With that preliminary statement I will call the first witness, who is Mr. J. Byron Wilson, chairman of the legislative committee of the Wool Growers' Association and secretary of the Wyoming Wool Growers' Association.

STATEMENT OF J. BYRON WILSON, CHAIRMAN, LEGISLATIVE COMMITTEE OF THE NATIONAL WOOL GROWERS' ASSOCIATION, AND SECRETARY OF THE WYOMING WOOL GROWERS' ASSOCIATION, MCKINLEY, WYO.

Mr. WILSON. Mr. Chairman and gentlemen of the committee, my name is J. Byron Wilson. My address is McKinley, Wyo. I am chairman of the legislative committee of the National Wool Growers' Association, and secretary of the Wyoming Wool Growers' Association.

The National Wool Growers' Association is an affiliation of State associations in the Western States and Texas, and we represent in that association probably 70 percent of the wool production of this country.

First, I want to thank the chairman and the members of the committee for calling these hearings so promptly. We feel that something must be done relative to the handling of the domestic wool clip. If something is not done, we fear-in fact, we not only fear, but we are quite certain that the production of wool in this country will not only not show any increase, but will show a decrease. That is due not only to the uncertainty regarding the price, but also to the difficulties we are having in securing labor. Our costs have mounted materially.

Today, in Wyoming, and I assume the same thing is pretty generally true throughout the wool-producing area, our wages are just 50 percent higher than they were 1 year ago. That fact in itself, while important, is not nearly so important as is the fact that the labor is very inefficient. You must remember that in putting a man out with a herd of 2,500 ewes you are entrusting property worth $25,000 to $30,000 to a man whom you are paying $100 a month and board. The inefficiency of labor is really our worst difficulty at this time. You can make a machinist more quickly, I think, than you can make a good sheep herder. You cannot make them very quickly; and we have not had too much of a supply of good herders in the past.

I think everyone recognizes the importance of wool in the war effort. The result of the lack of wool has been shown by the winter campaign in Russia, where it is reported that the German troops, because of the lack of wool clothing, suffered enormous losses; and it was reported from some source that there were more casualties from frozen arms and legs among the German soldiers than there were actual war casualties. They have had to use substitutes for wool, practically since the start, because their wool supply has been entirely shut off. That being true, everyone, I think, will agree that wool is very essential to the war effort.

During the last World War the Government purchased the wool clip through the Quartermaster's Department, or the Quartermaster's Corps. The wools were marketed in the usual way. The wool was sent to any one of the houses that would normally handle wool, and on its arrival the wool was valued by a valuation committee composed

of experts, and after the valuation committee had made their report, the Government paid for the wool on the basis of that report.

For the first time in history the grower actually received the full value of his clip, because it was paid for on the basis of an honest valuation. So far as the growers and the Government were concerned, it worked beautifully.

What I said about the grower getting the full value for his clip for the first time, means this, that frequently some growers get full value for their clip, but all growers do not. Naturally the people that are purchasing the wool want to purchase it as cheaply as they can. I have no criticism of that. But the consequence is that many growers sell wool at a lower price than its actual value.

They took over not only the domestic clip but purchased all the wool in this country except that which was in the hands of manufacAll foreign wools that were purchased subsequent to the taking over of the wools here had to be imported under license and were purchased by the Government either at the time they were purchased in South America or Australia, or shortly thereafter. At the close of the war the Government had on hand approximately 460,000,000 pounds of wool.

I remember that one of the first times that I came to Washington officially representing the growers was shortly after the war, when we were fearful that the marketing of this 460,000,000 pounds was going not only to disorganize but disrupt our marketing completely. So we came down and had a conference with representatives of the War Department. They were very cooperative and agreed they would suspend their auctions. They were selling wool at auction in Boston, on the theory that by so doing it would not interfere with the marketing of the domestic clip, which is shorn in April, May, and June.

They resumed those auctions in November. They again suspended them the next year, during the wool marketing season, and when they finally got through they recovered a larger percentage of the purchase price on the wools than on any other commodity handled by the Government. My recollection is that it was approximately 83 percent of the purchase price, which was a remarkable record, in view of the fact that when they took over these wools they took over some wools that had been in the warehouses of the dealers in Boston for many years, some wools that they did not even know they had. They got a certain amount of inferior wools; otherwise they would have been sold before the Government took the wool over.

So it did work well. They recovered a large proportion of the purchase price; and we can see no reason why it would not work equally well at this time.

The British Government, as your chairman has pointed out, has purchased the clips of their colonies, meaning particularly Australia, New Zealand, and British South Africa, for the duration of the war and 1 year thereafter. They agreed with the Australian growers upon a price which was satisfactory to the Australian growers, and some 3 or 4 weeks ago it was announced that they were going to increase that price by 15 percent, that is, the amount paid to the Australian growers for the new clip.

The wools that have been coming into this country have been sold at what they call the British issue price, which is well above the price paid growers, and it is estimated that on the new clip, when this 15

percent becomes effective, the increase will probably amount to about 12 percent in the price in Australia. War risk insurance has gone up a great deal, but the other items have not gone up in proportion, so the 15 percent, translated into the British issue price will amount to about 12 percent and it is the selling price at which those wools are sold to dealers, manufacturers, or anyone else except our Government. On July 31, 1940, in the days of the old Council of National Defense, or Advisory Committee-I probably do not have the name right, but it was the predecessor of the O. P. M.-Mr. Chester Davis, who is now on the Federal Reserve Board at St. Louis, was on the Advisory Council representing agriculture, and we were called here to discuss the storage of Australian wool in this country. We objected, but we found that the deal had already been made and that our consultation was merely a request, so to speak, for ratification. We find that frequently when we are consulted by some of these people. They have already made the deal, and then they ask us to come in and they tell us about it and say, "We are sorry, but it has already been done.'

So we performed, as I say. We ratified it. But, first, we had assurances from Mr. Davis and Mr. Stettinius, who at that time was chairman of that particular outfit, that the wool would not be used except in case of an extreme emergency. It would be called what they termed "an iron reserve.

We discussed it pro and con for 2 days, the 31st of July and the 1st of August 1940, at these conferences. During the discussion it was brought out that they had in mind that they might store in this country 250,000,000 pounds of wool. The deal was that the R. F. C. was to pay the freight and the marine and war-risk insurance and storage charges in this country, which would be a lien on the wool. The wool to remain the property of the British Government. The wool commenced to come in in small quantities in the latter part of 1940 or early 1941. Last fall-I do not remember the date-Secretary Jesse Jones, in his capacity with the Defense Supplies Corporation, announced that they had purchased this wool, the wool that was in this country and what I will refer to as the stock pile, and had agreed to purchase until December 31. That was later extended until January 31, and later until March 31. I think the last extension has just run out, on the 1st of July. I am not certain as to that.

The Army wanted a billion pounds of wool. Mr. Nelson, who is Chairman of the War Production Board, was in direct charge of these particular matters. It was his assistant with whom we did most of our business. He is now in London, in the Army, looking after supplies, I believe. Mr. Nelson was in charge of all purchasing. At that time they said they would like to get in this country as a strategic reserve 500,000,000 pounds of wool.

They have in this country now, in the stock pile, which is not all owned by the Government, a little over 500,000,000 pounds of wool. As nearly as we can get the figures, it is approximately 525,000,000 pounds of wool. I do not know the proportions of that that are owned by the Government, but I should say probably 300,000,000 pounds, or perhaps more, are owned by our Government. The balance is stored here under the original deal with the old Council of National Defense or Advisory Committee. If this country wants the wool it has the first call on it, and the R. F. C. or the Defense Supplies Corporation

are advancing the freight, the storage charges, and the war risk in

surance.

I predict that by this time next year you will find a billion pounds of wool in that stock pile. That billion pounds of wool would represent approximately 500,000,000 pounds of clean wool, which would represent nearly three times the annual domestic production of wool.

In going over the Army figures a few days ago with reference to the woolens purchased by the Army I found that they had ordered some ninety-odd-million yards-and this was since October 1940 of 18ounce serge, which is their uniform cloth, and some 46,000,000 yards of 32-ounce overcoatings.

That is enough serge to make somewhere between 31,000,000 and 32,000,000 uniforms. It is enough overcoating material to make approximately 15,000,000 overcoats.

Of course, I should state that that is on order, and I think it is all to be delivered by February 1 of next year. If it can be assumed that the Army will, next year, from the appropriation you made available just a day or two ago in this last defense appropriation bill, something over $2,000,000,000 is allocated for clothing and equipage, purchase as much as they did on this last order, then certainly they should have enough for initial equipment for somewhere between 8,000,000 and 10,000,000 men. After they have that initial equipment, then the Army estimates that it take 30 pounds of clean wool per man per year. I have a feeling that that estimate is a little high, but, even so, accepting their estimate, with a billion pounds of wool in the stock pile, or 500,000,000 pounds of clean wool, when it would take 270,000,000 pounds to supply the Army and leave another 30,000,000 to supply the other branches, it would take 300,000,000 pounds to equip all replacements for a very large army. Then, with the domestic clip which runs around 200,000,000 to 220,000,000 pounds of clean wool, we are going to have an awful lot of wool in this country.

The supplies of wool today, as nearly as anyone can tell, figure out about this way. The wool in the hands of dealers, manufacturers, and afloat to this country-and, incidentally, I may say that not more than 2 percent of the wool has been lost in ship sinkings so far—the wool in the hands of dealers, manufacturers, and afloat to this country amounts to about 375,000,000 pounds. The Government stock pile is about 525,000,000 pounds, and that is increasing almost daily, although there will not be so much increase from Australia until after the new seasons starts there, the 1st of September. The 1942 domestic clip is 450,000,000 pounds. That makes a grand total of 1,350,000,000 pounds.

They have ready for shipment, to be purchased by the Government, or about to be shipped here to be put in the stock pile, either to be used by Great Britain or this county, on which we have first call about 175,000,000 pounds.

Our Government has been negotiating with South America for a very considerable period relative to the purchase of the South American clip, all of it that would be suitable. In fact, I think they have even gone so far that now they are working on a proposition to purchase 50,000,000 pounds of South American wool, which probably is about all the present clip that would be suitable for military requirements.

That would give us a total of 1,575,000,000 pounds.

The 1943 clip-and this is a conservative estimate-will be 450,000,000 pounds. If something is done to encourage the production of wool, I anticipate that that might be nearer 500,000,000 pounds; and I think this year's clip was a whole lot nearer 500,000,000 than it was 470,000,000 pounds, which would give us wool supplies available until 1944 of 2,025,000,000 pounds.

The estimated requirements for the Army, the Navy, and civilian requirements, on the present basis, would require about 1,600,000,000 pounds of wool, so that we would have about 425,000,000 pounds of wool on hand in this country as of January 1, 1944, if we did not import any more wool than they have already made arrangements to import.

If the dealers and the manufacturers did not import any wooland they will-when added to our domestic clip of 450,000,000 pounds for the year 1944, you will have a total supply, without any further imports except those that I have mentioned, that they are negotiating or have negotiated for, of 875,000,000 pounds of wool.

It is not reasonable to assume that imports are going to be cut off. We realize that the shipping problem is serious, but so long as we are maintaining an army, or part of an army, at least, in Australia, we must keep supplies rolling to that army; and wool is one of the few things that can be shipped back from Australia. I think that is the reason, probably, that our stock pile has increased so much-because of the movement of materials, supplies, and troops to Australia.

This stock pile increased from something less than 200,000,000 pounds in January to somewhere around 525,000,000 pounds today. That gives us a good deal of concern, because up to date, and so far as we can see into the future, it has not been necessary to dip into that stock pile at all. The only part of that stock pile that has been sold has been some damaged wools which they had to sell because of water or other damage, mostly water damage, and they had to sell it very quickly. Otherwise none has been sold or used.

There is another complication in the situation. The President, by Executive order, recently removed the tariff duty on articles for defense. Wool comes under that classification. Shortly after that Executive order was issued Mr. Jesse Jones announced that none of the commodities or articles sold by the R. F. C. or its branches would be sold at not less than ceiling prices.

While I appreciate Mr. Jones' good intentions, he may not be here when they go to sell that wool; and so long as you have got a supply of 500,000,000 pounds odd, which I estimate at this time next year will amount to a billion pounds of wool on which no duty has been paid, it constitutes a real threat to our domestic market. It means that it is going to be very hard to get anything done in the way of selling wool at anything like values in this country.

I do not anticipate that any of that wool will be sold. I do not anticipate that it will be sold so long as Mr. Jones is here. But what is going to happen when this is all over is pretty much anyone's guess.

So long as they are purchasing the wool from Great Britain and South America-or attempting to purchase it from South America, would probably be a better way to put it-why not have all this wool where they can control it? It would not be necessary, then, to have these nonsensical blending orders that have come out through W. P. B.