And it is on that that the computation was made.

Senator KEFAUVER. Yes; and it was sufficient to make the computation, and the distinguished Senator does the committee an injustice. The calculations that were made were the manufacturing costs of production, having nothing to do with selling expense or profit.

In every case the calculations made by the staff of the subcommittee were above what turned out to be the actual cost of production.

In the case of making a tetracycline antibiotic tablet, the subcommittee calculated that the cost was about 3 cents a tablet.

It turned out that Bristol made the tablet actually in finished form, including its allocated share for research, overhead of their manufacturing plant, for 1.7 cents.

That was the material that came from Bristol.
The same is true in the case of corticosteroids.

The subcommittee overestimated the cost, and it turned out to be less than the subcommittee had actually estimated. Senator WILEY. Will the Senator yield?

Senator KEFAUVER. I am very happy to yield.

Senator WILEY. Judge Ervin, in my opinion, hit this issue right on the head.

He called it a congressional purpose.

(At this point in the proceedings, Senators Eastland and Johnston leave the hearing room.)

Senator WILEY. Now, in my opinion, we are not back in 1955. We are facing a situation where the world is entirely changed, and we might say, does it serve a congressional purpose if we damage the public interest.

We have something else involved here in this age of the "New Frontier," as the President calls it. I have just returned a little over a week ago from the northern part of my State where the iron mines are all shut down. I have just read the wires that have come in from these various companies in which they very decidedly make the point that foreign competition is a dangerous thing at this time.

Now, we do not have to close our eyes to what we can see around us anywhere, not only in steel and iron, but we have built the world up to become competitive with us. And the situation is that the public interest here is to me a very serious element.

In other words, if we go ahead and damage these great institutions that employ thousands and thousands of men, they have to close down, the impact upon our society, every segment of it, is something that we cannot measure. And that is why, instead of living back in the past ages of 1955 when the world had not been rejuvenated economically as it is now, we are living today in 1962, where we have got a competitive issue that is tremendous.

It is a public issue.

Congress will have to face it when it takes up this trade law. It will have to consider the question of protecting the industries of this country.

Now, if, as a matter of fact, as these wires contend, that foreign competition is a fact, and giving foreign nations, foreign businesses, the facts that they would get it if they were compelled to give them here would damage American industry, well, I feel that there should be no subpena issued.

(At this point in thep roceedings, Senators Eastland and Johnston enter the hearing room.)

Senator KEFAUVER. Mr. Chairman, I think Senator Ervin has it right, and if nobody else has any questions

The CHAIRMAN. Well, we have got to call on others.

Senator Keating?

Senator KEFAUVER. Well, let me respond to Senator Wiley's state

ment.

Mr. Patton did say that iron mines were closed down, men were laid off in many cities, that local steel business was being lost to foreign trade and to foreign competitors, and that business here was being lost to foreign competitors, and that our steel plants were only operating at 50 percent of capacity.

I am sure Mr. Patton would agree that this subcommittee had nothing to do with the plight that you have gotten yourself into. We have not asked for-your plight is not due to any cost data being asked.

Mr. PATTON. We hope you will not make it worse, Senator, by making us reveal confidential data. It is bad enough now.

Senator KEFAUVER. The trouble you have had, I think, Mr. Patton, is that since 1902 you have had an administered price industry in which you do not compete pricewise. If you ever start competing pricewise and get your rate of production up, as I shall bring out through questions, you will be able to not only keep your business, but you will be able to meet competition, and you would not have to lay off men.

You would not have to close up mines.

You would not have to be a sick industry.

But those are questions that I want to get to after a while.

Mr. PATTON. I must say, as head of the steel company which I am privileged to head, we are in the most intense competition of any industry that I have any knowledge of. If there ever was competition, it exists in the steel industry.

The CHAIRMAN. Senator Keating?

Senator KEATING. Mr. Patton, when did foreign competition become a major factor in the steel industry?

Mr. PATTON. It began to emerge in about 1955, late, or beginning in 1956, and it has gotten increasingly worse year by year.

As Senator Wiley indicated, as these new, modern plants were being completed, and as the years go by, it is going to get much more severe than it is even now, Senator.

Senator KEATING. Did I understand correctly at the last hearing that the steel industry was operating at about 50 percent capacity? Mr. PATTON. Somewhat. A little over 50 percent of capacity, generally; yes, sir. That varies from company to company, as you know. Senator KEATING. Has that figure been going down steadily since 1955 or 1956?

Mr. PATTON. It has varied from year to year, but may I say that since 1955, we had in 1955, 117 million tons of steel production in this country.

Never since that year have we begun to approach that.

And since 1957, the average has been more in the neighborhood of 100 million, so that, as I pointed out, we have been static in produc

tion more or less in this country, while the rest of the world is increasing enormously at the same time.

Senator KEATING. What has been the best year since 1955?

Mr. PATTON. I think it was one year we had 112 million tons. I think that was in 1956.

Senator KEATING. Do you have the figures since 1956 right at hand? Mr. PATTON. May I look just a minute?

I think maybe I do.

It was in 1956 we had 115 million.

In 1957 it dropped to 112 million.

And in 1958, which was a depression year, it dropped to 85 million. In 1959, it was 93 million.

In 1960, it was 99 million.
And in 1961 it was 98 million.
Senator WILEY. How much?
Mr. PATTON. 98 million.

Senator KEATING. And in 1962 do you have an estimate?

Mr. PATTON. Of about 98 million or less, so that we made no increase at all.

Senator KEATING. At the last hearing I inquired about unemployment at your Buffalo plant, and, if possible, with regard to the Bethlehem plant at Lackawanna.

Are you able to furnish those figures now?

Mr. PATTON. We are able to furnish you some figures that I think will serve to answer the question that you have in mind, sir. Senator KEATING. Would you do so?

Mr. PATTON. Yes, sir.

In the New England-New York market area served by the New York State steel plants, there was an increase in imports of steel mill products of 345,000 net tons in 1961 over 1955.

This is equivalent to full-time employment for more than 2,900 steelworkers for an entire year.

At current rates the payroll and employee benefits for these 2,900 steel workers would total over $23 million annually.

Now, for full employment figures, because of this and other causes, I have them, if you would like them, for the plants.

Senator KEATING. I would like the employment figures for the plants, yes.

And let me preface it by this:

I know there has been a drop, because I know the Buffalo situation. and I know it is severe, and that there have been a lot of steelworkers laid off.

Now, what is the major reason for that layoff?

Mr. PATTON. There are a number of reasons. One of the important reasons is the reason I just mentioned:

The 345,000-ton increase in the import of steel.

There may be some other factors such as business in this country itself may be a little slow.

And also there have been changes in equipment.

But one of the real important factors is the fact that 345,000 tons of steel that we used to sell in this area is now being sold in our markets by these foreign steel producers.

Senator KEATING. In percentage figures, can you give us any idea of what 345,000 tons means? How much of an increase in foreign

steel in the market of the northeastern United States does that represent?

Mr. PATTON. I would have to get those figures for you, sir, but it is an important item, as you can see.

Senator MCCLELLAN. Senator, will you yield for clarification? Senator KEATING. Yes.

Senator MCCLELLAN. This 345,000 tons, is that for the entire United States?

Mr. PATTON. No, sir.

This is the area served by the steel plants located in the State of New York. It is mainly New York State and the New England

area.

Senator MCCLELLAN. That is all I wanted to know. Go ahead.
I did not think you were talking about the entire United States.
Mr. PATTON. Oh, no.

It is much, much greater for the entire country, but Senator Keating was asking about the plants located in New York State.

Senator KEATING. This is what you might call, if you wanted to be uncharitable, a parochial interest.

Well, can you say whether it is closer to 5 or to 50 percent?

Mr. PATTON. I would be glad to get that for you, sir, but I do not have it. I can get it for you, and I will be glad to furnish it to you, but it is a very important element.

Senator KEATING. It is substantial.

Mr. PATTON. A very significant element.

Senator KEATING. I would like to have it specifically.

The CHAIRMAN. Senator McClellan said he desires the same figures for the entire United States.

Senator MCCLELLAN. I want to get the entire figures for the United States. If it cost 2,000 jobs in this particular area, that much increase that is just 1 year's increase, is that right?

Mr. PATTON. Yes. Senator McClellan, I have that in my statement, and I will be glad to repeat it right now.

Senator MCCLELLAN. If it is in the statement, it is all right.

Senator KEATING. It would be good to place those figures in the record at this point.

(Subsequently, the following material was received for insertion in the record:)

At the hearing on September 14, 1962, Senator Keating wished to know (at p. 36 of the printed hearings) the meaning of the increase of 345,000 tons in foreign imports in the New York-New England area between 1955 and 1961 referred to by Mr. Patton at page 51. The increase of 345,000 tons is an increase of 230 percent in that period because the foreign imports in the market referred to were 150,000 net tons in 1955 and by 1961 had risen to 459,000 net tons.

At the hearing on September 14 Senator McClellan stated (p. 52 of the printed hearings) that he would like figures for the entire United States similar to the figures Mr. Patton had supplied for the New York State-New England market area. The imports of steel mill products into the United States increased from 973,000 net tons in 1955 to 3,164,000 net tons in 1961, or an increase of 2,191,000 net tons, or 225 percent. This is equivalent to full-time employment for 18,500 steelworkers for a year. At current rates the payroll and employee benefits for the steelworkers would total over $145 million annually.

Senator MCCLELLAN. Put it in now and get it in perspective.

Senator JOHNSTON. Do you have it year by year?

Mr. PATTON. No, I do not, but if you will permit me, sir, I will tell you what I do have, and if you would like something else, I will be glad to get it in addition for you.

I stated, and I repeat, it has been estimated that if we had maintained our 1953-57 average participation in world export trade and prevented further import erosion, we would have shipped 6 million more tons than we actually shipped during 1961.

This means a loss of $1.2 billion in annual sales volume, a loss of 50,000 jobs and a loss of over $300 million in wages annually to American steel workers.

Senator MCCLELLAN. But that does not tell us

Senator KEATING. That is not the answer.

Senator MCCLELLAN. That does not tell us how much more steel was imported into the country last year.

Senator KEATING. That is the point.

Senator MCCLELLAN. You have got 345,000 tons increase in steel imports in a certain area.

Mr. PATTON. We can get you the import figure very easily, Senator. Senator MCCLELLAN. That is what we were asking for to get it all in at this point.

Senator KEATING. You do not have that.

Senator MCCLELLAN. You are talking about shipping steel; you are talking about exports in your 6 million tons? Mr. PATTON. Yes.

Senator MCCLELLAN. Let us get it all together.

Three hundred forty-five thousand tons in the northeast area? Now, let us get the same tonnage for the United States.

Senator SCOTT. If the Senator will yield

Mr. PATTON. May I call your attention to the chart on page 7 of my statement, Senator McClellan.

Senator MCCLELLAN. Very well.

Mr. PATTON. It shows that there has been an increase from 1954— I am looking at this-from about 700,000 tons up to about roughly 3,200,000 tons, the chart would indicate.

Senator MCCLELLAN. That is over a period of about 10 years. But you give 345,000 for a given area increase last year.

Senator KEATING. No; not last year.

Mr. PATTON. No, no. That is from 1955, sir.

Senator McCLELLAN. From 1955?

Mr. PATTON. Yes, sir.

Senator MCCLELLAN. Now, what is the increase for the same period. all over the United States?

Mr. PATTON. As I say, it goes, looking at the chart, from about 700,000 tons up to about 3,200,000 tons.

Senator MCCLELLAN. That will be 2.5 million tons increase?

Mr. PATTON. Yes, sir.

Senator MCCLELLAN. In the same period?

Mr. PATTON. Yes, sir.

Senator MCCLELLAN. Throughout the United States.

Senator KEATING. In other words, there has been more than a 100

percent increase?

Mr. PATTON. Oh, yes.