In the autumn of 1930, a car crashed on the road between Lake George and Glens Falls in upstate New York. Police on that road were used to catching bootleggers bringing liquor in from Canada. This time they found Swiss watches. The final count, according to a local history of the case, was 2,100 complete watches and the parts of hundreds more, packed in boxes labeled as electric light bulbs. The Brooklyn businessman behind the shipment pleaded guilty and received a suspended sentence. A year later he was arrested again at Rouses Point, on Lake Champlain, with a colleague and 500 more watches.
Another story, repeated by several watch writers, has two American jewelers caught in the 1930s with watches hidden in rabbit skins that began to smell on the way to New York. We cannot confirm it from a primary source, but it is a good measure of the lengths people went to. The question worth asking is why anyone would smuggle watches at all. The answer is in Washington. Congress had raised duties on watches in 1922 with the Fordney-McCumber Tariff, and then again in 1930 with the Smoot-Hawley Tariff, signed by Hoover on 17 June. The law also made watch movements carry the number of jewels, the adjustments and the country of origin, so the honest route was expensive and the dishonest route was lucrative.
On the other side of the Atlantic, the tariff landed on an industry already in crisis. Swiss watch exports collapsed from 307 million francs in 1929 to 86 million in 1932, and from about 20.8 million pieces to about 8.2 million, according to a London School of Economics study of the industry that matches the history of ASUAG, the industry's holding company. Wages paid by the industry fell from 140.9 million francs to 42.5 million over the same years. Swiss chambers of commerce passed resolutions calling for boycotts of American goods, and economic historians list watchmakers among the loudest protesters.
The tariff was not the only wound, and it was not the only reason the Swiss industry was fragile. The watchmaking valleys had grown as an industrial district of small family firms, each making a single part, and the industry had a habit of selling its own tools to the competition. The practice was called chablonnage: exporting unfinished movement blanks and parts to be finished and assembled abroad, often to avoid Swiss prices or customs duties. The historian Pierre-Yves Donzé argues that this transfer of parts and know-how sustained rival producers in the United States and Japan. As the Swiss industry saw it, the American tariff and the export of Swiss blanks were two halves of the same threat.
The Swiss answer was to organize. The industry's employers created the watchmakers' federation, the FH, in 1924. The movement-blank makers formed their own holding company, Ebauches SA, in 1926, and the parts makers followed with their own union in 1927. Collective agreements banned chablonnage, with exceptions for a handful of countries including France and Germany. In 1931 a super-holding company, ASUAG, was formed with help from the federal government and the banks, to control the makers of blanks and parts.
It was not enough. Dissident firms that stayed outside the agreements kept supplying foreign buyers, and the cartel could not enforce its own rules. So the cartel asked the state for help, and on 12 March 1934 Bern adopted a federal decree to protect the Swiss watch industry, in force from 15 March. From then on it took a permit to open or enlarge a watch company, and a permit to export parts, blanks and chablons. Add the decrees that followed through 1937 and you have what the Swiss call the Statut horloger, the watch statute.
The consequences were remarkable. Donzé writes that from 1934 on, Swiss watch companies were legally forbidden to buy parts from abroad and to export their own parts. The state, not just the cartel, decided who could make watches and how. It was a striking way for a government to protect an industry, by stopping its own manufacturers from selling to the world's competitors, and it was written in the middle of an American smuggling war.
The American side of the story was playing out in the same months, and the diplomatic record is public. In June 1935 a congressional hearing took up the smuggling of watches, and Congressman John McCormack of Massachusetts introduced a bill, H.R. 8624, that would have required watches and parts to bear detailed markings. The Swiss negotiator, Minister Stucki, who had just spent a week in Washington on a trade agreement, told the American minister in Bern, in a report now in the State Department's published papers, that the bill landed on him like a cold shower. He had not even known the hearing was taking place.
Stucki's case for Switzerland is vivid. By his count some 60,000 Swiss workers lived by watchmaking, in a country of about four million people, while the American industry employed about 5,000 out of 120 million. And he had just persuaded the Federal Council to reverse a policy it had held for years of refusing to help stop smuggling, on the argument that the country the goods were smuggled into was responsible for preventing it, and that lower tariffs were the best prevention.
The sticking point was a single symbol. The Swiss proposed marking exported movements with the exporter's symbol. The American bill called for the symbol of the American importer. The Swiss objected that small Swiss makers, who sold through retailers directly, would lose business, and Swiss watch-industry representatives told the Americans they feared the bill was a device of the American manufacturers to strangle Swiss competition. The American negotiator, David Williamson, made clear that the whole trade agreement depended on settling the smuggling issue first.
They settled. The trade agreement with Switzerland reduced American duties on most categories of watch movements from 15 February 1936, and a clause that came into effect on 1 May 1936 required watches and movements shipped to the United States to bear a mark distinct for each American importer, with the Swiss government giving the lists to the American legation in Bern. The State Department's trade chief recorded that the President approved the reduced watch duties because the arrangements with the Swiss would greatly reduce smuggling. The 1937 report of the Secretary of the Treasury says no substantial seizures of smuggled watch movements took place that year and credits the marking system.
That clause is why many Swiss movements sold in the United States carry three letters on a bridge or balance cock. They are import codes, and they are one of the most useful things a vintage Swiss watch can tell you. The code identifies the American importer, not the maker, so the same maker's watches carry different codes under different importers. One collectors' list, drawn from Kathleen Pritchard's reference on Swiss makers, records 348 codes. One collector's post ties the code HOX to the Henri Stern Watch Agency of New York, the American representative of Patek Philippe, so the codes can also tell you which door a watch walked through.
The tariff left another fingerprint on the same movement, and one that surprises people. Importers had to mark the jewel count and the adjustments. After 1930 the law required adjustments to be differentiated, for example as positions and temperature, and a contributor to the NAWCC message board explains that the duty on adjusted movements became so high that importers began shipping watches marked Unadjusted instead. That means the word Unadjusted on a movement may sometimes reflect a customs decision, not the quality of the watch. As with the code, it is a clue to read with care, not a rule.
The statute outlived the crisis that created it. After the Second World War Swiss makers recorded record profits, helped by the fact that the cartel limited competition at home while their rivals in Japan, Germany, France and the Soviet Union had been crippled. American makers saw a different picture. In 1954 President Eisenhower used the escape clause of the 1936 trade agreement to raise American duties on Swiss watches and movements, after the Tariff Commission recommended an increase of about 50 percent, and watchmakers told a Senate subcommittee that a strong domestic watch industry mattered for national defense. A United States Tariff Commission study later concluded that this escape action largely cancelled the 1936 reductions.
The Swiss system itself was slow to loosen. Donzé's research finds that until the 1960s there were almost no multinational companies in Swiss watchmaking, because the cartel forbade the import and export of parts and controlled what every watch company did, and he argues that the legal framework left the industry fragmented and without the rationalization it needed. The cartel was dismantled in stages through the 1960s, and the Statut horloger was abandoned in 1971, replaced by an ordinance that let companies use the Swiss name as long as certain activities stayed in Switzerland. The same research notes that Japanese makers, Seiko among them, built their competitiveness by hybridizing American mass production with the Swiss division of labor, a reminder of how much knowledge kept moving despite the statute.
A short, practical note for collectors
Our reading as dealers is this. The three-letter code is a customs receipt, not a quality mark, but it works as a time stamp and a trade route. A Swiss movement with an American import code was shipped to the United States under the 1936 arrangements, and the code points to the importer it came through. We could not find a definitive end date for the requirement, so treat the codes as strongest evidence for watches from the late 1930s through the post-war years, and do not use their absence alone to doubt a watch. Check the code against a list, expect different codes on the same maker's watches, and note whether the movement, dial and case tell the same story.
The statute also helps explain something else collectors notice. The cartel's holding company, Ebauches SA, became the dominant supplier of movement blanks to the cartel's watchmakers, nearly six hundred firms on average according to one Swiss account, which is a likely reason why unrelated Swiss brands so often share the same underlying calibers. That is our inference from the structure, not a documented rule, so confirm the caliber for any watch you handle.
The next time you hold a vintage Swiss watch, turn it over and look closely at the bridge. Three small letters there may be all that is left of a smuggling war, a diplomatic crisis and a law that locked the doors of the Swiss watch industry for decades. Our Swiss watches collection is a good place to start looking.
Where the sources disagree
The name and dating of the statute vary. Most sources date the permit regime to the federal decree of 12 March 1934, while at least one popular history puts the introduction of export and manufacturing permits in 1936, and some sources count tariffs set by the employers in 1936 as part of the statute. The list of countries exempted from the ban on exporting movement blanks differs between sources. The rabbit-skin story comes from popular watch writing, not from a customs record. Much of the detail about the Swiss side comes from the journalist Gil Baillod and from the historian Pierre-Yves Donzé, and the details of the American side come from diplomatic papers, so check any figure you plan to quote against them. Finally, the NAWCC and import-code material comes from collectors' forums and a watch blogger's research, which are valuable but not primary sources.
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