fact, I think we lost that amount during the last 5 years. It is an awfully interesting thing.

Well, no one can suppose for a moment that the prosperity of that industry is its own high wages, because the ownership of automobiles is on too broad a base. Of course, you have got in the case of automobiles a product which is more elastic in its consumption than textile products. If a man's income increases he will buy an additional automobile. If his income increases he will buy a somewhat larger amount of textiles, but the increase will not be perhaps so great on the average.

So the textile industry is conditioned on the general prosperity for the expansion and consumption of its products. It will, of course, contribute to that by an increase in wages, but that alone cannot accomplish it.

Now, as regards the matter of hours. Within the memories of all of us here, hours prevailing in the cotton textile industry have been reduced from as high as 72 hours per week in some of the States in the extreme South to a present standard work week of 40 hours per week. It has not been so long, only about 6 years ago, when I, myself, was very active in the State of North Carolina trying to get the hours reduced from around 60 to 50, and it was a difficult and discouraging job, and a great many cotton mills were opposed to it. Today the standard practice is 40 hours a week and practically all the cotton mills are in favor of it.

That is a magnificent record. Who could find fault with that? Who could look upon it with anything else than a sense of pride in the achievement? If there is such a thing as being proud of an industry, you certainly would have to feel proud of the cottontextile industry when you look back upon its history, for having accomplished this thing which you, yourselves, would have regarded an impossibility 10 years ago. But it has been done, and the industry is a virtual unit today in the maintenance of that 40-hour workweek. At the present time the industry has in progress what we call a pledge, an industry pledge, and I want to call that to your attention and then I have finished with my statement. I will read only a small portion of it, it will take just a moment.

In the hands of every cotton mill of the United States a copy of this has been placed for the signature of that mill. This only happened a couple of weeks ago. Since that time, the processing-tax difficulties have come along and we have all been completely submerged in things very urgent and very distressing, but I hope within the next few weeks to be able to report to you the answer by way of acceptance by the industry as a whole of these fundamental provisions of the code.

To maintain fair and constructive competitive practice, stability of employment, and proper standards of wages and hours of employment, and to protect the public interest, the undersigned pledges continued observance of the following principles:

1. For employees engaged in operating textile machinery inside the mill or engaged within the mill in handling material in process, the maximum work week shall not exceed 40 hours in any 1 calendar week.

2. The minimum rate of wages for such employees shall be 30 cents per hour in the southern branch of the industry and 321⁄2 cents per hour in the northern branch of the industry with the exception of learners and workers partially incapacitated by reason of age or disability.

3. Minors under 16 years of age shall not be employed.

4. Productive machinery defined as spinning spindles and looms shall not operate more than 80 hours in any 1 calendar week, such limitation to apply to each individual spindle and loom.

There are the fundamentals of the code number 1 in the adoption of which the cotton textile industry showed a more eager and a more alert responsiveness to its social and economic responsibilities than any other industry in America in the speed and the unanimity with which it has adopted its code; and that same spirit prevails in the declaration which it is now making to maintain the fundamentals of that code.

Just one more point. I am trying to conclude my discussion not by a negative attitude toward this proposed measure, but by a constructive attitude toward the problem as a whole.

The constructive attitude of the industry is demonstrated by these provisions which I have just read and which the industry is seeking to maintain.

The other constructive suggestion is a proposal for a change in the legal situation which will enable the industry more effectively to accomplish what has been suggested here. That is a change in the antitrust laws so that it will be possible for the industry to effectuate a voluntary agreement that will be absolutely binding.

I have had more than one mill man say to me during the past 2 months, "If you will make an agreement regulating hours and establishing standard wage minimums, if you can make that agreement binding, I will be only too happy to sign it."

The more water-tight you can make such an agreement, the better the industry will like it, and yet when we try to draw up a water-tight agreement which is not designed to bring about monopoly and price control, but to bring about intelligent policies in production and employment, wages and hours, we are told, "No, you cannot do that; that would be against the law."

Being unable to do that, we fail somewhat of our purpose, and, failing somewhat of our purpose, then the Government comes in with a proposal: We will make you do this and we will make you do that.

Gentlemen, that is so illogical. If it is a desirable thing that we accomplish the objectives as set forth in this proposed legislation, why should it have to come through a Government agency when all the industry wants is permission to do it itself, and, in doing it itself, do it better, retaining the spirit of the American economic system, retaining the spirit of American politics and American government; and at the same time retaining the flexibility which will make possible the progress which the industry has ahead of it, which it must have, which it must achieve, if it becomes an industry of which the country is proud in proportion to its greatness.

That concludes my statement, Mr. Chairman.

Mr. RAMSPECK. Mr, Murchison, in your study of the history of the textile industry, I am wondering if you have found that it has constantly migrated in an effort to achieve lower costs; and is that tendency continuing now even from the South to other countries where lower cost bases can be had?

Mr. MURCHISON. So far as the past is concerned, your statement absolutely correct. That is the history of textiles, not only from

the point of view of America but the whole world. It is a migrating industry. It is seeking always that lower cost level.

Mr. RAMSPECK. Is not that migration continuing now, for instance to Brazil?

Mr. MURCHISON. Brazil is developing its textile industry; there is no doubt about that.

Mr. RAMSPECK. Of course, we know that Japan has greatly expanded her textile industry.

Mr. MURCHISON. The United States is faced by a real peril from the Japanese.

Mr. RAMSPECK. The Japanese have captured the market in the Philippines already, have they not?

Mr. MURCHISON. Well, they were on the way toward doing it, and we have a gentleman's agreement now which restricts them to one-half of it, approximately. That agreement is for a period of 2 Whether it can be made a permanent thing still remains to be seen, but we had all of the Philippine market a short time ago. Now we may have half of it.

Mr. RAMSPECK. It is also true, is it not, that actual production of the raw material, cotton material, has a sort of tendency to migrate from the southeast to the southwest, where there are cheaper production costs?

Mr. MURCHISON. Yes, that is exactly true.

Mr. RAMSPECK. You spoke about income conditions in the South. What you said with reference to wages is not only true, as you said, in all lines of industry; but is it not also true as to school teachers, as to professional people such as doctors and lawyers?

Mr. MURCHISON. Yes.

Mr. RAMSPECK. And as to white-collar workers as well.

Mr. MURCHISON. Yes, it certainly is. We have some figures here comparing the income of cotton-textile workers with school teachers, and in some States in the South the school teachers are on a lower wage scale.

Mr. RAMSPECK. It is not uncommon for a school teacher in a country school in North Carolina, South Carolina, and Georgia to work for $50 a month, is it?

Mr. MURCHISON. Not at all. Those are very distressing facts. They are facts just the same.

Mr. RAMSPECK. I agree with you about that. Of course, I am anxious to see the whole level raised. But I just want the record to show that your statement as to the general income situation in the South is correct. I think it is.

Mr. MURCHISON. And as a member of the faculty of the University of North Carolina, my salary for about 6 months was cut 50 percent and for the entire period of the depression it was cut one-third.

Mr. RAMSPECK. With reference to the merchandising policies in the cotton-textile industry, is it not true that a great deal of the product is sold through brokers in New York?

Mr. MURCHISON. That is the gray goods, yes; brokers and commission men.

Mr. RAMSPECK. And one of the objections to the processing tax arose out of the fact that the product goes through so many hands and each handler gets a percentage of profit, a percentage on his cost

price, which meant that the processing tax was pyramided, as it were, through those various hands; is that not so?

Mr. MURCHISON. Yes, you are exactly right. The processing tax became very complicated administratively in the textile industry because the goods had to pass through so many hands; and that meant passing along the tax through so many hands, and, as you say, there was not only pyramiding but also the problem of adjustment when the tax was invalidated, and that has been driving us crazy the last couple of weeks.

Mr. RAMSPECK. If I understood you correctly, with reference to child labor, minimum wages, maximum hours, and hours of machine operation, if we can design a legal method by which those reasonable limitations can be enforced, the people you represent would be delighted to see that done; is that correct?

Mr. MURCHISON. We would do it, and we would do it happily, and I believe we would do it effectively.

Mr. RAMSPECK. You prefer to have it done by an agreement that is permitted under the antitrust laws rather than under a mandatory provision of the Congress?

Mr. MURCHISON. Much rather.

Mr. RAMSPECK. I presume, of course, that you would agree, if we give such a right as that to any particular industry, there ought to be some check on the minimum wages and the maximum hours, some approval of the agreement by some agency representing the public?

Mr. MURCHISON. Oh, yes; I think there would be no objection to that. I think any reasonable man would recognize that if a great group is given powers of coordinate action, it certainly does lie within the function of government to see that that power is not abused. I think that is an accepted principle in American policy.

Mr. RAMSPECK. In other words, it would not be fair to say to any group or industry, "We will permit you to make a binding agreement without any limitation", because, while I do not say they would do it, it would be possible, if we gave that authority, to fix a minimum wage of 50 cents a day, for instance; and you, of course, do not advocate giving that right to anybody?

Mr. MURCHISON. Not at all.

Mr. RAMSPECK. One other question. While you were not connected with the industry during the major part of the operation of the code, I have this strong conviction-and I have asked other witnesses the same question-that the main progress we made under the N. R. A. was in the establishment of minimum wages, maximum hours, elimination of child labor, and that the other things that were injected into the codes only brought us trouble.

What is your opinion about that?

Mr. MURCHISON. I think you are right about that. A
Mr. RAMSPECK. That is all.

Mr. SCHNEIDER. I understood you to say that the general income of the people in your State was about 25 percent less than the average of the country. Is that correct?

Mr. MURCHISON. For the Southern States as a whole the average of individual incomes is nearer two-thirds of the average for the rest of the country than three-fourths. I say it is certainly 25 percent less. It would be nearer 30 percent less.

Mr. SCHNEIDER. Do you think a condition of that kind is good for the country generally?

Mr. MURCHISON. No; I think the country would be more prosperous, business could carry on more effectively, if incomes in all regions were substantially on the same level. I think that would be a very desirable goal.

Mr. SCHNEIDER. Is the industry doing anything to bring that condition about?

Mr. MURCHISON. The industry developed in its low-wage area, and I believe the cotton textile industry has contributed more than its part to the lifting up of the income levels, and I will tell you why I say that. I say it because it is a fact that the textile mills have recruited their workers from the agricultural population, and the wage scales in the textile mills are better than agricultural wage scales. Therefore it must follow that the cotton mills have contributed to a higher income level. It cannot be otherwise.

Mr. SCHNEIDER. Do you think it is a fair proposition to say that the wages of industrial workers should not be higher than those of agricultural workers?

Mr. MURCHISON. No; I do not say that. I say the higher the better for any group so long as it is a wage which is an economic wage, that can be justified by the values that are being produced.

Mr. SCHNEIDER. The wages of agricultural workers usually are on an entirely different basis, a basis whereby the worker is provided shelter and food and other things that are necessry for hm otherwise to buy out of his wages; so that he has at the end of the month a certain amount of money which compares probably favorably with the low wage of the industrial worker.

Mr. MURCHISON. The statistics of incomes of southern agricultural workers that is, the sharecroppers and the tenant farmers, and also the day laborers-show that they get considerably less than the cotton mill workers.

Mr. SCHNEIDER. It is true, however, when you recruit the agricultural workers, you recruit the best of them.

Mr. MURCHISON. That is as regards the matter of rent, housing. Of course, in the South you have a condition of extraordinarily lowcost housing for the textile workers. It is almost a gift. It is so nearly so that you really should add on the value of the housing in computing the wages.

Mr. SCHNEIDER. You spoke about what the industry is doing with reference to improving the condition in the industry. You mentioned the reduction of hours from 70 and 60 hours a week to an alleged 40 now. Just what did the industry do to bring that about of their own voluntary action?

Mr. MURCHISON. It has been purely voluntary, purely voluntary. Mr. SCHNEIDER. You mean that the code had nothing to do with that, had nothing to do with putting into effect those hours?

Mr. MURCHISON. I take the position that itself the code was a voluntary thing.

Mr. SCHNEIDER. Do you mean to say that the President would have signed the code if it provided for 60 or 70 hours a week?

Mr. MURCHISON. No; I do not think he would. But then, that question is hardly fair because the industry had no intention of submitting any such code. What the industry actually submitted was a 40-hour week.