Letters, memorandums, statements, etc.-Continued United States Foreign Trade Zones, Sterling St. John, Jr., joint repre- Upholstery and Drapery Fabric Manufacturers Association, Inc., James, L. Fri, president: Letter to Senator Maybank enclosing DEFENSE PRODUCTION ACT AMENDMENTS OF 1952 MONDAY, MARCH 17, 1952 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The committee met, pursuant to recess, at 10:35 a. m., in room 301, Senate Office Building, Senator Burnet R. Maybank (chairman) presiding. Present: Senator Maybank, Robertson, Frear, Douglas, Moody, Capehart, Bricker, and Schoeppel. The CHAIRMAN. The meeting will be in order. Mr. McKissick, of the American Cotton Manufacturers Association, will be our first witness. Will you come up, please. STATEMENT OF ELLISON S. McKISSICK, REPRESENTING THE AMERICAN COTTON MANUFACTURERS INSTITUTE, ACCOMPANIED BY ROBERT JACKSON The CHAIRMAN. I might say that we are very happy to have you with us, Mr. McKissick. Will you go ahead, sir. Senator SCHOEPPEL. It is a pleasure to have you with us, Mr. McKissick. Mr. McKISSICK. Thank you. My name is Ellison S. McKissick and my home is in Greenville, S. C. The Alice Manufacturing Co., of which I am president, is typical of the hundreds of medium and small companies which account for the bulk of the output of the cotton textile manufacturing industry. I was assigned the duty of representing the American Cotton Manufacturers Institute before you, in my capacity as chairman of the institute's mobilization committee. We have filed a comprehensive statement. I will confine myself as briefly as possible to high-lighting points we regard as most pertinent. The CHAIRMAN. Without objection, any statement you want to file will be made a part of the record, as well as any other statement you desire to file. Go ahead. Mr. McKISSICK. We do not have to base our statements on opinion or guesswork. The facts in your hands fully support our conviction that controls are not only unnecessary in an industry whose products have been ranging from 26 to 28 percent below ceilings for months, but that the continuation of these controls is a cause of our industry's depression. Senator SCHOEPPEL. I would like to say I have received in the last few weeks many communications from members and associates in your line of activity and the industry. In their personal letters, in the information they have forwarded to me, they have substantiated many of the things you have pointed out in your statement here and it does appear that that is one industry that is really in a hard way and should for some very serious consideration before this committee, as we go into this control measure. I want you to know that. I presume other members of this committee have received many communications but I have certainly received many from your section of the country. come up The CHAIRMAN. I think yours is the second largest industry, is it not? Mr. McKISSICK. It is the second largest in terms of employment. The CHAIRMAN. And from one end of this country to the other, it is in a bad way. Mr. McKISSICK. Yes, sir. The CHAIRMAN. New England may be even worse off than the South? Mr. McKISSICK. We are all bad off. The CHAIRMAN. That applies to synthetics, also? Mr. McKISSICK. Yes, sir. The CHAIRMAN. More than that, they are very bad off in Europe, too. Mr. McKISSICK. These facts show why relief from controls would not set off inflationary prices in textiles. The facts also show how the depressed condition of this industry affects many other industries and imposes hardship of additional thousands of people whose livelihood depends indirectly on cotton textile manufacturing. Even in the 13 days since our last statement was filed, the depression which has lain so heavily on this industry has deepened. These have been 13 more days, in addition to the months before, of sales stagnancy, of restricted production, of unemployment and partial employment for thousands of men and women, of declining earnings, of worry and frustrations for worker and manager alike over the uncertain future. I refer to the United States Department of Agriculture Production and Marketing Administration. It shows the mill margins for January of 39-inch in 4-yard print loss 34.75. At the end of February, it was 30.77, the prices applying since the 1st of March. The CHAIRMAN. What would be the ceiling? Mr. McKISSICK. The ceiling is 29.5 cents for 39-inch, 80 squares, under the general price freeze, and the present market is about 1912 and I think you can buy it at 1914. The CHAIRMAN. It is down, in other words, 100 percent. Mr. McKISSICK. Up to now, the theory of inflation has been used as a reason for the continuation of controls over this industry. However, in this industry we are dealing not with the theory of inflation, but with the grim fact of deflation. Translated into day-to-day realities, the fact of deflation is seen in terms of people out of work or working only part time, of salesmen who can make few or no sales, of mill managers who do not know how much longer they can keep their mills running even at sharply re duced rates, of investors, many of whom are dependent on a return from their savings, who already have suffered serious cuts in income and who face still further losses. When translated into terms of people, the facts of deflation become infinitely more real and personal than the abstractions of theoretical inflation. We wonder to what purposes must these consequences be suffered longer and whether it is necessary to prolong the paralysis of actual deflation in order to curb a hypothetical inflation where it has not existed even as a possible threat for many months. The connection between controls and the depression which is suffocating this industry is direct, plain, and simple. It is a basic fact that the industry must be able to schedule its operations in advance in order to produce efficiently. This cannot be accomplished unless its customers follow their normal pattern of buying in advance. Senator SCHOEPPEL. That is one of your major difficulties right now, is that not true? Mr. McKISSICK. That is correct, Senator. Senator SCHOEPPEL. It is your long-range program that you have to schedule your operations into, and the purchasing of your supplies. It is that uncertainty that contributes to your further demoralized condition as a whole? Mr. McKISSICK. That is correct. The CHAIRMAN. Have you ever estimated how long it took from the time you bought a bale of cotton until a man bought a shirt from that same bale of cotton in the store? If you buy a bale of cotton today you get it next month some time. You would use it to make goods for sale next fall. Mr. McKISSICK. It would take nearly a year. The CHAIRMAN. From the time you buy it until it becomes clothes on a man's back, or furniture covering to go on furniture, or draperies, or what have you, it would be 1 year from the time you bought that until you processed it. Mr. McKISSICK. Yes. It goes through the mill, the bleachery, and so forth. The CHAIRMAN. You are making goods now, for next year. Mr. McKISSICK. That is right. This spring we should be selling goods going to the bleacher this fall to be made into goods next winter. Uncertainty over what OPS might do next, over what new restrictions might be imposed, over whether ceilings-of-the-moment are going to be rolled back, over what new interpretations might be issued, any of which might affect prices, will obviously have a restraining influence on the normal pattern of buying, or to put it another way, a killing effect on sales. Need I add that sales are the life blood of any industry, needed to make work, wages, and earnings? Rumors, even though unfounded, about new ceilings, roll-back of old ceilings, tailored ceilings, more changes and more adjustments interfere disastrously with normal operations. The CHAIRMAN. I have also heard the rumors coming out of OPS and I sincerely hope there will be no more. We have all heard them and it has upset everything. They were unnecessary but they have done damage. |