prevailing in four periods, namely, (1) 1909 to 1914 parity; (2) prices of October 1 to December 6, 1941; (3) prices as of December 15, 1941; (4) average price prevailing from 1919 to 1929, inclusive. The average price of good length fine wool, according to the yearbook of the Woolen & Worsted Manufacturers Association, during this period of 1919 to 1929 averaged about $1.29 per clean pound sold Boston basis. However, the ceiling price of good length fine wool was placed at $1.18 per clean pound by the Office of Price Administration. An attempt was made by certain of the O. P. A. officials to justify this flagrant violation of the provisions set forth in the Emergency Price Control Act. It was pointed out that insufficient price data was of record in the Department of Agriculture to establish an average value for fine wool during the period of 1919 to 1929. Second, they sought to justify the existing price ceiling, because certain minor grades such as three-eighths did not show the same price relation as did the fine wool grades to then prevailing values. About 70 percent of the domestic wool clip is of the finer grade and this is the grade usually employed as a standard in quoting market values and comparing prices. This action on the part of the O. P. A. constitutes a miscarriage of the letter of the law and intent of Congress as clearly set forth in the Emergency Price Control Act.

Ceiling prices named in the manner described were generally accepted by the wool growers and their representatives without protestation but with full knowledge that the prices named were below values that would result by strict adherence to the provisions of the

act.

Upon April 2, 1942, bids were received and shortly thereafter contracts let for the manufacture of 74,172,000 yards of government material and 10,000,000 army blankets. Invitations for bids had previously been delayed pending the adjustment of ceiling prices on grease wool by the O. P. A. in order that manufacturers might have a definite price basis for wool upon which to calculate their costs. Contracts on this vast amount of material were let at prices calculated to permit successful bidders to pay ceiling prices for raw wool requirements. Immediately after the contracts were let manufacturers began to cover their raw wool requirements and to manufacture as rapidly as possible. Upon April 28, 1942, the Office of Price Administration issued general maximum price regulations which, if literally interpreted, would be the equivalent of repudiating the majority of the contracts for military cloth placed upon April 2. The provisions of this general maximum price regulation declares that no material not covered by specific ceilings may be delivered after July 1 at prices higher than were secured for the same material delivered in March. Apparently no thought was given to the fact that wool for military cloth delivered in March was probably purchased by the manufacturer 8 months previous. The manufacturers by this time had acquired a large percentage of the wool necessary in the manufacture of these contracts. This constitutes repudiation of Government contracts that will, we are informed, reflect losses in varying degrees up to 51 cents per yard.

A very earnest discussion was had with Attorney Bancroft of the Textile Division of the Office of Price Administration upon May 26, 1942, in regard to the general maximum price regulation as it applies

to the textile industries, and particularly to the contracts upon which the manufacturers are now working. Some very amazing statements were made by this gentleman to the effect that they, the O. P. A., intended to cut right through the oustanding Government contracts which were based upon wool purchase well within ceiling prices placed upon grease wool by the O. P. A. in February. He further stated that wool values were too high and everyone knew it, that they intended to cut through the outstanding contracts and adjust prices on the finished material to such an extent that it would force the manufacturers to put the wool market where it belonged. This is the same gentleman who a few weeks before read to wool growers and their representatives price ceilings on wool not in accordance with the Emergency Price Control Act but a scale of values based upon their own interpretation. Now he says they propose to lower wool values by repudiating Government contracts that are now well along in the process of manufacture. Such utter disregard for the sanctity of Government contracts as displayed by this official of the O. P. A. is unthinkable and strongly tends to destroy confidence in all Government obligations, including Defense bonds. Our democratic form of government is based upon the confidence of its citizens. Let nothing be done to destroy it.

This untenable situation has demoralized the whole wool and textile industries and as usual the wool market is absorbing the shock, and Mr. Bancroft has accomplished his avowed purpose. The top futures market sagged from a high of about $1.37 to approximately $1.18 in a very short time. It is only fair to state, however, that upon June 3, 1942, price regulation No. 157 was issued by the O. P. A. which provides for a special method of figuring price ceilings on certain textile products as distinguished from the methods provided in the general maximum price regulation, which affords some measure of relief to the present holders of Government contracts but does not provide for the fulfillment of the original contracts as executed. The War Production Board as of January 4, 1942, issued curtailment or allocation orders covering the use of wool for the first quarter of the present year, limiting in a drastic manner the use of wool for civilian purposes. Further restrictions as to the use of domestic wool were established for the second quarter, and last week allocation orders were issued covering the 6 months' period beginning August 1. The last regulation reduced the amount of virgin wool used for civilian purposes by 50 percent and provides for a bounty or reward of additional allocation of virgin wool to manufacturers who will use the highest percentage of wool substitutes and reworked wool in their manufacturing operations. This enforced use of substitutes is something from which the wool-growing industry will suffer for many, many years to come. The matter of substitutes, I understand, Senator, has been covered thoroughly in former testimony before this committee. We wish to be recorded as supporting opposition to enforced use of substitutes.

Now, the grower knows that no substantial portion of his 1942 wool clip will be permitted in the manufacture of civilian material. Therefore, practically the only outlet will be for those grades and types of wool that fall within the specifications prescribed for Government material. A situation has been created whereby the use of certain types and grades of domestic wool and mohair are largely forbidden in

the manufacture of civilian business. There are no Government specifications that permit the use of mohair in Government contracts, and many grades of wool are not found in the list of eligible types for the manufacture of military requirements. In this manner normal market outlets for about 35 percent of the domestic wool clip, and practically all of the mohair clip, have been largely eliminated by War Production Board orders. Not only are the market outlets sharply curtailed, but our domestic growers are called upon to carry these wools against a time when their use may be permitted in the normal course of manufacture or a time when the Government specifications are altered to permit their use. In the meantime, the Defense Supplies Corporation, an agency of the Government, is purchasing vast quantities of foreign wool from Australia and other foreign countries to add to the strategic supply of the very grades and types comparable to domestic wool for which there is little or no market at this time because of the War Production Board allocation and conservation orders.

Since the ceiling price on domestic wool was established by the O. P. A. on February 28, 1942, the British Government has advanced the price of wool to the growers of Australia, New Zealand, and South Africa by 15 percent and it is our understanding that the goal for the strategic stock of wool is 1,000,000,000 pounds.

As a result of these conditions practically all manufacturers have withdrawn from the wool market for they do not know whether they have or have not valid Government contracts. Buying is at a standstill in the middle of the shearing season and values of certain types of wool for which there are no Government specifications and the use of which is limited by Executive order for the manufacture of civilian materials have declined 20 percent per grease-pound in exceptional cases within the last 2 or 3 weeks.

Confusion reigns supreme in the wool and textile industries. Growers are unable to interpret in grease cents per pound ceiling prices that have been named by the Office of Price Administration upon a clean or scoured-pound basis, for the growers in the majority of cases know neither the grade nor shrinkage of their own clips, yet there is a difference of 10 cents per grease-pound for every 1 percent variation in shrinkage that results from the scouring process. This lack of technical knowlede places growers at a distinct disadvantage as compared with dealers and manufacturers who are, in the majority of cases, experts in respect to both factors. Strict application of ceiling prices would make it necessary for each of the 500,000 wool growers to become experts as to both grade and shrinkage. How futile an undertaking. Better would it be to take the clip over and educate 15 or 20 expert Government appraisers whose duty it would be to examine or appraise the wool and see to it that each grower gets ceiling prices to which he is entitled according to the O. P. A.

The CHAIRMAN. Those experts could be found now without having to educate appraisers?

Mr. FAWCETT. That is right, Senator, and I venture to say that the services of expert wool men in the trade would be volunteered without cost to the Government, just as they were in World War I. I think there is no doubt about that.

The CHAIRMAN. In any event, they could be found and their services had for reasonable compensation?

Mr. FAWCETT. Yes; but I want to state that in our opinion there is sufficient patriotism and true interest in this matter to attract the attention and the services of men of such caliber that salary would be of no interest to them. I have that much faith in the wool trade of Boston, Philadelphia, Chicago, and elsewhere.

Growers are beginning to realize that their market is being denied them by allocation and curtailment orders issued by the Textile Division of the War Production Board whose personnel appear to be giving little or no consideration to the growers' viewpoint. The case in point is illustrated by a letter received by us from a New Mexico grower dated July 1, from which I quote:

Due to information concerning the importation of South American wools, the outlook for immediate wool prices doesn't look good to me. Therefore, at your earliest opportunity, appreciate your selling our wool even though you have to make some sacrifice in price.

This is typical of the attitude of a large percentage of growers. A stable or strong market is necessary to insure maintenance of production. We are wholly in accord with any measures that may necessarily be imposed by the War Production Board to insure adequate supplies of wool for military and civilian requirements. However, we believe the producers to be entitled to some consideration and sufficient assurance of a market to justify the present rate of production and some expansion if possible.

The situation is so serious from the wool growers' viewpoint that the executive committee of the National Wool Marketing Corporation convened in Washington June 22, 23, and 24. This matter was presented by this representative body of wool growers to the Assistant Secretary of Agriculture who was fully aware of the situation and ready to use his good offices to correct the inequalities now existing. A similar meeting was arranged with the Textile Division of the War Production Board. The matter was carefully reviewed. Our executive committee left Washington with the understanding that a definite promise had been made by the Textile Division of the War Production Board that corrective measures would be taken immediately. It was stated that there was no desire on their part to destroy the normal market outlets for 30 percent to 40 percent of the domestic clip and thereby compel the growers to carry the wool. Yet, nothing has been done and no satisfaction given as to their intentions.

The Department of Agriculture, we are informed, addressed a letter to the War Production Board suggesting that certain remedial measures be taken and a negative reply was secured. Later, some doubt was expressed regarding the authority of the Textile Division of the War Production Board to advise and support remedial measures. There seems to be no doubt as to their authority in giving authorization and instructions for the purchase of additional millions of pounds of foreign wool to add to t e strategic supply, much of which is of the same grade and type as that portion of the domestic clip for which there is little or no demand today due to restrictions upon its use placed by the Government. It is difficult for growers to understand why the War Production Board will continue to buy foreign wool in such vast quantities and at the same time prevent by regulation the use of certain types of domestic wool and mohair.

We are not asking for an increase in prices upon the remaining portion of the 1942 domestic clip in which growers retain a beneficial

interest, but we are certainly entitled to either an unrestricted market for our product or a guarantee against falling prices if we are required to hold our product indefinitely as a strategic reserve.

Manufacturers and topmakers hold vast contracts for their manufactured products at prices calculated to permit the payment of ceiling prices for grease wool and provide a reasonable profit upon their operations. These profits should not be augmented at the expense of the wool growers through the purchase of wool below ceiling values as determined by the Office of Price Administration. This assurance could in our judgment best be provided by taking over at ceiling prices the remaining portion of the 1942 clip still in the growers' hands. The machinery and personnel to do the job is available in the Department of Agriculture and the plan could be put into operation with a minimum of expense.

If in the judgment of the War Production Board, who have been staunchly opposing the taking over of the wool clip, a nonrecourse loan at ceiling prices would be preferable, I am sure the growers would be in accord with such a plan. A careful canvass of manufacturers and wool merchants develops strong support for taking over the wool clip. Manufacturers point out that the cost of raw wool would then be a constant factor. This would enable them to bid more intelligently and upon smaller margins than under the present haphazard method. It is the duty of the Department of Agriculture to maintain and increase if possible the production of wool. Stable prices are necessary to accomplish this. The Textile Division of the War Production Board by their actions are retarding this program. In all fairness they should remove their objections or correct the condition themselves by withdrawing all regulatory measures governing the use of wool and mohair in domestic consumption.

In proof of the chaotic situation, I quote from the Midweek Wool Report, issued by the Commercial Bulletin of Boston, Mass., on last Wednesday, the third paragraph of which reads as follows:

Manufacturers are still "in the air" about the question of the status of their contracts, after July 1. The Office of Price Administration has made no definite statement to show that they have receded from their position intending to superimpose MPR 157 upon current contract prices. Hence, the manufacturer might face a fine if he insists on his contract price and also would face a fine if he fails to deliver the goods.

It seems to me that that serves to illustrate the difficulty under which we are operating at the present time.

I should be glad, Senator, to answer any questions that may be asked.

The CHAIRMAN. Senator Thomas, have you some questions?
Senator THOMAS of Idaho. Yes, Mr. Chairman.

Mr. Fawcett, what is the argument on this question of the blending of the wool? We have the Truth in Fabric Act, that the wool growers. have worked to. What is the argument now? We are getting away from that?

Mr. FAWCETT. The argument, as I understand it, as advanced by the Civilian Supply Department of the War Production Board is that this is strictly a conservation measure to conserve wool by forcing the use of substitutes. Our contention is that that works an undue hardship on the manufacturers. They are accustomed to maintaining their blends in their lines of manufacture. May I illustrate?