They could do just as they did in the last war-allocate that wool to the manufacturers who were manufacturing for defense.

The wool business represents a rather peculiar picture. The O. P. A. established ceilng prices on wool as of about the last of March, I believe, under the formula of the bill passed by Congress, and those prices figure out an average for our fine wools, with which Senator Murray and Senator Schwartz are familiar, being from States which produce those wools, of about $1.18. There is a premium for choice wools and wools of very long staple; but the average would be about $1.18. That is all we can get. There is no bottom, but that is the total amount we can get for our wool.

The first product in worsted manufacturing, after the wool is sorted and scoured, is called tops. The top maker figures, and he is permitted to figure in the orders negotiated by the War Department, that the wool costs him $1.18. Of course if he can buy it for less than $1.18, then it is so much the better. He has a little profit that he would not otherwise have. They assume that the wool will be purchased at the ceiling prices, and they allow him the cost of conversion, which is the cost of sorting the wool, scouring it, and so forth. In addition to that, they allow him a profit.

The yarn spinner comes along, and he knows what his tops cost. It is all figured on a wool ceiling price. He gets a profit. The manufacturer gets a profit, but he doesn't do so well. The Army has got him screwed down so that he does not get too much out of it. I do not know what the manufacturer's average profit would be, but the Army has really kept him down.

I was figuring before I came up here this morning. I got some figures from home, and there has been a 13.6 percent increase in the cost of 18-ounce serge since the orders were placed in March 1941, something over a year ago, on a basis of 50 percent domestic wool and 50 percent foreign wool. There has been an increase in wool prices since that time. There has been at least one increase in labor. So they are probably not getting too rich; but yet they are able to get prices for their products on the assumption that the ceiling prices have been paid for wool.

We seem to be the only ones that do not have any profit motive to figure on.

Senator THOMAS of Idaho. Mr. Chairman, may I ask a question? The CHAIRMAN. Surely. Go ahead, Senator Thomas.

Senator THOMAS of Idaho. I might say that I am a member of the Idaho Wool Growers Association, and also of the National Wool Growers Association. But the question I wanted to ask is this: You mentioned the top maker getting ceiling prices. Is he paying ceiling prices for his wool?

Mr. WILSON. Not always; no. In some cases he does.

Senator THOMAS of Idaho. How is wool selling now?

Mr. WILSON. Right now there is none selling, or practically none. The wool market is in the doldrums, due to a combination of circumstances, some of which I have mentioned and some of which I did not propose to mention. Tney tell me that fleece wool sales are offand this would interest Senator Gurney-a full 10 cents a greasepound. That is a real decline.

I went over to the Quartermaster General's office some time ago with some gentlemen from Boston. Heretofore, until some 3 or 4

months ago, the Army specifications for blankets required the use of a fairly stiff percentage, if not all, of three-eighths wool, what we call 56's. That was changed before the last Army orders were placed to not less than 10 percent 56's and the balance not less than 50's, 56's, next to fine wool, constitute che largest production of wool in this country. The bulk of our production is fine wool, the next is 56's, and next comes either half or one-quarter. That wool just has not got any market at this time.

I was told of an offer from a dealer in Ohlo of just 10 cents less than he offered the wool for about 2 months ago. There just is not any trading.

Of the 1942 clip we have about 40 percent still in the hands of the growers.

In Senator Thomas' State they were smart and sold their wool pretty early. The same thing happened in Senator Murray's State. But another clip is coming on, and that is what we are concerned about.

The decline particularly in several of what we call the medium low wools has been really severe. You could not sell it at any price now.

I think the record should show that the Tariff Commission some time ago recommended to the War Production Board, I believe, that domestic wools be purchased. Some 6 weeks ago the Assistant Secretary of Agriculture made a similar recommendation. There have been numerous conferences with the Assistant Secretary of Agriculture on this matter, and the Wool Section of the W. P. B. have suggested that a loan be made.

We cannot see that a loan will do the job. The loan, first, would be made under the present authority of the Department of Agriculture. The loan would be somewhere around 23 to 24 cents, or, say, 23 cents. If the 100-percent parity loan figures go in, under the bill you are to consider, I believe, in the Senate on Monday, wool would not be affected because it is not a basic commodity and the 100 percent of parity loans applies only to basic commodities.

The bulk of our wool sold in the West ranges from 371⁄2 to 44 cents per pound. If any were sold there, that would be the price. So that a loan of 23 cents, would not help the situation at all. The growers do not need the money; they are being financed. The situation is nothing like it was when the Government in 1938 or 1939 made a loan, which, incidentally, was the only loan up to that time on which they had not lost money. It was made by the Commodity Credit Corporation. The growers then were hard up, in many places, and the banks did not have too much money. They might have had plenty of money, but they did not care to put it out to some of the growers who were pretty well extended. That loan helped out tremendously. Today it would not help. It does not remove the threat of this tremendous stock pile.

I must apologize to the committee because my remarks are so rambling and not in coherent order.

It must be borne in mind that the only customer for our wool, under the existing situation, is the United States Government. That is due to this fact. Something over a year ago we had a conference with Mr. Nelson, who was then the chief purchasing agent of the O. P. M., together with officials of the War Department, growers, dealers, and cooperatives agreed to a differential in favor of domestic

wool. You have in the appropriation bill a sort of an implied "Buy American" provision, which provides that so long as supplies are available and the price is not excessive, preference shall be given to domestic clothing and food purchased by the Army and Navy. The Army and Mr. Nelson did however, give us a differential in favor of domestic wool.

Senator GURNEY. How much?

Mr. WILSON. That is a matter that I have never been able to agree with them on, Senator Gurney. It started out at 9 cents. That was what they figured, and I think that figure was approximately correct. Then we pointed out to Mr. Nelson a year ago last March that our production costs were increasing enormously. He said he recognized that that might be true and that they were going to ask the Tariff Commission to make a study to determine the increase in costs of producing the 1941 clip as compared with the 1940 clip. The Tariff Commission sent some representatives through the West and the Southwest, and they returned, and as a result of their studies, with which I did not agree, by the way-I do not think they were correct, and I think it can be so shown to anyone who is unbiased-they held that the differential should be 12 cents. So we got 12 cents, approximately, on fine wool, with a lower differential on the medium and lower priced wools.

I do not think I have the figures here on that, but it meant a difference in September 1941 of about 2 cents a yard on serge. I am taking the bids of a large woolen company, showing $2.944 on domestic and $2.974 on all foreign wools. There is more difference than that now. I think probably there is a differential of about 20 cents per yard in favor of domestic wool.

Because of the fact that foreign wools have been up to this time lower in price than our domestic wools, we do not get any civilian business in domestic wools. So the Army and the Navy are our customers on account of this differential. When they run out of orders our market dries up, and we will not have any further orders for some time.

There is another matter, besides the tariff situation, that has to a certain extent brought about some of the demoralization of the wool market, and that is Mr. Henderson's "roll-back" order. Some of you learned gentlemen know probably more about that than I do. I confess that after reading his order I do not understand it but that would not be expected, I suppose, of anyone except a lawyer.

Senator THOMAS of Idaho. What do you mean by "roll-back"? Mr. WILSON. The prices are rolled back to the prices as of March. That brought about this situation. The Quartermaster, in March, advertised for large quantities of various woolens and worsteds, and in April he negotiated large contracts. He did not give the mills contracts at the price they had bid, but they negotiated the prices; and because in every case the prices are negotiated and in many cases the negotiated prices are perhaps several cents per yard less than the amount that the mills had bid, the O. P. A. comes in with this rollback which says that you cannot charge more than the price was in March. The mills were still delivering in March goods that they had contracted for in October and November of last year. At that time the wool price was not quite as high as it is now. There have been advances in labor costs, and if they had to roll back those prices to the March level they just simply could not do business.

It seems to me that this committee could properly and should inquire into this, because, after all, it is going to slow up materially the war effort.

I was talking to a large manufacturer who was working about 85 percent on Government goods, just one day last week, and he said he was starting deliveries this week and was going to bill them at the contract price. The Navy, so I am advised, are preparing to insert, or have inserted, in their contracts a provision that the price agreed upon has been agreed upon by negotiation and that it will not be changed by any orders heretofore made or hereafter made by any governmental department or bureau. But this order has demoralized the manufacturers.

After all, if they roll the prices back to March, they are not going to roll back the increases in labor; they are not going to roll back the increases in the cost, or other materials. So the only one who will feel it will be the producer. He always gets the full effect of it.

I think the committee should go into that.

The O. P. A. tell me that they are doing it on a case-to-case basis. They did issue an amendment on shirting flannel. The only reason that was done was because the Army wanted large quantities of it, and no mill in the country would bid on it, being fearful of this roll-back order.

We had assumed, and I think the Congress had assumed, that that was not going to apply to the Army and Navy contracts. But Mr. Henderson assumes and insists that it does.

I want to say in that connection that I think the Quartermaster Department has done a fine job. Perhaps because they have treated us so well is one reason that I say that. But I think, generally speaking, they have done a remarkably good job. I think they have plenty of goods on hand, plenty of clothing on hand, to meet any increase in the size of the Army. They are giving our troops the best clothing that any army has ever had at any time any place in the world. Their specifications are very rigid, and they are really doing a swell job and doing a good job in negotiating these prices.

However, these prices that have been negotiated are all figured on a ceiling price for our wool. They are all based on the assumption that we get the ceiling. But they are doing a magnificent job in that particular matter.

They are working now at W. P. B. on what they call wool-conservation orders. In the one before the last order that came out day before yesterday they had arrived at what they called the basic quarterly consumption, the consumption of each particular mill for the first 6 months of last year. They divided it by 2 to get the consumption for 3 months, and they allotted 20 percent of that basic quarterly average to the worsted system and 10 percent to the woolen system for civilian

use.

They pulled a new rabbit out of the hat and came out with an amendment to the conservation order which provides that there shall be 20 percent of the basic quarterly poundage on the worsted system, which apparently means just what the last order means. But the nigger in the woodpile is that this is figured on the basis of 6 months, and the basic quarterly poundage is figured on a basis of 3 months, so that actually, as I interpret it, you are getting just half the amount of

wool in the worsted system that you were getting under the previous wool conservation order.

The CHAIRMAN. Do we have any all-wool cloth coming in from Great Britain?

Mr. WILSON. Yes, indeed.

The CHAIRMAN. The quantity is not limited, is it?

Mr. WILSON. No; the quantity is not limited. We are getting in plenty of virgin wool cloth from Great Britain.

Senator THOMAS of Idaho. Does this regulation covering style of clothing, and so forth, apply to cloth that comes from Great Britain? Mr. WILSON. I do not know. I should imagine it would. That, to my mind, may save a little wool, but it is rather a ridiculous way of trying to save it. I do not happen to have it on today, but yesterday I had on a suit that had been made since these orders came out. I noticed that there is enough cloth turned up on the bottom of the trousers to make two pairs of cuffs. If I still have that suit when the war is over, I will have enough cloth for two pairs of cuffs.

The CHAIRMAN. What I had in mind was the importation of virgin wool cloth and suitings from Great Britain, when we are not permitted to make them here. That will really establish the English goods and work against us in the future. Is not that a fact?

Mr. WILSON. Undoubtedly. That is why we are so fearful of this so-called mandatory blending order. They have sugar coated the pill and it is not mandatory. They have cut down the amount of wool that you can use in pure worsted and virgin wool goods to just half of what was used. After August 2 you can only use half as much as has been used in the last 3 months. In order to encourage them to blend they give them an extra 25 percent of their basic quarterly poundage of wool if they will blend. If you blend that with not less than 65 percent new wool and not less than 20 percent wool fibers, it would mean noils, reprocessed, reused wool, various wastes, and so forth.

Of course it is impossible to use those particular items on the worsted system, so that your worsteds are going to be materially cut. They will be able to make useful cloth by this blending. But they are really paying a premium. And to help that out a little, Mr. Henderson says they ought to do a little more blending. So he comes out with an amendment to the order providing that any mill which makes blended goods and which has not heretofore made such goods, shall be given a price ceiling 10 percent higher.

So we have got a combination working against us on this blending. We no more than get one matter settled when it pops up in a new place.

We have no objection whatsoever to their taking all of the wool in this country and converting it into articles for the Army and the Navy and the defense forces, but there is no necessity nor is there any reason for this blending order. The people in the Civilian Supply Division of the O. P. A. want to have as much production of woolens and worsteds as possible during this time. Just why they should pick wool out to be an exception, I do not know. But assuming that we have the poundage they want, they are entirely overlooking the fact that we are going to have somewhere between 7,000,000 and 10,000,000 men in uniform, so that the quantity that was formerly