Mr. KELLER. Everything is possible. Let's not deal with possibilities.

Mr. MURCHISON. If we go to the maximum work week or 40-hour work week, I would say it is more probable. If we go to the limitation of machine hours to 80 hours, if the industry should make a definite agreement not to operate machinery more than 80 hours a week, we would be vulnerable under the antitrust laws.

Is that right, Mr. Ellenbogen?

Mr. ELLENBOGEN. I think you would. In my opinion, you would. Mr. MURCHISON. That is the point I am trying to make.

Mr. KELLER. You admit that industry came to the Congress asking for governmental interference when you were in very great distress, I understand. You knew they had done that, did you not?

Mr. MURCHISON. I knew the history preceding the N. R. A., Mr. Chairman, and I do know that business came to the Government. Mr. KELLER. Asking for interference on a very broad scale. Now, the Government did step in and helped very greatly, did it not? Mr. MURCHISON. Oh, yes. We are very proud of what the Government did.

Mr. KELLER. If the Government was asked to interfere to save industry, ought not the Government have the power to interfere to benefit that industry?

Mr. MURCHISON. Without the request of the industry?

Mr. KELLER. Oh, yes. That is just the point.

Mr. MURCHISON. When I am sick I want a doctor; and that is what the doctor is for. But I do not want him ringing my doorbell after I get well.

Mr. KELLER. No; after you get well you do not, but you ought to pay the doctor bill.'

Mr. MURCHISON. We will pay the bill. There is no way of escaping it.

Mr. Wood. Mr. Chairman, I understood him to say that, "King Cotton" is still sick.

Mr. KELLER. We are going to cure him.

And we are good doctors if you will work with us, Doctor.

I understand that you think that the piling up of the national debt at the present time is a very difficult and unfortunate thing for industry.

Mr. MURCHISON. Yes. That cannot be escaped. There is no getting around that. That is a fact.

Mr. KELLER. What proportion of our national wealth at the present time do we have in unrecoverable national debt?

Mr. MURCHISON. A very large proportion.

Mr. KELLER. What percentage of the national wealth at the prepanic period?

Mr. MURCHISON. The prepanic period? I would say the national wealth

Mr. KELLER. Take $400,000,000,000. Everybody disputes it, from $488,000,000,000 down to $368,000,000,000. Take $400,000,000,000. Mr. MURCHISON. I think that is excessive.

Mr. KELLER. I think it is less than excessive. But we will agree on that. I think it was much more than that.

Mr. MURCHISON. Would not a fairer comparison be the comparison of the debt to the income, because the debt has to be paid out of income?

Mr. KELLER. I am perfectly willing to go to that with you. Let us see first if we can arrive at an understanding of what percentage of the prepanic national wealth we now owe.

Mr. MURCHISON. Roughly about one-twelfth, isn't it?

Mr. KELLER. Well, it is something less. Assuming that we will recover none of our loans, it is something like 8% percent at the present time. But it is well known that we will recover a very considerable number of the billions that are out; so it will make it not over 71⁄2 or 7 percent at the very maximum.

Following the Civil War what proportion of the national debt did we owe as compared with the national wealth at that time?

Mr. MURCHISON. I do not recall those figures.

are.

Mr. KELLER. I want to give them to you, because I think they are figures that will be instructive to even as good an economist as you At the close of the Civil War our national wealth amounted to $20,000,000,000 and we owed $3,500,000,000, or 17%1⁄2 percent of the total amount. At the present time we owe less than half of that proportion of our national wealth. Since that period we have increased our wealth just 20 times; we have increased the individual holdings from $666 up to $3,300 for each individual in the United States.

And why are our industries in this country getting scared today, as they appear to be, when it is less than half of the proportion of the debt that we owed after the Civil War, that is, as compared with today, and when we are capable of producing twice as much wealth man for man as we were at that time. I am referring now to some of the big men interested in this matter who are talking nonsense and talking through their heads. Everyone who is a good business man knows that if you owed at one time 17% percent of your total wealth and at a later date owed only 7%1⁄2 percent, you were a lot better off than you were at the previous time. And I want you to get that, because instead of getting scared we ought to forge ahead and get at the bottom of it and get the facts. That is what this committee is trying to do.

If we had continued the income tax in force at the end of the World War, how long would it have taken us, Doctor, to have paid off the national indebtedness, the entire national indebtedness?

Mr. MURCHISON. It was being paid off very rapidly, of course. Mr. KELLER. The joint committee of experts between the House and the Senate on that subject prepared a table; and if this committee desires it I would be glad to put that into this hearing. It shows that if we had continued, we would have paid off every dollar of our national debt in about 7 years, as I remember it, and that we would have had no deficit at the present time.

I am only suggesting, gentlemen, that what we ought to have done was to continue the payment of the income tax until we had paid out of the war profits the cost of the war. And that would have included the payment of the bonus at that time. And it ought to have been paid.

Mr. WELCH. If we had good sense and kept out of the war we would not have to pay off the debt.

Mr. KELLER. But we got into the war.

Doctor, I also hope to have the figures to show the facts. I am also compiling a book, and I hope to have in my book facts and

figures showing that if we increased the average pre-panic income 50 percent that we would have a demand in the United States alone for 20,000,000 bales of cotton manufactured for the use of the people of the United States. And because you are an economist and because you have a broad view of it, we have come to you fellows. And I am suggesting to you that we have to increase the income, because overproduction is nothing less than underconsumption. It always has been and always will be.

We will now recess until 2:30.

(Thereupon, at 1 p. m. a recess was taken in the hearing until 2:30 o'clock of the same day.)

AFTER RECESS

The committee resumed its session at 2:30 p. m., Hon. Kent E. Keller, presiding.

Mr. KELLER. We are going to proceed this afternoon with the witnesses for the sick king. The first witness we will call will be Mr. Robert R. West, president and treasurer of the Dan River & Riverside Cotton Mills at Danville, Va.

STATEMENT OF ROBERT R. WEST, PRESIDENT AND TREASURER, DAN RIVER & RIVERSIDE COTTON MILLS, DANVILLE, VA.

Mr. KELLER. Mr. West, will you please give your full name?
Mr. WEST. Robert R. West.

Mr. Chairman and gentlemen of the committee, it might save some of the time of the committee if I start by outlining the excuse that I have for being here.

I am a cotton-textile manufacturer. I am the chief executive officer of a cotton-textile mill located in the State of Virginia. I am not a constitutional lawyer, I am not an economist, and I am not a financier.

The contribution that I can make to this hearing is as the result of the experience that I have gained and what I have learned about the conduct of textile manufacturing operations from working in the mill and the actual contact with mill operations and the problems that arise from conducting a manufacturing business.

I think there are two things which it might be helpful if I clarified to the committee at this moment. There was considerable discussion this morning in regard to the ability of the cotton-textile industry to fix prices as a result of the Code of Fair Competition under the National Recovery Administration. There was nothing in the Cotton Textiles Code which even remotely contemplated the fixing of prices, the price of goods that moved from the mills to customers. It was never sought by the industry, it was not incorporated in the code in any way, and it was never practiced. As a matter of fact, I believe that there is none of us who are engaged in the cotton-textile industry who has any desire for any kind of price-fixing scheme.

In one or two of the supplemental codes to the Textile Code, there were provisions that had to do with sales of goods below cost of production, but all of those had to do with merchandise after it left the hands of the manufacturers. I think it was the unanimous opinion among cotton manufacturers that price fixing is a wholly impossible procedure in the cotton-textile industry.

In the second place, there seemed to be a little confusion this morning about the situation regarding the movement of cotton mills from the East on the one hand to the South on the other. The impression that I got was this, that somebody felt there had been a great movement of mills, which had gone to the South and had built mills with northern capital. That is not strictly the case. There has been a great movement of northern capital to southern mills, but by and large in the greatest number of cases it has been the purchase of mills, mills which were already existing there, and in some cases the enlargement of those mills, and there has been a comparatively i small amount of actual development of new property. There has been some, but compared with the purchase of properties that already existed and were operating it was small.

The great bulk of cotton mills in the South today remains owned by local capital. It was stated this morning that in the case of the largest mills that did not obtain, but that statement is not correct. The largest of the textile mills in the South are still owned and operated by local capital.

Of course, the detailed information on that is available to the committee, and I shall be very glad to support it in any way the committee might like to have it supported. But the fact of the situation is that these mills that Dr. Murchison described this morning are still owned largely by local capital.

Mr. KELLER. You say you have information available on that subject?

Mr. WEST. Yes; it can be readily obtained.

Mr. KELLER. I think the committee would be glad to have it. Just put it in as short form as you can put it.

Mr. WEST. Yes.

Mr. KELLER. I would like very much to make it a part of your testimony.

Mr. WEST. All right, sir.

Just by way of illustration, I will say that the mill of which I am the head is owned by 2,200 stockholders, the majority of whom reside within 200 miles of the city of Danville. The ownership is very widespread.

Mr. Wood. Of whom are these 2,200 stockholders composed? Are those employees, or who?

Mr. WEST. Comparatively few of the employees own stock. Some of them do. They are the local people, the tobacco people-of course, southern Virginia is a great tobacco country-merchants, farmers, and professional men. Over a long period of years they have invested their savings in the securities of the Riverside and Dan River cotton mills. That is quite typical of a great many of the mills in the South.) In regard to the bill-in the first place, I should like to suggest a moderation in the language used in parts of the bill, particularly in section 2 (a), paragraph 1. That is the section, you will recall, which refers to the conditions that prevail in the cotton-textile industry as constituting, to use the words of the bill, "a menace to the health, safety, morals, welfare, and comfort of the citizens of the United States."

It should be borne in mind that in the event this bill becomes a law, the commission which is set up under the bill will, of necessity, have to obtain the sincere cooperation of all interests in the industry, and

if the commission in its approach to the problem that is handed to it by this bill is dominated by the idea that it deals with a menace to American life, the work of the commission will be unspeakably complicated.

Mr. Wood. That subsection 1 of section 2 is only a declaration of principle. I cannot see that you should have any objection to this language [reading]:

Under present unregulated conditions, wages below a decent standard of health and comfort, excessive hours, child labor, overburdensome work assignments and other unhealthy and demoralizing conditions of work, the denial of the right of self-organization and collective bargaining, and excess production prevail in the textile industry, cause widespread unemployment and heavy financial expense to the Government of the United States, and constitute a menace to the health, safety, morals, welfare, and comfort of the citizens of the United States.

You do not deny that such conditions do constitute a menace to the health, morals, and safety of the people, do you?

Mr. WEST. That is precisely what I deny.

Mr. WOOD. You deny that those conditions would be a menace to the safety and morals of the people?

Mr. WEST. According to the wording of this, as prevails in the textile industry.

Mr. WOOD. A certain amount of that prevails in every industry. There are good and bad employers in every industry, and wherever it prevails it constitutes a menace. That is my understanding of what the subsection means.

Mr. WEST. It is quite likely that we do not read it the same.

Mr. WOOD. Well, then, let us amend it by saying, "Wherever prevailing in the industry."

Mr. WEST. I am talking to the bill, Mr. Wood.

Mr. WOOD. That is what I am reading now. "Wherever prevailing in the industry.'

Mr. WEST. It does not state that, sir. It states that these conditions prevail in the industry.

Mr. WOOD. Can we not meet your objection by an amendment stating

** * and excess production, wherever they prevail in the textile industry, cause widespread unemployment—

and so forth?

Mr. WEST. I think it is quite likely that the wording might be amended. That is what I am pleading for in this.

Mr. WOOD. It is not a matter of wording. I do not think there would be any objection to having it read that wherever it did prevail in the industry it would constitute a menace to health, and so forth. In fact, it does it in that or any other industry. I do not think there would be any objection to that provision at all, do you, Mr. Chairman? Mr. RAMSPECK (presiding). I think that is an immaterial detail. I suggest we let Mr. West proceed.

Mr. WOOD. Yes; I do, too.

Mr. RAMSPECK. I suggest we let Mr. West go ahead with his statement. What we would like to know is, what are the conditions prevailing?

Mr. WOOD. I think it would be best to let the gentleman finish his statement.

Mr. RAMSPECK. Yes.