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The Country And The Industry Pull Out Of The Depression

By Yancey S. Gilkerson

The Country AndThe Industry PullOut Of The DepressionThe Depression lasted 42 months, reaching a low point in March, 1933, according to the technical definition of economists. For most people, the Depression lasted until the onset of World War 11.In human terms, the 42 months were devastating: industrial output cut almost in half; one in four without jobs; one-third of the railroad mileage held by bankrupt companies; foreclosures on farm mortgages so widespread that gangsters robbing banks were folk-heroes; banks themselves threatened by runs and unpaid loans. The Commodity Price Index (1910-14 = 100) fell to 86.4 in 1930; to 73 in 1931; to 64.8 in 1932. The Census Bureau index of all stocks 11926-100) went from 149.8 in 1930 to 48.6 in 1932.In July, 1930, The Reporter was talking of "conservative optimism"; the official line from Washington was that "prosperity is just around the comer."But, said The Reporter, "unless large gains in consumption are chalked up, production this year is going to be a considerable extent below the estimates that were made at the beginning of the year." Mill production was then estimated at barely 50% of capacity.Mills Start ClosingCotton consumption in the U. S. and overseas in May was the lowest since September 1924; wool consumption for the first four months was the lowest since 1920. Mills were able to sell in May only 66.9% of production and at the lowest prices in 15 years. Inventories piled up. Cash and credit ran low. Mills began closing.The Reporter, realistic but positive, sought silver linings in the clouds: Why is the textile industry singled out as one that is suffering What other industry is in better shape Isn't the whole industrial and business structure of the country depressed "Last year (1929), something more than 500 state and national banks failed. The other day, the Hamilton Brown Shoe Co., one of the biggest in the country, went into receivership. Anyone who knows Lynn, Brockton and Haverhill, the great shoe centers of the country, is aware of the fact that the shoe business is very quiet."Last year, the Fisk Rubber Co. Lost $7 million; the United States Rubber Co. Lost $3 million; the Hood Rubber Co. was taken over by a stronger organization; so was the Miller Rubber Co. and previously the Apsley Rubber Co. "One radio company after another has folded up. The automobile business isn't good. Dodge Brothers was taken over by Chrysler; Pierce Arrow taken over by Studebaker; the Jordan people asked their stockholders to put up more moneyand that is only a small part of the story. Packard has just slashed prices. Chrysler announces a big cut. The non-essentials are getting it just as much as the staple industries."The machine tool business is bad. The newsprint producers are suffering. The Canadian government itself has interceded in the newsprint situation endeavoring to raise prices. It isn't only textiles."In the cotton goods industry, the line of demarcation between the North and the South has been obliterated. The situation in the South is no better than in the East, if as good."The Maginnis Cotton Mills of New Orleans has been shut down since January first. The 50-50 plan of curtailment to better market conditions is to help the southern mills. The F. W. Poe Mfg. Company shares sold the other day at $28, and this has been one of the most successful print cloth mills in the country for a great many years, and, for the last half dozen years, on fancy goods from print cloth numbers. Victor Monaghan is cutting the dividend. "The condition of the textile industry parallels the condition of every other industry in the country. It isn't only textile shares that are selling low. Obviously, then, selected mill shares offer Just as good opportunities for a long term investment as do the securities of any other industry."Bennett's SuggestionsAs the Depression deepened, Editor Bennett inveighed against inefficiency and the differing job assignments in unionized and non- union mills. In July, 1930:"In one big worsted mill here in Massachusetts, there are 60 clerks in the efficiency department with a payroll in that one department of at least $90,000 a year, equal to 6 percent on $1,500,000. If the mill is profitable, it is in spite of this so-called efficiency work," he wrote, declaring that a firm of consulting engineers could lay out an efficiency program for a fraction of the cost of the clerks, 4but a whole litter of efficiency clerks 60 of themare a dead weight."And, in September:"The full-fashioned hosiery branch of the textile industry exemplifies the effect of complete unionization. Full-fashioned operatives in unionized millsand these are mill workers, not presidents and treasurersaverage $100 a week wages, and, in some mills, earn $150 a week wages. These operatives tend only one full-fashioned knitting machine. They are very arbitrary about apprentices. The owner of a full-fashioned mill can't put his own son into the mill to learn the business unless the union lets him. The unionized operatives, not the owners, run the mill."The operatives in the non-union full-fashioned hosiery mills in North Carolina, for instance, earn $40 a week and tend two machines."And he cited another example in September:"Nearly two years ago, the cotton mill operatives of the Newmarket Manufacturing Company were induced by the board of officials of the United Textile Workers to go out on strike. For more than 19 months, now the Newmarket cotton division has been shut down, and today the machines are being sold and the mill is to be given up. But, as of July 30th, the official report of the United Textile Workers of America reads as follows:'The Newmarket strikers were very cheerful at their meeting I attended Tuesday, July 15th. Much credit is due these people for the manner in which they have fought the New- market Manufacturing Company. After 18 months of struggle, they are still determined to see the strike to the bitter end, and their morale is in splendid shape.'But, the cotton mill is shut down, all the operatives have lost their jobs and the town is to be abandoned.More Work AssignedThe Reporter gave an example of how to properly apply an increase in job assignment, called by workers "the stretch-out":In a Southern mill, a woman weaver tended 24 looms. The superintendent thought she could handle more and suggested she try 60. She did, but found the work too much. The superintendent then suggested she try 55, which she found she could handle. By agreement, half the savings went to the weaver, half to the company. The weaver was told not to talk about her pay increase, but word got around and other weavers applied to tend more looms. "Now," said the Reporter, "a thousand looms are operated with less than half the weavers."Despite the sharp downturn, some business was good. The Goodyear tire fabric plants were being expanded while many mills were closing. Goodyear then had mills at St. Hyacinthe, Quebec; Atco, Cedartown and Rockart, Ga.; New Bedford, Mass.; Killingly, Conn.; Los Angeles, Calif.; and in England, Australia and Brazil.And, complained Editor Bennett, people owning "toy golf courses" were getting rich overnight while real business suffered. The miniature golf courses were springing up everywhere, in vacant lots and empty stores, a craze that peaked and quickly slumped.By October, The Reporter said the textile business was "much improved" with employment up 18%. At the Southern Textile Exposition that month, exhibitors filled all permanent space plus that in a steel annex and temporary wooden annex 130 x 40. Some 40,000 visitors jammed the aisles, and sales were said to be good. The Southern Textile Association and the textile section of the American Society of Mechanical Engineers met concurrently. A hit of the show was Draper's new looms for rayon and silk, and a new high-speed warper.Four million spindles had been junked by that time. Of the 20 million spindles in the Southern states, 10 million were on 24-hour operation. The Cotton Textile Institute called for an end to night operations by March 1, 1931.False DawnBut, the upturn was a false dawn. By mid-1932, American industry was operating at less than half of the 1929 production rate.Spindles in the textile industry had peaked in the Twenties, and the decline was to continue over the years as improved machinery and methods increased the output per spindle. For woolen and worsted machinery the figures were not spindles and looms as well as those in Mass. R.I., and Pa., the main woolen and worsted producing states.The dominant company, American Woolen, was operating 744,737 spindles and 8,437 looms. As an aside, Howard Bennett was responsible in 1936 for continuing the annual meeting of the American Woolen Co. for three days and two nights, without adjournment, to force through a change in management. Time Magazine referred to the event as the rowdiest, longest annual stockholders meeting ever held. The Reporter participated in the fight, conducted it, paid for the proxy solicitation and the lawyers' fees, and ended up eliminating the incumbent president and chairman.All Business SuffersThe total amount of wages paid in all business and industry in all of 1932 was only 40% of the 1929 total.Business suffered a net loss for the year of more than $5 billion, and that was when a billion dollars was BIG money. Total dividends were cut by 57%. Stock values, followed the over-the-clifftrend: U. S. Steel from 261 3/4 in 1929, to 21 174; General Motors from 72 ¾ to 7 5/8. Cotton sold for five cents a pound, sometimes less.President Hoover worked hard at trying to organize optimism. He summoned the big bankers, the top industrialists and businessmen to Washington where they conferred and issued statements saying that conditions were fundamentally sound and that prosperity really was just around the corner. But nothing changed.Then, Hoover declared a moratorium on reparations from Germany and on war debts due from the Allies, hoping to stimulate foreign trade. The world only went deeper into depression.Despite pleas from around the country, the president refused to entertain the idea of any federal action to relieve the distress of the millions of unemployed; that was a matter for individual charity and local government.Then he set up the Reconstruction Finance Corporation to provide federal aid to banks and businesses. Banks continued to fail, businesses continued to close.Washington was greatly alarmed that summer when World War I veterans including a few who talked revolution, marched into the city to demonstrate for war-service pay bonuses. The 17,000-man "bonus army camped for weeks, then was driven out by troops headed by Army Chief of Staff, Douglas MacArthur. Roosevelt Elected,More Banks CrashAnd so Franklin Delano Roosevelt easily won election over Mr. Hoover in November, but Mr. Hoover's tribulations had yet to reach their depth. That winter, the banks crashed. By March 2, 1933, two days before the inauguration of the new president, 5,504 banks had closed, and 23 states had suspended or drastically restricted banking operations. By Inauguration Day, nearly every bank in the United States was closed or under restriction.President Roosevelt sparked hope with his inaugural address, the famous "we have nothing to fear but fear itself," and immediately took action. He declared a four-day national bank holiday to allow bankers time to reorganize. Within three days, 4,507 banks reopened, and within two weeks, stock prices rose 15%. He called for a special session of Congress to convene March 9th.The importance to morale of Roosevelt's words and actions was deeply impressed on this writer's mind the following Sunday when he heard J. W. Arrington, president of Union Bleachery, Greenville, S. C., say to "the Dunean crowd" as he joined them in front of Christ Church: "Gentlemen, we have just escaped revolution."100 DaysIn 100 days of legislative action, that special session of the Congress changed life in these United States. Among the acts that emerged from frenetic sessions of the House and Senate:

  • The Emergency Banking Relief Act.
  • The Economy Act, cutting government pay and veterans pensions 15% to help balance the budget.
  • The act creating the Civilian Conservation Corps that put 250,000 jobless young males to work in the forests and national parks. More than 500,000 were on the rolls at peak point, and, by 1941, some 2,000,000 had passed through the CCC ranks.
  • The Beer-Wine Revenue Act legalizing beer and wine with up to 3.2 per cent alcoholic content.
  • The Federal Emergency Relief Act providing $500 million in grants to states and municipalities for work relief projects.
  • The Agricultural Adjustment Act providing subsidies to farmers for reducing crops.
  • The act creating the Tennessee Valley Authority to build dams and power plants and develop a vast area involving Tennessee, North Carolina, Kentucky, Virginia, Mississippi, Georgia and Alabama.
  • The Federal Securities Act.
  • The National Employment System Act, establishing the U. S. Employment Service.
  • The act creating the Home Owners Loan Corporation to refinance home mortgages.
  • The act creating the Federal Deposit Insurance Corporation, guaranteeing deposits up to $5,000.
  • The Farm Credit Act.
  • The Emergency Railroad Transportation Act.
  • The act creating the Commodity Credit Corporation to lend to farmers on their crops; in the early years, loans primarily to cotton farmers, bolstering cotton prices.
  • The act creating the Public Works Administration which spent $4.25 billion on 34,000 public works projects, mostly road and public buildings.
  • And, most important of all, the National Industrial Recovery Act, providing for industry self-regulation through "fair competition" codes governing operating conditions; participating industry was exempt from the anti-trust laws.
Section 7a of the Act guaranteed the right of labor "to organize and bargain collectively through representatives of their own choosing," applying to 22 million workers in 500 industries or areas of business. A National Labor Relations Board was set up to enforce the right of collective bargaining.In a few brief months, the Congress had enacted into law nearly all the planks in the socialist platform of the 1890's and l900's.Yet, business and industry welcomed the NRA at first, principally because it promised stability. In those days, state legislatures were continually considering legislation on hours, wages and other matters affecting business and many executives claimed they spent more time on political matters than in running their business.Spread The Work;Spread The Jobs!In the spirit of the times spread the work, spread the jobsThe Cotton Textile Institute that spring recommended to the textile industry that the work week in cotton mills not exceed 40 hours, and that production machinery not be operated more than two 40-hour shifts per week.The original members of the Cotton Textile Industry Committee which negotiated with the National Recovery Administration on the NRA code for the mills were: George A. Sloan, president of the Cotton Textile Institute; Thomas M. Marchant, president of the American Cotton Manufacturers Association; Ernest N. Hood, president of the National Association of Cotton Manufacturers; William D. Anderson, Robert Amory, Harry L. Bailey, Bertram H. Borden, G. Edward Buxton, Cason L. Callaway, Charles A.Cannon, A. E. Colby, Donald Comer, Stuart W. Cramer, B. B. Gossett, R. E. Henry, Gerrish H. Milliken, Frank I. Neild, H. Nelson Slater, Robert T. Stevens and Robert R. West. They dealt with General Hugh (lronpants) Johnson, NRA administrator.Pick-up In '33The Reporter noted that "the cotton textile industry has advanced from 51% of capacity in July, 1932 to 129. 1% of capacity in June, 1933, and some textile machinery firms are sold ahead for many months."The industry's former over-capacity was being drastically reduced: "Never before has there been such a liquidation and junking of textile equipment as has been carried out in New England during the last few years," The Reporter said in commenting on the reduction in New England from 20 million to 12 million spindles, a loss of 6 million spindles in Massachusetts alone.By spring of 1934, disenchantment with NRA and its codes and multitude of regulations was growing. The Reporter said it received seven and a half pounds of mail from NRA in one day."Manufacturers generally seem to be afraid to tell the whole truth about how the NRA affects their business. Some of them have government contractsperhaps they are afraid the government will cancel the orders. The present government does cancel contracts and does go back on its word. It does make the profoundest promises worthless."They may be afraid of labor troubles initiated by someone outside the mill. There are authorities in political office who could start a strike in any mill. The whole country is intimidated. Business has been bad for so long a period that the hope of a quick profit, perhaps a phantom profit, and the opportunities for speculative advance in raw materials seem to have destroyed the old time insistence on the part of American businessmen that the truth and sound practices are more important than a temporary advantage."Labor Unrest GrowsIn mid-April, Bennett reported: "A Fall River mill operating executive writes us that the labor leadership in that town is dominated by aggressive people. Tuesday, April 10th, the employees in a very large plant in that city walked out. The labor leaders presented a long list of alleged grievances, one of the most serious being that overseers within the mill favored with the work certain operatives who were undeserving of it and that the favoritism was for ulterior purposes. Thursday, April 12th, the labor leadership presented the management with a list of 35 persons who must be discharged before the strike can be settled. Who is running the mill"Mill workers had grown bolder about union membership since the Government placed its stamp of approval on unions with Section 7a of the National Industrial Recovery Act guaranteeing the right to organize. For many, the stigma formerly attached to unions was removed. Many new locals were organized. In mid-August, the United Textile Workers' board voted to call a general strike in the textile industry on or by September 1st, demanding a 30-hour maximum work week, six hours for five days, at the same pay as for the current 40-hour week; industry-wide recognition of the union as representative of all industry workers, and the adoption of specified work loads (described by management as "ridiculous").The strike was on, but not all workers struck.Newspapers reported that as of September 6th, 73% of the industry's 410,000 operatives were at work. In the North, 32,000 of 100,000 workers walked out; in the South, 60,000 of 154,000. The percentage of strikers varied widely by locality. And not all who walked out stayed out. There were hotbeds of union fervor, such as Gastonia in North Carolina and Spartanburg in South Carolina.Union ViolenceThe hotbeds spawned "flying squadrons"caravans of trucks and cars loaded with strikers moving from mill to mill, rushing into plants, cutting off machinery, flourishing clubs (and an occasional pistol) and intimidating those at work. Half the mills in the Carolinas closed, but only briefly, for the National Guard was called out to protect mill property and those who wanted to work.Tempers flared when strikers attempted to block men trying to enter the mills to work. Deputies were guarding the main entrance and strikers were gathered in front when first shift workers appeared at Chiquola Manufacturing in Honea Path, S. C. Angry words were exchanged, gunfire erupted. Six strikers died and 13 were wounded.Reaction To ViolenceReaction to the flying squadrons resulted in stories still told today, some of them surely apocryphal. They tell of:
  • The dyehouse worker at Cliffside, N. C., who climbed to the mill tower and aimed a stream of sulfuric acid at the squadron below.
  • The workers at a Greenville mill who had walked out a few days earlier in a dispute with management, had returned, asked for, and received an issue of picker sticks with which to greet the squadron.
  • Col. Elliott White Springs, a World War I fighter pilot, flying out from the mill to scout the approach of a squadron reported moving in from Gastonia and, so goes one version, rolling his plane's wheels on the cab of the lead truck, causing the group to turn back lest the Colonel "get real mad." To protect his workers, Col. Springs did close several plants until the National Guard could arrive to protect them.
A presidential commission brought an end to the strike, a failure for the UTW whose memory has lingered for decades, often thwarting the efforts of other organizers. Not long afterward, the ClO's Textile Workers Organizing Committee (TWOC) moved in to salvage what they could of the UTW faithful and work just as unsuccessfully on their own. The organizing group included Miss Lucy Randolph Macon (of the Virginia Randolphs) who served as publicity director.A side effect of the UTW strike was the postponement of the October, 1934 Southern Textile Exposition to the spring of 1935 because Textile Hall was commandeered for use as barracks for the National Guardsmen called to the Greenville area.Peace Restored:Technology RevivedWith labor peace restored, interest in new machinery was mounting by the time of that Spring 1935 show. The Reporter had commented earlier that "big package spinning is very interesting to the worsted industry....the changeover from cap spinning with one-ounce packages to ring frames with 4-oz. packages is being generally considered."President Roosevelt NRA was declared unconstitutional by the Supreme Court in 193S, but FDR succeeded in getting Congress, to pass a National Labor Relations Act to continue government backing for unions. Also passed then was the Social Security Act. In 1937, the president became a cropper when he tried to pack the Supreme Court; the Southern Democrats defected from his cause. But, he staged a comeback in 1938 with the wages and hours law setting a minimum wage of 40 cents an hour within eight years, beginning the stairstep with a 25 cents an hour minimum, and a maximum work week of 40 hours within three years, beginning with a 44 hour maximum. The act also mandated time-and-a-half pay for over 40 hours, and forbade labor by children under 16.Improved Rayon ThrivesThe 10- and 12-hour work day and the six-and-a-half day week were to become memories, as were the days when the natural fibers were sole rulers of the textile roost.Consumption of rayon had outpaced that of silk in the late 1920's. Now, in the late 1930's, the first resin finish for rayon was available, substantially improving the hand of rayon fabrics, and the first rayon tire cord was being produced.The Reporter was running weekly sections on rayon, and commented that "a very large percentage of the growth and profits of the textile industry is going to come from the cotton goods industry going into rayon work. The rayon weaving is going to be in the old, established cotton mills, rather than in the silk mills, because cotton manufacturing has always been a more economical, more efficient industry than silk manufacturing. Cotton mill methods are far ahead of silk mill methods."The domain of the natural fibers was also being invaded by other fibers besides rayon. Commercially useful glass fiber was produced by Owens-Corning Fiberglas Corp. in 1938, used first as a filter medium for air conditioning and as insulation. By the end of the decade, glass yams and fabrics were established in a number of industrial uses and in draperies, curtains and tablecloths.Cotton responded to the challenge. The National Cotton Council was organized November 21, 1938 at the Peabody Hotel in Memphis, Tenn., by cotton producers, ginners, seed crushers, warehousemen, and merchants. The Council's major thrust at the beginning was research and promotion, but it quickly became involved in government affairs. Textile Manufacturers joined the Council a few years later. Cotton co-operatives, which had been part of other interests from the beginning, became a separate interest in the Sixties. Observers say the Council has held together for nearly 50 years because of a key bylaw provision that no position is taken without at least majority approval of the delegates from each interest voting separately DuPont's nylon fiber, on which Wallace Carothers had begun research back in 1928, went into commercial production at Seaford, Del., in 1939. The first nylon stocking would captivate the nation's women in 1940.In the summer of 1939, The Reporter was commenting that the "worsted business, particularly on lightweights and tropicals for men's wear, is already feeling the effect of Southern competition, and cut worsted staple and cut rayon staple blended yarns, are generally made in the South, and much of it woven in the South. Riverside and Dan River have 500 looms on woolen mixture men's wear, a big cotton mill. A weaver in New Hampshire has purchased a lot of cut worsted and rayon blended yarns for weaving men's wear fabrics, the yarn coming from Cannon and from Textiles, Inc. in Gastonia and from other Southern mills. There isn't any status quo in any branch of the textile industry."Rising Tide Of WarNor was there any status quo in the world. Hitler's Germans and Mussolini's Italians had successfully dueled with Russia in the Spanish civil war, and had won. Then, Hitler brow-beat the British and French into appeasement at Munich in 1938 and Czechoslovakia died. In April, 1939, Italy invaded Albania, and, in May, signed a military alliance with Germany.On August 2, 1939, Albert Einstein wrote President Roosevelt alerting him that recent research made possible an explosive device based on splitting the atom.On August 23rd, the Russians and Germans signed a non-aggression pact.On August 31st, The Reporter commented on "a sense of foreboding" in the textile industry: markets uncertain, woolens withdrawn by large producers and the wool auction at Sydney postponed.On September 1st, Germany invaded Poland.World War 11 had begun. The atomic bomb had been conceived. Vast changes lay ahead.