time as much as you conveniently can. How much time do you think you will require?

Mr. MUNROE. About an hour, Mr. Chairman.

Mr. WOOD. I would like to have you reduce that to a half an hour if you possibly can, and in order to do that all the witnesses will have to reduce their time as much as possible, for this reason, that legislation is just as liable to come before the House this week that will make it impossible for this committee to hold hearings more than a couple of hours a day, in the morning. We went on last week morning and afternoon and I think the members of the committee ought to attempt to confine themselves and perhaps adopt a rule confining themselves for 10 minutes each, as we usually have done on former hearings, as far as interrogation is concerned, and if you can cut it down to 30 minutes I shall appreciate it.

STATEMENT OF SYDNEY P. MUNROE, ASSISTANT TO THE PRESIDENT, THE COTTON TEXTILE INSTITUTE, INC.

Mr. MUNROE. Mr. Chairman, I will do the best I can. I would like to have you bear in mind, though, that we had a number of witnesses here last week who wanted to be heard but could not stay. We expected to be able to go on Wednesday afternoon and did not get on until late Thursday afternoon.

Mr. Wood. I suppose the reason they could not be heard was that we took up too much time with each witness. We took one whole morning with one witness last week. Nothing can be accomplished by keeping one witness on all morning. I think better information can be adduced from these hearings by having three or four witnesses instead of one.

Mr. MUNROE. Mr. Chairman, it is my desire to be just as helpful to this committee as I can, and I think I can be more helpful if I am a little explicit.

At the outset, in order that you may have a reasonable idea of the background on which my statements are based, I am assistant to the president of the Cotton Textile Institute. I have been, all my business life, in the cotton-textile industry.

Mr. WOOD. With the Cotton Textile Institute?

Mr. MUNROE. No, sir. I am coming to that. I went to work in a cotton mill in 1912, for $10 a week, working, I believe, 58 hours a week, and for 8 years I was working in cotton mills in various positions, gradually improving them, and, finally, in 1920, I entered an engineering line, installing cost systems in cotton mills.

For the first 5 years of that period I was located in New England, and in that time I had intimate access to all the figures, data, and finances of approximately 100 cotton mills.

Five years subsequent to that I lived in Greeneville, S. C., and traveled from Alabama to Virginia, installing cost systems in some 65 cotton mills in the South.

In 1930, 6 years ago, I entered the employ of the Cotton Textile Institute. Now, since I have been with the institute, I have been in charge of the field staff of the institute; at one time we had as many as seven men, and since then we have been reduced to four.

Throughout the period of the N. R. A. code I was compliance director for the code authority. I had charge of our field agents who investigated wages, hours, and complaints.

Prior to the N. R. A. code, at the time that we took, or rather undertook, to persuade mills to reduce their schedules to not over 55 hours a week, where many were running 60 and 66, I had charge in that case of the field staff promoting that program and had charge of keeping the records as to the conformancy with that program.

When we subsequently undertook to persuade mills to eliminate the employment of women and minors at night, my field staff was the most active agency in promoting that campaign.

I had charge of that effort in the field and kept the records on that matter.

Since the code has elapsed, I have kept my field men at work practically all of the time visiting mills in all parts of the country, checking the extent to which mills are observing the minimum-wage and the maximum-hour provision of the former code and we have kept elaborate records along that line.

Now, Mr. Chairman, I would like to take just a second to reimpress upon the minds of the committee two things regarding which there seems to be some uncertainty.

There was, I thought, the belief that cotton mills undertook to have prices fixed under the Cotton Textile Code. I want to say, from my intimate contact with the code authority as compliance director, attending practically every code authority meeting and many of the conferences before the code was formed there was no effort made at price-fixing by cotton mills under the Cotton Textile Code.

I would like also to say that there were members of our code authority, three Government representatives, including one labor representative, who was Dr. Leo Wohlman, one consumer representative and an impartial representative who was Gen. Hugh Johnson, Administrator of the N. R. A.

In the statement of "Findings and policy" forming the preamble to H. R. 9072, introduced by Mr. Ellenbogen, it is proposed that the Congress of the United States "as a matter of legislative determination" find certain "facts" to be true, which so-called facts are thereafter set forth.

It is reasonable to assume that the distinguished members of this committee and of the respective Houses of Congress will not desire to find as facts situations which are not susceptible of proof, which may consist only of half-truths or which, in point of fact, are at present nonexistent or have, perhaps, never existed. It is, perhaps, not unreasonable, also, to assume that the distinguished member of Congress introducing this bill, the party or parties who prepared its text, and the individuals or groups fostering the ideas and programs it contemplates, have diligently explored and canvassed the entire scope of reasons, arguments, or shall we say, excuses, which exhaustive mental effort might discover or imagine for the justification of such radical, revolutionary, and dictatorial proposals as this bill contemplates. If we may concede the ability of these various agencies to unearth all conceivable reasons and excuses for undertaking in this proposed legislation to deprive owners of cotton-mill properties of reasonable managerial authority over such enterprises and if the socalled facts adduced as reasons or excuses for such program can be shown to be relatively unimportant or, in fact, nonexistent, it may then be assumed that there is no sufficient reason or excuse for such

legislation. Moreover, it would then become apparent that for this distinguished committee or for either House of Congress to find that such statements are "facts" would result in a departure from truth and integrity in legislative finding. It will be our undertaking in the present statement to examine the extent to which the elements of truth and integrity apply to these so-called facts. It is our assumption that, if these so-called facts can be shown to be nonexistent or relatively insignificant, the meticulous diligence with which this proposed legislation has been prepared precludes the possibility that other reasons or excuses can be presented as arguments for its enactment and that, therefore, lacking any substantial reason for enactment, the proposed act must, because of its insecure foundation, collapse.

Mr. Chairman, I do not mean in what I have said to imply any belief in a lack of sincerity on the part of anybody in proposing this bill. I do not believe that there is any insincerity among the proponents of this bill, but I believe that the committee should bear this fact in mind; the bill was written last summer. It was proposed to the House last summer, or last August. The N. R. A. had elapsed legally on May 27. This bill was written, gentlemen, at a time when all of us, and I include myself, believed that there would be a collapse of wages-when we feared that there would be a breakdown in the hours of work. That is when this bill was written. Gentlemen, I believe that the effects since that time will show that that fear has not been substantiated.

Let us examine the indictment of this entire industry, explore the records, and establish the facts.

It is stated that in recent years commerce in textile products "has substantially declined in value and amount". This statement standing by itself and if true omits the important consideration of the relation which such decline, if any, bears to such a decline, if any, in other fields of commerce and industry as well as to the decline, if any, in the flow of commerce in the cotton textile industries of other textile producing countries.

Now, gentlemen, I have here a tabulation which sets forth the facts as to those relationships.

I refer now to a tabulation of the production index for all United States industries, which is derived from figures provided by the Federal Reserve Board. I have it here for 1926 to 1935.

The figure in 1926 was 108. Yearly, the figures are as follows from that time forward.

1927, 106; 1928, 111; 1929, 119; 1930, 96; 1931, 81; 1932, 64; 1933, 76; 1934, 79; and 1935, 89.

Now, let us look at the index of cotton processed for the years 1923 to 1935.

In the year 1926 the index was 6,688,000 bales or 109. In 1927 it went up to 121. In 1928 it dropped to 107.

In 1929 it went to 115, and then, in 1930 went to 88, and in 1931 to 89 and in 1932 to 82, and in 1933 it went up to 101, and then it dropped to 88 in 1934 and in 1935 there was a slight rise to 90.

Mr. WOOD. That is production?

Mr. MUNROE. That is cotton processed, Mr. Chairman.
Mr. WOOD. The entire output?

Mr. MUNROE. Cotton processed in the United States; yes.

It will be noted from these tabulations that the decline in cotton processing in the United States between 1926 and 1935 of 19 in the index figure (the difference between 109 and 90) is identical with the decline from 108 to 89 of the index figure for total production of all United States industries. If this is an argument for governmental control then it must follow that the Government should control the entire industrial structure of the United States. Such a thought is, of course, preposterous, unconstitutional, and un-American.

Mr. Wood. You mean that this bill of Mr. Ellenbogen providing control is preposterous, unconstitutional, and un-American when you speak of control of the industry?

Mr. MUNROE. I feel that way, Mr. Chairman.
Mr. WOOD. You feel that way?

Mr. MUNROE. Yes, sir. I would be glad to develop that idea after I finish this statement. I would rather wait until I finish this statement.

Mr. WOOD. All right, proceed.

Mr. MUNROE. To be sure, many industries followed the lead of the cotton textile industry when it voluntarily subjected itself to a degree of governmental supervision by coming forward in 1933 to undertake the first of the N. R. A. codes. But such action was purely voluntary and it was then believed that the industry was undertaking a partnership with the Government whereby employment and purchasing power would be, and in fact were, greatly improved. It was understood that to the extent that this involved government it was government with the consent of the governed. Imposition of rigid governmental control as proposed in this bill over the clear objection of the owners of the properties involved is not government with the consent of the governed.

Returning to the tabulated records:

I have tabulated the consumption of cotton in the important cotton manufacturing countries of the world.

I have this for the cotton year 1926-27 through the cotton year 1934-35. The source is the New York Cotton Exchange.

United States cotton consumption declined between 1926 and 1931-32, from 7,190,000 bales to 4,866,000 bales.

It rose in the cotton year 1932-33, to 6,137,000 bales, but has since declined to the cotton year 1934-35, 5,361,000 bales as compared 9 years ago with 7,190,000 bales.

Now, cotton consumption in the world, excluding the United States, in that same period, increased from 18,679,000 bales to 20,067,000 bales and, in Japan, cotton consumption advanced from 2,750,000 bales up to 2,934,000 bales in the cotton year 1932-33, but in the past 2 years to 3,622,000 bales.

Now, it is noteworthy that although total production of all cotton in all countries other than the United States advanced in that 9-year period, hours declined substantially. The reason is not hard to discover. The application of the Cotton Textile Code in July 1933, having increased over night the industry's annual wage bill at the rate of about $105,000,000 was followed 2 weeks later by the cotton processing tax which, with the floor stock tax, saddled upon the industry in its first effective year an added production cost of $145,000,000, an amount nearly equal to half the industry's annual pay roll at that time. Buyer resistance to these added costs resulted in reduced

consumption of cotton goods both at home and abroad. This situation was believed aggravated by the failure to assess the compensating taxes contemplated by the Agricultural Adjustment Act on competing commodities.

We lost business to competing commodities that did not have to pay the processing tax. It was further aggravated by failure of the Government to protect cotton mills in their added N. R. A. labor costs against destruction of their export markets and incursion into their domestic markets by the cotton mills of low-wage countries, such as those of Japan.

It is interesting to note in the foregoing tabulation that while annual consumption of cotton by the cotton mills of this country (which pays the highest cotton-textile wages of any country in the world) had declined over 1,700,000 bales between 1926 and 1935, annual world consumption of cotton, excluding the United States, experienced an increase of over 1,300,000 bales and Japan, a country of notoriously low wages, increased its annual cotton consumption by about 900,000 bales or nearly 70 percent of the world increase just stated. Moreover, Japan's annual consumption had advanced less than 200,000 bales between 1926 and 1932, leaving a 700,000-bale increase in the brief period from 1933 to 1935. This particular discouragement cannot be attributed to any great degree to the cotton processing tax because the A. A. A. established export rebates and added import duties approximately balancing the tax on such business. It traces more directly to the advanced labor costs under the N. R. A. Code, with respect to which no such protection against foreign competition was accorded. Hence we have a situation where our higher labor costs are causing loss of markets while the proponents of this bill would have us add nearly if not quite one-half more to our already high labor costs.

It had been my purpose, Mr. Chairman, at this point to mention some specific figures as to what that increase in cost will amount to. I will not take your time to do it unless you wish.

Mr. Wood (presiding). It is after 12 o'clock and I am sorry I will have to interrupt you at this point. We do not have the authority to meet after 12 o'clock until we get permission from the House. Chairman Connery has gone over and probably in the next half or three-quarters of an hour will get permission to meet this afternoon and if we get the permission from the House we will reconvene here at 1:30 at which time you may continue.

(Whereupon a recess was taken to 1:30 p. m.)

AFTER RECESS

(The committee resumed its hearing at 2 p. m.)
Mr. KELLER. Gentlemen, are you ready to proceed?

FURTHER REMARKS OF SYDNEY P. MUNROE

Mr. MUNROE. I believe I am, sir, if you are.

Mr. KELLER. The committee will come to order, please, and we will resume taking the evidence.

Mr. MUNROE. Mr. Chairman, I had just made the observation, before the adjournment for luncheon, that we have a situation where