Mr. POAGE. People can smuggle money or diamonds and extremely valuable goods on a pack mule, or even on foot, but you cannot smuggle in any large number of bales of cotton unless you haul them down the road.

Colonel BALDWIN. There is no cotton being smuggled. There might be small quantities of textiles. A bolt of cloth on a man's back would not be impossible to take through.

Mr. POAGE. In other words, there is not any large movement of concealed cotton or textiles?

Colonel BALDWIN. There cannot possibly be.

Mr. PACE. Thank you very much, Čolonel Baldwin. We are greatly indebted to you for your time and the information you have given us.

We have as a final witness this morning two gentlemen whom I will ask to come up and testify jointly. One of them is Dr. Scott, who is the Director of the United States Department of Agriculture's regional laboratory at New Orleans, and the other one is Dr. G. E. Hilbert, Chief of the Bureau of Agricultural Industrial Chemistry in the Department of Agriculture.

I understand that you have been informed as to the general nature of the committee's inquiry, which is the redrafting of the cotton program for the future."

We thought that it would be worth while if you gentlemen could give us a brief outlook on the prospects of cotton from the research angle. We would be glad to hear from you.

STATEMENTS OF DR. WALTER M. SCOTT, DIRECTOR OF THE SOUTHERN REGIONAL RESEARCH LABORATORY IN NEW ORLEANS; DR. G. E. HILBERT, CHIEF OF THE BUREAU OF AGRICULTURAL INDUSTRIAL CHEMISTRY, DEPARTMENT OF AGRICULTURE

Dr. HILBERT. I will proceed.

Mr. PACE. Also, in the course of your remarks we would like to have your view with regard to the synthetic situation and the competitive situation.

Dr. HILBERT. I have been considering this whole problem of cotton and synthetic fibers from a broad standpoint. Dr. Scott has been considering it from a more detailed point of view.

Now, I would like to point out first something that I am sure you are all familiar with: During the past 20 or 30 years there has been an increasing production of synthetic fibers. There has also been a diversification of synthetic fibers. There are several new types of synthetic fibers coming on the market at the present time.

Now, in addition to this increased production, which has been at the expense of cotton, the cost of synthetic fibers has been continually decreasing up until the last year.

In the case of rayon the price has continually decreased during the past 20 or 30 years. In the case of nylon it has been decreasing for the past 10 years. I say up until about a year ago. Recently the price of rayon has increased and the price of nylon has increased.

Now, is this just a temporary situation or is this perhaps an important factor over the long term? That is the matter which I

would like to discuss the long-term outlook for synthetic fibers and

cotton.

Mr. HOPE. Before you continue perhaps there are other members, like myself, who do not know the difference between the price of cotton and the price of rayon.

Dr. HILBERT. At the present time the price of rayon is half a cent a pound more than that of cotton.

Dr. SCOTT. Around 37 cents, both of them. They are pretty close to each other.

Dr. HILBERT. Considering the long-term outlook, one has to consider availability and cost of raw materials.

For example, the raw materials going into nylon, the raw materials going into rayon, and cotton itself. The other important factor one has to consider is the human and the financial resources back of the synthetic-fiber industry as compared to the cotton industry.

I would like to discuss now the availability and raw materials costs, say, of wood pulp, one of the raw materials used in the production of

ravon.

The cost of wood pulp has increased tremendously during the past 10 years. The reason for that is that it is more difficult to get men to go out into the woods to cut down the trees. That is one important

factor.

Another important factor, for instance in the Province of Quebec, is the effect of the "baby bonus." The "baby bonus" is the result of legislation that was passed by the Province of Quebec whereby they would pay a bonus to families of large size. I think that there is a bonus for every youngster in the family.

Mr. PACE. How does that relate to the price of wood pulp?
Dr. HILBERT. I am coming to that right now.

In the Province of Quebec the loggers are the heads of these families. They are farmers who produce their food during the summertime. They did not get enough cash to support the families throughout the year, so during the wintertime they went into the woods to cut down the trees; but as soon as this bonus law was passed they got sufficient

money.

Mr. PACE. To stay at home?

Dr. HILBERT. They got sufficient cash so they did not have to go into the woods. As a result, a number of companies had great difficulty attracting men; they had to pay increased wages.

One other factor is that the available forests are being cut down, that is, the accessible forests, forests close to streams. They need streams in order to float the logs to accessible transportation points. It is becoming necessary to use tractors to haul the logs to streams and then float them down. This increases costs.

Still one other factor, and rather important, is legislation which was passed by the Province of Ontario. The Province of Ontario. passed a law prohibiting the exportation of wood pulp. That law will go into effect in 10 years. In other words, the Canadian Government wants Canadian industry to convert the logs into wood pulp and into paper and into rayon.

The availability of cellulose is becoming such an acute problem that within the last year one of the largest rayon producers in this country, the Celanese Corp., has set up a wood-pulp plant at Prince Rupert, in British Columbia, several hundred miles north of Vancouver.

Mr. PACE. Pardon me for interrupting at this point, Doctor. That means, then, that Canada is trying to become self-sufficient in textiles and is going to synthetics, and getting out of the cotton market?

Dr. HILBERT. That is right. They would like to process those materials themselves and then send the processed material into this country.

Mr. PACE. Will you tell us what duty there is, if any, on synthetics coming into this country from Canada?

Dr. HILBERT. I do not know the answer to that question; perhaps Dr. Scott does?

Dr. SCOTT. I do not know it, either.

Dr. HILBERT. We should be glad to get that information for you, however.

Mr. PACE. I shall ask Mr. Parker to get that information and insert it in the record at this point.

Rayon yarn and staple fiber: United States import duties in the Tariff Act of 1930 and changes negotiated at Geneva, effective Jan. 1, 1948

1 Negotiated by the United States at Geneva under General Agreement on Tariffs and Trade, dated Oct. 30, 1947. Per length of 450 meters.

NOTE.-By definition in paragraph 1313 of the Tariff Act of 1930 the terms "rayon" and "other synthetic textile" mean the product made by any artificial process from cellulose, a cellulose hydrate, a compound of cellulose, or a mixture containing any of the foregoing, which product is solldified into filaments, fibers, bands, strips, or sheets. Therefore, this does not include products of noncellulosic synthetic materials made by artificial process, such as synthetic polyamides (nylon), vinyl resin, and related plastics materials; casein, vegetable-seed proteins, and other proteins; algin; and fibrous glass.

Dr. HILBERT. In this country, then, the paper and pulp industry has become so concerned regarding the availability and the cost of wood pulp, that they are giving serious consideration to using wheat straw as a raw material for the production of pulp. I do not intend to give the impression that they are going to be using wheat straw a

year from now, or 2 years from now, but they may be using it 5 years from now if the wood pulp situation does not ease up.

Mr. PACE. How does it compare with wood pulp?

Dr. HILBERT. Straw pulp is an excellent pulp; it is comparable to wood pulp.

So, because of these various factors I feel that the price of wood pulp will tend to increase, or it will tend to level off. At any rate, the effect of the increasing cost of pulp has already had its effect on the rayon industry. I pointed out to you that the cost of rayon is now higher than the cost of cotton.

Mr. PACE. Then it is of interest at least to the cotton grower to have a high rate of building in process in this country?

Dr. HILBERT. Yes, I would say so.

Mr. PACE. I am sorry for the interruption; please proceed.

Dr. HILBERT. The cost of wood pulp affects not only the over-all paper industry-I am thinking of bagging now; bagging, toweling, and napkins from paper, which are replacing some cotton-but also its effect on increasing the cost of rayon itself.

That is the picture on rayon. I think they are in for a period of increasing costs and they are going to have increasing difficulty in getting enough raw materials.

Let us take nylon. About 10 years ago, the du Pont Co. publicized the fact that they were producing nylon from coal, water, and air. There again that picture has changed tremendously. The main raw material that the du Pont Co. was using for the production of nylon was benzene or benzol, which is obtained from coal tar. There has been such an increasing use for benzol, and there is not a sufficient amount for the chemical industries in this country, that the price has been increasing continually. It is becoming apparent that there is not enough of benzene or benzol for the chemical industries of this

country.

So a few years ago, the du Pont Co. explored the possibility of locating other raw materials than benzol for producing nylon, and they went to corncobs. From corncobs can be produced furfural. They have set up a plant in Buffalo which at the present time is using furfural as a raw material, rather than benzene, for the production of nylon. This again, indicates increasing costs ahead for nylon. Although corncobs would appear to be a very cheap raw material, nevertheless, the price of corncobs will tend to go up for the reason that the farmer, up until the present time, has gotten practically no return from corncobs. My guess is that in the future he probably will, or he probably should, expect to get a return from corncobs, which will have its effect on the cost of nylon.

There is one other important material for the production of synthetic fibers that I have not discussed yet, and that is petroleum. Petroleum and natural gas are the raw materials used for the production of vinyon, saran, and other potential synthetics.

A large chemical industry was established 15 or 20 years ago to use as a raw material natural gas and petroleum. The reason that industry was established was because they were able to get their natural gas at distress prices; you might say, for practically nothing. Back in the thirties, there was so much natural gas that the companies were just letting it go into the atmosphere, or they were burning it. Because they were getting this raw material for prac

tically nothing, they were able to produce alcohol and other organic chemicals at prices that the agricultural industries could not compete with. Now, there again, in the last 15 years, there has been a tremendous change. In 1938 the petroleum industry was suffering from indigestible surpluses. Now, as you know, the situation has been reversed; we have not enough petroleum. We have not enough natural gas and the one industry that has had a powerful effect on the synthetic industries is the bottled-gas industry; that is, they are bottling natural gas now and large quantities are being sold and used in households. This has had its effect on the chemical industry.

Back 15 years ago, when the chemical industry purchased natural gas, they purchased it under long-term contracts; 15-year contracts, 20-year contracts. Those contracts are expiring or have expired and now the chemical industry cannot get any long-term contracts. All they can get are short-term contracts for natural gas at a greatly increased price. The cost of the raw material has increased tremendously and this is again, I think, a long-term trend; that is, a rising price of petroleum, of natural gas, which will have its effect upon the chemical industry.

Now, in the case of cotton, my own feeling is that the effect of mechanical harvesting

Mr. PACE. Pardon an interruption before you get to that. What is the possibility of the extensive use of cotton as a base for cellulose and rayon, and so forth?

Dr. HILBERT. Of course, linters are one of the raw materials being used for the production of rayon.

Mr. PACE. What is?

Dr. HILBERT. Cotton linters. There again a change has taken place which is favorable to the cotton industry. The price of linters is now practically the same as the cost of this wood pulp to which I have referred.

Mr. PACE. I have been told that they have perfected a machine than can now cut cotton fiber into a state comparable with linters.

Dr. HILBERT. That is correct, but cotton costs already more than 30 cents a pound and linters are selling at around 9 or 10 cents a pound. Mr. PACE. At the same time, do you see any practical possibility of the cellulose industry turning to cotton as a base, to a considerable extent?

Dr. HILBERT. That will depend in part on decreasing the cost of cotton. And I think that is also in the books. That is the effect that mechanical harvesting will have, I think on the cotton crop.

Mr. POAGE. If I may ask this question, Do you see any possibility of doing what some have suggested, harvesting our cotton, not by taking the fiber separately from the rest of it, but cutting the entire plant, possibly defoliating it first, and then cutting the entire plant and processing cellulose from the stalk, the burr and the lint?

Dr. HILBERT. I know that that possibility has been mentioned frequently in the past, but frankly I do not see much possibility of it. Mr. PACE. It would seem to me that it ought to be better than corncobs.

Dr. HILBERT. What is that?

Mr. PACE. The cotton stalk and the cotton lint should be a better base than corncobs.