Second: That actual expenses of all committees holding meetings be paid by the Association.

Third: That an active campaign for new members be pushed during the last half of the year, in order that every mill may be enrolled before the first of next January.

Fourth: That a publicity campaign be conducted for the purpose of showing what cotton mills have voluntarily done for the education and welfare of employes.

Fifth: That traffic and purchasing departments be established.

Sixth: That standard systems of accounting be considered by a special committee, and a suitable one for cotton mills be adopted.

Seventh: That closer relations be established between this and other associations of manufacturers.

Eighth: That a spirit of co-operation be encouraged between this Association and the National Government for the purpose of promoting foreign trade.

Ninth: That a like spirit of co-operation be promoted between manufacturers, the railroad companies, and between them and Southern ports, with the view of increasing and developing port facilities.

I think they are worthy of your careful consideration, and perhaps some of them may be worth trying out.

Two of them I want to especially advocate, and trust you will agree that they are essential to the continued growth of our indusry.

CO-OPERATION

To secure this, we must begin a campaign of education.

Our people love independence. Political independence has been bred in the bone of every North Carolinian of the white race.

Esse quam videri, describes a pronounced characteristic of our people, but we would sacrifice everything, even life itself, to maintain our independence.

This passion for political independence has so permeated our natures that we find it hard to realize that under present conditions it has but a small place in world commerce.

We must first learn to know each other and work together. We must co-operate with our railroads, and with our seaports. We must join hands with Chambers of Commerce throughout the country.

We need to cultivate the acquaintance of bankers at home and abroad.

We must join hands with our National Government, and win our share of the commerce of the world.

Shifting our position from a debtor nation to one prepared to finance a large portion of the world's needs, gives to this country an opportunity that we, as manufacturers, cannot afford to miss.

No company in the South is strong enough to go it alone.

W must have a State Association with every mill a member. I earnestly appeal to every textile mill in this State to enroll its name without delay.

I firmly believe that with concerted effort, this country can export at least twenty per cent. of all cotton mill products, and if that can be done, over production will be impossible and hard times will soon only be a memory.

MILL COSTS AND SELLING COSTS

There was a time when both of these were largely disregarded, but both home and foreign competition compel a careful scrutiny of every item of cost entering into the making or selling of all products.

Spinning is the simplest of mill operations, and to illustrate the cost of the first process, Mr. John E. Halstead, Specialist in Mill Accounting, has prepared a paper which will be of real value if the principle is carefully studied.

The preface and pages 21, 22, 23 and 24 might be printed and mailed to members, if approved by the Executive Committee. "Wear and Tear" enters largely into the real cost of manufacturing.

What percentage should be charged off each six months?
It is important that a standard should be agreed upon.

We are between the insurance companies and tax gatherers. We would, of course, not try to mislead either of them, even if we do try to fool ourselves when computing earnings.

SELLING COSTS

The trend of commerce is towards reducing the cost between producer and consumer.

The process has been slow, but the direction is unmistakable.

The first thing we should advocate is elimination of abuses. The second: Simplify the terms, getting as near a cash basis as possible.

Third: If any mill is too small to maintain an agency, form selling companies by combining mills that do not compete with each other as to products.

Other items on the list cannot now be discussed, but the Executive Committee, if you so order, can consider them.

I beg to thank you for your confidence and support and ask that you consider this address as my valedictory.

Following this the President, in accordance with the order of business, stated that the next on the program was the report of the Secretary and Treasurer.

Outstanding check No. 247 for Stamps.... By difference, Ella Mfg. Co. check, October 5th, 1915.....

Total Credits.....

Cash on Hand...

Bank balance, July 15th, 1916...

Less Outstanding Check No. 247.

Cash Balance.

10.00

.10

$6,106.79

$ 416.91

$426.91
10.00

$416.91

HUDSON C. MILLAR, Treasurer.

SECRETARY'S REPORT

Having placed before you the report of the Treasurer, I now desire to bring to your attention some things which have come under the observation of the Secretary during the past few months.

Pardon me for a moment, however, if I say that it is good to stand before such a body of men, representative of one of the greatest manufacturing industries in the world. It is good to feel that one has a small part in the growth of such an enterprise.

In the first place, let me call your attention to the sort of publicity the cotton industry, especially of the South, is obtaining throughout the United States.

In newspapers tracts, bulletins and magazines there are many stories of the bodies, lives and souls of little children being ground out and crushed by the great cotton manufacturer. These purport to give facts and are backed up by photographs which are published as actual conditions. (Let me state here that there are isolated cases of exploitation, but this is only an incident, not a condition, and we should do all we can to eliminate this.) You who sit before me know that these things when pictured as conditions leave false impressions of our industry, so palpably false that you have not thought it worth while, as an industry, until now, to publicly refute them.

Not only newspapers, magazine articles, tracts and bulletins have imposed false impressions on the public, but some organizations create sympathy by sending agents through the states throwing pictures on screens, telling pathetic, appealing stories, which almost wring the heart of the credulous public. Pictures which misrepresent, stories that are distortions and while you know the impressions they create are false, the public does not.

At least one moving picture has been shown throughout the country picturing the health of little children wrecked, blood gushing from the mouth, in hemorrhage, and life itself destroyed by the cotton mill. This is a picture too-yes, a faked picture

that killed children on machines never heard of in a cotton mill, and never nearer any mill than the imagination of the author or the studio of the director who produced it.

You need to wake up! The mill men and employees of the South are asleep at the switch, and public opinion, the most important factor in the forces of the world, is going on the wrong track.

No other industry in the world and no other manufacturers, except a few specialties, carry on the welfare work for, or look after, its people as do the cotton mills of the South. Many cotton mills have carried this to a high degree. We commend to you a study of this work in order that each one may do all he can for his people and most effectively. But, regardless of what you do, if you allow false impressions to remain and do not, through some sort of publicity, show up true conditions, the false impressions will come home to us in the form of drastic legislation, baneful alike to the mill employees and the industry.

At the present time the majority of the mills are paying commission on freight charges. This is not a commission on your product, but a commission on an actual expenditure in cash aside from the manufactured article. You are losing hundreds of dollars each year.

I know of at least one mill whose product is fine goods, and their freight charges on the out-bound product is approximately thirty thousand dollars ($30,000) a year. This means that if they pay 5% commission, there is a dead loss of one thousand five hundred dollars ($1,500) per year. This abuse should be eradicated, and I am informed that some commission houses have already met the mills on this and the freight charge is deducted from the invoice before commission and discounts are figured. How about your mill?

Another matter of importance to the mills is a proper and thorough knowledge of the cost of production. Ignorant competition is dangerous to the development of our industry. We are told that in efficient Germany ninety (90%) per cent. of the manufacturers know absolutely the cost of their product while in the United States scarcely ten (10%) per cent. have such knowledge. Firms who cut prices, not knowing what their goods cost to produce, not only demoralize the industry, but often lose money and force themselves out of business.

The Federal Trade Commission has had much to say regarding Standard Accounting during the past year and I understand are making a study of this. I, therefore, offer the resolution that they be invited, through our Congressmen and Senators, to make such a study of the Cotton Manufacturing Industry, and that they be given all possible co-operation by the mills.