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Mr. Wood. How did you acquire this knowledge?

Mr. BESSE. How did I acquire it?

Mr. WOOD. How did you acquire it; by actual experience in the working of the business or by conference with executives?

Mr. BESSE. That makes even Mr. Gorman laugh. As far as I have been able to acquire it, Mr. Wood, I acquired it because it was my business to acquire it.

Mr. WOOD. Observation?

Mr. BESSE. I have been in this position only 2 years. Naturally, the amount of information I have been able to absorb is limited. Í am quite free to confess to my lack of information and knowledge on this subject.

Mr. Wood. You are just representing an association as its secretary, then?

Mr. BESSE. I happen to be president; that is immaterial.
Mr. WOOD. Do you draw any salary as president?
Mr. BESSE. I do, sir.

Mr. Wood. How much salary do you draw?
Mr. BESSE. Is that germane to this inquiry?

Mr. Wood. You can answer or not, as you please. The employees have been very frank in telling about their wages and working conditions. Of course, you do not have to answer it.

Do you think $15 a week is too much for any mechanic to receive? Do you think that will foist a great burden on the industry, for a skilled mechanic to receive a minimum of $15 a week?

Mr. BESSE. Our average wage is considerably higher than that. I do not think $15 a week is an adequate wage. I certainly do not.

Mr. Wood. Your figures here in this exhibit do not indicate that the average wage was more than that.

Mr. BESSE. Have you multiplied 47.7 by 40?

Mr. WOOD. No. This is the hourly-wage schedule here. Is that just the mechanics and the working men or does that include the superintendents, foremen, and executives of the plant?

Mr. BESSE. That includes people who are subject to the 40-hour limitation and excludes all supervisors and foremen. It includes only actual factory employees.

Mr. Wood. How do you feel about the Hawes-Cooper law?
Mr. BESSE. I do not know the law.

Mr. WOOD. The textile industry and the garment industry were two of the prime movers in the enactment of the Hawes-Cooper law. They carried on many years of work and effort to have passed a law similar to the Hawes-Cooper Act, which divests convict-made goods of its interstate character when it crosses a State line. Do you think that is a good law or a bad one?

Mr. BESSE. I am not qualified to express an opinion. I have not read the law. We have no such problem in the wool textile industry. Mr. WOOD. Do you think, then, that convict-made goods should be shipped promiscuously throughout the United States without any regulatory legislation?

Mr. BESSE. NO; I do not think so. I am simply saying, Mr. Wood, I have no knowledge of those particular conditions. They do not exist in our industry. We have substantially no prison-made woolen goods.

Mr. WOOD. There has been a great deal, not now, of course, but previously. You would not, then, hazard a guess whether the Hawes-Cooper law was a good or bad law?

Mr. BESSE. Not until I read the law.

Mr. Wood. You do not understand the meaning of the law at all? Mr. BESSE. I have never read that particular law. I understand from you that it has reference to the shipment of prison-made goods in interstate commerce.

Mr. Wood. It divests the goods of its interstate character when it is shipped from one State to another. When it is shipped from one State across the line of another, it comes within the purview of the law of the State to which it is shipped.

Mr. BESSE. If I understand you correctly, I should say most decidedly I would not be in favor of the provisions of the act.

Mr. WOOD. You would not be in favor of a State being able, then, to protect itself against the influx of convict-made goods?

Mr. BESSE. Yes; I would. It is apparent that I did not understand your description of the act. I would be opposed to that.

Mr. WOOD. That is what the Hawes-Cooper law is. It enables the States to protect themselves against the shipping of convictmade goods, made under the prison laws or system by private contractors, into another State, coming in unfair competition with free labor. If the law is good, then why would not the law work both ways? Why would not a law divesting the goods manufactured by the free manufacturer of its interstate character when it crosses the line be proper, to eliminate unfair competition?

Mr. BESSE. I am still very hazy about this law. It seems to me that you have to have in mind what you propose to accomplish and whom you are going to protect. I think any free workman should be protected against prison-made goods, whether he lives in one State or another State.

Mr. WOOD. What is the reason they should be protected?

Mr. BESSE. That is a pretty big question. I cannot see that any penal institution should be allowed to interfere with the opportunity of free workmen to earn their living.

Mr. Wood. That is it, unfair competition. That brings us right back to the Ellenbogen bill. All this bill seeks to do is to eliminate unfair competition, which was engaged in so extensively, from 1929 up to and including the early months of 1933, at which time the textile industry was on its back.

What do you mean by "extensive coercion"? This law elicits. extensive coercion, you say.

Mr. BESSE. That is decidedly the impression I get from reading this bill.

Mr. WOOD. Would you mind explaining what coercion you mean? Coercion by the Government, or by whom?

Mr. BESSE. Coercion by the Government through the Commission. Mr. WOOD. What do you mean by "coercion"?

Mr. BESSE. I mean the utilization of power which may or may not be properly and judicially applied.

Mr. WOOD. You made the assertion at the outset, I believe, if I remember right, that a great deal of evidence and testimony submitted here was based not upon actual knowledge of the operation of the business; that the allegations as to reduction of wages and stretching

of hours and adding to the machine load were not correct. Then in the same breath you give us this exhibit A, which indicates that in 1933, prior to the enactment of N. R. A., the average wage, as revealed by your own figures, was 35 cents, 35 cents, 34 cents, 34 cents, and as low as 32 cents. The highest in the first 7 months of 1933, was 36 cents an hour, and the lowest was 32 cents.

Then from the advent of the N. R. A., your exhibit shows that hourly wages immediately jumped to 40 cents, 48.2 cents, 50.8 cents, 47.6 cents, 48.7 cents, and so on, as high as 51.1 cents, and 50.6 cents.

Then since the voiding of the N. R. A., it dropped from 49 cents to 47 and 46 cents an hour, 46.9 cents. It was 49.5 cents in the latter part of May, then it dropped to 48 immediately in June, then to 48.3, 46.9, 48.3, 47.9, and 47.7 in November. That indicates to me that your hourly-wage rate dropped after the N. R. A. was declared void.

Mr. BESSE. The facts do not bear that out, Mr. Wood. The index of the Bureau of Labor Statistics shows a variation of up to 1.5 cents without any wage increase or decrease due to the difference in sample, the difference in the type of activity, as to where it takes place, and the difference in the total of employment.

In our own industry, as borne out by these figures, there was always a slight and ascertainable increase in the average hourly wages when employment goes down. The reason for that is obviously the fact that you keep your higher grade and more highly skilled employees. When business is not sufficiently active to provide employment for the big number of individuals you naturally let go your poorer workmen first, so that your average hourly wages will go up at any such time, and conversely, whenever you take on new employees and increase your employment your average hourly wage goes down for the same reason.

Mr. WOOD. You gave these to us as accurate figures.
Mr. BESSE. Exactly.

Mr. Wood. In the next breath you admit it is not a clear picture, that there are some deviations when you talk about the rise and the lowering of the hourly wage.

Mr. BESSE. I am giving you the figures, which are accurate figures. I cannot give you anything else, Mr. Wood. I am trying to explain to you why there are variations and why you should not jump to a conclusion and take from the figures conclusions which you are not justified in taking.

Mr. WOOD. In any instance, then, variations would be possible anywhere along the line here from 1929 to 1935. How do we know about the variations you are talking about? You give us this exhibit here as actually what is happening in the industry. Then you say that is not exactly clear, and you explain that probably this dropping off here of the wage after N. R. A. was voided, was brought about, by the taking on of new employees and discharge of old ones.

Mr. BESSE. I am giving you the figures, Mr. Wood. Most of them are from the Bureau of Labor Statistics. I am doing my best to interpret them to you. If you don't think my interpretation is valid or should receive weight, it is your privilege to disregard it.

Mr. WOOD. A very fine lady testified this morning who represented the Child Labor Division of the Department of Labor, and she gave us some statistics which revealed that in the 7 months following the voiding of the National Industrial Recovery Act that there were

11,000 certificates issued to employers, representing 11,000 children between the ages of 14 and 16. They had received 11,000 certificates for children; that is, for the employment of those children. In the whole year 1934—that is, in the full 12 months-there were only 7,000 certificates issued. It reveals that since N. R. A. the employment of children between the ages of 14 and 16 has increased nearly 300 percent. A little while ago you told the committee the childlabor phase of it was erroneous.

Mr. BESSE. I am sure sorry Mrs. Best is not here, because she told me that to the best of her knowledge there were no minors employed in the woolen branch of the textile industry.

Mr. WOOD. Don't you think this report of the Department of Labor is correct?

Mr. BESSE. The report, to my knowledge, shows nothing about the woolen textile industry. I am speaking about the branch of the industry with which I am familiar. I have yet to see an instance, since I have been there, of employees under 16 years of age.

Mr. SCHNEIDER. To what extent does your industry meet the competition of products made foreign and that are imported?

Mr. BESSE. You ask about foreign products?

Mr. SCHNEIDER. Yes; I do.

Mr. BESSE. Of course, there are two ways in which we might have the competition. One is the importation of yarns or piece goods and the other is the importation of garments made of woolen products. There is a certain amount of competition in peice goods, England being the country with which we are mainly concerned. Within recent months there have been a number of fabrics shown from Japan. The amount of imports to date has been small. We are disturbed at the possibilities of Japanese competition in view of the extremely low prices that are put on those goods. There is another field of competition in the importation of made-up garments for men's wear, principally from England. That varies somewhat. There are indications that it may be larger next year than it has been heretofore. It has not been an item of great importance, and the industry has adjusted itself to it pretty well.

Mr. SCHNEIDER. About what percentage of the products that you produce are imported?

Mr. BESSE. That is, the percentage of the total goods sold in this country which are of foreign origin, you mean?

Mr. SCHNEIDER. Yes; that is what I mean.

Mr. BESSE. In the woolen textiles, you mean?

Mr. BESSE. It is less than 10 percent.

Mr. SCHNEIDER. What differential exists as between northern employees in your woolen mills and those in the South?

Mr. BESSE. As respecting the minimum, it is $1 per week. That is the minimum now. If we took the average wages there would be a larger differential in favor of the southern mills. But only about 5 percent of our industry is located in the South as the South is defined or as it was defined under the code.

Mr. SCHNEIDER. Is the industry growing in the South?
Mr. BESSE. Not to any extent.

Mr. SCHNEIDER. Is there any objection on the part of the northern employers to that kind of competition with the $1 per week differential?

Mr. BESSE. Not particularly. It is an item, of course. But in our industry it has not seemed of sufficient importance to get very much excited about, with such a very small percentage of the industry located in the South.

Mr. SCHNEIDER. What is the labor cost, or what is the percentage of labor cost in the product that you put on the market?

Mr. BESSE. About 25 percent. That is a rough figure. It varies in different branches of the industry.

Mr. SCHNEIDER. That includes what?

Mr. BESSE. That is the percentage that the labor cost bears to the selling price of the goods.

Mr. SCHNEIDER. I mean in making up that 25 percent labor cost, Mr. Besse, would that mean the labor cost in weaving that finished article and preparing the yarn, and all of that?

Mr. BESSE. It would be the labor cost from the time we started to process the raw wool. It would have to be figured in what we call an integrated plant, which takes the raw wool, scours it, spins it into yarn and weaves it into cloth, and so on. It would be the proportion of the labor cost over the entire industry.

Mr. SCHNEIDER. When you say over-all you mean the wages and wool, or do you mean just wages? Is the salary computed in the overhead of your industry?

Mr. BESSE. I am afraid I do not understand you.

Mr. SCHNEIDER. How is the salary of those other than the wage earners figured in the overhead cost of your industry?

Mr. BESSE. I cannot answer that. We have no figures on it. It would vary substantially from one mill to another.

Mr. SCHNEIDER. You are sure that it is not figured in with that 25 percent labor cost?

Mr. BESSE. Yes, sir.

Mr. SCHNEIDER. But you don't know where it is?

Mr. BESSE. I know it is a part of the total, insofar as they have any salaries. If it were a small mill and the man paid himself a salary he might have to take that out of something else than profit.

Mr. SCHNEIDER. He would take it out of the cost of production of that article? Can you furnish this committee with a break-down of the cost of production of the finished product, divided into the parts as you usually divide it, with reference to the percentage of labor cost and executive salaries, fuel, rent, and so on and so forth?

Mr. BESSE. No, sir. You could do it with respect to a single fabric in a single mill. It would mean nothing as an over-all proposition in the industry.

Mr. SCHNEIDER. Could you furnish the committee with figures from one or two mills just to give us an idea of how this cost is made up in the production of this product?

Mr. BESSE. You want the cost, and with no relation to the selling price; the total elements of cost in the production of some particular fabric?

Mr. SCHNEIDER. Yes; broken down as you usually break it down. Mr. BESSE. I can't if you desire figures broken down to heat and light and some of those items.

Mr. SCHNEIDER. Well, however you break it down in making up those figures:

Mr. BESSE. Yes, sir.

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