RADIATION PRODUCTION AND SHORTAGES (MILLIONS OF SQUARE FEET - MONTHLY AVERAGES) Source:- Monthly Report of John D. Small, CPA Administrator, dated January 28, 1946. The CHAIRMAN. The next witness is Mr. Harvey W. Moore. STATEMENT OF HARVEY W. MOORE, REPRESENTING THE AMERICAN COTTON MANUFACTURERS ASSOCIATION, CONCORD, N. C. The CHAIRMAN. Mr. Moore, you are appearing for Mr. Cannon? Mr. MOORE. Yes, sir. The CHAIRMAN. You are the executive vice president of the Brown Manufacturing Co., of Concord, N. C. Mr. MOORE. As you have stated, Mr. Chairman, I am pinch-hitting for Mr. Cannon, who is chairman of the board of the American Cotton Manufacturers Association, and I am speaking for that association which represents the southern textile mills consuming approximately 85 percent of the cotton consumed in the United States. Our members include something over 600 different units. The total number of spindles operating in the South is 17,000,000 out of a total of 23,000,000 in the United States and this represents an average of 30,000 spindles to the unit. While the average size of the unit is small and the industry properly classifies as smaller manufacturers, the southern mills represent an important part in the economy of the South and it furnishes weekly pay rolls and employment for over 400,000 employees and a market for the cotton farmers and their families representing over 12,000,000 people. The employees of the cotton mills in the South represent families totaling more than 2,000,000 people. The cotton economy touches the lives of upward of 20,000,000 people in a very direct manner. The products manufactured by these mills include a large number of items which are essential to every day life in America. First, there are yarns of various types going into everything from hosiery to fi3seine, and then the fabrics include products for clothing, for house hold utilities, for industrial use, for agricultural use and a great variety of other uses. To give you briefly the history of the effect of price control on cotton textiles the Price Stabilization Act became a law in February 1942. Pearl Harbor occurred December 1941 and in May 1942 the first price limitation on cotton yarns became effective. If I might digress right there, I think that limitation was put on because of the need of these yarns for the war effort; and if I may be so modest I would like to point out the wonderful work done by the textile industry during the war. In July 1941 this was expanded and a substantial portion of cotton cloth was put under price ceilings. In October 1941 an escalator clause was adopted allowing the products of cotton textile mills to fluctuate automatically with the price of cotton. In May 1942 the escalator clause was canceled by OPA. The consumption of raw cotton, which in turn rather closely reflects the production of cotton textile products for consumer use, was expanding until May 1942. Thus it was expanding as long as the escalator clause was in effect and as soon as the escalator clause was eliminated the consumption of raw cotton began to decrease and the annual decrease has been continuous since that time. 85721-46-vol. 160 There have been many public statements issued by officials of OPA within recent weeks claiming an increase in industrial output at the present time and predicting further increase through this year. The basis of these predictions is not known, but it is clear that the statements do not apply to cotton textiles as is indicated by the authentic record of the United States Department of Agriculture covering the consumption of raw cotton as follows: It is to be noted that the peak of raw-cotton consumption for the crop year 1941-42 was 11,170,000 bales and since that time the trend has been steadily downward until the year 1944-45 in which only 9,576,000 bales were consumed. This was a decrease of 1,594,000 bales. The predictions of increased textile production for the year 1946 could be based, therefore, only upon estimates as there are no figures available nor are there any facts available to support the optimistic estimates of the OPA as to what the present and future production might be. Senator TAFT. Do you have any figures for January and February, and so forth, of this year, on cotton consumption? Mr. MOORE. I have not, Senator. Senator TAFT. Are there any such figures? Mr. MOORE. I understand that there are not. I was told yesterday that they were not available. However, had the production continued at the same rate of the consumption of the first 5 months of 1942, which was the peak production period, we would have consumed through April 1946, 511⁄2 million bales of cotton more than was actually consumed and this would have represented a production of approximately 5,800,000,000 yards of cotton goods which are so badly needed by the consumers today. Had the escalator clause been allowed by the OPA to remain in effect until this time and had OPA been alert in approving prices which would reflect the rapidly increasing wage and conversion costs it is safe to say that a substantial part of this production would not have been lost. The attitude of the OPA toward the escalator clause which was and still is closely related to their attitude toward other increases to reflect mounting costs has reflected itself in delayed and inadequate increases in cotton textile ceiling prices which have been the basis of the fundamental differences of opinion between the Agency and the industry, and these differences have resulted in narrowed margins which have handicapped production. For instance, on March 8, 1946, when general increases were granted the cotton manufacturers to reflect wage increases, increases in price of cotton, and other costs, the typical cotton-textile fabric, print cloths, should have been increased at that time approximately 18 percent. The actual authentic record showed a justification of an increase from 53 cents per pound to 62 cents per pound. Instead, however, the OPA allowed a price of 57.93 cents and to this they added an incentive, making a total of 60.83 cents per pound. This incentive was to encourage increased production, but the increased price did not adequately reflect increases in cost. Admittedly the OPA did not attempt to reflect the full replacement costs of cotton, and as a consequence the incentive was placed upon an inadequate basis and therefore lost much of its effect. A similar picture could be shown in the case of sheetings, denims, many of the yarn numbers, and other major cotton textile items. We will not take your time with the details in support of this statement, for these figures are a matter of OPA record. The result of their failure to allow the inclusion of increased costs and the long delayed announcement of the decision inevitably caused a decrease in the consumption of cotton, a decrease in the production of goods, and an exaggerated and continuous shortage of cotton textile fabrics and garments. When the cotton mills know beyond any doubt that their principal elements of costs have definitely and materially increased, and even the public knows this fact, and when an increase in ceiling prices to reflect such costs is inevitable to any reasonable thinking, and when the OPA has delayed for weeks or months in authorizing the needed action, the delay may involve the withholding of millions of yards, and it is perfectly natural for uncertainties to arise and for these uncertainties to affect the sale and shipment of goods to the market, just as the farmer who has been promised an increase in the price of his hogs or corn will naturally and justifiably delay their sale and shipment until the promise is made good. Time and again the Price Administrator and the Stabilization Director have promised relief from such delays or have predicted action which was to be taken with reference to the cotton clothing program. The following list of promises taken from the Louisville, (Ky.) Times is historically correct and throws an interesting light on the inadequate operations of the instruments of price and production control: June 20, 1944: Government agencies, in their drive to return low-cost clothing to the market, today announced a program September 6, 1944: * * * August 16, 1945: Plentiful clothes stocks 4 months away. October 3, 1945: The OPA today promised an increase by next month in the supply of cheaper clothing. February 21, 1946: OPA drafts plan to raise clothes output. April 3, 1946: More fabric for cheaper clothes set. April 13, 1946: Stabilization Director Chester Bowles expressed confidence today that the shortage of inexpensive clothing will have eased considerably in 3 months-he appealed to the public to be patient a little longer. A comparison of these promises and predictions with actual accomplishments will show that not a single one has come true or has been made good; and of all of the shortcomings of OPA these administrative shortcomings have had the most serious influence upon production. As applied to the price of raw cotton I would also quote from a recent statement of an OPA official: The evidence points very strongly to the fact that farmers have benefited only in part from the rise in the futures market prices of cotton. From August to February, while the price of cotton on the futures exchange was rising 3.27 cents, the average farm price of cotton rose only 1.68 cents. The facts in the case are that the quotations on the futures exchange apply to 16-inch Middling cotton and that this quality of cotton in the farmer's hands increased 3.46 cents. The OPA is in error, due to the fact that they are including lower grades than those quoted on the futures exchange. We contend correctly that the futures exchange more properly represents the price of our raw material. It is regrettable that we must report to you after several years of experience under price control that in the cotton-textile industry price control has failed. Its continuation is further emphasizing its failure to accomplish production. Price control with cotton textiles has failed because it has not increased the production of cotton textiles. Actually it has brought about a steady decrease in raw cotton consumption. This failure is due directly to the fact that the policy of the agency has been to prevent price increase to the consumer by forcing at least a partial absorption of cost increases by the manufacturer and the distributor. This squeezing of the differences between the costs and the selling prices can have only one effect, and that is to discourage production. The reason given for the long and continued decrease in production since the peak early in 1942 has been that the decrease has resulted from a decrease in manpower. This conclusion appears • erroneous when cotton textile production is compared with production in cotton, wool, and rayon products. The consumption of wool in 1945 was the highest ever reached in this country. Rayon was at its highest in both percentage and poundage used. However, cotton had declined from 81 percent of the total to 76 percent of the total poundage used. The rayon was manufactured in the same plants |