Business: It May Bleed a Japanese Town to Death

THE SILVER KNIFE

A TOP customer of the U.S. is Japan. Last year it bought twice as much from the U.S. as it sold. To bridge the gap, Japan wants to boost its U.S. exports, which it favors far more than trading with Red China. But last week, as Congress began hearings on extension of the reciprocal-trade act (see NATIONAL AFFAIRS), prospects were that exports to the U.S. will be cut rather than raised. To plead their case, ten gentlemen from Japan called upon U.S. officials in Washington to tell them about what is happening to the little town of Tsu-bame—and thereby told a tale of how even a small U.S. tariff change can bring economic disaster abroad.

Tsubame, a town of rickety houses and muddy streets, produces nearly all of Japan's stainless-steel flatware—and sends 80% to the U.S. This good fortune is due to U.S. businessmen; they put Tsubame back to work after World War II, when its shabby flatware industry was nearly defunct. The first few small orders from occupation forces for stainless-steel flatware helped keep its 15,000 people alive. Then in 1949, some U.S. cutlery companies saw in Tsubame a wonderful opportunity. The U.S. companies wanted low-priced stainless steelware to undercut the high-quality product that Europeans had begun shipping to the U.S. They sent technicians to Tsubame, supplied it with equipment, orders and credits When U.S. silverware makers also be gan feeling hot European competition against their plated tableware, they too joined in building up Tsubame's production in order to save the expense of shifting to stainless-steel production in their own plants. Tsubame exports to the U.S. soared from 421,476 dozen pieces, valued at $396,000 in 1953 to 5,900,000 dozen, worth $5,400,000, in 1956.

Supplying the demand, the town doubled in population, brought prosperity to thousands of people near by. Every fourth house became a small home factory with at least one buffing wheel. Of the 1,695 plants, the biggest had 13 workers; most had under four. It was hard, unhealthy work, and almost all the 11,000 workers have lost fingers on buffing, grinding or cutting wheels. But the price seemed well worth the return; many made as much as $70 a month, double the average Japanese wage. Tsubame was soon getting 43% of its revenue from the industry. Last year it finally had enough cash to begin building its first paved road, made plans for other civic improvements.

In winning success, the Japanese also created a new household market for U.S. makers, whose cheaper ware previously went mainly to restaurants and institutions. U.S. silverware makers themselves soon turned to stainless steel. They, too, were quite successful. All told, U.S. makers boosted their sales from 10.8 million dozen pieces in 1953 to 14.4 million in 1956, and new jobs were created. But because the sales of U.S. makers did not rise as fast as imports, which in 1956 captured about one-third of the total U.S. market, the U.S. companies began complaining about imports.