industry, and in 1930 I wrote a book on the problems of the textile industry, the title of which is "King Cotton is Sick."

I spent a great deal of time out in the field, making preparations for that book. I spent a couple of months in New England; spent long periods of time touring through the Southern States; and the book was written from close observation of the mills themselves and the management problems.

Following that, I wrote quite a number of magazine articles on that subject. In 1934, I was appointed director of the Bureau of Foreign and Domestic Commerce, began the duties of that office on May 30, 1934, and continued there until November 15 of this last year.

As director of the Bureau of Foreign and Domestic Commerce, I served on the subcommittee of the Cabinet Committee making textile investigations, and helped prepare certain portions of the report put out by the Cabinet Committee.

During my entire life my feeling toward the industry has been one that was purely objective. I had no interest either way.

In the course of my studies, I have come to have a feeling of very deep sympathy, both for the management of the industry as well as the labor in the industry; and so this morning, in my discussion, I want to assure you in the beginning, that the observations I shall make will be purely objective, untinged with any emotional feelings whatsoever, and unbiased by any special interest.

The bill which we are discussing, the Ellenbogen bill, is described as a bill

To rehabilitate and stabilize labor conditions in the textile industry of the United States; to prevent unemployment, to regulate child labor, and to provide minimum wages, maximum hours, and other conditions of employment in said industry; to safeguard and promote the general welfare; and for other purposes.

That description, of course, labels the bill as a labor measure and yet, as a labor measure, it undertakes to achieve those particular objectives by completely changing the economic processes within the industry itself.

By setting up a national textile commission; by giving that commission very broad administrative powers; by stipulating what the hours shall be and what the wages shall be; how work assignments shall be determined, and many other things, the bill is really changing the character of the industry itself, changing that character so radically as to be in opposition to everything that we have heretofore thought of as being the traditional American method of doing business.

Now, if that is the purpose of the bill, then it would seem essential to establish that this particular industry is unique. It is not sufficient merely to say that conditions are bad within the industry. It is necessary to say that these conditions are unique as regards American industry as a whole. Otherwise, the proposed legislation is bound to receive the judgment of being discriminatory.

Now, I sat through these hearings all day yesterday, listened very carefully to the testimony of both sides, and have also taken occasion to read the reports of the preceding days' hearings. As the hearings progressed, I was more and more impressed with this fact, that here is an industry which is being put in the spotlight and, being put in the spotlight, of necessity certain deficiencies appear. Of course, it would be the sheerest folly to make denial of the existence of many of these alleged deficiencies.

But this also occurred to me. Turn the spotlight anywhere else you wish to on the American scene; turn your spotlight on the telephone operators; turn your spotlight upon retail-store clerks; turn your spotlight upon the mining industry; turn your spotlight upon the tenant farmers in the South; turn it upon the lumbermen; turn it upon the turpentine workers; turn it anywhere you like, and what will you get? You will get substantially the same story.

Turn it upon the school teachers; turn it upon the universities of the country; turn it upon the hospitals, and you come back with the same result. Legislation so radical as this, in the sense that it aims to accomplish such drastic changes from established practice then, cannot be justified unless the object of its application can be proven to be unique in the American economic system.

We have in American policy recognized that certain industries are apart and should be put into a separate classification. And one of those classifications, the one most closely analogous to what we are discussing this morning, is the classification of public utilities.

We have had railway regulation in the United States for certain special reasons. We have regulation of the power companies and other public utilities, but I fail to find any instance where any public utility has been subjected to the same detailed degree of regulation as is set forth in the proposed measure, and if industry so vital to American economic life as transportation and power do not receive such drastic regulation, then again that emphasizes the point which I have made, that the cotton textile industry, which is not a public utility, should not be subjected to this type of regulation.

Now, I am the first to admit that there are certain unique characteristics in the textile industry. It is unique in the sense that it is composed of many independent and separate units. Our latest figures indicate about 1,140 manufacturing plants in the cotton-textile industry. They are widely scattered.

Mr. ELLENBOGEN. That is just cotton.

Mr. MURCHISON. Yes; that is cotton. No one unit in those 1,140 occupies a dominant position in the industry as a whole. In that sense the industry is unique.

It is unique in another sense, and that is the wide territorial distribution of the industry has been attained rather recently, and within the lifetime of all of us. We have viewed the migration of the cotton textile industry from a center which lay in the Northeast to a center which now lies below the Mason and Dixon line. But at some stage in its history, all of the industries of America have gone through this migration period. The shoe and leather industry, in moving from New England to Missouri, went through that same experience. So did the iron and steel industry. And as the cotton textile industry has moved south and southwest, it is following a natural economic procedure in the sense that it has been seeking always an environment which provides a lower cost basis.

Of course, that fact has to be accepted, and I think in consideration of this proposed legislation, the particular point which I now have reference to becomes very important, because one of the allegations most consistently and vigorously made as regards the textile industry is this, that the low wage scales in the South represent an unfair situation as compared with New England.

It would seem to indicate-that is, the inference would seem to be there, that we had during this period of migration, a certain welldefined group of men who looked the situation over and decided that they could get lower wages in the South, and so they began moving their plants from Massachusetts and Rhode Island, shifting them down to the Carolinas, to Georgia, and to Alabama. Of course, that is not true.

Those of you who would like to have the most authentic history of the development of the American cotton textile industry would go to a book written by Mr. Broadus Mitchell, economist at Johns Hopkins University, recently Socialist candidate for Governor in the State of Maryland. Labor has no more ardent sympathizer in America than Mitchell. I think most of you probably know Mitchell; he is a very close personal friend of mine. In that book he points out that the great majority of the cotton mills in the South sprang up as a result of community endeavor. The local business man, the local preacher, the local school teacher, along with the other members of the community who had civic responsibility, said:

This community needs a pay roll; this community needs an industry which can provide men steady employment, more steady employment to the people who heretofore have had to depend upon agriculture, upon whatever haphazard employments came along.

And there you have got the story or the explanation of the origin of most of the southern cotton mills.

There you have the application of the fact that in a State like North Carolina, for example, approximately 80 percent of the mills are locally owned.

To be sure, in States like Alabama and South Carolina, the percentage of mills belonging to outside ownership, belonging to interests which were previously in the textile business, is somewhat larger. But in every case the ownership is preponderantly local; the management is more than 50 percent locally owned.

The reason why I have mentioned that is this: That the mills have grown up in a given wage situation and have accepted that situation.

The South is a low-wage area, relatively speaking. It has been since the Civil War. It has been generally accepted by students of national income that the Southern States generally have incomes, average individual incomes, which are about one-third less than the national average.

A great majority of the southern workers were agricultural workers and they regarded themselves lucky if they got as much as a dollar a day; and I am speaking of conditions, not in the remote past, but as they now are and have been.

And when a cotton mill comes into a particular community or is built up in a particular community and offers a wage that is substantially above what the people in that community have received, they welcome it. The justification for that wage does not lie in its relationship to what is being paid in any other part of the world. It lies in its relationship to what exists in that community, and it cannot be outherwise. Certainly it removes the taint that it is an unfair wage, because in some other portion of the world the wage is higher.

That is the point that I wish to emphasize here. In making that point I do not in any sense mean to imply that those wage levels are satisfactory. I am merely indicating that those wage levels are his

torical. They are an integral part of the economic system of that region of the United States, and the same differentials that apply to textile workers apply to wages in all other occupations; even the railroad workers, the telephone operators people in every line of activity in that southern area have differentials as compared with other portions of the country.

And it is accepted as a matter of course. And when the code was established in the cotton textile industry, there was still a recognition of that differential and an attempt to put it on a scientific basis resulted, as all of you know, in establishing a 30-cent minimum wage for the Southern States and a 321⁄2-cent minimum wage for New England. At present, so far as I know, there is no controversy on that differential.

The industry is unique further in that its organization is extremely complicated. We have spinning mills which sell their product to the weaving mills. We have among the weaving mills a few which do their own finishing but a majority which do not. The weaving mills sell to another group, the converters, who are responsible for determining what sort of finish shall be imparted to the goods, what sort of patterns, what sort of colors; and the converters in their turn selling in some cases indirectly, most selling direct to wholesalers, garment manufacturers, and other types of customers, including the great industrial consumers.

So that cotton goods, in their process of manufacture and distribution, go through many hands. There is a constant transfer of ownership and control and processing responsibility.

That would seem to suggest that the problem of making the textile industry a stable and a prosperous industry is a problem which reaches far beyond anything contemplated in the proposed measure. And what I mean by that is, it is a problem which has got to be solved by things which are constructive and not by a program which is restrictive.

It may involve a change in the organization of the industry, a change in its merchandising policies; a complete transfer of responsibilities as to the efficient operation of the industry.

You put the textile industry in a strait jacket of governmental restrictions at this moment and you definitely prevent the attainment of what to my mind is the most desirable possible objective in that industry, and that is its progress toward a better form of organization. Now we will come to the special charges which have been made against the industry and which presumably will be met by the proposed legislation.

I wish first to refer to child labor, that old skeleton of child labor, which has been dragged out of the closet once more, and, of course, mill men laugh now when you mention it.

In spite of certification reports from various agencies, the childlabor question is one which is practically negligible at the present moment in the cotton textile industry; I mean the presence of child labor is practically negligible. No cotton-mill man wants to employ anybody under 16. Every cotton-mill man knows that the employment of people under 16 is a losing proposition.

If this committee were to inaugurate a child-labor bill this morning prohibiting the employment of any person under 16 years of age, the cotton-mill man would welcome it; they would fight for it; there would not be in the entire industry a single voice raised against it.

And yet you say, "Here are certain cases where it exists." All right, look into those particular cases. Here and there a youngster who, during vacation wants a job, because his parents are poor. Here and there a youngster whose daddy is dead, whose mother is very poor, and they have got to have food. The mill management employs the child as an act of charity.

Here and there a recalcitrant boy who won't go to school, who won't make the grade, who is kicked out. Where shall he go? To the gutter? Put a broom in his hand and let him sweep the floor. That is better than putting him out in the gutter.

So, as you go from one instance to another, you find a special reason, the effect of which was to overcome the reluctance of the cotton-mill manager in employing that youngster. You will never find a case where the cotton-mill manager said, "I would like to have you come and work for me; you are under 16." You do not find those cases.

As to the matter of wages, I have already referred to that as regards the southern branch of the industry. Now, with respect to the industry as a whole, I merely want to point this out, that the textile industry has for many years been one of our important export industries. Back in the 1920's we exported regularly half a billion yards of cloth per year.

The development of the textile industry in Japan, in Brazil, India, China, and other countries, has meant that the American textile industry has been called upon to encounter progressively increasing competition from other countries, and we are apparently losing out. We are shipping now about half of what we did; last year about 226,000,000 yards. All right, if we want to give that up, very well. I am not arguing against high wages, understand. If we want to give up that export business, very well, we will give it up. That will mean twenty or twenty-five thousand less people working in the textile industry.

Will higher wages under present conditions produce a larger domestic consumption? If it does, that will be the first time in economic history such a curious thing has happened.

Mr. KELLER. Will you restate that for me, please?

Mr. MURCHISON. Higher wages will not produce increased consumption of textile products, because it will bring about a higher cost basis. It will kill our export trade.

I am merely trying to point out both sides of this, and now I will point out the other. If the general economic situation can be improved so that wages throughout American industry as a whole can rise concurrently and the general purchasing power be increased then-yes, of course. What could be finer?

If we analyze the various industries of the country from the standpoint of their wage-paying possibilities, what do we find? We find that the industries which pay high wages are those which are fundamentally prosperous.

There at once rises the argument as to where the cause and where the effect. Take the automobile industry as a most significant example. It pays high wages, relatively speaking. General Motors Corporation last year made a net profit, as reported in the papers, for 1935, of $167,000,000. It is a bigger profit for that one company than the entire textile industry has made in 5 years. As a matter of