Some persons devote all or a large share of their time to the export market and are fully cognizant of the fact that their livelihood depends upon that market. But many persons devote some portion, however small, of their time to the productive stream which leaves our borders without any realization that they are contributing to the volume of foreign trade. It is, therefore, obvious that the number of persons engaged in producing exports cannot be counted as the popu lation of a State, the production of wheat, or the output of automobiles can be counted. Rather, the number must be estimated from the relationship of export and production statistics.

The procedure used in this estimate is designed to arrive at the full-time equivalent of the number of persons engaged in producing for export as if this number were a distinct group in the economic organization. While the total number of persons who devote a portion of their time to producing for the export market is an important figure for many purposes, the estimates presented here attempt to give the number of full-time jobs which would be required to produce and bring to market the commodities sold abroad under existing productive conditions. It should be fully recognized that there is a certain degree of artificiality in this concept. It does not mean that had there been no exports in 1935, say, that the exact number of persons estimated to have been engaged in producing for export in that year would have been added to the unemployed. Nor does it mean that such a number of persons engaged exclusively in producing for export could have produced the quantity of goods that were actually exported. In either case, there is no way of ascertaining whether the number of persons would have been larger or smaller. The estimating procedure takes the volume of production of every commodity exported as a basic fact and assumes that the productivity of labor is the same for the export trade as for the goods domestically consumed. It does not follow that, if exports were entirely cut off in any year or produced under different industrial and economic conditions, the productivity of labor or the average hours of employment would remain the same under the altered circumstances.

An attempt has been made to include in the estimates all of the labor directly engaged in producing and distributing the exported commodities through all stages of production. Thus, the figure for agriculture includes agricultural products exported in semi- or finished-manufactured form; the figure for manufactures includes the production of steel, glass, etc., used in automobiles as well as the automobiles themselves; the figure for transportation includes the domestic transportation of goods eventually exported as well as the loading at the seaboard and shipping (in United States vessels) on the high seas. Because of the limitations of the underlying data or the insufficiency of the information available upon which to make an allocation, several categories of employment which are directly engaged in export trade had to be omitted or only partially included. The major limitations in this regard are as follows: No employment in public utilities is included. In the field of finance, in which 890,000 persons were engaged in 1929, only those employed in the foreign departments of banks were included. No allocation was made for financing in the earlier stages of the production process. In the field of insurance only those engaged in handling marine insurance were included, while of the total persons engaged in distribution only those classified as exporters and export agents in the census of distribution were included.

It was felt that it was better to omit estimates where no reasonable basis for them existed rather than to include figures that could have been very far from accurate. This limitation should not obscure the fact that a sizable number of persons is involved which may easily amount to several hundred thousand. To this extent the total figures are underestimates. Other categories of employment such as government, professional service, construction, educational, and service trades were excluded as being too remote from the production of exports. Furthermore, there is a considerable volume of indirect employment created by the expenditures of those who directly receive their income from the export trade. None of this indirect employment has been included in the estimates.

While all sources of information have been used to make the estimates as accurate as possible, it should be understood that in many cases only scanty data are available so that the probable degree of error is not negligible. For this reason the estimates should be viewed as rough approximations. In addition, the method of estimation requires the use of rather broad assumptions, which are likely to be more correct on the average than for individual industries.

'It is probable, therefore, that the figure for total manufactures or total agriculture is more accurate than for any of the subdivisions by industries or crops. More accurate estimates cannot be made until better information on labor requirements for the various types of productive activity is available.

The results of the study may be summarized as follows: The total number of persons engaged in the production and servicing of goods for export declined from 3,198,000 in 1929 to 2,384,000 in 1933 as a result of the reduction in the volume of exports that attended the depression. In 1935 there was a further decline to 2,088,000 because of the smaller volume of agricultural exports, despite the fact that exports of many commodities were expanding. Preliminary data for 1937 indicate that the total in that year had risen to 2,400,000 even though the figure for agriculture was still 500,000 less than in 1929.

A comparison of the estimates of persons engaged in producing for export with total employment in the United States reveals that, in 1929, 6.6 percent of the total employed persons were engaged in producing for export. By 1933 this figure had fallen to 6 percent, and in 1935 to 4.7. In 1937 the figure rose to 5.1 percent.

There are, however, many categories of employment in the total United States employment figure for which no allocation to export trade has been made, such as construction, public utilities, service trades, government, education, professional services, and only small allocations from wholesale trade and finance. A comparison of the total employment in agriculture, manufactures, mining, and transportation with the estimates of export employment in those categories may, therefore, give a more accurate impression of the importance of export trade in our economy. The percentage of employment in this group of occupations devoted to export trade in 1929 was 12.4 percent, which declined to 11.1 percent in 1933 and to 8.9 percent in 1935. With the recovery of agriculture from the drought, a figure of 9.6 percent was reached in 1937.

A note on method

A brief description of the method used in making the estimates by broad industry groups is given below.

Manufactures.-Exports of manufactured goods were grouped according to the industry classification of the Census of Manufactures. Then the ratio of value of exports to total value for each industry was obtained and this ratio applied to total persons engaged in each industry. The figures thus obtained are underestimates because the values given in the census involve duplication due to the use of products of a given establishment as material for another in the same or a different industry. Exports are net values but census figures are gross values. In order to correct for this error, the employment in export figures were adjusted upward by industry groups on the basis of the estimated ratio of gross to net values computed by Tracey E. Thompson (American Economic Review, vol. XXII, No. 4, December 1932, pp. 660-668). The same result would be secured by reducing the gross values in the census to net values and then obtaining the percentage exported, but the procedure adopted involves less computation. These additional persons were included in the group figures shown in the table where the bulk of the duplication must be within the group. Otherwise they are listed under the title "Semimanufactures." The details of computation for an important manufacturing industry are shown on page 6 to illustrate the method used in making the estimates for persons engaged in the production and distribution of manufactures for export.

Agriculture.-Exports of manufactured agricultural products were converted to raw material equivalents on the basis of information supplied by various experts of the Department of Agriculture and were added to exports of raw products to obtain total agricultural exports by commodities. The ratios of exports to production were computed. In order to distribute the total persons working on farms among the various agricultural commodities, the production of each commodity was weighted by the man-hour requirement per unit from data supplied by the national research project. Ratios of production man-hours for each commodity to total production man-hours were computed and applied to total persons working on farms. Then the number of farm workers allocated to each commodity was multiplied by the percent of that commodity exported to obtain the number of persons producing for export. The illustration given for cotton on page 7 shows how the estimates were made for persons engaged in the production and distribution of agricultural commodities for export.

Mining. Total exports of the products of mines were computed by adding products exported in manufactured form to direct exports. The former were computed by taking a percentage of domestic consumption equal to the percentage of the value of manufactured goods exported. The figure for coal includes an allowance for the bituminous coal used in manufacturing and railroad transportation applicable to exports.

Transportation. The direct employment of longshoremen and merchant marine workers handling exports was computed on the basis of the ratio of tonnage of exports to tonnage of water-borne commerce comparable with the employment figures available. The employment in railroad freight, trucking, and inland water transportation handling goods which are eventually exported was computed by applying the percent of movable goods exported to the appropriate employment figures. Pipe-line workers were divided on the basis of the percent of petroleum (crude and refined) exported by volume.

The estimates published in the release of November 1 are given in the following table:

Estimate of number of persons engaged in the production and distribution of goods for export in 1929, 1933, 1935, and 1937

Details of estimate of number of persons engaged in the production of food and kindred products for export in 1929

Details of estimate of number of persons engaged in the production of cotton for

1 Sources of data are given in preliminary summary.

1,000 bales.
1,000 bales.

7,035

773 7,808

1,000 bales.

14, 825

Percent...

52.7

Hours.

240

1,000 bales.

1,000 hours 3, 558,000

Number.. 2, 263, 000

Number 1, 193, 000

Ratio of cotton production man-hours to total production man-hours (18.2 percent) was applied to per sons working on farms (12,428,707).

Mr. SAYRE. In that general connection, I might add here, you might be interested in a break-down which was made several years ago with regard to the status of workers in the United States as employed in different kinds of industries, and whereas I believe the Department of Commerce indicated that there were some 50,000,000 persons gainfully employed in the United States, we found that about half of these, or some 25,000,000, roughly, were employed in service industries such as transportation, wholesale and retail trade, public utilities, hotels, professional services, and the like. Obviously foreign competition cannot reach those occupations.

High tariffs, clearly, cannot protect them.

On the other hand, high tariffs can do them immeasurable injury along the line you were suggesting; the wages of those engaged in

railway, steamship, stevedoring, insurance, trucking, and similar work are manifestly dependent upon commerce and trade.

High tariffs which reduce trade are clearly injurious to their welfare.

Furthermore, all of the workers within this group, as consumers, suffer direct injury from excessive tariffs through increased costs of living, and when the general prosperity of the country is retarded by excessive tariffs, the prosperity of all of the industries in which they work is also diminished.

Then, to go on with that break-down, you must remember that 50,000,000 who are gainfully employed persons, are involved. Of the remaining 25,000,000 gainfully employed, some 10,000,000 are farmers. Only an insignificant fraction of these are directly benefited by tariffs.

Of course, the great bulk of our farmers producing such staples as cotton, tobacco, rice, wheat, hog products, and fruits and the like, depend on export markets, and of course they suffer by excessive tariffs not only by being cut off from their export markets but by having to pay higher prices for the consumer goods which they must purchase.

Now, of the remaining 15,000,000 workers gainfully employed, about half are in the manufacturing industries and the remainder, for the most part, in the building or mechanical trades or in mining, forestry, and fisheries.

Of these 15,000,000, fully two-thirds are in branches of production which cannot be effectively protected by tariffs, either in those types of manufacturing or mining industry which are on an export basis, or else in building and other trades which are outside the range of tariffs.

So that these 10,000,000 workers, like those engaged in agriculture, are incontestably injured rather than benefited by excessive tariffs.

To those working in industries on an export basis, excessive tariffs mean increased costs of the goods they want to buy, and generally reduced purchasing power, both foreign and domestic, for the goods they produce and desire to sell.

Now, of the remaining 5,000,000, it would appear that only about half are employed in industries which are in any major sense on an import basis, and hence so situated that tariffs could have any appreciable effect on prices of the things that they produce. That is equivalent to about 5 percent of the total number gainfully employed in the United States.

In other words, I believe it is true that only a fringe, so to speak, of workers are benefited by excessive protective tariffs. The great bulk of workers of the country suffer rather than are helped by excessive tariffs.

Now, this is not an argument to remove all tariffs. As I have said before, I do not believe any responsible statesman today, I do not believe any responsible economist advocates the removal of all tariffs and launching into free trade.

What the trade-agreement program is seeking to effect is the lopping off of those excessive tariffs, those tariffs which lack economic justification and which are not needed really to safeguard domestic

workers.

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