1 Per quarter, based on production in 4th quarter of 1950 and 1st quarter of 1951. 2 Estimated.

"Other types of consumer debt have also dampened current expenditures. Consumer credit outstanding has soared in the last few years as more and more people have used this means to purchase automobiles, furniture, television sets, and household appliances. Total consumer credit rose from $5.7 billion at the end of 1945 to $28.9 billion at the end of 1953; automobiles alone account for $11 billion of this total.

"Thus there is a total consumer-homeowner debt of nearly $95 billion, which takes a big bite out of consumers' current income. This reduces consumer expenditures for items which can be postponed, with apparel one of the chief victims. The proportion of the consumer's dollar spent on apparel has declined steadily since the war.

“Apparel expenditures as a percent of total consumer expenditures

"For the last 4 years, the proportion spent on apparel has been below the prewar level (8.6 percent in 1939).

"DISILLUSIONMENT WITH NEW FIBER

"The last 3 years have witnessed a series of aggressive advertising campaigns to promote new textile fibers like orlon, dacron, acrilan, and dynel. However, great irresponsibility has marked the launching of these new products as 'miracle fibers.' Consumers found the claims for these synthetics to be exaggerated. Moreover, many spinning mills lacked proper equipment or know-how to process the new fibers, and often resorted to shortcuts which resulted in inferior yarn and fabric.

"The widespread disillusionment of consumers hurt the market for these new fibers. Also creating confusion was the multitude of different blends of natural and synthetic fibers, generally marketed without reporting the proportion of each fiber or the special advantages offered. Nevertheless, the bulking quality which enables the new fibers to be used as a wool substitute or for blends, plus their superior crease-resistance and launderability, makes them a formidable threat to the older fibers.

"COTTON HAS RECOVERED PART OF THE MARKET PREVIOUSLY LOST TO RAYON "Spinners and weavers of wool, rayon, and acetate have all suffered from the inroads of the new fibers. Although there is no assurance that they will hold their present position, they have seriously upset the industry, especially the older branches, and discouraged consumer buying. Cotton, on the other hand, has recovered part of the market it had previously lost to rayon and acetate.

"In addition to the displacement of natural fibers by synthetics, the textile industry has suffered from the substitution of nontextiles in various household and industrial uses. Plastic film has made major inroads in the upholstery fabric market and in automobile seat covering and door paneling. When added to the earlier displacement in window and shower curtains and tablecloths, these developments assume major importance.

"WOOLENS AND WORSTED IN BAD SHAPE

"Failure of the woolen and worsted branch of the industry to protect its competitive position stands in marked contrast to the success of the cotton interests in improving their styling, finishing, and merchandising. With Government aid in studying the properties of cotton and its potential uses, growers and manufacturers cooperated in developing new processes and staging an effective propmotion campaign. Research is needed in the wool field to improve its qualities with respect to shrinkage and mothproofing. Fabric design has lagged behind the times as domestic mills generally gave up the initiative to foreign producers. While many woolens have been styled to meet the shift in consumer preference toward casual wear worsteds have not yet been adequately adapted to this trend. Many mills are also unable to compete because of obsolete plant and equipment. The woolen and worsted industry will have to bestir itself to meet the growing challenge of the newer synthetics. Creative answers must be forthcoming to the problems posed by product design, technology, merchandising, and sales promotion.

"MILL LIQUIDATIONS

"The rate of mill liquidations increased substantially in the last 2 years, leaving a train of ghost towns and some 50,000 jobless workers. Management deficiencies which had been glossed over in the textile booms that followed World War II and the Korean war were glaringly exposed by intensified competition. Companies whose stockholders enjoyed a bonanza in dividends from highly profitable operations in 1946-48 and 1950-51 found that their failure to plow back sufficient funds to modernize plant and equipment left them at a serious disadvantage in 1952-53. The necessity of cutting costs posed finanial problems for which they had not prepared themselves and many mills were forced out of business.

"FINANCIAL MANIPULATIONS CAUSED SOME CLOSINGS

"A number of mills were liquidated as a result of deliberate schemes by management to achieve maximum financial gains. The welfare of the workers who had devoted the major portion of their lives to these mills was ignored in the ruthless drive of a few men to profit from loopholes in our tax laws, under which capital gains (such as a gain from the sale of a plant) are taxed at only 26 percent compared to a maximum rate of 92 percent on ordinary income. No consideration was given to the fate of communities whose entire economic life depended upon the operation of these mills. Instead, every opportunity was seized to exploit communities in other parts of the country through acquisition of new plants and equipment paid for by industry-hungry towns which used their tax-exempt authority to float municipal bonds.

***The pressure for cost reduction in the last 2 years resulted in the expenditure of over $500 million for plant improvement and expansion. The bulk of the postwar expansion program had been completed by 1951 so subsequent capital expenditures were concentrated in improvement of existing facilities. Altogether the industry has spent more than $3 billion on new plant and machinery since the war. By the end of 1953 more than half the gross value of the industry's capital assets was made up of postwar installations.

"INDUSTRY HAS MODERNIZED

"Along with improved technology the textile industry has transformed its methods of operating along the lines of the most modern American industries. Centralized controls have been instituted over scheduling and production, and systematic checks imposed on quality. Plant layouts have been revamped to provide a straight-line flow of production. Materials handling has thereby been reduced to a minimum and, where actually necessary, mechanical means have been substituted for labor. Technically trained supervisors and time-study engineers have combined to tighten labor standards. Man-hour output has been substantially increased. With the decline in activity at the end of 1953 many companies pared their overhead and work force. Demands for higher machine assignments for workers were more numerous than ever.

"FAILURE TO SECURE TARIFF RELIEF

"To protect the industry from further destruction TWUA in 1953 requested the United States Tariff Commission to implement a provision of the General Agreement on Tariffs and Trade which authorized raising tariff rates on woolen and worsted fabrics when imports exceed the trigger point of 5 percent of production. This request was rejected on a technicality. Early in 1954 the union again urged the commission to raise the tariff rate from 25 to 45 percent as soon as imports in any weight category reach 5 percent.

"While woolen and worsted imports have been rising, exports of cotton goods (the only textile item which the United States exports in substantial quantities) have been dropping sharply. Shipments of cotton fabrics declined from 802 million square yards in 1951 to 762 million in 1952 and 630 million in 1953, a drop of 21 percent in 2 years. Foreign markets for cotton goods have been contracting as domestic textile industries have been built up in the underdeveloped areas of the world. Japan and India have expanded their capacity to a point where their exports exceed those of the United States. Great Britain's industry is also geared to supply a larger portion of the world cotton goods market. United States therefore faced a shrinking foreign market.

"VIGOROUS ACTION BY GOVERNMENT NEEDED

The

"The economic problems faced by the textile industry call for vigorous action by the Federal Government to aid in making the necessary adjustments. In the 1952 presidential election campaign, General Eisenhower made specific promises to aid distressed areas and to effectuate other policies leading toward a recovery in textiles.

"In Lawrence, Mass., where more than 20 percent of the labor force of 53,000 was unemployed as a result of woolen-mill closings, the President had promised preference for distressed areas in obtaining Government contracts. The Truman administration's policy of setting aside parts of contracts to be let in distressed areas had not been sufficient because of the requirement that the lowest bid be matched. At the end of 1953 President Eisenhower announced he favored strengthening the set-aside program to assist distressed areas, but withdrew his support before any alleviation could be worked out. He explained that it was not his intention to offer special assistance to any area, but rather to improve conditions throughout the Nation; the only result was continued unemployment in Lawrence and other hard-hit cities."

We wish to offer herewith the most recent statistical compilation made by the research department of the Textile Workers Union of America, showing levels of employment and weekly man-hours worked in 23 principal textile States. This compilation gives the figures on employment in the industry at about the high point in February 1951 as contrasted with the situation in April 1954. We can say to this committee that since April the drop has continued.

The

According to these data, there has been a reduction of employment in textiles in the United States between February 1951 and April 1954 of 21.2 percent. drop in average weekly man-hours in that same period has been even more severe. The decline in man-hours is 28.2 percent.

Although the economic blight which has overtaken textiles is nationwide, it is painfully clear that certain geographical areas are suffering much worse than

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others.

The fact that the drop in employment and man-hours worked in the six New England States has been so severe is no doubt due largely to the fact that so large a proportion of the woolen and worsted mills of the country are located in that region. The woolen and worsted section by and large is the most badly hit portion of the industry and the type of manufacture which has experienced the most prolonged difficulties.

In the New England States employment has dropped 39.7 percent between February 1951 and April 1954, while man-hours worked have been cut 44.2 percent.

In the 9 most important textile-producing States in the Southeast there has been an 8.5 percent drop in employment between February 1951 and April 1954, while the man-hours worked have been reduced in the same period 18.3 percent. We reproduce the table in full herewith:

Employment and average weekly man-hours in textile mill products industry by State, February 1951 and April 1954

2 Maine and Vermont are not included in man-hour data because they are not available.

3 Not available.

4 Employment and man-hour area totals are for those States for which data are available. Maryland and Louisiana, which are included in employment totals, are excluded from man-hour totals because data are not available.

5 April 1954 figures are not available. Figures shown are for March 1954.

6 Employment and man-hour totals are for those States for which such data are available

7 Area totals are for California, the only Far West State which reports such data.

Source: State departments of labor and U. S. Bureau of Labor Statistics.

One other statistical table which we believe to be of considerable importance in connection with this testimony dealing with the general problem of unemployment in textiles is appended herewith.

This table illustrates the wide variations in the different States in the average contribution rate for unemployment insurance in the textile industry. We have used the latest data available in each case. Whereas in Rhode Island the rate was 2.7 percent, in such competing States as Alabama, Georgia, and South Carolina, average employer contribution rates were respectively 1.02 percent, 1.21 percent, and 1.23 percent in 1952:

Average contribution rates for unemployment insurance in the textile mill products

State

industry

Source: U. S. Bureau of Employment Security; from table published on p. 111 of Senate Finance Committee hearings on Employment Security Administrative Financing Act, March 1954, and typewritten table dated Apr. 9, 1954.

The "textile mill products industry" is as defined in Industry Code No. 22 of the Standard Industrial Classification Code.

Our purpose in presenting this table is to emphasize our point that in an industry which is as competitive as textiles, the need for substantial standardization of taxes collected from all establishments, irrespective of location, should be very evident. Moreover, we feel strongly that the great disparity in amount benefits and duration of benefits between the textile States is socially unsound and economically harmful both locally and nationally.

THE HUMAN ASPECT

In all of the above materials dealing with broad statistical trends and the basic economic difficulties of this widespread industry, we have not mentioned the human aspect of this problem. The committees of Congress can so easily fall into the habit of forgetting that back of all these tables and sets of figures, which must be part of testimony such as this are men women and children, each of whom has special needs and problems which cannot actually be portrayed by any set of statistics.

In Rhode Island, in the past few months, a well-known institution of learning has made a careful sample study as to what is happening to the men and women who were thrown on the labor market due to the closing of textile mills. TWUA