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Trade Agreements Extension Act Of

The War Within

In 1854, America’s first watch company, Waltham, was formed, which went on to make the first-ever watch with interchangeable parts and the first 100% American-made watch. Shortly after, in 1863, Elgin, from Illinois, was established. New York had Bulova, launched in 1875. In 1892, Hamilton, from Pennsylvania, got going. By the turn of the 20th century, American watchmakers were moving quickly. However, every industry, including watches, tells a story of competition: the rise and fall of companies. This one was no different; after all, stakes were high as the world was their market, but the Swiss knew that too.  

The 1920s were roaring to American watchmakers, indeed, as following WW1 – both men and women were on board and wearing watches. By the end of the 1920s, the America watch production had dropped from 1.8 million movements in 1923 to 1.75 million, 5 years later. Imports, mainly from Switzerland, rose during this same period from 2 million to 4.3 million. Of the thirty-five manufacturers which had once been in production, in the U.S., only four were left, the above mentioned. Between the world wars, watchmakers made numerous beautiful watches including stunning art deco pieces incorporating a range of luxurious components, including white gold cases and jeweled faces.  

A trade agreement, with Switzerland and the United States, went into effect on February 15, 1936. Duties on Swiss watches, imported to the U.S., were cut an average of thirty-four percent below the previous 1930 rates. In exchange, the Swiss, in turn, lowered their tariffs on American goods. Prior to this agreement, the American watch industry had fifty-three percent of the American public jeweled watch market. Aided by government subsidies, the Swiss led in technological innovations and the American companies began to lose market share.  

During World War II, the US watch industry was halted and ordered, by the government, to stop all watch production and companies immediately moved into the defense industry, manufacturing military watches, chronometers, fuses for artillery shells, altimeters and other aircraft instruments and sapphire bearings used for aiming cannons. 

In March 1944, the American watch companies petitioned the government for relief from the avalanche of Swiss imports. Switzerland, officially neutral during World War II and have not taken part in a war since 1505, the longest standing neutral nation in the world, was not ordered to halt production and continued, as normal.  

During the U.S. halt, the Swiss captured, a whopping, 95% control of the U.S. watch market and had a complete monopoly of the machinery needed to make watches. During the war, the U.S. watch industry had worn out its equipment, from war production, and now needed to replace it but the Swiss factories would only lease them new equipment. American watch companies argued, by renting the equipment, the Swiss will then be able to exert control over foreign watch industries. The U.S. government, in return, did not put such conditions on the sale of American machine tools that the Swiss needed to make their watch machinery, when needed. Walter Cenerazzo, president of the American Watch Workers Union, at the time, pleaded with a congressional committee in Washington, D.C., in May 1942, for a higher tariff, on Swiss watch imports, stating The United States Government says to the American watch workers: “You cannot produce for civilian use as we need your output for American defense”. We agree the United States Government is correct in doing so, but, on the other hand, the Swiss watch industry is given free rein to ship into the United States an unlimited amount of watches, at total landing costs which are less than our cost of production’. This put substantial stress on the American watch industry.  

The War Within
Trade Agreements Extension Act of 1951

Further, an investigation was instituted, on May 19, 1964, as a petition for tariff adjustments, by the Bulova Watch Company, Elgin National Watch Company and Hamilton Watch Company – backed by The United States Tarriff Commision, they issued a report to the President (Lyndon B. Johnson) about an investigation involving ‘Watches, Watch Movements, and parts of watch movements’.   The purpose of the investigation was to determine whether – because of concessions granted under previous trade agreements whether watches being imported into the United States in increased quantities cause serious injury to the domestic industry.  

The President proclaimed increased rates of duty, brought on by The Trade Agreements Extension Act of 1951, were effective July 28, 1954, on all the categories of watch movements on which the rates had been previously reduced, stating – several of the rates were increased to rates originally provided in The Tariff Act of 1930. Further, this investigation has produced no clear evidence that watch movements are being imported in increased quantities within the meaning of the Trade Expansion Act. The official statistics show that imports of movements in 1959-63, although at a higher level than in earlier years, varied only moderately from year to year in that period but with no discernible trend.  

And more – clearly, it is impossible under these circumstances to attribute changes in the volume of imports—whether declines or increases, to the concession rate of duty, which has remained the same. It is equally obvious that changes in the volume of imports have been stimulated mainly by changes in the trade, in the structure of production, and in the business decisions being made by one domestic manufacturer (United States Time Corporation – later known as Timex) which makes some of its parts in its overseas installations for assembly in the United States and elsewhere. Thus, there is no basis for determining in this instance that the trade-agreement concession has been a major influence with regard to the volume of imports.  

The Commission summarized that the variations in the level of imports of movements, and parts, stem predominantly from factors other than the trade-agreement concessions as modified in 1954, submitted and signed by Vice Chairman Dan H. Fenn Jr., Commissioner Glenn W. Sutton and Commissioner James W. Culliton.

The ruling did not help the already struggling American watchmakers still recovering from the U.S. War halt. Waltham closed its factory doors and declared bankruptcy in 1949 – the company went through a series of bankruptcies and restarts under new ownership, with watches and clocks bearing the Waltham name still being made and marketed today. Elgin, once the largest site dedicated to watchmaking in the world, closed their original factory in 1964, discontinued all US manufacturing, in 1968, and sold the rights to the name ‘Elgin’, which were subsequently resold multiple times over the years. The Hamilton Watch Company was sold to the Swiss SSIH, in 1974; now an umbrella brand within The Swatch Group. Bulova, still in operation today has resold multiple times over the years beginning in 1979, and most recently in 2008 when Japanese multinational conglomerate Citizen Watch Company purchased the brand.