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Mr. Wood. What was the price of textiles in December, as compared with 1933?
Mr. Dorr. What was the price as compared with what time in 1933?
Mr. Wood. The beginning of 1933, in March of 1933.
Mr. Wood (interposing). Were there not increases in the price of textiles from March of 1933 until December of 1935?
Mr. Dorr. There was a tremendous rise in the price of our raw material and a tremendous price rise in our labor costs and, consequently, although I do not have the figures in mind, I am sure that there has been.
Mr. Wood. There has been a tremendous rise in the cost of the finished product, too.
Mr. DORR. An increased and corresponding rise.
We were selling our goods at a loss, in 1932, of $53,000,000 in the industry as a whole.
I think, unquestionably, in the last half of 1934, as is shown by the Federal Trade Commission, we were losing money on those sales as a whole. We were losing money then.
As to the first half of 1935, the Federal Trade Commission is looking into that and we have not received the report but, from the reports of mills, they were losing money at that time.
What it was during the last half of 1935, I do not know; but I think, if you will look at the investigations which the Tariff Commission made into the costs of gray goods and the selling prices of gray goods, you will find that they were losing money then and are losing money now all over the country on gray goods.
Mr. Wood. According to your theory then, it has been the policy of the Textile Institute, textile manufacturers, in 8 or 10 years, in general, to operate at a loss, and I would like to know how they have built all these tremendous institutions, how they have extended their business, and how they have survived when they have been constantly operating at a loss.
When do the textile manufacturers expect to make a profit?
Mr. Wood (interposing). It seems as though this industry has been operating at a loss for the past 6 or 7 years.
Mr. Dorr. No; during 1934, and the last half of 1933—the last half of 1933 and the first half of 1934—it operated at returns, as shown by the Federal Trade Commission, of about 6 percent, or something of that sort. That is, some branches did.
Mr. Wood. Do you really think it is possible now for any great industry to operate within 60 years at a loss and survive? Do you really believe that? Do you believe any businessman will operate his business for 6, 7, or 8 years at a constant loss?
Mr. Dorr. The income-tax returns showed that from 1928 on, until 1933, it did operate at a loss, and it continued to operate, and very many mills went out of existence.
Mr. Wood. Do you think it is possible for any large business enterprise, one of the largest industries in the country, to operate for 6 or 8 years at a constant loss? Do you really believe that a businessman can do that and survive?
Mr. DORR. He may not survive but he maintains his plant; that is, the property may go into the hands of other people who buy it at less value.
Mr. Wood. That has not been shown to be the fact.
Mr. Wood. The great proportion of the industry—the proportion of former owners in the industry remains unchanged. There is no indication of the change at all.
Mr. DORR. I think you will find there have been tremendously large areas of the industry in which mills have folded up and liquidated. I will give you the figures on that if you would be interested.
Mr. KELLER. Have you any further questions, Mr. Wood?
Mr. Wood. But, since the processing tax was declared unconstitutional, they are still operating at a loss?
Mr. Dorr. I did not say that, Mr. Wood, quite. I said that in the last half of 1933 and the first half of 1934 the Federal Trade Commission reported that we had, the industry as a whole had, made a profit for the last half of 1934, as I remember it, it having reported that we made a slight loss, as a whole, in our return on the investment as a whole.
In 1935, we do not have the figures although I believe they will show that that same condition continued, only perhaps worse.
Mr. Wood. How has business been since May 28, 1935? Has business been worse?
Mr. DORR. Since May 28, 1935?
Mr. Wood. Yes. What is the condition of the business in the past 8 or 9 months?
Mr. DORR. I think the condition of the cotton business is that what you refer to?
Mr. Wood. Yes; I am talking about the cotton business.
Mr. Dorr. I think it is better than it was at that time. It was in very, very bad condition at that time.
Mr. Wood. According to the testimony last week they have instituted, since the N. R. A. was declared unconstitutional, have increased hours; they have reduced wages, and they surely have garnered some profits in dividends from that policy, and probably more than the 5 cents you say they would lose if we passed a law here with a retroactive feature, making it impossible for you to collect the money you have impounded on the processing tax.
Mr. Dorr. Mr. Wood, you are making certain statements which do not accord with our information.
Mr. Wood. What portion of the statement are you speaking of?
Mr. Dorr, Why, that the industry as a whole has extended hours, extended work assignments, and reduced wages.
Mr. Wood. How did you get that information? We had some 25 or 30 men here last week representing the organizations in the localities, men who work at tbe plants and know the condition of the plants in the localities. What better testimony can you get than that? Do you suppose that these men were coming here just for the pleasure of misrepresenting the case or do you suppose they were impelled by the danger of reverting back to the condition of 1932?
You surely do not contend that these 18 or 20 men that came here last week representing employees would come here and deliberately misrepresent the condition of their plants just for the pleasure of it. Do you not think they had some reason for coming here, and do you suppose they would be here at all if the cotton textile manufacturers were still abiding by the code? What occasion could they have for coming here?
Mr. Dorr. Mr. Wood, I would say this, if you will listen. The next witness is broadly familiar with that situation in a way that I am not, and I think that you will get perhaps a different picture of the situation, but just let me point out one fact which seems rather significant to me and it may not to you, and that is that the hourly rate of pay, as shown by the Bureau of Labor Statistics for the last month we have it, which, I think, is the month of December, November, or December, is higher than it was immediately after the code which would indicate that the evidence which you have heard does not represent conditions in the industry as a whole but represents conditions in some instances which happi y are sporadic and not prevailing
Mr. Wood. Will you show me the report of the Department of Labor that has reported that wages have increased in the textile industry since July 1935, as compared with July 1934?
Mr. Dorr. What I said was that our average hourly rate--
Mr. Wood (interposing). Since July 1, 1935, you do not have anything from the Department of Labor on that, do you?
Mr. Dorr. Pardon me, the next witness will give you something of that kind if you do not already have it.
Mr. KELLER. Let us see if we cannot get through that. Are there any further question you care to ask, Mr. Wood?
Mr. WOOD. No.
Mr. ELLENBOGEN. I would like this witness to tell us if this is a genuine letter sent out by the Cotton Textile Institute (exhibiting letter to witness).
Mr. Dorr. It appears to be.
Mr. ELLENBOGEN. Just one more question. The processing taxhow soon after the manufacture was it due, on cotton?
Mr. Dorr. You mean after the opening of the cotton bale?
Mr. Dorr. Three months, that is between the opening of the bale, not the completion of the manufacture. The manufacturing process is a long one, you see.
Mr. ELLENBOGEN. Yes.
Mr. Dorr. And, it is 3 months after the bale of cotton is opened. Those taxes may be payable before those goods have been shipped at all.
Mr. ELLENBOGEN. How long does it take you to make a return?
Mr. Dorr. Well, returns have to be made in 30 days after the bale is opened.
Mr. ELLENBOGEN. After the taxes due?
Mr. DORR. After the end of the month during which the bale is opened.
Mr. ELLENBOGEN. You have a total period of 4 months, do you not; 3 months and 1 month?
Mr. DoRr. If it is opened during the beginning of the month, I would say, yes. If it is opened at the end of the month, I would say, 3 months.
Mr. ELLENBOGEN. When was the decision of the Circuit Court of Appeals handed down? Mr. DORR. July 16.
Mr. ELLENBOGEN. Then, going back a period of 4 months, takes it back to February, February, or March, depending on the mill. July is the seventh month.
Mr. Dorr. That mill did not quit paying taxes simply on that basis, Mr. Ellenbogen.
Mr. ELLENBOGEN. When that decision was handed down, the mills had not paid the tax subsequent to February.
Mr. DORR. There was some additional time given. The law changed in August and extended the period.
Mr. ELLENBOGEN. So that that period would go back even further?
Mr. Dorr. No, we had to pay more quickly prior to the amendments of last August. At that time, you extended the period
Mr. ELLENBOGEN. There was some time prior to the decision of the Court during which the tax had not been paid at the time the decision was rendered.
Mr. DORR. I did not quite get that.
Mr. ELLENBOGEN. There was, or were some months prior to July, when the decision was handed down, that the processing tax had not been paid.
Mr. Dorr. There was a period of time.
Mr. ELLENBOGEN. Now, for that period of time, the tax has never been paid.
Mr. DORR. Some mills have not paid it.
Mr. Darr. The only way they would not have paid it, either they got an extension from the Treasury Department or an injunction.
Mr. ELLENBOGEN. Yes. Now, as to those that got an injunction, and there are some, is that right?
Mr. DORR. Yes.
Mr. ELLENBOGEN. The 120-day contract would not go back that far.
Mr. Dorr. No, the 120-day contract—the decision of the Supreme Court not having come until January, would not go back that far.
Mr. ELLENBOGEN. That is the period of time that the industry will have to do something about it because there is no disposition to permit the industry to retain that tax.
Mr. Dorr. It is the period of time which the industry is giving thought to, Mr. Ellenbogen, and I think you will find when you have to deal with this, that you will feel that the industry is disposed to take just as fair a position as they are going to ask you to.
Mr. ELLENBOGEN. All right.
Mr. Munroe, it is the desire of the committee to dispose of this matter as promptly as possible and we would ask that you limit your time as much as you conveniently can. How much time do you think you will require?
Mr. MUNROE. About an hour, Mr. Chairman.
Mr. Wood. I would like to have you reduce that to a half an hour if you possibly can, and in order to do that all the witnesses will have to reduce their time as much as possible, for this reason, that legislation is just as liable to come before the House this week that will make it impossible for this committee to hold hearings more than a couple of hours a day, in the morning. We went on last week morning and afternoon and I think the members of the committee ought to attempt to confine themselves and perhaps adopt a rule confining themselves for 10 minutes each, as we usually have done on former hearings, as far as interrogation is concerned, and if you can cut it down to 30 minutes I shall appreciate it.
STATEMENT OF SYDNEY P. MUNROE, ASSISTANT TO THE PRESI
DENT, THE COTTON TEXTILE INSTITUTE, INC. Mr. MUNROE. Mr. Chairman, I will do the best I can. I would like to have you bear in mind, though, that we had a number of witnesses here last week who wanted to be heard but could not stay. We expected to be able to go on Wednesday afternoon and did not get on until late Thursday afternoon.
Mr. Wood. I suppose the reason they could not be heard was that we took up too much time with each witness. We took one whole morning with one witness last week. Nothing can be accomplished by keeping one witness on all morning. I think better information can be adduced from these hearings by having three or four witnesses instead of one.
Mr. MUNROE. Mr. Chairman, it is my desire to be just as helpful to this committee as I can, and I think I can be more helpful if I am a little explicit.
At the outset, in order that you may have a reasonable idea of the background on which my statements are based, I am assistant to the president of the Cotton Textile Institute. I have been, all my business life, in the cotton-textile industry.
Mr. Wood. With the Cotton Textile Institute?
Mr. MUNROE. No, sir. I am coming to that. I went to work in a cotton mill in 1912, for $10 a week, working, I believe, 58 hours a week, and for 8 years I was working in cotton mills in various positions, gradually improving them, and, finally, in 1920, I entered an engineering line, installing cost systems in cotton mills.
For the first 5 years of that period I was located in New England, and in that time I had intimate access to all the figures, data, and finances of approximately 100 cotton mills.
Five years subsequent to that I lived in Greeneville, S. C., and traveled from Alabama to Virginia, installing cost systems in some 65 cotton mills in the South.
In 1930, 6 years ago, I entered the employ of the Cotton Textile Institute. Now, since I have been with the institute, I have been in charge of the field staff of the institute; at one time we had as many as seven men, and since then we have been reduced to four.
Throughout the period of the N. R. A. code I was compliance director for the code authority. I had charge of our field agents who investigated wages, hours, and complaints.