QUINQUENNIAL CENSUS WEDNESDAY, OCTOBER 29, 1941 HOUSE OF REPRESENTATIVES, The committee met at 10 a. m., Hon. Guy L. Moser (chairman) presiding. The CHAIRMAN. The committee will be in order. We shall be glad to hear from you, Mr. Capt. Mr. CAPT. Mr. Chairman, may I ask that you hear Dr. Reed, before you hear me? The CHAIRMAN. I am sure that will be satisfactory to the committee. We shall be glad to hear Dr. Reed. STATEMENT OF DR. VERGIL D. REED, ASSISTANT DIRECTOR, BUREAU OF THE CENSUS Dr. REED. Gentlemen, I appear before you this morning mostly to break a few idols that have been, in my opinion, falsely set up by some of my friends in the industrial marketing group with which I used to be connected. First I would like to say that I am, more or less, a Dr. Jekyll and a Mr. Hyde this morning. I happen to be an author in this field myself, having published two books, one in 1929 and one in 1936, rather widely accepted in the field. Therefore I would like to appear both as having some knowledge of industrial marketing as well as Assistant Director of the Census Bureau. I should like to say that the group represented by the National Industrial Advertisers Association has made a plea for what I consider special consideration, and I would like to show their position in the field of manufacturing. I have been a subscriber to Industrial Marketing as well as a member of the National Industrial Advertisers Association, and according to the circulation statement issued by Industrial Marketing through the Audit Bureau of Circulation-I analyzed that statement and found that about 1,542 copies go to manufacturers; or rather, about 1,542 manufacturers out of 186,000 in the United States are represented in the net paid circulation of that paper. It has, according to the statement given to the Audit Bureau of Circulation, December 31 of last year, a net paid circulation of 2,867 copies, and a total distribution of 4,848. I went over the list of the National Industrial Advertisers Association carefully, and according to their own claim, as best I could count them myself, their membership represents a total of 1,053 companies, and many of those are not manufacturers. 63971-41-15 221 I would like to set that off as against the total number of manufacturers, 186,000, in the United States. That is less than eighttenths of 1 percent, any way you put it, and I hardly think you gentlemen would consider that as representing the field. Mr. Chairman, I would like to introduce for the record, with your permission, a letter. As compared with the representation to which I have just referred, we have here a letter from the National Association of Manufacturers. That group, by the way, represents a membership of approximately 7,000 manufacturers, and an affiliation of 55,000, which affiliation amounts to approximately 30 percent of the total manufacturers in the United States. They favor the bill. And in a letter to Senator Bailey, dated July 15, they make the statement over the signature of their secretary, Noel Sargent, as follows: I am writing you with reference to S. 1627. I wish to advise that the National Association of Manufacturers endorses this bill, providing that a definite termination date is incorporated therein. We assumed that they meant the termination date for the loosening of the confidential feature to meet the needs of the defense agencies. So we wrote back to them and had a reply assuring us that that was the only thing they had any objection to. And, as you gentlemen know, it has already been suggested in the subcommittee that that clause be limited to the duration of the emergency. I should like to introduce at this time, therefore, these two letters, with the permission of the committee. The CHAIRMAN. Without objection, the letters referred to may be made a part of the record at this point. (The letters referred to are as follows:) Mr. HOWARD H. MCCLURE, NATIONAL ASSOCIATION OF MANUFACTURERS, Washington, D. C., October 27, 1941 Executive Assistant to the Director, Bureau of the Census, Washington, D. C. DEAR MR. MCCLURE: Pursuant to our telephone conversation of today concerning the position of the National Association of Manufacturers on S. 1627, I telephoned New York and talked with Mr. Sargent, who, as you know, is secretary to the association. He advised me that the association in taking the position that there should be a definite termination date included in the measure had in mind this situation. The association feels that during the present emergency it is not advisable to place any unnecessary restrictions upon the dissemination of data between government agencies if the dissemination of such data is in any way helpful to the defense program. At the same time the association feels that the dissemination of such data should not be continued onec the emergency is past. It is for this latter reason that a termination date is requested. Trusting this is the information you desire, I am, Very truly yours, Hon. JOSIAH W. BAILEY, M. C., Washington, D. C. WALTER CHAMBLIN, Jr. JULY 15, 1941. MY DEAR MR. BAILEY: I am writing you with reference to S. 1627. I wish to advise that the National Association of Manufacturers endorses this bill providing that a definite termination date is incorporated therein. Respectfully yours, NOEL SARGENT, Secretary. Dr. REED. I should like also to say that we, as Federal officials, must consider the interests of the many and not the few. I must confess that this one group has made a very vociferous appeal, and I do not have any criticism of their trying to get what they would like to have. But we must think in terms of the many rather than the few, and since compromise is the basis of democracy anyway, we feel that the many have a right to some consideration in having the 10-year census taken at 5-year intervals, as compared with the few standing out for keeping a Census of Manufactures every 2 years, when, as a matter of fact, that was changed to 2 years largely as a result of a desire of the National Association of Manufacturers, as I understand, several years ago. Now the National Association of Manufacturers has come to the conclusion that 5 years is often enough, and they have favored the bill. So I think that disposes of that. The plan that we present in this bill benefits the South and the North; it benefits the East and the West; small business and big business; the retailer and the wholesaler; the barber and the farmer; the manufacturer and the garageman; the hairdresser and the contractor, just as examples. In other words, it benefits many. As to the small businessman, we had some time ago, September 26, a release on what constitutes small business, and as compared with the small number of manufacturers represented by the group which has testified before you, I should like to say that by far and away the larger portion of the retail stores are small businesses. The lower half, so far as volume is concerned, for instance, makes up 1,400,000, approximately, of the 1,770,000 retail stores. Let us take manufacturers. We find that out of approximately 185,000-between 185,000 and 186,000 manufacturers-the lower onethird, so far as size is concerned-in other words, the small ones that fall in that lower one-third-account for 155,000 of them. Now, gentlemen, that is some evidence of the place where small business comes in as compared with a rather restricted group demanding that we give them special consideration at the expense largely of these other deserving groups. We confess that if the funds in the Treasury were inexhaustibleand I am too Scotch to assume that we might be justified in taking a census of manufacturers every 2 years, or maybe a census of business and mines every 2 years. But in all honesty, we cannot see that we are justified in incurring an expense on the taxpayer to that extent when we feel from our own experience that taking these censuses every 5 years, with a reasonable amount of current statistics, to keep them up, will answer all reasonable needs of those groups. We were also led to believe that without this census of manufactures every 2 years, the industrial manufacturer, the manufacturer who sells to the industrial market, would suffer greatly. If my friends in the N. I. A. A. contend that seriously, I must say that they are overlooking half of their market, in many cases much more than half their market, because a large portion of these manufacturers do not sell direct to other industries. They sell through distribution channels. I, as a marketing man, cannot see where any marketing man can assume that he is covering his market properly if he ignores the channels through which the goods get to his market. And to have a picture of those channels, he must have the census of business. Let us take just a few examples here of the industrial products-and I pick them more or less at random. Woolen woven goods: Only 40.7 percent of the total output is sold direct to other industrial users. The rest must go through channels. Coke oven products: Only 22.3 percent is sold direct to industry. Turpentine and rosin: 14.5 percent is sold direct to industry. Leather: 49.8 percent is sold direct to industry. The rest must go through channels. Abrasives: 36.7 percent. Gypsum products: Believe it or not, only 1.7 percent of the total output of manufacturers of gypsum products goes direct to industry. The remainder goes to various intermediary channels. Plumbing fixtures made of pottery and porcelain: 3.9 percent. I will not bother you with many more of these. Cast iron pipe and fittings: 38.3 percent. Plumbers' supplies: 12.8 percent. Steel works and rolling mill products: Only 52.9 percent goes direct to industry. Cash registers, adding and calculating machines, and other business machines, except typewriters: Only 18.1 percent goes direct to industry rather than through channels. Electrical machinery, apparatus and supplies: 23.5 percent. Motor vehicle bodies, and parts: Only 35.1 percent go direct to other factories in the industry as sales. Mr. KINZER. What did typewriters represent? Dr. REED. Typewriters and parts, 25.6 percent are sold direct to industry. These figures, by the way, come from the census of busi ness. Mr. BISHOP. Will you leave that whole list for the record? Sold to industrial and other large users: Cotton fabric, dyeirg, and finishing. Woolen woven goods. Turpentine and rosin. Percent 41. 3 40. 7 14. 5 Coke-oven products.. 22. 3 Plumbing fixtures.. 3. 9 Marble, granite, slate (pottery and porcelain), and other stone cut and shaped- 31.9 Cast-iron pipe and fittings. 38. 3 Steel works and rolling-mill products.. 52.9 Cash registers, adding and calculating machines, and other business Dr. REED. Now, as to my own background in marketing, including both domestic and foreign, much of it industrial marketing. This one book that I have here is Advertising and Selling Industrial Goods. My own background in that field leads me to believe that even many manufacturers themselves are guilty of overlooking the real connota |