Remoteness from markets.-The southern manufacturer does not depend primarily upon the southern market for the distribution of his goods. His main markets are in the consuming centers of the East and Middle West. It is obvious, therefore, that his cost of distribution is necessarily greater than that of a manufacturer located within easy reach of the metropolitan areas. He not only suffers the disadvantage of the higher distribution costs, but the time element, which enters into prompt delivery, must be overcome by accepting a slightly lower price for his commodities. In those instances where manufacturers depend chiefly upon the southern markets, the expansiveness of the southern area, the relative sparseness of population, and distances between consuming centers add greatly to the cost of distribution. In the North and East, the density of population offers opportunity for a much quicker and cheaper distribution, thereby rendering it unnecessary to warehouse large stocks which add to the cost of handling. Freight rate discrimination.-Directly tied up with the problem of remoteness from markets is the problem of transportation costs, since as previously stated, the industry of the South is dependent in a large measure upon the distribution of its products in the North and East. In recent years, northern carriers have applied a higher rate on goods originating in the South, to be delivered in the consuming centers of the East and North, than on goods transported over the same routes from the northern factories. As an illustration of this, the firstclass rate south of the Ohio River on a 100-mile haul is 76 cents; north of the Ohio River, it is 56 cents. With this spread in freight, it is impossible for the southern price to be competitive with that in the North, unless a saving is effected through lower production costs. It has been the tendency of the National Recovery Administration with its increased costs of production and overhead to bring costs in the South up to a nominal level with northern costs. The nearer this common level is approached, the more certain will be the gradual elimination of all industry in the South, and the more remote the possibility of expanding its industries, and developing its industrial resources.

Border States.-In some of the codes, parts of the South, particularly the border States have been lifted out of their traditional setting and grouped with States whose industries are governed by different conditions. Virginia, Kentucky, even Arkansas, and in a few instances other States South of them have been classified with States in other sections. While socially, the association is not at all uncongenial, nevertheless this practice has been in disregard of the factors of distinction to which attention has been called.

These border States are as truly southern in all those things that make for a homogeneous economic unit as are any of the other Southern States, and we very respectfully insist that they shall be so treated, and that all codes should be harmonized with this fact in mind.

Another quite unhappy fact is to be noted. Codes for the most part are written by majorities in the first instance. Those majorities in most instances are obviously in areas which compete with the industries of the South. Not only have nearly all of the codes been written by the South's competitors, but they are interpreted and administered by them. For the first 500 codes written, there are approximately 3,500 individual members of code authorities. Less than 10 percent of this membership is drawn from the Southern States. While this is quite a natural outcome of the application of the majority principle, it is nevertheless a matter to which southern industry cannot be expected to reconcile itself.

It has been urged that organized labor should be represented in code administration. Such a right, it seems to me, cannot be consistently admitted unless it is admitted at the same time that the overwhelming majority of unorganized labor elements shall also be permitted to participate in proportion to their numbers. Such participation could be as easily effectuated by executive appointment as by election, and I can see no just reason why these large majority elements of our laboring masses should not be equally recognized on all proper occasions. But, as a matter of fact, gentlemen of the Board, those clamorings for recognition and advantages, as well as the multitudinous complaints about discriminations and other unjust treatment only indicate the difficulties involved in trying to codify American industry.

As far as the industry of the South is concerned, as I interpret it, its attitude is one of sympathetic cooperation with those who are sincerely and earnestly trying to surmount the difficulties made manifest by our common experience during the past 18 months. We have no sympathy with any who may be striving to use our present general situation, or the machinery set up under the National

Industrial Recovery Act, as the occasion or the vehicle for purely selfish ends. We have enjoyed in the homogeneous South, an industrial peace which we want to maintain, and will maintain if our Government will protect us against the machinations of those whose business it is to make war. Take the profit out of industrial war, and it will be as effectually stopped in this country as taking the profits out of wars between nations will stop those unnecessary conflicts. We don't want our working people exploited either by their employers or by those who would teach them that their employers are their natural enemies and that they can't get justice except with some sort of club. We think that the South's future lies in the development of its industrial possibilities. It is for the unhampered opportunity of preserving our present industrial status and of expanding that position harmoniously with the rest of the Nation, that we are here today. We wish no advantages of any sort to which we are not justly entitled, and we shall continue to stand resolutely against those false, un-American theories and philosophies which tend to promote hatred and discord among our people, and to split up this great democracy into warring classes and groups.

Taking advantage of the Board's kind permission to file with a brief, for the Board's consideration, any other data pertinent to the subject, I beg to say that with this presentation of mine, I am filing statistical information supporting our position, and copies of several hundred telegrams and letters from southern manufacturers, setting forth their views. I am also filing a very illuminating article from Mr. Donald W. Comer of Birmingham.

SUPPLEMENT

TABLE I. Average (median) hourly earnings in cotton textiles, 1933–34

NOTE.-From Bureau of Labor Statistics report on Wage Rates and Weekly Earnings in the Cotton Textile Industry, table 8, p. 43.

TABLE II.-Average hourly wage rates in the South for skilled and common labor

Wage rates derived from an analysis of 400 reports to Southern States Industrial Council from representative manufacturers throughout the South.

Percentage increase in sales comparing 6-month periods to June: 33.8 percent. Sales figures corrected for increase which occurred in wholesale prices between June 1933 and June 1934, indicate increase of only 15.75 percent.

From reports to Southern States Industrial Council.

TABLE V.-Analysis of production, southern-northern location

Production of bags in northern factory-Oct. 10, 1934 (with white operators sewing small bags to 10 pound bags, inclusive):

12 operators sewed.

Average per operator..

Total amount paid.

Average cost per M..

1 inspector...

Cost of inspection per M.

Cost per M in northern plant...........

Production of bags in southern factory-Oct. 10, 1934:

136, 500

11.375

$39.81

$0.284

$2.80

.02

304

311,600

7.420

$83.03

.266

$37.80

. 121

$36.40

.117

.504

Cost of piling and clipping per M.

14 inspectors at $2.60 per day.

9

Mr. GILBERT. Mr. Chairman, we will be in attendance during the hearings. I am leaving town, but I will be back Wednesday.

Mr. SCHNEIDER. Was your organization opposed to the National Industrial Recovery Act?

Mr. GILBERT. Yes, sir.

Mr. SCHNEIDER. You are opposed to remedial legislation for labor by any legislative means, aren't you? Mr. GILBERT. I think so.

Down there we hold that the Government is going too far and that it went too far under the National Industrial Recovery Act with regard to employment relations between employer and employee. I will say, however, if I might be permitted to do so, that when the National Industrial Recovery Act was an

nulled I took a referendum to the industrialists of the South and found that 92 percent of the 12,000 are adhering today to the provisions under the N. R. A. with respect to hours and wages. Those were the two things that most affected the South. We raised our wages, we reduced our hours, and we are standing by that, even though it did hurt industry in the South. But we are regulating our businesses now under the provisions of the National Industrial Recovery Act. But we felt the Government was going a little too far.

Mr. SCHNEIDER. Did you include that statement of your compliance with the hours and wages in this statement which you have left? Mr. GILBERT. Yes, sir. You will find it in there.

Mr. WOOD. You are a manufacturer?

Mr. GILBERT. No, sir. I an secretary of the manufacturers' organization.

Mr. Wood. What is your occupation?

Mr. GILBERT. I am secretary. I am an employed secretary of the Southern States Industrial Council.

Mr. WOOD. Besides being secretary, what was your occupation? Mr. GILBERT. Prior to that time 24 years ago I was a manufacturer, manufacturing soda and baking powder in the city of Nashville, Tenn. I went from that work as secretary of the Tennessee Manufacturers' Association, which position I still hold and which I have held for 24 years. For the last 3 years, in addition to that, I have been secretary of the Southern States Industrial Council.

Mr. WOOD. What is the condition of business in these 14 States now as compared with March 4, 1933? Is there any improvement? Mr. GILBERT. Yes, sir. And I will go one step further. There is a decided improvement since the annulment of N. R. A. Employment has greatly increased in the South since that time.

Mr. WOOD. I have heard that statement oft repeated, but, of course, statistics do not show it.

Mr. GILBERT. My statistics do.

Mr. Wood. You say that the N. R. A. hurt business. Then, in accordance with your theory, when the N. R. A. was enacted business in those 14 States got worse?

Mr. GILBERT. Yes, sir.

Mr. WOOD. Is that true?

Mr. GILBERT. Yes, sir; very much worse.

Mr. Wood. During the life of N. R. A. your business was very much worse?

Mr. GILBERT. It was very much worse.

Mr. Wood. And it has only improved in the last few months? Mr. GILBERT, There has been an improved condition started. Employment over the country has increased, according to the statistics, 5 percent since the annulment of N. R. A.; in these 14 States, industrial employment has increased 18 percent. We are taking back more people now. Eighteen percent more were employed in industry in these 14 southern States in December, when these figures were gotten together, than were employed during the latter days of N. R. A.

Mr. WOOD. Do you mean to tell me that during the 2 years or more of life of N. R. A. that business in the South continued to get worse in those 14 States?

Mr. GILBERT. Absolutely.

Mr. WOOD. Is that your statement?

Mr. GILBERT. It is; and I will stand by it.

Mr. WOOD. Do you desire this committee to believe that?

Mr. GILBERT. I hope they will. I can prove it by any number of instances. I can prove it by statistics.

Mr. WOOD. What was the occasion for that? Why was it that all over the country except this one spot of 14 States there was an improvement in the conditions, but your companies went back?

Mr. GILBERT. We slipped back.

One of the reasons is

Mr. WOOD. How do you account for that? Mr. GILBERT. There are many reasons. that the 14 southern States were the only section of the country that was vitally affected by N. R. A. I was connected with the Government for N. R. A., and under N. R. A.

Mr. WOOD. Do you mean to say that those 14 States were the only section in this country that was vitally affected by N. R. A.?

Mr. GILBERT. That was vitally affected; yes, I do. I will say that the 14 southern States were the only group in the United States where wages were perceptibly increased. Our wages in the South went up in most instances a hundred percent, whereas wages in other sections of the country were actually reduced under N. R. A.

Mr. WOOD. Then this $12 and $13 minimum in the South that prevailed under N. R. A., according to your statement, brought the wages up 100 percent, and they must have been paying six or seven dollars a week down there?

Mr. GILBERT. Yes; they were, Mr. Congressman.

Mr. Wood. Do you think it is necessary for any industry to survive in this country by paying six or seven dollars a week to men of families? Do you think it is necessary for them to pay six or seven dollars a week to men of families in order to survive?

Mr. GILBERT. It was necessary.

Mr. WOOD. Do you think that is the American standard of living? Mr. GILBERT. No; I do not think that is the American standard of living, Mr. Congressman; but it was a standard that prevailed at that time in the South, and the people who received that wage were very well satisfied with it and were living.

Mr. WOOD. Is that the reason why your group opposed the N. R. A., because you did not want to pay this 100-percent increase?

Mr. GILBERT. Not necessarily that we did not want to pay it. Our whole fight on N. R. A. was that the $1 a week differential under the codes was not enough to give us an opportunity to live. The South, industrially speaking, must train her workers. Besides, we are a long distance from market. We have to ship our products to the East.

Mr. RAMSPECK. Mr. Gilbert, I wish you would explain to this committee why you say that you have a lower wage in the South that is necessary. I would like to have the record show that.

Mr. GILBERT. One of the reasons is that down South, as I stated, we are a new industry. We have inexperienced employees; we do not have the efficient workers in the South that we have in the other sections of the country which are more largely industrial. Therefore, our people, being inexperienced, cannot produce per man or per woman the amount of goods in a given period of time that can be produced in some other section of the country. We will find in many