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Mr. KELLER. I am perfectly willing to go to that with you. Let us see first if we can arrive at an understanding of what percentage of the prepanic national wealth we now owe.

Mr. MURCHISON. Roughly about one-twelfth, isn't it?

Mr. KELLER. Well, it is something less. Assuming that we will recover none of our loans, it is something like 83 percent at the present time. But it is well known that we will recover a very considerable number of the billions that are out; so it will make it not over 7 or 7 percent at the very maximum.

Following the Civil War what proportion of the national debt did we owe as compared with the national wealth at that time?

Mr. MURCHISON. I do not recall those figures.

Mr. KELLER. I want to give them to you, because I think they are figures that will be instructive to even as good an economist as you are. At the close of the Civil War our national wealth amounted to $20,000,000,000 and we owed $3,500,000,000, or 1772 percent of the total amount. At the present time we owe less than half of that proportion of our national wealth. Since that period we have increased

. our wealth just 20 times; we have increased the individual holdings from $666 up to $3,300 for each individual in the United States.

And why are our industries in this country getting scared today, as they appear to be, when it is less than half of the proportion of the debt that we owed after the Civil War, that is, as compared with today, and when we are capable of producing twice as much wealth man for man as we were at that time. I am referring now to some of the big men interested in this matter who are talking nonsense and talking through their heads. Everyone who is a good business man knows that if you owed at one time 1772 percent of your total wealth and at a later date owed only 774 percent, you were a lot better off than you were at the previous time. And I want you to get that, because instead of getting scared we ought to forge ahead and get at the bottom of it and get the facts. That is what this committee is trying to do.

If we had continued the income tax in force at the end of the World War, how long would it have taken us, Doctor, to have paid off the national indebtedness, the entire national indebtedness?

Mr. MURCHISON. It was being paid off very rapidly, of course.

Mr. KELLER. The joint committee of experts between the House and the Senate on that subject prepared a table; and if this committee desires it I would be glad to put that into this hearing. It shows that if we had continued, we would have paid off every dollar of our national debt in about 7 years, as I remember it, and that we would have had no deficit at the present time.

I am only suggesting, gentlemen, that what we ought to have done was to continue the payment of the income tax until we had paid out of the war profits the cost of the war. And that would have included the payment of the bonus at that time. And it ought to have been paid.

Mr. WELCH. If we had good sense and kept out of the war we would not have to pay off the debt.

Mr. KELLER. But we got into the war.

Doctor, I also hope to have the figures to show the facts. also compiling a book, and I hope to have in my book facts and figures showing that if we increased the average pre-panic income 50 percent that we would have a demand in the United States alone for 20,000,000 bales of cotton manufactured for the use of the people of the United States. And because you are an economist and because you have a broad view of it, we have come to you fellows. And I am suggesting to you that we have to increase the income, because overproduction is nothing less than underconsumption. It always has been and always will be.

We will now recess until 2:30.

(Thereupon, at 1 p.m. a recess was taken in the hearing until 2:30 o'clock of the same day.)


The committee resumed its session at 2:30 p. m., Hon. Kent E. Keller, presiding:

Mr. KELLER. We are going to proceed this afternoon with the witnesses for the sick king. The first witness we will call will be Mr. Robert R. West, president and treasurer of the Dan River & Riverside Cotton Mills at Danville, Va.


DAN RIVER & RIVERSIDE COTTON MILLS, DANVILLE, VA. Mr. KELLER. Mr. West, will you please give your full name? Mr. WEST. Robert R. West.

Mr. Chairman and gentlemen of the committee, it might save some of the time of the committee if I start by outlining the excuse that I have for being here.

I am a cotton-textile manufacturer. I am the chief executive officer of a cotton-textile mill located in the State of Virginia. I am not a constitutional lawyer, I am not an economist, and I am not a financier.

The contribution that I can make to this hearing is as the result of the experience that I have gained and what I have learned about the conduct of textile manufacturing operations from working in the mill and the actual contact with mill operations and the problems that arise from conducting a manufacturing business.

I think there are two things which it might be helpful if I clarified to the committee at this moment. There was considerable discussion this morning in regard to the ability of the cotton-textile industry to fix prices as a result of the Code of Fair Competition under the National Recovery Administration. There was nothing in the Cotton Textiles Code which even remotely contemplated the fixing of prices, the price of goods that moved from the mills to customers. Ît was never sought by the industry, it was not incorporated in the code in any way, and it was never practiced. As a matter of fact, I believe that there is none of us who are engaged in the cotton-textile industry who has any desire for any kind of price-fixing scheme.

In one or two of the supplemental codes to the Textile Code, there were provisions that had to do with sales of goods below cost of production, but all of those had to do with merchandise after it left the hands of the manufacturers. I think it was the unanimous opinion among cotton manufacturers that price fixing is a wholly impossible procedure in the cotton-textile industry.

In the second place, there seemed to be a little confusion this morning about the situation regarding the movement of cotton mills from the East on the one hand to the South on the other. The impression that I got was this, that somebody felt there had been a great movement of mills, which had gone to the South and had built mills with northern capital. That is not strictly the case. There has been a great movement of northern capital to southern mills, but by and large in the greatest number of cases it has been the purchase of mills, mills which were already existing there, and in some cases the enlargement of those mills, and there has been a comparatively small amount of actual development of new property. There has been some, but compared with the purchase of properties that already existed and were operating it was small.

The great bulk of cotton mills in the South today remains owned by local capital. It was stated this morning that in the case of the largest mills that did not obtain, but that statement is not correct. The largest of the textile mills in the South are still owned and operated by local capital.

Of course, the detailed information on that is available to the committee, and I shall be very glad to support it in any way the committee might like to have it supported. But the fact of the situation is that these mills that Dr. Murchison described this morning are still owned largely by local capital.

Mr. KELLER. You say you have information available on that subject?

Mr. WEST. Yes; it can be readily obtained.

Mr. KELLER. I think the committee would be glad to have it. Just put it in as short form as you can put it.

Mr. WEST. Yes.

Mr. KELLER. I would like very much to make it a part of your testimony.

Mr. West. All right, sir.

Just by way of illustration, I will say that the mill of which I am the head is owned by 2,200 stockholders, the majority of whom reside within 200 miles of the city of Danville. The ownership is very widespread.

Mr. Woop. Of whom are these 2,200 stockholders composed? Are those employees, or who?

Mr. West. Comparatively few of the employees own stock. Some of them do. They are the local people, the tobacco people-of course, southern Virginia is a great tobacco country-merchants, farmers, and professional men. Over a long period of years they have invested their savings in the securities of the Riverside and Dan River cotton mills. That is quite typical of a great many of the mills in the South.

In regard to the bill-in the first place, I should like to suggest a moderation in the language used in parts of the bill, particularly in section 2 (a), paragraph 1. That is the section, you will recall, which refers to the conditions that prevail in the cotton-textile industry as constituting, to use the words of the bill, "a menace to the health, safety, morals, welfare, and comfort of the citizens of the United States."

It should be borne in mind that in the event this bill becomes a law, the commission which is set up under the bill will, of necessity, have to obtain the sincere cooperation of all interests in the industry, and


if the commission in its approach to the problem that is handed to it by this bill is dominated by the idea that it deals with a menace to American life, the work of the commission will be unspeakably complicated.

Mr. Wood. That subsection 1 of section 2 is only a declaration of principle. I cannot see that you should have any objection to this language (reading):

Under present unregulated conditions, wages below a decent standard of health and comfort, excessive hours, child labor, overburdensome work assignments and other unhealthy and demoralizing conditions of work, the denial of the right of self-organization and collective bargaining, and excess production prevail in the textile industry, cause widespread unemployment and heavy financial expense to the Government of the United States, and constitute a menace to the health, safety, morals, welfare, and comfort of the citizens of the United States.

You do not deny that such conditions do constitute a menace to the health, morals, and safety of the people, do you?

Mr. West. That is precisely what I deny:

Mr. Wood. You deny that those conditions would be a menace to the safety and morals of the people?

Mr. WEST. According to the wording of this, as prevails in the textile industry:

Mr. Wood. A certain amount of that prevails in every industry. There are good and bad employers in every industry, and wherever it prevails it constitutes a menace. That is my understanding of what the subsection means.

Mr. West. It is quite likely that we do not read it the same.

Mr. Wood. Well, then, let us amend it by saying, "Wherever prevailing in the industry.”.

Mr. WEST. I am talking to the bill, Mr. Wood.

Mr. Wood. That is what I am reading now. "Wherever prevailing in the industry.”

Mr. West. It does not state that, sir. It states that these conditions prevail in the industry.

Mr. Wood. Can we not meet your objection by an amendment stating

and excess production, wherever they prevail in the textile industry, cause widespread unemploymentand so forth? Mr. West. I think it is quite likely that the wording might be amended. That is what I am pleading for in this.

Mr. Wood. It is not a matter of wording. I do not think there would be any objection to having it read that wherever it did prevail in the industry it would constitute a menace to health, and so forth. In fact, it does it in that or any other industry. I do not think there would be any objection to that provision at all, do you, Mr. Chairman?

Mr. RAMSPECK (presiding). I think that is an immaterial detail. I suggest we let Mr. West proceed.

Mr. Wood. Yes; I do, too.

Mr. RAMSPECK. I suggest we let lír. West go ah ment. What we would like to know is, what a prevailing?

Mr. Wood. I think it would be best to let the his statement.


Mr. West. I shall be glad to handle it in any way that suits the convenience of the committee.

Mr. Wood. Whatever is convenient to you.

Mr. West. If it is to the convenience of the committee to question me as I go along, that will be perfectly satisfactory, sir.

Mr. Wood. All right.

Mr. West. What I am suggesting is a moderation of this language, because an industry that employs some million of people, which provides the livelihood of this million people and their dependents, and which supports by its taxes whole townships, counties, and in some cases States, can hardly be looked upon as a menace to American life.

If you were to write to the city council of the city of Danville and ask them if the Riverside and Dan River Cotton Mill was a menace to that community, I am quite sure of the answer you would get, from them, from the authorities in Pittsylvania County, or from the authorities in the State of Virginia and many other textile communities in the South.

The use of that kind of language in a bill which is proposed to be passed by Congress is an extravagantly inaccurate use of the English language.

During the last few years the textile industry has been subject to numerous surveys: The Cotton Textile Labor Relations Board, the Winant Board, the Textile Labor Relations Board, the Textile Industry Work Assignments Board, the Bureau of Statistics, and the Cabinet Committee.

A careful study of the reports of these authorities fails to reveal an opinion even remotely approaching the calling of the industry a menace. It is going to be sufficiently hard to deal with the problems, of the textile industry without further complicating it by irresponsible charges and countercharges.

In the spring of 1935 at the instance of certain Members of Congress, the President of the United States appointed a committee to report on the conditions and problems in the cotton textile industry. This committee was composed of four Cabinet members and an exhaustive study was made, the results of which were embodied in a report transmitted by the President to the Congress under date of August 21, 1935.

The report has been published as Senate Document No. 126. I respectfully commend this report to the attention of this committee.

It deals at great length with the problems sought to be answered by the Ellenbogen bill. It is a dispassionate, calculated, objective study of a great industry. Its findings and recommendations come as the result of studies, the prosecution of which engaged such services as are rarely at the command of an industrial investigation.

In summary, this report of the Cabinet Committee lists four basic problems of the cotton textile industry. It might be helpful to the committee to review this bill in the light of the extent to which the bill might help to solve the problems outlined by the Cabinet Committee Report.

Mr. Wood. That investigation was made before the N. R. A. was declared unconstitutional, was it not?

Mr. West. No, sir. That is not quite correct. It was authorized before, but it was prosecuted and was not published until long after. The report was published in August 1935.

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