the bill before us, and more particularly as a spokesman for my many constituents whose livelihood is directly affected by the provisions of this bill, I wish to speak in opposition to the pending amendment.
My views on this amendment apply, with equal force and reason, to any similar amendment which may be proposed later.
The basic issue behind this amendment stems from the action of the Secretary of Commerce, early in July, to exercise his authority under the Export Administration Act to regulate the export of cattle hides. The Secretary acted only after the longest possible study, consideration, and, in my opinion, undue delay imposed as a concession to the Secretary of Agriculture.
In the period of time since last August 15, almost a year ago, when price controls were imposed on most sectors of the economy, the price of cattle hides has soared. Cattle hide prices have risen, depending on the type and grade involved, by some 100 percent to 200 percent. The impact of this dramatic price increase has been felt in the first instance by the tanning industry and then by the shoe manufacturing industry. It is about to be felt in full force by the consuming public.
I should point out, Mr. President, that at the time that cattle hide prices were doubling and tripling the tanning industry and the shoe industry were subjected to unusually rigorous regulation by the Price Commission. In the case of the shoe industry, shoe manufacturers were singled out for practically unique hardship by the Price Commission in that that industry has been prohibited from earning its normal profit on costs. The Price Commission has pointed out that this severe regulation was made necessary by the soaring cost of cattle hides.
While this action by the Price Commission seems to me to be lacking in reason, and possibly unjustified in terms of the Economic Stabilization Act, nevertheless it places pressures upon the shoe and tanning industries which make it impossible for those industries to continue in business if the hide market situation should get worse. Thus, in the past few months, many shoe manufacturers and tanners were forced to begin planning to close down their factories.
The State of New Hampshire has seen too many shoe plants close down before. In this case, it is just inconceivable to me that a Secretary of Commerce could sit by and watch this situation get out of hand. Months ago, I and other Members of the Senate urged the Secretary to move swiftly to impose export controls on hides. Now that he has finally acted, it would be the height of irresponsibility for Congress to make his job even more difficult.
The Secretary acted because the cattle hide situation met the statutory criteria. There exists today an abnormal foreign demand for hides – caused by the curtailment of supplies for the world hide market from Argentina. This demand has created inflationary pressures and domestic shortages. Prices have skyrocketed and domestic buyers are unable to fill their needs, at any price. I understand, for example, that Japanese buyers have placed standing orders for hides at 2 cents per pound higher than the domestic market regardless of the market level. So a domestic shortage clearly exists.
It has been suggested today that these controls are unfair to the economic interests of the cattle industry. Nothing could be further from the truth. The system of controls imposed by the Department of Commerce bends over backwards to be fair to the cattle interests. For one thing, export levels are set at the level of 1971 exports and 1971 was the best year in history for hide exports. Hide prices are now up at levels which cattlemen for decades would have believed to be unreasonably high, or even impossibly high.
The income from the sale of hides and meat has been felt. Last Friday the Government released the quarterly personal income figures for States and regions. The greatest positive improvement in personal income was felt in the Rocky Mountain and Southwest regions of the country. The report states:
The large income gains in the Rocky Mountain and Southwest regions primarily reflect large increases in farm proprietors' income associated with soaring livestock prices ... (Dept. of Commerce, BEA 72-47, July 28, 1972)
Mr. President, at the same time that soaring livestock prices were resulting in large income gains for the cattle interests, shoe workers in New Hampshire were losing their jobs.
I am not opposed to higher incomes for cattle producers, but I do not believe that these gains should be achieved at the cost of jobs for shoe and leather workers. The export controls which have been placed on cattle hides are very generous to the cattle interests; they are temporary, they are flexible, and they represent a balancing of the various equities involved. Mr. President, I urge the Senate to reject any amendment which seeks to further restrict the ability of the Department of Commerce to impose controls on commodities which are in short supply.
Mr. JAVITS. Mr. President, will the Senator yield me 30 seconds?
Mr. MONDALE. I yield.
Mr. JAVITS. Mr. President, it is always refreshing to hear the voice of the consumer and the voice of the worker spoken in these protectionist issues. It is refreshing to me, and I believe it is refreshing to many in this country. I congratulate the Senator from New Hampshire, who has spoken from the position of deep analysis which coincides with the analyses of the administration. I should like to identify myself with the Senator's position and express the hope that the Senate will reject the amendment.
Mr. McINTYRE. I thank the Senator from New York.
Mr. MONDALE. Mr. President, I yield 4 minutes to the Senator from Maine.
Mr. MUSKIE. Mr. President, I intend to vote against the amendment to the Export Administration Act of 1969 offered by Senator CURTIS. His amendment, if adopted, as the Senator from New Hampshire has pointed out, would seriously harm the leather and shoe industries of our country by invalidating the export controls on cattle hides which the administration imposed on July 15 after the most careful study.
Indeed, the administration clearly resisted the imposition of export controls on hides, and I and a number of my colleagues, over a period of several months, directed a steady stream of letters to the President and the Secretary of Commerce citing the accelerating cost of cattle hides and urging that action be taken under the Export Administration Act to control their export. Secretary Peterson, in announcing the export controls on July 15, underlined the administration's reluctance to impose these controls when he described the elaborate study process which preceded their imposition. Secretary Peterson noted that the administration:
Launched the most comprehensive kind of intensive survey of supply and demand outlook for hides – both domestic and international. Under the Secretary's statutory authority, we got the facts from packers, farmers, exporters, and shoe manufacturers on their inventories and their expectations of short-term demand. We got the latest estimates we could get of cattle slaughter and hide production.
Only then did the administration act to impose controls, and only after the facts uncovered made the need for action overwhelmingly clear.
What were these facts which mandated the administration's action? They included the following:
First, hide prices are at record highs with the composite prices running in the 27 cents to 29 cents per pound range for the 2 months prior to the imposition of Secretary Peterson's orders.
Second, a Commerce Department survey projected a demand for an additional 638,000 hides for current use for the period March through December 1972 over a comparable period for 1971.
Third, for the last 5 months of 1972, domestic shoe production is projected to increase 7.3 percent over the comparable period for 1971.
Fourth, a Commerce Department survey projects, in the absence of controls, an increase in the export of cattle hides of 576,000 hides for the period March through December 1972 over a comparable period of 1971.
Fifth, Argentina's and Brazil's exports accounted for 26.2 percent of total world exports in 1969, 20.7 percent in 1970, and an estimated 10.2 percent in 1971– but these sources have been terminated.
Sixth, between March 1971 and March 1972, domestic cattle hide and leather inventories have decreased 1,002,000 hide equivalents.
Seventh, in spite of projected production increases in hides, the projected demands for hides for the period March through December 1972 could be expected to exceed supplies by 1,521,000.
These facts, as Secretary Peterson recognized, portray precisely the kind of situation envisioned when the Export Control Act was adopted. I was privileged to serve as chairman of the subcommittee which drew up that act, and I was one of its principal sponsors. The statutory language triggers controls when they are necessary "to protect the domestic economy from the excessive drain of scarce materials and to reduce the serious inflationary impact of abnormal foreign demand." There is no doubt in my mind that the present hide situation fits these criteria.
Now, slightly over 2 weeks after Secretary Peterson acted to control hide exports, and even before the ticket system of controls begins operation on September 1, the Senate is asked to overrule Secretary Peterson's actions and turn its back on the serious plight of the shoe industry in our country. Such hasty action would be unfair and unwise.
There is evidence that our domestic shoe industry, after a period of decline, will experience an increase in shoe production. But this hopeful trend simply cannot survive an uncontrolled rise in cattle hide prices. Hides are the major cost of producing leather and a principal cost of making shoes. The hide price increases that have occurred so far are expected to affect the retail cost of American-made shoes in varying degrees, according to size and construction. Specifically, the cost of women's shoes will probably rise $1 to $2, men's shoes will cost $2 to $4 more, and women's boots may be as much as $4 to $6 more expensive.
The precarious competitive position of our domestic shoe industry is gravely endangered by such increases. In my own State of Maine, between 1968 and June of 1972, employment in Maine's leather footwear industry declined from 26,900 employees to 18,500. During 1971 and 1972, 13 shoe firms in Maine employing over 3,000 people have closed. This pattern is not unique to Maine. We must not allow the situation to deteriorate further through uncontrolled increases in cattle hide prices.
I would have hoped that export controls on hides would not have been necessary. I believe we should pursue, as vigorously as possible, free-trade conditions. However, we cannot be blind to reality and ignore the plight of a vital American industry. When market conditions warrant, and Secretary Peterson has pledged to monitor the situation closely in the coming months, the controls can be lifted. In the interval, in a period of serious hide scarcity and dramatically rising hide prices, Secretary Peterson's necessary action deserves support. I urge my colleagues to adopt this wise course of action and vote against the amendment offered by the distinguished Senator from Nebraska.
Mr. MONDALE. Mr. President, I yield 3 minutes to the distinguished Senator from New Hampshire.
Mr. COTTON. Mr. President, for many years, many of us have been struggling with the Secretaries of Commerce of this and the last three administrations, and with other officials of these administrations, first, to save our textiles and, second, to save our shoe industry. I have rehearsed on this floor, on other occasions, the fact that mill after mill, and factory after factory, has closed in my State of New Hampshire as well as in adjoining States.
At last, we have received some action in insisting upon voluntary quotas and, if necessary, other quotas to protect our shoe workers and save our shoe industry. As a matter of fact, I have voted on several occasions, in other years, with my good friends from Nebraska and from other States, to help them save and promote the meat production industry and sales. I never want to be parochial in my attitude, but I cannot find myself greatly alarmed, even though I respect and admire my dear friend from Nebraska, for his spirited attempt to protect the export of hides. I hold in my hand today's copy of the Wall Street Journal and I note on page 28 that 1 year ago the price of hides was 15 cents a pound and today it is 33 cents a pound. It went up 1 cent a pound right after the Secretary of Commerce issued his order.
I believe that the Secretary of Commerce can be depended on not to do anything seriously to injure our friends in the West. He has not done so yet because the price of hides has not gone down but has gone up. It would absolutely vitiate this protection we have, to make it subject to the Secretary of Agriculture, because it would be the old story of putting the fox in charge of protecting the chicken coop.
I am compelled, Mr. President, to vote against this amendment offered by my good friend from Nebraska.
Mr. MONDALE. Mr. President, I yield 2 minutes to the Senator from Tennessee.
The PRESIDING OFFICER (Mr. HUMPHREY). The Senator from Tennessee is recognized for 2 minutes.
Mr. BROCK. Mr. President, I rise in opposition to the amendment to exempt cattle hides from the Export Administration Act of 1969.
The purpose of this amendment is to nullify the action taken by the Secretary of Commerce on July 12 to control export of cattle hides to cut inflationary pressures on prices of shoes and other leather goods. The action taken by the Secretary was both necessary and fair to all concerned.
In face of the soaring hide prices and shortage of cattle hides, the Secretary had no other alternative than to act in a vigorous manner. Since August 15, 1971, the start of phase I of the President's economic program, hide prices have increased almost 100 percent. This fantastic inflation in hides means that retailed shoe prices must go up at least $1 to $2 a pair and the end is not in sight. These increases will be borne by the American consumer. In addition, there is a deepening shortage of cattle hides which is crippling our domestic leather and shoe industries. In spite of projected production increases in cattle hides, projected demand for hides for the period March-December 1972 could be expected to exceed supply by 1,521,000 hides.
This dire situation has been brought about by the activity of foreign hide buyers who are increasing their demand for U.S. hide production, thereby driving prices up and draining hide supplies. Since 1967 hide exports have increased from 11,900,000 to 16,000,000 in 1971.
In the same period, exports as percent of domestic hide production climbed from 33.2 percent to 42.6 percent. The Department of Commerce survey projected increases in export of cattle hides of 576,000 hides for the period March through December 1972 over a comparable period in 1971 if controls were not instigated.
The shortage of hides in this country can be attributable to several factors, the principle one being that the major hide exporting nations with exception of the United States have placed embargos on exportation. For example, Argentina and Brazil who exported 26.2 percent of the world's supply of cattle hides in 1969 have placed a total embargo on exports. The policy of both of these countries is to build tannery and shoe industries to become major shoe exporters.
It seems grossly unfair to ask the American worker and consumer to bear the brunt of the restrictive policies of these countries.
Although hide production in this country is expected to increase for the remainder of 1972, absent controls, it would not be expected to meet domestic demands.
Thus, the Secretary of Commerce was faced with a critical situation. Countries normally buying in South America are converging on the U.S. market. Foreign buyers have the great advantage of currency revaluation which has made their money worth more. Prices of leather goods and shoes were soaring. Factories were threatened with curtailment or shutdown from sheer lack of supply.
That would have meant more unemployment. The action taken by the Secretary of Commerce was long overdue.
The Secretary's program should prove to be a fair and effective one. Rather than impose conventional export controls as was done in 1966, the Secretary is utilizing an export ticket system in hopes of preventing windfall profits to go to exporters of foreign producers. Under the regulations, export tickets will be issued to cattle hide producers in an amount equal to last year's export levels. The effect of this approach will be to reserve for hard-pressed domestic buyers and industries the additional cattle hides which it is anticipated will be available for sale to people who export hides. Under the ticket system benefits of higher foreign hide prices should accrue to the American consumers and cattle producers – not to foreign purchasers and exporters.
Under this program the consumer will enjoy stable prices for leather goods, the workers in the leather goods industry will have their jobs preserved, and the cattle producers will receive the benefit of any increase in prices on the foreign export market.
Mr. CURTIS. Mr. Presidents how much time remains to each side?
The PRESIDING OFFICER (Mr. STEVENSON). The Senator from Nebraska has 20 minutes remaining and the Senator from Minnesota has 12 minutes remaining.
Mr. MONDALE. Mr. President, I yield 4 minutes to the Senator from North Dakota (Mr. YOUNG).
The PRESIDING OFFICER. The Senator from North Dakota is recognized for 4 minutes.
Mr. YOUNG. Mr. President, the cattle industry is in a unique situation. Controls on imports have been lifted so that they now have to compete with the rest of the world on the meat that they produce. Now controls are being placed on exports. One of the few commodities we can produce and sell to the rest of the world are cattle hides. But the cattle producer is in a bind both ways.
Mr. President, I have a great deal of sympathy for those here today who express concern about losing an industry in the United States. The textile industry has been hurt badly during the past few years. I voted to help them. The shoe industry, no doubt, is being hurt. But even if they got the cattle hides for nothing, they would still have about the same trouble, because the cattle hide represents only a small percentage of the cost of a pair of shoes.
There are many other industries in this country which are getting hurt and where we are exporting jobs. It is hard to buy a camera today in the United States where most of the components are not made in foreign countries. It is hard to buy clothing of any kind where the cloth is not made in some foreign country. The same thing is true of bicycles and motorcycles. We cannot even buy barbed wire any more made in the United States. We stopped making barbed wire except for military purposes. We are, of course, importing more and more automobiles. Many other industries are getting hurt badly by excessive imports. Thus, Mr. President, I feel that we are
facing a serious situation when we are exporting jobs and importing all our requirements.
The answer is not to destroy an industry in this country that needs help, or to injure it, which would result from limiting exports.
My gosh, at this time, we should be concerned about producing more commodities for export to earn more money which will place us in a better position with regard to our balance of payments.
Mr. President, the recently announced limitation on the export of cattle hides was a most unfortunate blow to the American livestock producer and to the economy in general.
The Secretary of Commerce made a questionable interpretation of his authority under the Export Administration Act when he ordered these limitations. I feel that it is absolutely necessary for the Congress to spell out that authority clearly so that further problems of this type will be avoided.
We are all concerned over the inflation that has plagued our economy. Controlling inflation must be our No. 1 domestic economic goal. While I recognize this need, I am deeply disturbed that two of the most publicized moves taken in recent weeks to help control inflation will have a direct, adverse impact on a segment of the economy that has not fully shared in the great advances in the general level of economic activity. I am speaking of course, of the American farmer and rancher.
The lifting of meat import quotas a few weeks ago will force livestock producers to compete with additional quantities of lower quality, lower priced meat produced in foreign countries under lower cost conditions. The hide export limitation, on the other hand, prevents producers from taking full advantage of an export market that is badly needed.
Last week, the Senate Committee on Agriculture and Forestry held hearings on this action.
During these sessions, it was repeatedly demonstrated that the limitation would have little, if any, effect on the rate of inflation in this country. It will, however, have a serious adverse impact on our balance-of-payments problem.
This problem has become one of the most difficult economic problems ever to confront this Nation. Every possible effort is being made to expand American exports in an effort to bring relief from these difficulties. The record is clear, Mr. President, that market development efforts on hides have been successful. The record is equally clear that export limitations on them are damaging to that market. Limitations were placed on hide exports in 1966. While those limitations did not halt the rise in shoe prices as they were supposed to, they did very effectively reduce the level of hide exports. In fact, it took 3 years to regain the level of hide exports we had in 1966.
This action is going to lose markets for the United States. Some of these markets will be lost for a few months or a few years, depending on how long the limitations are in effect. Others will be lost for good. A major effect of this move will be to force foreign purchasers of American hides to look for synthetics or substitutes for leather. Invariably, once a manufacturer goes to cheaper substitutes or synthetics, he rarely goes back to the better quality, natural product.
To argue that this move will protect the consumer from further increases in the price of shoes and other leader products is to ignore the experience of 1966. Despite the export limitation at that time and the consequent drop in hide exports and prices, shoe prices in this country continued to rise.
It is easy to understand why this happened then and will, in all probability, happen again. The U.S. Department of Agriculture estimates that less than 5 percent of the cost of a pair of men's oxford shoes goes to pay for the rawhide used.
Mr. President, I strongly support the effort to remove this unwise limitation. It will not remove the threat of rising leather product prices. It will result in reduced income for livestock producers. It will adversely affect our balance-of-payments situation.
Mr. CURTIS. Mr. President, will the Senator from North Dakota yield for an observation?
Mr. YOUNG. I am glad to yield.
Mr. CURTIS. The testimony is that out of the average cattle hide they can make 20 pairs of men's shoes. Of course, women's shoes with just the sole, the heel, and some straps, maybe twice that many – and certainly with children's shoes. So the hide is only about 5 percent of the cost of a pair of shoes; is that not correct?
Mr. YOUNG. That is correct. In referring to testimony, in many cases, the higher priced shoes are much less than that, down to 1½ percent.
Mr. CURTIS. I thank the Senator from North Dakota.
Mr. President, I yield 4 minutes to the Senator from Oklahoma (Mr. BELLMON).
The PRESIDING OFFICER (Mr. STEVENSON). The Senator from Oklahoma is recognized for 4 minutes.
Mr. BELLMON. Mr. President, I thank my distinguished colleague from Nebraska for yielding me this time. I am very proud to be a cosponsor of his amendment. It is very much needed. I believe that those who oppose it probably do not fully understand the impact of this action by the Secretary of Commerce.
In the long range, this amendment is very much in the best interests of the consumer. As one who is in the cattle producing business, I can testify that the price of cattle hides in recent years has been slowing down. A substantial amount of the cattle hides produced in this country are not even recovered.
There was a time when the renderers of the country would come around to the ranches and the farms and pick up animals that had died, to recover the hides as well as the fats, oils, and the proteins in the carcasses. But over the past several years, the price of hides has been so low that the animals have been allowed to decompose on the farms and ranches, and that potential source of leather has been lost.
Mr. President, I would also like to point out that at the present time we are involved in a presidential campaign. One of the big issues that has been raised is farm parity. Farm parity with interest has gone up recently from 73 percent to 75 percent. I challenge any Member of the Senate to point to any other industry that can operate when it receives only three-fourths of the amount of income it is entitled to have.
The situation in the cattle industry is a little better. Cattle parity is something like 93 percent. But here we have an action by the Government, by the Secretary of Commerce, which is taken for the devout purpose of forcing down the price of hides which constitutes a very substantial amount of the income of the farmer when the price of the product is only 93 percent of what it should be.
To me it is totally inconsistent for our Government, a part of the Government, to complain about low farm parity and on the other hand to take action that tends to keep the price from rising to a fair level.
I feel that the Curtis amendment is needed and that it will help to bring equity to the farm income. We have to make available an adequate supply of this essential material.
The testimony on this matter before the Committee on Agriculture and Forestry points out that Mr. Letson, from the Department of Commerce, had some misinformation upon which his decision was based. The testimony from the Secretary of Agriculture showed that we expected about 1,560,000 more cattle to come to market during the balance of the year than during 1971.
The testimony was that the increased demand for domestic hides was far less than that amount.
It appears we will be faced with a surplus and not a shortage of hides. The witness was totally mistaken.
Mr. President, I express my support for the Curtis amendment and urge its adoption.
Mr. CURTIS. Mr. President, I yield 3 minutes to the Senator from Iowa.
The PRESIDING OFFICER. The Senator from Iowa is recognized for 3 minutes.
Mr. HUGHES. I am pleased to join with Senator CURTIS on this amendment, which would correct a serious injustice done to cattle producers as well as a dangerous reversal in our historic policy of encouraging agricultural exports.
In principle, and as the law now declares, export controls should be used only in cases of an excess drain of critical materials or when there is a serious inflationary impact.
The facts now available to us do not justify this extreme step.
Exports of cattle hides are up only 2 percent this year compared with the first 6 months of 1971.
Domestic demand has dropped along with declining shoe production.
And domestic cattle production is up, With 900,000 more cattle than last year expected to be slaughtered in the next 6 months.
Shoe prices have been going up, as have all prices, but rising cattle hide prices are not solely to blame. In fact, shoe prices have risen only as much as the general consumer price level. Yet, the current export controls will make cattlemen bear the entire burden for these increases, when hides account for 75 cents to $1.50 in the $20-to-$40 cost of a pair of shoes.
Already cattle producers have been placed in double jeopardy by this administration – first by the suspension of meat import quotas and now by the restrictions on exports of hides.
I think it is time we stopped making our food producers pay for the failure of the administration's economic policy to halt inflation or to correct our balance-of-payments deficits.
The 50,000 cattlemen in Iowa should not be further penalized by policies which deny them the right to sell at a fair price what they have worked so hard to produce. Yet, if history is any guide, they will suffer. In 1966, when such controls were last imposed, livestock prices plummeted but shoe prices actually increased. Some of my constituents now estimate that these export controls will knock $4 or $5 off the price of every steer sold to the packinghouse.
In fairness to our cattlemen, while still doing justice for our consumers, I believe that this amendment should be speedily approved.
I am pleased to join with the Senator from Nebraska in an amendment which would correct what I believe is a serious injustice being done to the cattle producers as well as a dangerous reversal in our historic policy of encouraging agricultural exports.
I rise as a Senator with a record in the Senate of supporting the problems of the American worker and American consumer. And in every instance I believe the record will show that I am willing to support measures that do not deprive a quite seriously affected segment of our economy in order to bring about an element of relief. There are better ways of doing that.
I rise in support of the 50,000 beef producers of the State of Iowa who for years have struggled and have been going down in numbers as a result of the economic pressures on the American farmers and the American beef producers along with an ever-increasing rise in the price of food for the American table with the American dollar being able to buy less than the previous year.
The facts now available to us do not justify this extreme step. The export of cattle hides are up only 2 percent this year compared with the first 6 months of 1971. Domestic demand has dropped along with declining shoe production.
The domestic cattle production is up, as has been stated here.
I believe, Mr. President, that we are taking the wrong approach. Those of us who are willing to support the problems of the workers in the factories and who have continued to express that support in the Senate do not believe that the method to take in supporting them is to deprive an ever-increasing number of farmers from the rural sections of the country of a fair income.
This is precisely the step that has been taken already. The cattle farmers have been placed in double jeopardy, first by the restriction on meat export quotas and next with respect to the reduction in hides.
I think it is time that we stop this practice.
I strongly urge passage of the amendment of the Senator from Nebraska.
Mr. McGEE. Mr. President, will the Senator yield me 2 minutes?
Mr. CURTIS. Mr. President, I yield 2 minutes to the Senator from Wyoming.
The PRESIDING OFFICER. The Senator from Wyoming is recognized for 2 minutes.
Mr. McGEE. Mr. President, as a sponsor of amendment No. 1371 to the Export Administration Act (S. 3726), I want to join with my distinguished colleague, the Senator from Nebraska (Mr. CURTIS), in urging passage of this proposal.
The recent action by the Secretary of Commerce in imposing a ceiling on hide exports has resulted in a grave disservice to the American cattleman. The reasons given by the Secretary of Commerce for taking this action range from the alleged inflationary pressures stemming from a recent increase in prices for hides over the 1953-70 composite average, to an alleged estimated shortage of such hides in meeting the domestic supply demand.
However, I would like to refer to testimony offered the Senate Committee on Agriculture and Forestry last week by Mr. C. W. McMillan, executive vice president of the American National Cattlemen's Association.
Mr. McMillan stated that:
The domestic beef cattle industry is tired of having to "pay the bill" under the threat of U.S. tanners and shoe manufacturers that they must raise shoe prices "if something isn't done to restrict the exportation of U.S. cattle hides."
The 1972 action of the Commerce Department, although not identical to 1966, closely parallels it.
In 1966, shoe manufacturers threatened to raise shoe prices unless something was done to force down the price of domestic cattle hides.
An export embargo was placed on them, prices fell, reflecting approximately $4 per head drop in domestic cattle prices and the shoe manufacturers proceeded to raise the price of shoes anyway. U.S. cattlemen paid the bill and the U.S. shoe manufacturers pocketed the profits.
Although the 1972 action of the Commerce Department still permits hides to be exported, there has been so much confusion and concern about the complex ticket or certificate method, meat packers cannot adequately plan their cattle buying programs and take into account by-product values. This completely disrupts marketing patterns of beef cattle.
Mr. President, I believe Mr. McMillan's concerns are well founded. It appears that this administration's response to complaints of inflationary pressures on the economy is to find a scapegoat. High meat prices in the supermarket resulted in the administration placing the door wide open to foreign meat imports. Now we see the American meat producer again being made the scapegoat, because U.S. tanners and shoe manufacturers claim they will have to raise shoe prices "if something is not done to restrict the exportation of U.S. cattle hides."
Once again; the administration is wide of the mark in searching out the real culprit for this Nation's economic woes. It is not the American cattleman. Mr. McMillan also testified that:
It is the earnest hope of the American National Cattlemen's Association that the restriction on hide exports will be lifted. Were it not for the price revels that have prevailed for hides in recent weeks, the byproduct drop of meat packers would be much lower. If that by-product drop declines substantially, the meat packer must adjust his margin by paying less for cattle or selling carcass beef for more.
If carcass beef prices increase, this means that consumers will have to pay more for beef in the retail meat counter. If meat packers pay less for cattle. it could place cattlemen in a "loss" position. As a practical matter, both of these things will probably happen.
A serious effect of restricting hide exports is the matter of U.S. balance of payments. It seems inconceivable that the Administration has opened the flood gates to more meat imports while restricting hide exports. Both of these actions are detrimental to the beef cattle industry, but together they compound the very serious balance-of-payments problem.
Mr. President, it is, indeed, apparent that the Department of Commerce did not realistically assess the situation before they took action to limit the exportation of cattle hides. If they had, we would not be spending the time today to rectify the inequity of this action.
We have been fighting this battle and trying to protect those who are on this economic ladder against mistakes and misjudgment in inflationary tendencies that take place all the way down the line until it reaches the consumer.
Invariably, we still fail to convince the consumer when the cattleman has a good case in point. The cattleman receives the prices now that he was receiving in 1952. Yet, he is asked to live in a really inflated world in which it costs a great deal more to live.
There was an attempt made to restrict the export of meat products. This socked the meat producer of this country where it hurts. We now have a proposal to bar the exports of cattle hides.
Once more they are delivering the body blow to the very group that is the least at fault in this economic chain of events.
My petition is that we point the finger at some of the economic factors that are to blame.
Whatever else, the cattlemen of this country, the producers of agricultural products of the country have not been the ones who have been adding to the prices of the products or skimming off the top, whatever it may be.
I would hope that the Senate supports the amendment of the distinguished Senator from Nebraska.
Mr. CURTIS. Mr. President, I yield 2 minutes to the Senator from Minnesota.
The PRESIDING OFFICER. The Senator from Minnesota is recognized for 2 minutes.
Mr. MONDALE. Mr. President, yesterday I spoke briefly in favor of the amendment offered by the Senator from Nebraska. In my remarks I made reference to the fact that the last time we imposed restrictions on the import of cattle hides, the price of the hides to farmers and hide producers dropped disastrously. At the same time I noted that the prices of American shoes went up. This shows that export quotas on hides, while sure to hurt the producers, will not necessarily help our consumers.
There is not a close relationship between the cost of the hides and the price that the consumer is paying for shoes, because the cost of the hides is a very small proportion of the cost of the shoes. Something like 3 or 4 percent at the most
Since yesterday, Mr. President, I have had a chance to check the 1966 records. The Bureau of Labor Statistics indices are very clear on the point I made. Quotas were imposed in March 1966 and were in force until October of that year. Largely as a result of quotas, hide prices tumbled 46 percent from May 1966 to May 1967. During that same 1-year period, however, as I said yesterday, men's and boys' shoe prices showed an increase of 1 percent.
So, if it is thought that forcing down hide prices to farmers with the export quotas is going to have a beneficial effect on the American consumer, the 1966 case shows that it probably will do no such thing.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. CURTIS. Mr. President, I yield the Senator 1 additional minute.
The PRESIDING OFFICER. The Senator from Minnesota is recognized for 1 additional minute.
Mr. MONDALE. Mr. President, the fact is that cattle hides have very little to do with shoe prices because they are such a small proportion of the cost. They have practically nothing to do with corresponding shoe prices. The only thing quotas will do is deliver a disastrous reduction in farm income at the very time when the American farmer most needs an income boost.
Mr. President, I am hopeful that the amendment, which is a very modest one, which has been offered by the Senator from Nebraska, will be agreed to.
Mr. CURTIS. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator has 5 minutes remaining.
Mr. CURTIS. How much time do the opponents have remaining?
The PRESIDING OFFICER. 12 minutes.
Mr. CURTIS. Mr. President, I yield 3 minutes to the distinguished Senator from Wyoming.
The PRESIDING. OFFICER. The Senator from Wyoming is recognized.
Mr. HANSEN. Mr. President, I think it is important that we get a few facts straight. I have supported the distinguished Senator from New Hampshire on every bill that I recall he has introduced to protect American industry. I have been pretty consistent in that respect. But I think we should know and understand it is one thing to talk about protecting American industry and American jobs, which I favor, and it is another thing to talk about protecting the consumers, by opposing this amendment.
Mr. President, if we are interested in cheap shoes, send all the hides abroad because the lower wages paid by the Japanese, or other foreign countries will insure you can buy cheaper shoes in America if they are made abroad. Let us not get into any charade around here and say that we are concerned about the consumer by saying we want a ban on the export of American cattle hides. It does not stand up.
It is important that we do something to see that American job holders all prosper because they undergird this great economy of ours and make it possible for all of us to live better. That is what I want to do and it should be what the Senate wants to do, and if I may predict, it is what the Senate will do.
The reason it is important not to let this bill pass without the Curtis amendment attached to it is that we are concerned primarily in this country with two products that come from the ranges, the farms, and ranches of America engaged in the production of cattle. No. 1 is meat and No. 2 is leather. If we want to concern ourselves with both of these major continuing interests what we must do now is to see that we help support the reasonable price of meat by assuring that the price paid for hides will be as much as the market will bear in order to help make it possible for the price of meat to be as low as the market itself will permit it to be.
In the long run the best interests of all consumers will be served by all actions which encourage the production of adequate supplies of beef in the United States. A profitable operation gives this incentive. The Curtis amendment helps assure that the impact of demand will contribute to the best interests of those who wear the shoes and eat the meat – all Americans.
It is on this point I think it makes sense that the very realistic amendment proposed by the Senator from Nebraska carry in order that the price of hides will support the continued production of meat and beef so that Americans tomorrow and next year can be assured there will be adequate supplies, not only of leather but of meat, reasonably priced at the same time. That is what we are talking about, and it is what my colleague from Wyoming was talking about when he said we have been trying for a long time to help out an industry that is important.
I hope this amendment is agreed to.
Mr. McINTYRE. Mr. President, will the Senator yield to me for 2 minutes?
Mr. MONDALE. I yield 2 minutes to the Senator from New Hampshire.
The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
Mr. McINTYRE. Mr. President, with the passage of the Equalization and Stabilization Act domestic sales of hides were under controls; the export of hides for sale abroad were not under control. The world situation with respect to the demand for hides was made extremely critical in the past year by the embargo by Argentina, a country that is one of the great suppliers of hides, prohibiting the export of hides from Argentina. In this situation the world price of hides has soared.
The price was very appetizing to our friends from cattle-producing areas and they continued to sell them at high prices.
In the Economic and Stabilization Act, I believe that the manager of the bill voted with me to insert into the Stabilization Act the words "domestic shortages." This would be a trigger under which the Secretary of Commerce could act to prevent the sale or exportation uncontrolled. Am I correct?
Mr. MONDALE. Mr. President, I yield myself 1 minute to respond to the Senator.
The Senator from New Hampshire will remember that this very issue came up in the Committee on Banking, Housing, and Urban Affairs. At the time we were dealing with the President's Economic Stabilization Act. I vigorously opposed an amendment which was offered, which was designed to impose restrictions on the export of cattle hides. My point of view was sustained in the Committee on Banking, Housing, and Urban Affairs.
Mr. MCINTYRE. Does the Senator not recall that he agreed to provide in those situations where the Secretary of Commerce could act, where he could figure into action, the words "domestic shortages"?
Mr. MONDALE. I do not remember that.
Mr. McINTYRE. It is in the bill.
Mr. MONDALE. I recall the issue on cattle hides.
Mr. McINTYRE. It is in the bill. That is what occurred. After long and laborious efforts the Secretary of Commerce under this administration acted, and this amendment this evening by the Senator from Nebraska seeks to void and nullify the action of the Secretary of Commerce in bringing some measure of relief to the tanners, shoe manufacturers, and I say to the consumers of America.
Mr. MONDALE. Mr. President, I think the record will show that the Commerce Department acted under the terms of the Export Administration Act and not under economic control legislation. I think there is grave doubt they have legal authority to do as they did because the specific language of the Export Administration Act under which they have acted provides there must be very substantial evidence of serious inflation resulting from the failure to impose restrictions on export of cattle hides before action may be taken. I do not think there is evidence to justify that finding.
Mr. McINTYRE. It is my understanding that on some hides, and I am not an expert on hides, the prices have increased 100 to 200 percent. Does the Senator deny that? Does the Senator feel this is untrue?
Mr. CURTIS. I would like to answer that question. The price of hides is down to 14 cents. As a result, as was pointed out by the distinguished Senator from Oklahoma (Mr. BELLMON) many dead cattle were not even skinned, because it was not worth it. They could not get anybody to come out and pick them up. The fact it is doubled does not mean anything. In a pair of shoes only 5 cents is related to cattle hides.
This is clearly intended to be an imposition on agriculture and to beat down their prices because you are faced with higher labor costs and other costs than are foreign competitors. That is an unfair restriction.
Mr. McINTYRE. I understand the Senator stated the price of hides in the last year has risen 200 percent.
Mr. CURTIS. Not 200 percent; it has gone up about 100 percent, but it is still far below parity.
I would like to correct the RECORD. There is no shortage of hides. We have been exporting hides for 15 years. This is the greatest meat consuming country in the world, and you cannot get meat without producing some hides. Last week the second largest slaughterer did not sell a single hide.
Mr. MONDALE. Mr. President, I yield 1 minute to the Senator from Minnesota.
Mr. HUMPHREY. Mr. President, I rise to cite what I remember and recall as an experience in the previous administration. My good friend, Secretary Freeman, imposed quotas on hides; export controls. What happened? The price of hides went down. What else happened? The price of men's and boys' shoes, which use a lot of leather, practically stayed the same. Then, what happened? It was not very good for the farmer, it was not very good for the consumers; it did not help our export business; and it did not help domestic sales. It just does not work. When reference is made to women's shoes, there is little leather in them; most of them are a fabricated, synthetic product, and the price of those shoes is not affected by hides any more than cereals are affected by the price of wheat.
Mr. McGEE. Mr. President, on July 15, the U.S. Department of Commerce announced it would take action which would limit the exportation of cattle hides to last year's level.
The reason given for this action is the recent increase in the prices of cattle hides over their 1953-70 composite average. The Commerce Department asserts it is taking this action in order to check the "inflationary" impact these price rises are allegedly having on the domestic shoe and other leather industries.
However, cattle producers and hide sellers are opposed to this arbitrary action which they fear will adversely affect the prices they receive for hides and live cattle.
As a result, I have introduced amendment No. 1373 to the Export Administration Act (S. 3726) which would prohibit the Secretary of Commerce from limiting the exportation of cattle hides from this country. In addition, the order which accompanied the July 15 announcement by the Commerce Department would cease to be effective under the Export Administration Act renewal – the legislation which is presently before this body.
The reasons for the introduction of this amendment are many. The benefits to farmers and consumers of higher prices for hides on the world market far outweigh the minimal benefits to anyone else. Farmers and ranchers in this country get the direct benefits of higher prices for hides; while housewives are the indirect beneficiaries, since they avoid paying higher prices for beef when hides and other byproducts can be sold for good prices.
It was not so long ago that, in my own State of Wyoming, a rancher was lucky if he could get $2 for a big steer hide let alone find a hide buyer.
It seems that most of the shoes being produced in this country were being made out of ersatz leather and paper.
Then, quite unexpectedly, the American cattle producer discovered there was a demand for his cattle hides. Foreign shoe manufacturers began bidding up the prices on American cattle hides, because they could be obtained at such a bargain. An overseas market developed. As a consequence, according to official figures, last year alone saw more than 15.5 million cattle hides exported from this country, which brought the American livestock man a bonus of $125.8 million.
According to statistics compiled by the National Farmers Union, some 20 to 25 pairs of shoes can be made from one hide. The value of green hide in one pair of shoes is only $1. If the price of a hide should drop a quarter, then the price of leather in a pair of shoes should go down about 25 cents. Yet, not many of us expect that the retail price of $15 for a pair of shoes would be shaved to $14.75, because of lower hide prices. This makes the argument by the Secretary of Commerce, that cattle hide prices are having an inflationary impact on the domestic shoe and other leather industries, specious at best.
In his testimony to the Senate Committee on Agriculture and Forestry on the question of the Commerce Department order, William N. Letson, General Counsel for the Department stated:
The question of whether and how to introduce controls proved to be one of the most difficult questions which the department has faced in a long time. This was particularly so, since we all strongly believe in free and open markets. However, facing the facts – the seriously inflated prices, the domestic shortage of hides. and the abnormal foreign demand – and bearing the responsibility which Congress placed in our hands under the Export Administration Act, we concluded that we should act.
However, American Meat Institute feels that proper interpretation of the current hide situation is this:
First, the June 1972, hide exports were released last Friday. These figures showed that 1,317,000 pieces were exported compared to 1,235,000 exported in June of 1971. Hide exports for the first 6 months of 1972 were 8,073,000 pieces as compared to 7,848,000 pieces for the first 6 months of 1971. This means the 6-month exports for 1972 are only 2 percent greater than for the first 6 months of 1971. This hardly represents an abnormal foreign demand causing an excessive drain on a scarce raw material – hides – which is one reason the Commerce Department gave to back their July 15 action.
Second, through May of this year, figures show that shoe production is down 1½ percent this year as compared to last year. Yet the Commerce Department projected an increase in domestic shoe production requiring 638,000 more hides. Some of the testimony delivered to the
Agriculture and Forestry Committee last week by the tanners indicated they expect leather shoe production to be down this year, not up.
Third, industry analysts now are expecting commercial cattle slaughter for July through December of this year to total about 19 million head, which is 900,000 more than last year. This forecast is supported by the USDA estimate of 1,566,000 more cattle on feed this July 1 than last year. Thus, the slaughter estimate used by the Department of Commerce appears to be very much on the conservative side.
Fourth, the calculated shortage presented by the Commerce Department in support of its export program included a figure of 1,002,000 hides needed to replace inventories. However, there is no such thing as a minimum inventory, which has been violated as the Commerce Department officials claimed.
Fifth, hence, instead of an imbalance of 1,521,000 hides to be rectified by controls, we see the possibility of a surplus developing that could wreak havoc with the hide market and seriously depress cattle prices if the controls are not discontinued. I believe this to be a key issue, and it could very well be what the Commerce Department had in mind when it issued the order. This is certainly in line with other administration action which resulted in lifting the quotas on the importation of foreign meat and the urging of beef producers in other countries to flood the American market with foreign beef.
It is apparent from these discrepancies between the Department of Commerce figures and estimates and those of the Department of Agriculture that perhaps someone is purposely giving us an inaccurate picture of the cattle hide situation in this country. I hardly suspect the Department of Agriculture experts are the ones who are off the mark in their projections.
In conclusion, Mr. President, it is inconceivable to me that the Department of Agriculture would begin regulating a raw product such as cattle hides – a product which was virtually worthless just a few years ago – at a time when the livestock industry is just beginning to regain some signs of economic stability. It is also inconceivable to me that at a time when this Nation faces serious balance-of-payments problems that the Commerce Department would limit exports of a product which can only result in strengthening our balance-of-trade problems.
In light of these facts, I urge my colleagues to support my amendment to the Export Administration Act.
Mr. ALLOTT. Mr. President, will the Senator yield me 1 minute?
Mr. MONDALE. I am glad to yield 1 minute to the Senator from Colorado.
Mr. ALLOTT. Mr. President, I want to bring out one point that I think has not been emphasized here. This does not hurt just our cattle raisers and our cattle feeders. It also hurts our processors.
I have a letter in my files in which a man points out to me and gives the specific economics of where the actual profit is taken at his packing plant in Colorado Springs. He points out that it comes not from selling the meat – and he sells mainly to one of the retail grocers – but his profit comes out of the sale of hides, liver, and the other byproducts of the cow.
I think it is fair to say that, with respect to the amount of leather used in shoes, we cannot leave the hides sitting around this country with no place to sell them when we have a market for them abroad. We have done this to the American farmer for a long time, and it is about time that we stop.
Mr. TOWER. Mr. President, I support the amendment of the Senator from Nebraska. I do not believe that the recently imposed controls on cattle hide exports will be of any significant assistance to the consumer of leather products, and yet it will serve to interfere with our trade relations, with our international earnings, and with our farm earnings.
We are fortunate in this country to have a very active cattle hide export industry in this country. They have managed to open markets for our hides around the world, hides which we simply could not consume totally at home. Hide is not a great cost factor to the shoe production process, so that even restricting all of the U.S. hides to the domestic market would not make shoes so much of a bargain that shoe purchases among lower income consumers would be materially increased. We need this export market in order to make the best economic use of this cattle byproduct, and I cannot see any economic justification for closing off normal international supply-demand forces in this market.
Our farmers and ranchers also receive a portion of their already too low income from the sale of cattle hides. These are presently worth perhaps $16 to $17 per hide. If cattle hide prices have been moving upward due to increased domestic and international demand, who is to say that the farmer does not deserve to receive some of this financial benefit of being in the right business at the right time? Why limit the further potential of real demand forces to place an economically justified price on this particular cattle byproduct, particularly when there is only a minor effect on consumer prices?
I urge my colleagues to vote aye on this important amendment.
Mr. PEARSON. Mr. President, once again an attempt is being made to restrict the export of cattle hides from this country. We went through this exercise for 8 months in 1966 and the Congress finally had to legislate an end to the controls. Today, the Senator from Nebraska (Mr. CURTIS) offers an amendment to S. 3726 to prevent the introduction of controls on the export of hides. I am a cosponsor of that amendment and urge its acceptance.
Mr. President, neither the theory behind this attempt to halt excessive price rises in leather goods nor the method the administration proposes to use in regulating the exhort of hides are sound. I shall address my remarks to both theory and method.
Theoretically, the proposed controls are to be imposed, because cost increases in the shoe industry are so excessive that the economic damage to cattle raisers, the damage to our balance of trade and the high administrative cost of the complex controls are worth the price. I submit that this is not the case.
Price increases in the shoe industry have not been excessive. The American Meat Institute points out that the increase in the price of footwear has only matched the general consumer's price index. This represents an increase of 3 percent in the last year. And it must be pointed out that the price of leather contributes to only 5 percent of the cost of shoes.
Second, shoe industry demands for leather have not increased. Instead, this year's shoe production is down 1.5 percent. Finally, according to USDA estimates, hide production is increasing in this country. Therefore, with falling demand, rising hide prices may well be checked by the forces of increasing domestic supply and reduced demand.
Putting aside all of the arguments concerning the supply-and-demand situation, the method of controlling the export of hides is incredibly complex and costly to administer. It could well lead to a black market in these so-called export tickets.
It would seem clear, Mr. President, that this well-intended effort to hold down the cost of footwear misses its mark. The facts of the case simply do not bear out the position of those who favor controlling exports of cattle hides. I urge the Senate to adopt the amendment of the distinguished Senator from Nebraska (Mr. CURTIS) and myself.
Mr. THURMOND. Mr. President, we are now considering amendment No. 1371 to S. 3726, which would prohibit the Department of Commerce from setting export controls on agricultural commodities including fats and oils or animal hides or skins, without the approval of the Secretary of Agriculture.
The Department of Commerce has placed export controls on hides under authority granted by the Export Administration Act of 1969, which says exports may be controlled to prevent the excessive drain of raw materials or to reduce the serious inflationary impact of abnormal foreign demand. There is no evidence that exporting hides is having either effect.
In reality, Mr. President, hide exports have helped the economy of the United States. The purchase of hides by foreign nations has added favorably to our balance of trade. The foreign demand for hides has provided an additional market for the financially unstable livestock industry.
Demands for export controls have come from shoe manufacturers who want to reduce hide prices by limiting foreign sales and flooding the domestic market. They say that hides are scarce on the domestic markets and are so expensive that the price of shoes will have to be raised. Yet, testimony before the Committee on Agriculture and Forestry disputed these claims. Hide dealers said they had no shortage of hides and some even testified of surpluses which were difficult to sell.
Testimony also revealed that the amount of leather in an average pair of shoes, costs about 80 cents. This figure is so insignificant it hardly figures in the cost of one pair of shoes. If the price of hides were cut so drastically that the amount of leather in a pair of shoes costs only 10 cents, there would still be no savings to pass on to consumers. The only group which benefits from export controls on hides are shoe manufacturers who save a few pennies on each pair of shoes.
Mr. President, I urge my colleagues to support this amendment, and give agriculture a representative voice before export controls are placed on their products.
Mr. KENNEDY. Mr. President, I oppose the pending amendment because I believe the President should have broad authority to deal with specific international economic crises, free of restrictions designed to benefit special interest groups in particular cases.
The present amendment is a case in point. During the past several months, many American shoe and leather companies have been crippled by a serious shortage of hide supplies. Domestic manufacturers, especially those in Massachusetts and other New England States, have faced a dwindling hide supply and rapidly increasing prices. As a result, American consumers in all parts of the country have been confronted with spiraling prices on shoes and leather products.
In large part, the current crisis is the result of unusual international economic circumstances. A drastic cutback in exports of hides from Argentina resulted in substantial increases in the cost of hides on the world market and a severe cutback in the supply of hides for domestic manufacturers in the United States, as many U.S. hide producers turned to international markets to reap the windfall benefits of the soaring world prices. Shoe and leather industries in New England – already facing severe cutbacks in production, higher prices for other raw materials, and intense foreign competition – suddenly found themselves confronting yet another crisis because of the difficulty in obtaining hide supplies at reasonable prices.
Earlier this month, in a move that was widely approved by many groups and concerned citizens, the administration acted to alleviate the heavy burden of the crisis by imposing specific controls on hide exports, under the authority of the Export Control Act. I supported that action as a necessary step under the circumstances, and I oppose the present amendment as an unfortunate attempt to deny to the administration the effective remedy it has already invoked.
The facts of the current situation are as clear as they are distressing. In my own State of Massachusetts, the shoe industry continues to decline as a result of increased imports of foreign-made shoes. In 1967, we had 189 shoe factories in the Commonwealth. Today we have only 122. The raw statistic that 67 shoe factories have closed over the past 5 years alone is dramatic evidence in itself of the plight of the shoe industry in New England – a shocking 35-percent decline in 5 years. But it does not even begin to indicate the hardship and economic dislocation suffered by the 11,500 workers in Massachusetts who lost their jobs when these factories shut their gates.
In 1967, six shoe factories closed in Massachusetts; 15 in 1968, 15 in 1969, 16 in 1970, and 14 in 1971. The slide is continuing today. This year, the Hammond Shoe Co. in Worcester was forced out of business, and 200 more workers lost their jobs. In 1969, when the B. F. Goodrich Co. closed its doors in Watertown, Mass., more than 3,000 workers were left without jobs at a single stroke.
We cannot measure in these figures the human misery for the thousands of shoe workers and their families who have been affected by these closings – many of them are elderly citizens, who have spent long and productive lives in the shoe factories, only to lose their jobs at a time when they can least afford it. We cannot measure the number of additional shoe companies which will be forced to close if vigorous action is not taken to resolve this latest crisis for the industry – the crisis caused by the shortage of hides.
In recent years, the shoe industry has begun to make effective steps toward progress and modernization. But we cannot look forward to the revitalization of this threatened industry in Massachusetts as long as shoe and leather manufacturers continue to be exposed to the sort of serious problem posed by the shortage of raw materials like hides.
The situation in the leather industries is a critical one for domestic manufacturers and consumers alike. The administration has chosen export controls as the remedy for the crisis, and it came at a time none too soon. Indeed, estimates ranged from $1 to $4 on the increased price for a pair of shoes if action had not been taken immediately to assure an adequate domestic hide supply. Undoubtedly, many additional plants would have been forced to close, and many additional workers would have lost their jobs.
In closing, let me say that I am pleased to have been able to work with representatives of industry and Government officials in an effort to find a fair solution to the present situation.
On March 9, I met with representatives of the Tanners' Council of America to discuss the hide crisis. Following that meeting, I contacted a number of other members of the New England congressional delegation, asking them to join with me in urging the administration to take immediate steps to aid our stricken industry in facing this new threat. Subsequently, on March 15, we sent a joint letter to the President, urging him to take appropriate action, including the possibility of export controls.
Then, in a letter of June 30, I expressed my grave concern to Under Secretary of Commerce James T. Lynn, emphasizing the need for immediate remedial action by the Department of Commerce.
Finally, Mr. President, on July 18, the administration recognized the need and acted effectively to meet it. The pending amendment would jeopardize all the progress we have made, and I urge that it be defeated.
Mr. President, I ask unanimous consent that the text of the letters I have mentioned may be printed in the RECORD.
There being no objection, the letters were ordered to be printed in the RECORD, as follows:
MARCH 16, 1972.
The PRESIDENT,
The White House,
Washington, D.C.
DEAR Mr. PRESIDENT: As you know, recent events in Argentina have resulted in a catastrophic increase in the price of cattle hides. In the first eleven months of 1971. Argentine hides exports declined by more than three and one-half million. As a result, the purchasing countries have almost uniformly turned to the U.S. as a source for cattle hides. Exports of hides from the U.S. in the last several months have left the American leather and shoe industries with less than 50% of the supply needed. Hide prices have increased 80% since the wage-price freeze was imposed, affecting not only American, but Western European leather industries as well. We join together to request that your attention be given to this urgent situation and ask that the administration take immediate steps at the highest level to avoid further economic chaos.
Direct action by the Administration is needed to stabilize the world market in hide prices, to reduce the drastic inflationary prices in shoes for the American consumer, and to prevent the already crippled shoe industry from further devastation due to a lack of supply.
Price stabilization is one of the major goals of Phase II economic policy, and we believe that the problem of soaring prices in the leather and shoe industries deserve immediate attention. If prompt action is not taken for these industries throughout the world, we will have dealt the final blow to our own shoe manufacturers and tanning companies. During this period of hide supply shortage, we urge your action to guarantee to the American consumer that he will have the shoes and leather products he needs at a price he can afford.
We have joined together to direct your attention to this crisis. We urge the Administration to explore all possibilities of action, including use of the Export Administration Act of 1969 and other remedial trade measures available to the Government.
Sincerely,
Edward M. Kennedy, Edward W. Brooke, Margaret Chase Smith, Edmund S. Muskie, Thomas J. McIntyre, Abraham Ribicoff, John O. Pastore, Clairborne Pell.
Robert F. Drinan, Harold D. Donohue, F. Bradford Morse, Michael J. Barrington, Thomas P. O'Neill, Jr., Louise Day Hicks, Margaret M. Heckler, James A. Burke.
Hastings Keith, Silvio O. Conte, Edward P. Boland, Peter N. Kyros, William D. Hathaway. John S. Monagan, Fernand J. St Germain, Robert O. Tiernan.
JUNE 30, 1972.
Hon. JAMES T. LYNN,
Under Secretary of Commerce,
Department of Commerce,
Washington, D.C.
DEAR Mr. LYNN: I am writing to you regarding the urgent situation in the shoe and leather industries in my state as a result of the shortage of hides. As you know, I asked the members of the New England delegation to join me in a request to the President for immediate action to avoid further economic chaos in these threatened industries. Our response indicated that the Department of Commerce was analyzing conditions to determine whether export controls were warranted.
During your discussion with Congressional representatives on April 17, you indicated that the Department of Commerce was conducting a field investigation to determine the cause of the spiraling costs of cattle hides, since current information did not suggest an increase in exports was the cause of the shortage. Since that time, the shoe and leather companies have continued to experience a hide shortage and a crippling increase in hide costs. I am told that two large tanneries in Massachusetts have announced they will close if action is not taken immediately.
Because this situation in the shoe industry is crucial, I am asking again that the Department of Commerce take immediate action to assist these companies. I would appreciate any information which the field investigating team has gathered to date which suggests the cause of the hide shortage, and your suggestions for remedial action. I feel that the shoe and leather industries, as well as the American consumer cannot tolerate any further delay.
Thank you for your attention to this.
Sincerely,
EDWARD M. KENNEDY.
SENATOR RANDOLPH SUPPORTS CONTROLS ON EXPORT OF CATTLE HIDES
Mr. RANDOLPH. Mr. President, I am in opposition to the pending amendment to limit the jurisdiction of the Secretary of Commerce to impose controls on the export of cattle hides. As Senators know, this amendment is offered to counteract the action announced on July 15 by the Secretary of Commerce. Having watched the cattle hide situation closely, I believe that the Secretary was fully justified by the facts which his Department so carefully and conscientiously gathered over a period of 3 months. Without doubt, the controls imposed on the exports of cattle hides were required by the dire circumstances which confronted domestic users, including the tanning industry. The manner in which this authority was exercised by the Secretary was aimed at avoiding the kind of situation which arose in 1966 when export controls were last imposed.
Rather than being criticized, it is my belief that Secretary Peterson deserves to be commended for his diligence in trying, to the best of his ability, to protect the interest of cattle hide producers and the consumer, while at the same time meeting his responsibilities under the short supply provisions of the Export Administration Act.
I think it is important to review the facts which confronted the Secretary: Hide prices had reached record high with the composite price running in the 29-cent range – more than double the historic average of 14 cents per pound. To be sure, there is nothing sacrosanct about 14 cents. We must bear in mind, however, that the price has gone up more than 100 percent in less than a year, a rise which surely can be labeled inflationary.
The Commerce Department projects demand for an additional 638,000 hides for current use for the period March through December 1972 over the same period last year. At the same time that cattle hide re-exports are expected to increase by 576,000 hides over exports for the comparable period in 1971.
Argentina's and Brazil's exports amounted to 26.2 percent of total world exports in 1969, 20.7 percent in 1970, and an estimated 10.2 percent in 1971. Now these sources have been terminated and it is my understanding that there is little prospect for change in the situation.
Between March 1971 and March 1972, domestic cattle hide and leather inventories have decreased 1,002,000 hide equivalents.
Cattle slaughter is projected by Department of Agriculture to yield 695,000 additional hides during March through December 1972 over comparable period in 1971. It is expected that in 1973 cattle slaughter in the United States will increase about 1,300,000 over 1972.
Estimated production increases will not cover projected demand for hides for the period March-December 1972. Demand is expected to exceed supply – and I emphasize this point – by 1,521,000.
It is my belief that these facts of record high prices; increased domestic demand for cattle hides, low levels of cattle hide and leather inventories; increased exports of hides over the past few years, and estimated record levels in the remainder of this year; and hide demand in excess of supplies meet the statutory criteria for short supply export controls. Without export controls, the result would be continued and increased inflationary pressures on domestic users and consumers.
Senators have referred to the 1966 export control program for cattle hides, which had several unfortunate results. Export quotas were announced that were far below previous years' levels: 1,800,000 hides below the comparable 7-month period for 1965. A two-price system developed in world markets and the benefits of the higher foreign prices accrued to foreigners and exporters.
In addition, the reduced export quotas greatly distorted foreign markets. The situation regarding this new export control program is substantially different.
Quotas for the remainder of 1972 are set at 1971 levels for comparable period; and 1971 levels were at record highs. By establishing such a level, disruption of foreign markets will be minimized. Further, the export ticket system will assure that benefits of higher foreign hide prices will go to the American consumers and cattle producers rather than foreign purchasers and exporters.
The action taken by the Secretary benefits American workers and American industry by insuring a stable supply of hides for the tanning domestic shoe industries. It will protect against further sharp increases in the cost of shoes to the American consumer, and because of the ticket system used to administer these export controls, the producer of hides will share in any difference between world and domestic price markets. The short supply provisions of the Export Control Act were designed to meet circumstances such as prevailed in the cattle hide situation over these past few months, and it would be unwise for the Congress to exempt from these controls one particular segment of our economy.
Mr. President, I think Senators should be aware that the Secretary's decision to limit the export of hides has impact on many communities throughout our country where the major source of employment is a leather or tanning operation. Very frankly, it was this aspect of the cattle hide question that brought the complex issues into focus for me.
In West Virginia, we have five tanning plants or firms which depend on a continuing and stable supply of cattle hides. For one of our communities, Parsons in Tucker County, the Parsons Tanning Co., is the largest employer in the area.. Approximately one-hundred and fifty persons are employed in the tanning plant, with a total payroll of nearly $70,000 per month.
Recently, this county lost its most important source of employment with the closing of a woolen mill and the loss of over 300 jobs. Now there are some areas where the loss of 300 or 400 or 500 jobs might have little impact on the economy. In such areas, those persons who are out of work might be quickly absorbed into the existing labor market – although I am not aware of many parts of our Nation which can take the loss of this large number of jobs. I know, however, with complete certainty that Parsons and Tucker County, W. Va., cannot sustain such a high loss of employment. Tucker County has a population of less than 7,500 people, while Parsons has approximately 1,500 residents. Without any real knowledge of the basic economy of this area, one can readily visualize the impact of losing 500 jobs – and that is just the situation which was existing in this area of West Virginia. Clearly, the continued maintenance of the tanning industry employment is critical to the economy of this community.
However, because of the skyrocketing cattle hide prices, the Parsons Tanning Co. announced its closing in May of this year.
This company requires approximately 20,000 hides per month for its full operation. As of last September, this company – as other firms – was paying slightly less than 13 cents per pound for hides, with the average hide costing $6.66. As Senators know, that price was driven to a high of nearly 30 cents per pound at the time of Secretary Peterson's decision to impose controls. The average cost of a hide was $18.58. For the Parsons Tanning Co., I am advised that the break-even point is in the range of 18 cents a pound. Thus, it is quite apparent that this company could not stay in operation without some indication of relief from spiraling prices and some action to provide a stable supply of hides.
Mr. President, over a period of several weeks my able colleague (Mr. ROBERT C. BYRD) and I worked with local officials, citizens, and representatives of the Parsons Tanning Co. in an effort to find some solution to this perplexing problem. And we did explore many avenues, from Government loans to possible reduction in the prices of tanning agents which are sold from Government stockpiles. None of these possibilities gave any hope for relief. We worked constantly with officials of the Department of Commerce. Senator BYRD and I very definitely arrived at the conclusion that only feasible and timely course of action which might
provide the opportunity for this company to remain in operation and continue to employ 150 persons was the imposition of export controls.
Once the imposition of export controls was announced, officials of the Parsons Tanning Co. very quickly made a decision to reopen this plant and to go to full operation as quickly as possible, possibly by the middle of August. The pending amendment could cause that decision to be reversed.
Mr. President, this is the story of Parsons, W. Va. It is a set of facts which must be told here in the Senate, before a vote is taken on the pending amendment. While there are many facets to the problems of cattle hide prices and supplies, I think that this information on this one company and community clearly indicates that Secretary Peterson took an action which will aid people and help to preserve jobs. And it was a reasonable and carefully drawn action to alleviate any adverse impact which might develop on another sector of our economy. It is my hope that the pending amendment will be defeated. I shall vote against it.
IN SUPPORT OF THE AMENDMENT
Mr. HANSEN. Mr. President, I support the efforts to rescind the restrictions placed on cattle hide exports on June 15, by the Secretary of Commerce.
I am opposed to the action taken by the Secretary under the Export Control Act to place a ceiling on the number of cattle hides which may be exported from the United States. I respect the Secretary for his diligence in meeting his responsibilities, and I would never suggest that he should do less. But after reviewing his action of July 25, 1972, I believe that the action taken is without justification and misses the mark.
The secretary stated:
Our main concern must be shoe prices for the American consumer and there was no relief in sight.
I do not share this view to the exclusion of other considerations. If low priced shoes were our only objective it could logically be argued that we should export all our cattle hides, buying relatively cheaper imports which reflect the great differential in wages paid American shoe employees and their foreign counterparts.
When the Secretary states that our main concern must be shoe prices for the American consumer,
I suggest that a prime concern of this administration and the American consumer has been meat prices for the American consumer and this major concern appears to have been conveniently overlooked in the Secretary's decision.
To insure that the total picture is reviewed and analyzed before decisions of this type are made, I have joined with the Senator from Nebraska (Mr. CURTIS) in sponsoring an amendment to the extension of the Export Administration Act of 1969 which would require the approval of the Secretary of Agriculture before any action is taken by the Secretary of Commerce to restrict the exportation of an agricultural commodity.
Hopefully, this requirement would prevent the recurrence of the situation we face today. Action has been taken to depress the price of cattle hides in this country. Cattle hides are an important byproduct of the meat packing industry. A depression in cattle hide values can result in a readjustment of margin by the meat packer by raising the prices on carcass beef and the American consumer paying more for the beef products consumed in his daily diet. Or the meat packer might pay less to the cattle producer resulting in loss to the cattle industry. This effectively means that the cattle producer and his employees are being required to take a loss in order to protect the profits of the shoe industry and its employees. The inequity of the situation is obvious.
Not only is the restrictive action on hide exports of concern because of its potential effect on meat prices to the American consumer and its impact on the cattle industry, but the Congress and the administration should be equally concerned that this administrative action will result in increasing the deficit which the United States is presently experiencing in its balance of trade.
Recently the import quotas on beef were rescinded. This action will result in a currency flow from the United States to pay for imported beef. Now we are being told that a ceiling will be placed on the export of cattle hides, an important byproduct, which will result in a decrease in the flow of currency to the United States in exchange for cattle hides. This situation makes little sense in light of the importance which is attached to the question of U.S. balance of payments.
In summary, these recent actions appear to have been taken without regard for overall strategy and total impact. I believe that the Curtis amendment to the extension of the Export Administration Act of 1969 would remedy this situation and hope that Senators will join with me in supporting this amendment.
I do not wish to be misunderstood. I, too, am concerned over shoe prices and jobs for American workers in the shoe industry. I have stated this position many times on the Senate floor. But the problem is caused by the high price of American labor versus the cheap cost of labor in foreign countries. This is the problem to which the Secretary of Commerce should address himself rather than taking action which can increase food costs to the American consumer, penalize one American industry to protect another, and increase the deficit in the American balance of payments.