Mr. BENITEZ. If that is not possible, what would be your recommendation as to the necessary period for readjustment after independence?

Mr. TIMMERBERG. Readjustment after independence?

Mr. BENITEZ. Yes, after independence. Assuming that before independence the export taxes would be removed.

Mr. TIMMERBERG. I think there is no probability at all of making readjustments if we are wiped out of exportation to the United States.

Mr. BENITEZ. But you are a manufacturer of high-grade cigars, I believe. What possibilities are there in that direction of sending high-grade cigars to the United States?

Mr. TIMMERBERG. Possibly very low possibilities of sending highgrade cigars to the United States. There is a table here that shows that it amounts to almost nothing. We send to the United States almost entirely two-for-five cigars.

Mr. BENITEZ. But could you not invade the high-class market? Mr. TIMMERBERG. Well, on account of advertising of national brands in the United States they are spending tremendous amounts for advertising, and we cannot do that. It is impossible for us to spend this amount. And in the States there are now only about ten or fifteen brands of cigars which have a big consumption.

Mr. BENITEZ. But when it comes to cost, you think you could compete in the high class?

Mr. TIMMERBERG. We could compete, but on account of people in the United States-they read the papers, the billboards, and every retailer has to carry their brands.

Chairman MACMURRAY. Are there other questions?

That concludes our hearing on the subject of tobacco.

(Here follow two briefs submitted by the Manila Tobacco Association.')

We could now go on with the group of hearings that have been scheduled for this morning, the group of embroidery manufacturers. I should say that the Philippine Button Corporation, which was scheduled for today, has waived appearance. Then, we will have the Rattan Products Manufacturing Company, the Philippine Textile Committee, representatives of the American leather tanners, and the Buntal Hat Weavers' Association. We would have time, perhaps, to make at least a beginning with the hearing of the group of embroidery manufacturers represented by Mr. S. Davis Winship.

1 See vol. III.

STATEMENT OF MR. S. DAVIS WINSHIP, REPRESENTING THE EASTERN ISLES IMPORT CORPORATION

Chairman MACMURRAY. What firm do you represent, Mr. Winship?

Mr. WINSHIP. The Eastern Isles Import Corporation. The brief tendered on behalf of the embroidery industry1 is a copy of the Waring-Dorfman report with a few minor changes and additions. We felt that it was a better statement than we could prepare. My attention has been called to two paragraphs which might be misleading to one not well acquainted with the trade.

Page 12, under the heading "Effect of Export Taxes". This might convey the impression that American labor produces hand embroideries, which is not so. A small amount of hand needlework is produced in the vicinity of New York City by Puerto Rican immigrants, and more along the Rio Grande by Mexicans who cross the line to work in the United States but who spend their earnings in Mexico. Page 13, "Embroidery Trade in the United States". The $20,000,000, annually, mentioned there, represents only embroidered goods made in the United States and Puerto Rico. The actual production of silk and cotton underwear and infants' wear must be ten times that amount. This means that the Philippines supplies less than 2 percent of the ladies' underwear and infants' wear demand in the United States.

In closing, I will say that the embroidery industry furnishes sparetime employment to many Filipinos, in many cases providing the only cash income of agriculturists. It does not compete seriously with American labor. It provides a highly desirable article of commerce at a very reasonable price. It is worthy of your utmost consideration.

I would be glad to answer questions if there are any.

Chairman MACMURRAY. Are there any questions for Mr. Winship? Mr. DORFMAN. If, in consequence of the export taxes on embroidery sent to the United States, the industry in the Islands were obliged to liquidate to a substantial degree-and I take it that you agree that that would be the case-would there be an embroidery industry or any other industry in the United States which would then consume the cotton cloth which is now consumed out here in the manufacture of embroideries which are sent back to the United States?

Mr. WINSHIP. I believe that there would be an increase in what is called "domestic production" of the machine-made product. That would take care of the greater part. There may be another industry.

1 See vol. III.

Mr. DORFMAN. Then, so far as the American manufacturers of cotton cloth of the varieties used out here are concerned, there would be no great loss in consequence of the industry being liquidated here? Mr. WINSHIP. I think not. I should like to have it understood that in answering questions I am speaking for myself only and not for the group of manufacturers who helped in making this brief.

Mr. DORFMAN. Then, you feel that American cotton-cloth exporters have no particular interest in whether or not the embroidery industry survives out here?

Mr. WINSHIP. They do not seem to.

Mr. DORFMAN. Do you feel that they actually have something at stake but that they do not know their own interest?

Mr. WINSHIP. Well, since the total Philippine production is such a small part of the total consumption of the garments of the type that we make, I do not believe that they have a real interest.

Mr. DORFMAN. Thank you.

Mr. WARING. Mr. Winship, I should like to ask whether or not, in your opinion, there would be any possibility of increasing the price at which Philippine embroideries are sold in the United States to take care of a substantial part of either the export taxes or the full duty.

Mr. WINSHIP. I can answer that by saying that we manufacture a complete line. That is to say, we manufacture low-priced misses' wear, infants' wear and underwear and high-priced misses' wear, infants' wear and underwear-being the only house in the country that manufactures a complete line. We have averaged about 17 percent of the total export for the last several years. I was in New York this summer and went very thoroughly into that question with the local house with which we deal. We have agreed to continue full manufacturing until the end of 1941, and in 1942 to close up business. That is our opinion of what the chances are of going ahead. In the discussion I suggested that we could probably handle the export tax up to about the third year, manufacturing at some profit, but that in the following year, of course, it will be with increasing risk and less chance of profit, and that we will incur loss in the succeeding years, so why prolong the agony?

Mr. WARING. I understand that the quality of work done here is considerably higher than any other type of handwork that is available in the American market, and I was wondering whether the quality of workmanship would permit a certain increase in the price.

Mr. WINSHIP. I do think it would be possible, up to the time of the full tariff, to manufacture a line of higher grade than the average line manufactured at the present time; but it will be a small quantity, and it will have to be handled by experts; that would be on the assumption that there were no further burdens placed on the industry

SENATE CHAMBER, LEGISLATIVE BUILDING,

MANILA, PHILIPPINE ISLANDS,

Thursday, September 17, 1937.

The hearing before the Joint Preparatory Committee on Philippine Affairs was resumed at 2:30 o'clock p.m., on Thursday, September 17, 1937.

Present:

The Honorable J. V. A. MACMURRAY, Chairman;

The Honorable JOSÉ YULO, Vice Chairman;

Mr. JOSEPH E. JACOBS, Vice Chairman;

Mr. CONRADO BENITEZ;

Mr. Louis DOMERATZKY;

Mr. BEN D. DORFMAN;

Mr. JOAQUIN M. ELIZADE;

Colonel DONALD C. MCDONALD;

The Honorable QUINTIN PAREDES;

Mr. CARL B. ROBBINS;

The Honorable José E. ROMERO;

The Honorable MANUEL L. ROXAS; and

Mr. FRANK A. WARING.

Chairman MACMURRAY. This afternoon's proceedings will begin with the testimony of Mr. Frank Hale, on behalf of the Philippine Rattan Manufacturing Company.

STATEMENT OF MR. FRANK HALE, REPRESENTING THE RATTAN PRODUCTS MANUFACTURING COMPANY

Mr. HALE. Mr. Chairman, Ladies and Gentlemen: In submitting my small brief1 to this honorable Commission, it was not my intention to appear here, but I was requested to do so by members of the Philippine-American Trade Association, merely to give an expression of the dependence of industries in the Philippine Islands on the privilege or the necessity of exporting products made by those factories or industries to the United States having a market greater

See vol. III.