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STATEMENT OF MRS. NELL Q. DONNELLY, GARMENT MANU,

FACTURER, KANSAS CITY, MO. The CHAIRMAN. Mrs. Donnelly, will you give your name and address and occupation?

Mrs. DONNELLY. Mrs. Nell Donnelly, 5235 Oak Street, Kansas City, Mo. I am a garment manufacturer in Kansas City,

Senator KENDRICK. Mrs. Donnelly wants to make a statement as to how the bill will effect the consumer. Mrs. Donnelly, how many people do you employ?

Mrs. DONNELLY. About 1,000 people-perhaps from 950 to 1,050. I feel that I have read this bill very carefully, I feel that it is a sales tax on food and clothing and I think it will be a great hardship to the wage earners of the country and I can't see where it will benefit the farmers for the reason that in my experience, from my knowledge in a general way, the wage earners are spending practically everything they can make for food and clothing at the present time. In the case of my own people, I have been very fortunate in being able to keep them working practically the entire time,

As a matter of fact, I think in the last two years, I am sure they haven't lost more than perhaps a week or two in the entire year. Though I have felt that my own people were very fortunate in our being able to keep going, still I find that a condition exists of people who are working but are helping to support others of their families who are not working. So instead of my own people going along with the same standards that they have had before, they have a sister who is home with 3 or 4 children and whose husband isn't working or they have taken in their fathers or mothers or brothers who are out of work, and so I find that where these people were living fairly comfortably before, there are now 2 or 3 or 4 families living together and that what they make is really going for actually just food and clothing.

This came particularly to my notice. Although I was in a business that is very seasonal, it has been my policy and I established the practice during my years of business of not taking any more business in one season than I could get in another season, so that in the spring, which is our big season, I simply didn't fill my orders but kept a certain size factory going the year round. A couple of years ago a woman who was in charge of my factory came to me and said, this being in the spring: “We have all these orders and we can't take care of them in our regular factory, but there are so many people out of work that I think we should take another floor in another building and even though we can only work a couple of months or three months, it will give them that much work. The machinery costs very little, we have the orders, why not do that?”

Of course, there was no reason why we shouldn't do it, it was very little inconvenience to ourselves. That kind of business is not profitable but when there were so many people out of work, we thought it would be a good thing to do. So we opened this extra factory and of course, that just became another responsibility. When it came time to close it down, we didn't really want to do it, so we have come along. Last.fall when it looked like business wasn't going to come in for a time, of course, we said We will close up that factory” because it was nothing but an extra factory anyhow. Then the woman in

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charge came to me and said “Mrs. Donnelly, if you can only give 2 or 3 days' work a week, that will buy food for these families and many of them have someone that can furnish the home.” She said that if we could keep going those few days, whatever we could, it would buy food. Well, we kept it going and we went out and worked a little harder and pretty soon we were able to keep it going right along. We went through the winter with that factory going practically entirely. Then a few weeks ago when this banking situation came up, of course, I began again and again to question whether I should continue it because we always felt that this was a little extra factory. Not knowing what would happen, I really felt I must think of my own finances and how I would keep my business going. Then it was a question of whether we would close that factory or not.

Well, I had four women come to me and say, “Mrs. Donnelly, if we can keep that factory going one day a week, it will cost us something to do that but that will help to buy food for those people.” That, together with other knowledge that has come to me, impressed me greatly with the fact while I think my people are in a better position than most, the workers generally are spending practically all of their money for food and clothing right now, so all that this bill would do and all that an extra tax would do would simply be to give those people half as much food. They are spending all the money they have, so they would only get half as much food and clothing for what they are spending. So when the farmers are getting practically all of the money they have now, I can't see how putting this tax on will do anything but give the workers less food and no more money to the farmer.

Senator THOMAS of Oklahoma. You are afraid, then, that this bill will raise the price that your people must pay so that they can't buy as much as they are now buying?

Mrs. DONNELLY. Yes; along the lines of the gentleman who just now testified. I think if food becomes higher, they just can't buy it. I know people who should have fresh, green vegetables for their children in the wintertime. Well, just a lot of people simply can't buy fresh, green vegetables for their children because they are too high. If they were less expensive, they would consume more.

Senator THOMAS of Oklahoma. What sort of garments do you manufacture?

Mrs. DONNELLY. I manufacture women's dresses.
Senator THOMAS of Oklahoma. Exclusively?
Mrs. DONNELLY. Yes, sir.

Senator THOMAS of Oklahoma. Don't you think if the farmers received more for their produce that they could buy more dresses and even pay a little better price for them?

Mrs. DONNELLY. I am sure they could, but I don't see how you are going to get it from my workers when my workers now are spending all they have—when I say my workers, the others are the same way—when the workers are spending all they have for food and clothing and at the present time I am paying them all I possibly can. If you will check my place, you will see that I haven't had to reduce my wages to amount to anything.

Senator THOMAS of Oklahoma. You are getting the same prices you received in former prosperous years?

Mrs. DONNELLY. No, no, no, of course, and I am not making anything like as much money.

Senator THOMAS of Oklahoma. If prosperity should return, you would get a better price for your product and you could pay the workers more?

Mrs. DONNELLY. I have no objection to prosperity returning. I want it to return. [Laughter.] But I can't see how having the workers pay more for their food will do anything for the farmer. I think after all the wage-earning people of the country are the ones that consume the great amount of food. In my own household, and perhaps the households of everybody here, food is just 1 item, it is just 1 item of your expense. Where families kept 3 houses going and had gas and heat and electric light for 3 houses, they have now doubled up in 1 house. They don't spend that money for those other things, but practically everything goes for food and clothing. They are not buying automobiles or radios or pianos or the luxuries that in former years and better times the workers were able to buy.

Senator FRAZIER. I want to ask you if you think it is fair to have the farmers produce food products and sell them below the cost of production?

Mrs. DONNELLY. I don't think it is a matter of our thinking it is fair-I have to sell at times, if I produce something that the public doesn't want, I have to sell it for what price I can get for it.

Senator FRAZIER. But you continue to do business and you couldn't continue to do business unless you got the cost of production for your product?

Mrs. DONNELLY. The textile business in New England for years has been doing business at a loss. They will have to overcome that. I have no objection to trying to do something for the farmer but I think this bill isn't going to do anything. I think if you open up your markets in Europe, take off some of these tariffs that we have, and give our farmers a chance to sell their goods some place else, that that is a better way to do it. In the meantime, I can't see how you are going to get any more purchasing power for the farmers because the wage earners have no more money to spend. They will eat less food. If you have so much money to spend and you have 3 children and you need 4 quarts of milk a day and that costs you probably a minimum of 50 cents, if you have only 50 cents to spend for milk then you will only have 2 quarts of milk if you double its cost.

Senator FRAZIER. Are you willing to reduce the tariff on manufactured dresses?

Mrs. DONNELLY. Yes, indeed; I am. I am willing to produce dresses in competition with anybody. There is no greater competition anywhere in the world than we have right here in America.

Senator MURPHY. Mrs. Donnelly, are you operating your business at a profit?

Mrs. DONNELLY. Yes, I am; not a large profit, a small profit.

Senator MURPHY. Is it your impression that the agricultural business is being operated at a profit today?

Mrs. DONNELLY. No; I think it isn't from all we have heard about it.

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Senator MURPHY. Is it your impression that any more than a very small percent of businesses are being operated at a profit?

Mrs. DONNELLY. I am sure they are not because I read the statements of a great many retailers. That is another thing, I think the Government can't take the responsibility of an industry making money. Three or four years ago I had a young man that did city selling; I had enough retailers, small retailers around in Kansas City that it took one man to call on. The first of the year we checked it over and found that there were only four small accounts in the city that we were willing to sell. They had either gone out of business or their credit was so poor you couldn't risk selling them.

Senator MURPHY. You are operating today at a reduced profit? Mrs. DONNELLY. Very much reduced profit.

Senator MURPHY. Are you getting a return on your investment in your business?

Mrs. DONNELLY. Not what I could get if I had the investment out or had it in Government bonds, something that was bringing in.

Senator MURPHY. Then you don't make 174 or 136 or 4% percent?

Mrs. DONNELLY. I haven't figured it exactly but I know the investment in my business is not paying 4% percent.

Senator MURPHY. Is any part of your output sold to farmers?

Mrs. DONNELLY. Yes; it is sold all over the country to the large and small towns.

Senator MURPHY. Is the volume of your sales reduced? Mrs. DONNELLY. No; my sales were increased last year. Senator MURPHY. Increased in dollars? Mrs. DONNELLY. Yes. I think it is because I am making what the public wants-well, I will not advertise my business here.

Senator MURPHY. Merely as a statement of fact, and your answer won't reflect any vanity, I know, but your business is very exceptional, isn't it?

Mrs. DONNELLY. Yes, it is. Of course, everybody knows that our industry is a very highly competitive one, and it is even not considered a bankable business. The greatest competition we have always has been the small local manufacturer in the different cities. Of course, those small local manufacturers are out of business. I didn't put them out.

Senator MURPHY. If we gave the farmer a little more for what he sold -

Mrs. DONNELLY (interposing). Who is going to give that? My workers are going to give that to them and all the wage earners of the country.

Senator MURPHY. Let's take that for granted momentarily. If we gave the farmer something more for what he sold, do you think we would thereby increase his purchasing power?

Mrs. DONNELLY. Of course if you gave the farmer more for what he sold. What I am thinking of is who is going to give him that? That is the objection I have. Who is going to give that money to the farmer? I say the wage earner can't do it. He is already giving him everything he has.

Senator MURPHY. If we gave the farmer a little more, we could increase his purchasing power?

Mrs. DONNELLY. Of course, no question about it. If you gave me more, I would have a bigger purchasing power, too.

Senator MURPHY. Precisely. If we give him a bigger purchasing power, it is possible there will be an increased demand for the thing you produce in your factory. Do you think that is probable?

Mrs. DONNELLY. Probably; yes.

Senator MURPHY. If that were true, you would be able to employ more people or increase the wages of those you have now employed; is that possible?

Mrs. DONNELLY. It is possible.

Senator MURPHY. Of course that is the theory on which this whole thing rests. You think that is possible?

Mrs. DONNELLY. It would be possible, of course. If there were more people wanting to buy my merchandise, if I wanted to increase my business, I could increase it.

Senator MURPHY. Suppose we could start that process. Things are about as bad as they could be, aren't they?

Mrs. DONNELLY. I think in a great many industries they are, but there are so many other people. I have personal friends who have been in the real estate business in Kansas City and in other businesses where the wives, the women past middle age, whose families have been very well to do, and who are entirely untrained, come pleading with me to give them work, and they say in their cases, “I own my home but what I need is food.” That is actually the condition that comes to my attention constantly.

Senator MURPHY. Those conditions are painfully evident everywhere.

Mrs. DONNELLY. Women that have never worked outside of their homes before, they are willing to work on my machines. These are personal friends. Their husbands are in the real estate business and all different kinds of businesses, and they are in a very bad way, too.

Senator MURPHY. That is true, but we want to get at the base somewhere to start this thing. Your business, manufacturing garments, is not a basic industry?

Mrs. DONNELLY. No; but when you give those people less food for the money, I say you are putting a hardship on them and they are spending all the money they have for food anyhow.

Senator MURPHY. How long would that condition be likely to continue if you increase the farmers' purchasing power?

Mrs. DONNELLY. I don't think you should increase the farmers' purchasing power out of the wage-earners' pockets. I don't think they have to do so. I think you should open up your foreign markets.

Senator MURPHY. I am in agreement with you about the foreign markets but I think something more than that is necessary. The point I am trying to emphasize or develop-I am troubled with exactly the same thought that is in your mind—I think there is a temporary bridging that has to come in there. We will increase the price that the farmer receives, say, and we will say that that will diminish the purchasing power of your employee, having to pay a cent or 2 cents a pound more for pork chops and perhaps some people can't buy so many pork chops, but this increased amount the farmer receives will find its way into the channels of trade. Don't you think it will?

Mrs. DONNELLY. There is another point on that, though, there is a certain fixed expense; I have a certain plant and machinery and investment, and when I turn out a certain amount of garments in a

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