We would like at this time particularly to stress the fallacies which lie behind any plan to have mandatory blending of rayon, cotton, or other nonwool fibers, with new wool. It is our understanding that there is a shortage both of cotton and of rayon. Under date of April 7, 1942, there appeared an article in the daily News Record, from which we quote as follows:

"Dr. Claudius T. Murchison, president of the Cotton Textile Institute, expressed the fear that this year's cotton crop will be actually under domestic consumption needs, and said he fears there will be a real shortage of cotton in 1943."

It seems illogical to compel a new and extended use of a fiber already scarace in its own important field. The most persistent rumor has, of course, been that there might be a mandatory blending of rayon staple in all worsteds. This would be particularly unfortunate and would be beneficial to no one. There are a number of reasons why this is so.

In a statement made before a special committee investigating the resignation of Mr. Guthrie, composed of members of the House Military Affairs Committee. Mr. Kenneth Marriner made a statement that the worsted industry could continue running at its present rate on military fabrics until the end of 1944 without importing a single additional pound of wool. This would confirm the fact that there is no actual present shortage of wool, but that the War Production Board takes the attitude that it is better to conserve wool during times when it is still plentiful rather than to allow the wool reserves to run dangerously low. This statement that there is no current shortage of wool is borne out by all the available figures pertaining to this question.

Even assuming for the moment, however, that there is a shortage of wool, there is, on the other hand, a definite shortage of rayon. In the statement of the American Viscose Rayon Co. published on March 27, 1942, the management says, "The corporation business was limited only by its capacity to produce." If this were true in 1941, how much truer it is in 1942 when rayon is being used for export to South America by lend-lease, for military purposes in this country, as well as for civilian use. The mere blending of two scarce fibers does not in itself produce more yardage.

During periods of emergency such as these, when time, effort, and money must be conserved, in every practical manner, it is better for the consumer to have one quality garment than two or three inferior garments which will not furnish the proper warmth or wear. By maintaining proper standards of quality, not only will consumers be served more economically but labor will be conserved, and the scarcity of labor is not only apparent now but will grow increasingly more noticeable as the necessary war effort is expended and increased.

A very important point to consider against the mandatory blending of rayon in worsteds is that it will definitely injure the war effort. Rayon is a fiber which notoriously flies around in production and settles in tops and yarns and fabrics entirely composed of wool which are intended for the armed services. Obviously this is definitely detrimental to these fabrics.

Up until recently many mills had ample time to do a considerable amount of experimentation. Today with 70, 80, or 90 percent of their production taken up with rush orders for our armed forces, the mills no longer have the time or capacity to make costly experimentations for civilian purposes but must continue to manufacture, if possible, the type of fabrics to which they have been accustomed and for which they are best suited both in equipment and personnel. Any experimentation taking place today should be for the improvement of uniform fabrics. If rayon is to be used at this time by worsted mills, it should be used in large quantities by those mills who have had past experience with its manufacture and who are technically and economically set up to segregate the fabrics containing rayon from those containing wool. Most mills are not so set up. Any mandatory blending of rayon for all mills would obviously cut down the available supply of rayon for those mills who have consistently been using rayon, and the abortive effort to infect the entire industry with rayon will be useless and deterimental for all concerned. In other words, the small amount of rayon which could be diverted to all worsted mills will merely cause defective goods in these mills without substantially increasing the amount of fabrics produced.

It is an acknowledged fact that the use of rayon in any mill definitely increases the fire hazard. It is estimated by insurance companies that the fire-insurance rates for a mill using wool alone would be increased from 10 to 15 percent if rayon fibers were to be blended with the wool. No organization is more keenly alive to the presence of fire hazards than the insurance companies because their judgment in fixing rates must be backed by cash reserves. It is not contended

that the payment of increased fire-insurance premiums is in itself a stumbling block, nor is it argued that the handling of rayon is a dangerous occupation when conducted by those who are thoroughly equipped and experienced in the use of this fiber. It is important to note, however, that if rayon is introduced into mills which have not heretofore handled that fiber, the fire hazard for those establishments is definitely increased and at a time when every possible step should be taken, and in fact is being taken, to protect vital plant properties from fire loss or any other form of interrupted production which might retard the making of essential fabrics in the least possible time for the war emergency.

It is universal practice to utilize the wastes which are produced in the manufacture of worsted yarn in the manufacture of fabrics made from wool-spun yarns. These wool-spun fabrics must go through a carbonizing process in order to burn out impurities such as vegetable matter, etc. If rayon were used in the worsted, spinning system, rayon would then of course be prevalent in the worsted wastes used by the wool spinners. When these wool-spun pieces are of necessity carbonized, the rayon would be burned out and destroyed by the carbonizing process. This would represent an unnecessary and useless waste of rayon which is already a scarce and needed fiber.

From every hand we hear that wastage must be stopped, in homes, in industry, and everywhere, in order to use our reserves in the most efficient manner for the prosecution of the war. The loss of rayon here referred to is diametrically opposed to this general policy of conservation.

Îf the wool industry is to be infected with the universal introduction of rayon, the entire industry would suffer an irreparable set-back. As a matter of fact, the only ones who will then be selling 100 percent virgin wool fabrics will be the British. If the American public becomes firmly rooted to the idea that fine all-wool fabrics can only be obtained from abroad and that all domestic fabrics are adulterated with blends, it will be many years after the war is over before this opinion can be eradicated, and the prestige of the American wool industry will suffer tremendously.

From every standpoint, including that of serving the public in the most economical manner, it would be preferable to make fewer fabrics of good and enduring quality than to make inferior fabrics that will not wear as well. The mere fact that there is any discussion at all about a shortage of raw wool and wool fabrics shows how very important it is for the wartime and peacetime economy of the United States to maintain a healthy wool-growing and wool-manufacturing industry.

It is a known fact that appreciable quantities of wool are blended with rayon and other fibers and used by manufacturers other than those engaged in the woolen and worsted industry. It should be borne in mind that when wool is used in a blend by rayon manufacturers it is used in a way and in a quantity which does not give to the finished fabric the acknowledged high insulative quality which is one of the primary and most important characteristics of wool. This is in itself a wasteful procedure. From the standpoint of the most efficient use of raw fibers, equipment, personnel, and experience, it would seem more logical to revert such wool to the worsted and woolen industry rather than to ask worsted mills to adopt a fiber with which they are largely unfamiliar.

If it is necessary to restrict wool for civilian purposes, it might be advisable to eliminate the use of woolen fabrics for neckties, shoes, spats, handbags, very lightweight woolen dresses, and other articles where wool is employed largely for its style appeal rather than its ability to provide necessary warmth and protection. There has been some suggestion that so-called "spring fabrics" should be eliminated for the duration. The connotation "spring fabrics" is in itself a misnomer, since there are many sections of the United States where "winter fabrics" are never used. For example, in the more southerly half of the United States there is very little demand at any time for the 16- to 17-ounce women's-wear fabrics, men's-wear coatings weighing over 20 ounces, or men's-wear suitings weighing more than 12 to 13 ounces. In such southerly sections of the country lighter-weight woolen fabrics are worn during what is called the "winter period" and cottons are worn during the summertime. This means that for these people lightweight wool fabrics are not a luxury but form the basis for necessary clothing during a large portion of the year.

Furthermore, by using lightweight woolens in this manner, instead of forcing the use of heavier-weight wool materials that are not necessary in such a climate, the wool conservation is definitley aided because the lightweight fabrics obviously require less new wool per yard. It would seem more logical, therefore, to limit wool fabrics by use rather than by weight. This would save wool by cutting

off nonessential articles, and yet at the same time permit each section of the country to have those types of wool garments that are most necessary and most efficient. We believe that every member of the wool textile industry is anxious to give every possible aid to the war program, and to this end they will accept any cut in the use of wool for civilian purposes which may be necessary, even up to 100 percent. It would seem, however, that the most helpful thing that the War Production Board could do to conserve wool is to be governed in its actions by these two primary objectives, without restricting the industry unnecessarily: (1) Our armed forces should be provided with all necessary materials, whatever these demands may be; and

(2) The wool supply for civilian use over and above this first requirement should be conserved to whatever degree the War Production Board deems advisable.

The wool manufacturers will naturally use their ingenuity to the utmost in producing the maximum yardage which their experience, equipment, and personnel can achieve, and the consumer will buy those types of fabrics which are best adapted for the climatic conditions under which they live.

The War Production Board, with the vast information at its disposal, is in a position to know how much wool is to be currently used for military purposes, how much is to be used for lend-lease, how much wool can be safely allocated for civilian use, and how much wool should be held in reserve to meet unforeseen emergencies.

Mr. WALTON. Mr. Chairman, could I ask one question? I am just interested in this word "reprisal." I do not know just what Mr. Wilson is referring to, and if he is referring to us I would just like to have it clear.

Mr. WILSON. Mr. Walton, I was making a general statement. It could be applied to you or to anyone else in Government service. Senator HATCH. We shall take it, Mr. Walton, there are not going to be any reprisals.

Mr. WALTON. I was just a little surprised to hear it come up, since these are not a staff. I just want to present anything else I should know about it.

Senator CONNALLY. I do not know Mr. Gillis. I was not here, but I assume what you meant was that you hoped that the War Production Board and others would not in anywise undertake to discipline Mr. Gillis for coming up here.

Mr. WILSON. That is exactly what I mean, Senator.

The CHAIRMAN. Of course, we have not asked Mr. Gillis about all these matters; but at the first hearings when the wool producers came on to testify I requested him to come up here and to suggest or ask any questions that I might otherwise not have asked.

Senator CONNALLY. Certainly I suppose he had some function up here in Washington, and that is to advise and tell us what he knows about wool and mohair, and if it hurts the feelings of anybody we shall just have to find that out right quick.

Mr. WILSON. I anticipate you will have to use Mr. Gillis maybe this afternoon on some of this roll-back provision.

The CHAIRMAN. We shall take a recess now until 2 o'clock. (Thereupon, at 12:40 p. m., a recess was taken until 2 p. m. of the same date.)

AFTERNOON SESSION

The committee resumed at 2 p. m., on the expiration of the recess. The CHAIRMAN. I was asked during the noon hour, in conference with the members of the committee, to state that the committee has asked that Mr. Gillis conduct the examination of Mr. Bancroft. I shall now call Mr. Bancroft.

STATEMENT OF HARDING F. BANCROFT, CHIEF COUNSEL OF LEATHER, WOOL, AND MISCELLANEOUS FIBER PRODUCTS UNIT OF THE LEGAL DIVISION, PRICE SECTION, OF THE OFFICE OF PRICE ADMINISTRATION

Mr. BANCROFT. My name is Harding F. Bancroft. I am chief counsel for Leather, Wool, and Miscellaneous Fiber Products Unit of the Legal Division, Price Section, of the Office of Price Administration Mr. GILLIS. Mr. Bancroft, before this committee yesterday Mr. C. J. Fawcett, general manager of the National Wool Marketing Corporation, Boston, Mass., made the following statement:

May we point out at this time that the Emergency Price Control Act of 1942 specifically provided that ceilings on agricultural commodities could not be placed lower than the highest average price 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 and 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 Office of Price Administration 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 threeeighths, 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 Office of Price Administration constitutes a miscarriage of the letter of the law and intent of Congress as clearly set forth in the Emergency Price Control Act.

The committee will be glad to have any comments you care to make for the record upon that statement, Mr. Bancroft.

Mr. BANCROFT. In the first place, I should like to state that the relationship between clean basis wool and clean wool is a problem principally for our economists. It is not a legal problem.

On the legal side of the question, however, I should like first to read section 3 (a) of the Emergency Price Control Act and to show that in establishing maximum prices for domestic shorn wool by domestic price regulation No. 106, we have complied with the provisions of the act. Section 3 (a) of the act provides as follows:

No maximum price shall be established or maintained for any agricultural commodity below the highest of any of the following prices, as determined and published by the Secretary of Agriculture: (1) 110 per centum of the parity price for such commodity, adjusted by the Secretary of Agriculture for grade, location, and seasonal differentials, or, in case a comparable price has been determined for such commodity under subsection (b), 110 per centum of such comparable price, adjusted in the same manner, in lieu of 110 per centum of the parity price so adjusted; (2) the market price prevailing for such commodity on October 1, 1941; (3) the market price prevailing for such commodity on December 15, 1941; or (4) the average price for such commodity during the period July 1, 1919, to June 30,

1929.

Pursuant to that section we obtained from the Secretary of Agriculture a letter dated February 13, 1942, addressed to Mr. Leon Henderson, Administrator of the Office of Price Administration. I should like to put that into the record, if I may.

The CHAIRMAN. You may read it into the record for the benefit of the other members.

Mr. BANCROFT. It reads as follows [reading]:

DEAR MR. HENDERSON: This is in response to the inquiry from your office with respect to wool prices published by the Department of Agriculture and the relation of such prices to the provisions of section 3 of the Emergency Price Control Act.

Two types of data are available on prices of wool over a long period of years. Since 1909 the Department of Agriculture has compiled and published monthly, the average price received by farmers for wool. This average is based upon reports from dealers and farmers over the country on prices prevailing for wool at the many local markets in the various States. Since practically all wool is sold by farmers in the grease (unscoured), the reported price received by farmers are on a grease basis. The average price received by farmers for wool for the United States is figured from prices of various grades and descriptions of wool sold throughout the country. In computing the national average price, State averages are weighted by the number of sheep and lambs on farms in each State on January 1.

Data also are available on prices of wool by grades at Boston, the leading wool market. Because of differences in shrinkage of wool on scouring, price quotations at Boston are given on a scoured basis, although prices for some wool at Boston are given on a grease basis. Practically all wool is sold in Boston as grease wool, but prices are quoted on a scoured basis and transactions usually are made in terms of prices on a scoured basis with buyers and sellers agreeing on an estimate of shrinkage. Since 1923, the Department of Agriculture has reported price quotations for various grades of wool sold at Boston. For some grades it is possible to secure Boston prices for the period 1919-23 from the Boston Commercial Bulletin, but this is not possible for all grades. No general average of the prices for all wool sold on the Boston market is available either on a scoured basis or a grease basis. The only general average available for domestic wool sold in the United States is the average price received by farmers, or the local market price. On the basis of prices received by farmers, the four limitations on maximum prices for agricultural commodities (Emergency Price Control Act of 1942, sec. 3) for wool are as follows: (1) 110 percent of the parity price or 110 percent of the comparable price. The parity price for wool in mid-January 1942 was 26.7 cents per pound; 110 percent of this figure is 29.4 cents per pound. No comparable price for wool has been determined by the Secretary of Agriculture.

(2) Market price prevailing for such commodity on October 1, 1941. The average price received by farmers is available only for the 15th of each month, The average price received by farmers for wool in mid-September was 36.3 cents per pound, and it was the same in mid-October. Since market prices did not change materially from September 15 to October 15, the October 1 average price received by farmers would be approximately 36.3 cents per pound.

(3) Market price on December 15, 1941. The average price received by farmers for wool in mid-December 1941 was 37.1 cents per pound.

The average

(4) Average price for the commodity July 1, 1919-June 30, 1929. price received by farmers for wool in this period was 34.1 cents per pound. Based on the foregoing figures, the highest of the four limitations for wool is the market price prevailing on December 15, 1941.

For quotations of prices for individual grades of wool on the Boston market, however, the situation is different. The average of price quotations for Fine territory combing wool, scoured basis, at Boston for the period July 1919-June 1929 was $1.28 per pound, while the average quotation on or about December 15, 1941, was $1.16 per pound. The 1919-29 average of price quotations for territory Half Blood combing wool also is a little higher than the December 15 quotation. The 1919-29 average quotation for territory three-eight Blood combing wool was about the same as the December 15 quotation, but the 1919-29 average of quotations for territory one-fourth Blood combing wool was lower than the December 15 quotation. Price data for the Boston market are not available for the 1919-29 period on wool from the fleece States (Corn Belt and eastern regions), but prices for most of such wools, except those from Ohio and Pennsylvania, probably would be more like territory one-fourth and three-eighth Blood than like territory Fine and Half Blood wools.

Averages of price quotations at Boston for the 1919-29 period can be computed by the Department of Agriculture for only a limited number of grades of wool. Even in the case of these few grades, it is necessary to utilize trade or commercial