Mr. CAPT. Mr. Chairman, do you care to have me comment on that?

The CHAIRMAN. If you wish.

Mr. CAPT. The reports we gather on cotton are taken during the ginning season. The gin is the meter through which the total is really measured. It may be in the field, but if it does not get to the gin, it is not of any commercial value.

Many commercial organizations do go out and make surveys, but it is commonly found that figures that are obtained by special interest groups, trade associations, and manufacturers' associations-any group, commercial or otherwise-tend too much to be colored by selfinterest. I think it was the Brookings Institution that made the comment in one of its reports to the effect that statistics gathered by trade associations and the like, and that pass current in the trade, are too often colored so much by self-interest that they are used not so much for the public good as for the purpose of taking advantage of the public ignorance. An institution such as the Brookings Institution can be trusted to make a fairly honest, unbiased, and accurate estimate of a situation. So the Congress in its wisdom decided a good many years ago that the Bureau of the Census should take this census of cotton through the gins as the basis from which corrections might be made for other surveys that might be undertaken by other agencies of the Government, or private enterprises.

Mr. MURDOCK. I certainly approve of that, but I was wondering if that parallel condition existed in industry.

Mr. MURPHY. I do not think it exists to as large an extent as that. There are publications in particular industries that attempt, as Mr. Capt has said, to portray the volume of business in their particular industry. It is largely done in order to get advertisers and firms to use their publications, because of the size of the existing market. I think on the whole they attempt to show a trustworthy estimate, but it is, of course, colored by their own interest in selling advertising in that field.

The CHAIRMAN. Are there any other questions?

Mr. TALLE. Mr. Murphy, your work is to assist industries to plan their affairs; is that right?

Mr. MURPHY. That is rather a large order. I would not say it is exactly that. My present connection happens to be as the administrative executive in an advertising agency. I joined the agency the first of this year. Prior to that, for 10 years, I was the advertising manager of the Sloan Valve Co., which is a rather small manufacturing concern manufacturing flush valves, and for several years prior to that I was the sales manager of a cast-iron foundry that made special pipe and fittings for the building industry.

Mr. TALLE. The term "planned economy," which we see in quotation marks so much in the daily papers-does that not relate to the fact that almost everything is now being "planned"?

Mr. MURPHY. Yes; to some extent, that is true. But I think that possibly the amount of time that the individual industrial executive gives to over-all planning for the entire country and for entire industry is referred to.

There are always a few in industry or through associations take the broad viewpoint, but most of them are so busy meeting pay rolls, trying to increase sales, and trying to make sales that it concerns the problems of all companies.

Mr. TALLE. What I have in mind is that in the past the business units have done their own planning.

Mr. MURPHY. That is right.

Mr. TALLEY. And now the planning is being shifted, let us say, to the Government.

Mr. MURPHY. Well, of course, you have that in some respect.

Mr. TALLE. Through government "planned economy."

Mr. MURPHY. In some instances it may be necessary or unnecessary in others.

Mr. TALLE. I was wondering how far you would carry "planned economy."

Mr. MURPHY. If you can meet 51 percent of the demands you are all right; if 49 percent you may go broke.

Mr. TALLE. How "rugged" must the individual be to survive in a "planned economy"?

Mr. MURPHY. Well, they have done pretty well, I would say. The CHAIRMAN. Any further questions? If not we thank you, Mr. Murphy.

Mr. MURPHY. Thank you.

The CHAIRMAN. We will hear now from Mr. L. R. Garretson, of the Leeds & Northrup Co. of Philadelphia.

STATEMENT OF L. R. GARRETSON, VICE PRESIDENT, INDUSTRIAL ADVERTISERS ASSOCIATION, PHILADELPHIA, PA.

Mr. GARRETSON. Mr. Chairman and gentlemen of the committee, I am afraid that you will find my statement somewhat a repetition after hearing Mr. Murphy. But I was very glad of the opportunity of being invited down here to talk for the National Industrial Advertisers Association on a question which we think all need to work together; and I think that if I can put before you gentlemen one thought it may be enough for me.

I have been in the advertising business, first as a salesman in the merchandising business, and then an advertiser, being an advertiser for years; then financing advertising, and then in the general industrial advertising plan and planning and, more recently, advertising machine goods in industry. I was rather interested as I came down on the train, to realize that my company did not know I was coming, so I do not represent my own company here.

One of the things that has stuck out in my mind in considering this question, and in connection with some questions asked by you gentlemen here, if I may say in passing, is the difference between consumer merchandising and industrial merchandising. The difference, I do not think, is well enough understood, even among advertisers themselves.

If we were to take one side of that wall [indicating] and were to draw a circle the size of this room to represent all groups; and then in the center of that circle a concentric circle, very much smaller which would represent all of the markets which are represented by people who are in business; and then on the inside of that circle we should draw another circle we could put the manufacturers in that center circle; and in that circle put a dot, that would represent the manufacturers who manufacture for other manufacturers.

Now, of course, there are intersales between all of those groups but they all tie in to the middle. You have the larger groups who are

interested in a survey on a 2-year basis, the manufacturers themselves. In the larger circle, because their livelihood depends on that, you have the other groups.

Now, the difference between those two groups, those on the outside, the manufacturer groups and the other groups, is that one represents utilities and farmers and distributors, wholesale, retailers, and so on. Now, in the main circle are the people in industry, on account of the fact they are earning their living, who represent the group in the bigger circle, the consumers, and the difference is very great. And in that larger circle, represented by consumers, you have a group that is responsible to a rather large mass buying group, buying in more or less quantity basis, and the advertising, as you can see, goes to the fellow who is carrying on advertising of the kind that is not acceptable to the trained mind.

Now, the selling association in this field-and I do not want to say that it is not good; I am simply saying there is a difference, and when you get to the inside circle you are dealing principally with trained buyers, trained salesmen, who have become responsible for buying and selling and who have to be in position to prove that purchases will be economical and that sales can be made.

The nature of the work that has to be done in the selling of most of the merchandise, so far as the professional buyer is concerned, radically differs from the other group that you reach through mass marketing advertisements. For instance, with chewing gum the advertising is done nationally and you see very little personal salesmanship used. When a person asks for a package of chewing gum the merchant simply hands him the kind he wants; the sales work is done through advertising.

But inside this other circle that I have indicated that is not true, particularly when you are dealing with capital goods, that is, capital goods and supplies.

When you are dealing with capital goods where the marketing process is slow it requires that you shall undertake to advertise in order to build up your sales. You have to contact your advertiser; you have to have high-priced salesmen out in the field who are able to contact the representatives of these 300 or more industries that have been referred. You do not have, however, the contact through advertising you do with consumer goods. So, we have an entirely different set-up in reaching this market.

And, furthermore, the turn-over is different. You have to have a pretty fast movement in order to keep up with it. Suppose, for instance, you are talking about oil refining. The process used some years ago was a distinctly different process from the cracking process that is now used, and when that was developed it was necessary to build refineries along that line. Then, it was necessary for the salesmen to know about the refining industry, to know where the industry was located and to know in detail about it through personal salesmanship.

I remember when I was quite a young man I was sent to a concern which concern did about a $150,000 business-and at that time we had three salesmen who traveled all over the country in order to contact those people and, as a result, they were never able to pay dividends on the common stock. If they had only had sense enough to limit the activities to the localities where there was a possible

outlet for their goods, which were concentrated in certain areas and had concentrated their sales activities in those areas, part cularly, how much better they could have been developed, and through such planned economy they might have been able to pay dividends on the common stock, which they never did.

Now that system which existed sometime ago has changed; they have learned through educational methods to confine their activities to the efficient manufacturing processes and to work through efficient salesmen. That condition is changing and has been changing through all the years, and is going to change, in my estimation, much more rapidly along the lines that Mr. Murphy has been talking about. And of course nobody can tell what is going to happen but we certainly think that we can tell something is going to happen. We know, for instance, that certain markets which are being sold, and a lot of them in considerable volume, are being sold up, and when they stop functioning it is not going to be possible to sell any more of the kinds of goods put out by those industrial companies. And the industrial company which is going to survive I believe will have to take account of those markets in order to determine what they can continue to do; whether they can continue with their present goods, or with other products or whether they are going to be able to increase, or must decrease their output, or just what will have to be done.

Therefore, the work that the Government will do will present a very small part of the work that has to be done.

I think I have pretty well finished with my story. I will add this further thought, that in normal times the industrial market, which differs from the consumer market, in that the industrial market is a relatively small market representing big buyers whereas the consumer market, is a big market of small buyers. It is the big market, I think, which has the tendence to have a lot of movement, where the turnover is much more rapid. I think that none of those two markets are entirely distinct in their nature, but I believe that the rapidity of turn-over justifies a more frequent gathering of data than the slower turn-over in the big market on the outside.

I think that is about all I have to say.

The CHAIRMAN. Mr. Allen.

Mr. ALLEN. Do I understand from what you say that you are against this bill?

Mr. GARRETSON. I am here, as Mr. Murphy very well said, to represent the National Industrial Advertisers Association and to request just one thing, that the census of manufacturers be continued on a biennial basis.

Mr. ALLEN. As I understand from what you said in your illustration concerning those who would be benefited by this, they would be represented by that small dot in the inner circle; is that right? Mr. GARRETSON. That is right; the manufacturers.

Mr. ALLEN. In other words, you said that if you could draw a circle over this whole room that would represent business, and those who would be benefited by this bill would be the group represented by the dot in the inner circle.

Mr. GARRETSON. One of the groups benefited.

Mr. ALLEN. That is, we would be legislating not for the mass of people but rather for the group represented by that dot.

Mr. GARRETSON. Yes; but that dot represents concerns which are employing the poeple who are actively engaged in making a living.

While it is representative of a group within a group, and I indicated that dot by way of contrast, of course there are numerous concerns in the industrial market who are actually selling to other industrial concerns, which is a relatively large number. And that represents a great many in the total; if you take the concerns as separate plants we are very apt to be misled. A large number of concerns are engaged in manufacturing some goods for other manufacturers, and some concerns are manufacturing goods only for manufacturers. But you will find concerns which have a consumer market and an industrial market; and you will find people who are selling across the lines indicated by these concentric circles. You will find, for instance, people in the utilities selling to the industrial market; you will find people in all of these divided groups who are selling in the industrial market just as you will find groups in one circle selling to groups in another.

So, it is not only some group in one circle that is interested but also those in the concentric circles on the outside. In other words, the utilities are included; the communications group and other larger numbers of groups, as you know better than I, are interested.

Mr. ALLEN. But this legislation, at any rate, will benefit only some group, the group that is selling manufactured goods.

Mr. GARRETSON. That sells goods to manufacturers.

Mr. ALLEN. It is not of material benefit to the consumer group, for instance?

Mr. GARRETSON. Except as they are employees of the manufacturing group, and it is very, very important to them. Because, as I look back over some of the experiences that I saw in the last depression, and you all saw them, I dare say, the people within those groups, who are consumers of manufactured goods, many of them were people who were dependent for their livelihood in having sales of consumer goods made by companies where they are employed; so, they are very much interested in what is going on, and they look to the people in that company who are responsible for the merchandising of those goods for their own livelihood.

Mr. ALLEN. Suppose, for instance, that this census will benefit only the selling group or those who are employed by the selling group then it will not be of concern to the farmer groups, for instance?

Mr. GARRETSON. Well, I think you have other branches of the census that take care of the other groups that you are talking about. Mr. ALLEN. What I am talking about just now is the biennial census will not help the situation of the commodities, we will say, of the farmer group.

Mr. GARRETSON. If I may go into another phase of it, I think so. When you look ahead for just a moment I think you can see a good reason why that may be true. For instance, if we run into a depression certain industries will more or less have to close down. That will be true, let us say, of the steel industry, where people may say we have enough steel to tide us over and we can have a leeway of, say, 2 years or 1 year in manufacture. But that is not true in the manufacture of foods and perhaps of clothing and articles that are used by the people every day and which are being used up; and speaking generally, the situation is going to be such that there will be keen competition among those having the privilege of supplying the general public.

Now, the manufacturer in selling to manufacturers is, to a very large extent, responsible in the process of manufacturing to con