the price factor as compared to paper, how does your firm, J. Walter Thompson Co., and your client, the Indian Jute Association, intend to overcome this price factor? Do you contemplate a reduction in the price of jute?

Dr. REED. Well, we hope that prices on jute and burlap will come down, and we believe it would be to the advantage of the Indian economy if they did come down. Naturally at present, until just a few months ago, the supply was very short as compared with demands. This year we think that there will be enough jute without any question to fill demands.

Mr. PACE. Are we to understand that it is the plan of your organization, if the plans go forward, to promote the use of jute in the United States through an extensive advertising campaign, advertising the merits of jute?

Dr. REED. Yes, sir.

Mr. PACE. And then to further promote its use by a probable reduction in cost of burlap and burlap bags?

Dr. REED. And in that connection I think it might help you orient your thinking on it, to know that, of all of the burlap that comes into the United States 75 to 80 percent of it always goes into bags. The rest is piece goods used for many, many purposes, including the baling of cotton piece goods

Mr. PACE. Furniture, automobiles.

Dr. REED. Yes, and linoleum and a wide number of uses. They even use burlap to stuff bicycle seats. I was quite surprised at the many uses when I got into it.

Mr. PACE. You think if that can be done, so far as cotton is concerned, you won't have so much trouble with that as a competing factor?

Dr. REED. I don't think either you or we need worry about the two, because the use of burlap is often for the type of bags for which cotton is not really fitted. There are some, of course, for which cotton is better fitted than jute. There are others, on the other hand, in which burlap makes a much better bag.

In many cases during the war, manufacturers practically had to get burlap bags because they were the only satisfactory thing for their use. There are other uses such as for seed and feed and for some fertilizers, for which cotton is well suited. By the way, fertilizer is another field where cotton and burlap are losing out very largely because those commodities are going into paper bags. But there are some uses where cotton bags are unquestionably preferable, and other cases where burlap bags are preferable.

For instance, I grew up with the Osnaburg 2-bushel grain sack out in the Middle West, and it is still used but to a much smaller extent. There is one other thing you gentlemen should keep in mind as even a greater competitive factor than burlap, yet still not as great as paper paper is your competitor as well as ours-the fact that there is a great tendency toward shipping in bulk. There is even a tendency toward the practice of shipping sugar in liquid form to candy factories and other large users in tank cars rather than shipping it in paper, burlap or cotton bags, either one. There is the tendency toward shipping concrete in bulk rather than in barrels or bags. And that has been very successful. There is also the practice of shipping grain in bulk from the threshing machine. Bags have practically disappeared in

that operation, and that is where a lot of your Osnaburg bags went. They have just disappeared. At the present time one of the manufacturers of agricultural implements tells me that on their combines only 10 to 15 percent are even fitted for dumping in bags. For the rest of them, they run a truck alongside of the combine, and the machine dumps the grain into the truck, and the truck drives to the elevator.

Mr. HOPE. The Pacific Northwest is about the only area where they still use bags for that operation.

Dr. REED. And they are stopping that practice there because they have found a way of putting sideboards higher so that when they are going up and down the hills they do not lose the grain.

That was one of the reasons they clung to the use of bags in that area, because in going up and down the hills they lost a lot of grain. However, they are shipping mostly in bulk now.

Mr. ANDRESEN. The grain for export is shipped in bulk.

Dr. REED. Except for certain countries where they do not have facilities for handling it in bulk alongside piers.

Mr. ANDRESEN. Most of these countries who used to get flour from us want to get the wheat from us now so that they may make their own flour. That would mean that we would not have the volume of flour shipped out.

Dr. REED. That is probably right.

Mr. PACE. Mr. Hope.

Mr. HOPE. I want to ask about the productive capacity for jute in India. In the event that the price situation improves relatively, can they produce more jute than they have been producing over there? Dr. REED. Not quickly, for two reasons: First, India produces only 30 percent of the total used in the mills; and, therefore, it is a question of what Pakistan's policy is as to whether they increase the crops or not, and they are still a little bit short of food. Although I do not think they will limit the production of jute this year, India has, in the past few years, definitely taken acreage away from jute and used it for raising rice. As the food condition improves over there, that will probably be done less and less. In fact, the Indian Government's announced policy is to increase jute acreage.

Mr. HOPE. They can both be grown in the same type of soil and under the same conditions?

Dr. REED. Yes. Jute is grown close to the river in the flooded areas, just as they do rice. They strip the jute and cut it and lay it under the water to rot or ret, and then they take the fiber out and shake it in water to wash it, that is your jute fiber.

Mr. HOPE. Is their present method of production efficient?

Dr. REED. No. I would have to say it is not efficient in our sense of the word, because it is a small-scale operation and what I would call patch agriculture. Seeing India from an airplane gives you a better idea of what their agriculture pattern is than you would get from a hundred books, and their system is patch agriculture. In fact, some of their fields are so small you could not turn a tractor around in one of them. A half an acre is a pretty good little patch of jute. Mr. ANDRESEN. What are the prospects of you as an advertising man for their account to do a little trading-sell them some cotton textiles in return for this jute?

Dr. REED. They have been buying some of your cotton textiles, but their biggest purchases are other things. Let me tell you, since you gentlemen are representing our whole economy, just what they do purchase from us. I will just name them. I will not give you the amounts, but I will give you the products they purchase in greatest amount. Tobacco, fountain and stenographic pens, photographic goods, scientific instruments, office appliances, radio receiving sets, electrical appliances, refrigerators, nonmechanical pencils, combs, tooth brushes, sewing machines, and chemicals are among the big imports they have. And, again, I want to stress that in our capacity as an international advertising agency we have long ago come to the conclusion that it is to everyone's advantage to have two-way trade. I think you gentlemen feel the same way, because either we give away our dollars and goods or we get something in return.

Mr. ANDRESEN. We do both. We give away our dollars from the Treasury without getting anything back, and then the businessmen trade and receive their pay in dollars.

Dr. REED. Well, that is probably because of the very widespread belief on the part of Americans that exporters are gentlemen and scholars and benefactors of the human race, but that an importer is a liar, a thief, and a scoundrel taking food out of American babies' mouths.

Mr. PACE. What benefit would you say the cotton producers get from that list of exports to India?

Dr. REED. I think that anything that increases the stability of the economy of the United States reflects to the interest of the cotton producers, because it means you have a better market.

Mr. PACE. There is no such thing as cultivating this jute; is there? Dr. REED. Except for a little weeding and thinning, pulling off suckers and things of that sort.

Mr. PACE. No such thing as planting and cultivating?

Dr. REED. Oh, yes; they have to plant it. There is not much cultivating to do. It is really an enormous grass.

Mr. PACE. Does the man who grows it cultivate it, or does he hire workers?

Dr. REED. It will give you the picture if I tell you that 70 percent of the population of India is necessary to feed the people poorly. In fact, about 30 percent of the Indian population does not get enough to satisfy its hunger, let alone getting a balanced diet. Compare that with 14 percent of our total employed people necessary on our farms to produce all we produce on farms, even our exports.

Mr. PACE. When any employment is necessary, what is the wage? Dr. REED. The wage, is very low by our standards. In fact, a fairly good wage is about 30 cents a day for an untrained worker. Mr. PACE. That is a good wage?

Dr. REED. That is a fairly good wage. That is for an untrained worker. I want to make that plain. A trained worker would of course get more than that.

Mr. PACE. These jute mills, what wages do they pay?

Dr. REED. I think the figures have been published as to the basis arrived at by Government arbitration and I believe the basic wage is something like 60 rupees a month.

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With the present exchange that is about 30 cents, so that would be about $18 a month. But of course most of the mills have creches or nurseries and they take care of the small children of the women who work in the mills, and there are a great many women as well as men who work there.

Mr. PACE. In connection with the cotton textile mills we were told that the wage was around 10 or 11 cents a day.

Dr. REED. It was, say in 1939 or 1940, but I do not think you will find any such wages over there now, because there have been a number of Government arbitrations which have raised them, and in addition the Government gives a food subsidy, and a cost-of-living increase subsidy which does not appear in the wage scale.

Mr. PACE. Well, we can say that the manufacture of burlap, the cost from the standpoint of wages, is incidental as compared with the cost in America?

Dr. REED. No. I will tell you why. I think that is a generally accepted idea but strangely enough I did not realize that was not true until I went over there. I frankly think their wage cost is very high because of the inefficiency of labor in the first place, and secondly, they have the tendency to employ as many people as they can, so they have two people doing a job whereas by our American methods one person could take care of it.

I think their wage costs are high because of that.

Mr. PACE. As soon as we send all of these experts, scientists, and technicians, proposed by the President, to all points of the world, they will be able to build up their efficiency, will they not?

Dr. REED. Yes; but at the same time they will build up their standard of living and purchasing power. All I need do is to call your attention to the fact that we are a much better market for the exporters of the world now than we were when we were an agricultural nation with a lower standard of living. India too will be a better market.

Mr. PACE. I realize that you cannot expect a country to purchase unless it has something to sell, but I am not quite as encouraged over the cotton situation as you seem to be. As you know, the synthetic industry of this country itself is already displacing approximately 3,000,000 bales of cotton, and I am sure you also know the new product orlon is now moving into manufacture and is calculated to displace many of the industrial uses of cotton, and that orlon has qualities such as not being affected by weather, the rain and sun, and so forth. Then, as you also realize, there is already moving enormous quantities of rayon into this country from Europe. You probably know of the intention to negotiate at Geneva in the next few weeks and this rayon is one of the things to be further reduced, for the benefit of Italy and under the most favored nations' clause that would be to the benefit of other countries.

Dr. REED. Yes, sir; but we get back something to-if they can pay for what we send them.

Mr. PACE. Yes; I want to get back to that. In addition to that, we have an expansion of foreign production of cotton under a wage scale that is much lower than the American standard. Then in addition you tell me that your company contemplates quite an ambitious program of promoting the increased use of jute in this country.

Dr. REED. May I make one comment. I would not call it an ambitious program because as a matter of fact, it will not be nearly

as ambitious a program as that which your Cotton Council has under way. We hope to compete with you on an equitable basis, however. Mr. PACE. The only point I am making is that it is something new in the jute field.

Dr. REED. That is right.

Mr. PACE. The Indian Jute Mills Organization proposes to finance a new program advancing the cause of jute. Then you have clearly demonstrated the competitive position that cotton is in with regard to

Mr. PACE. We can talk all we want about world trade and buying something from somebody else but to be perfectly frank with you it looks to me that the competitive enemies of cotton are now concentrated to the point where American cotton may not long have a market.

Dr. REED. I would not be surprised that in 50 years from now cotton will be a very small thing. But you people in the South will have a much better economy in some other ways.

Mr. PACE. What others?

Dr. REED. Soybeans for making plastics, for instance.

Mr. PACE. Of course you know soybean production has increased eight times, and not everybody can grow soybeans.

Dr. REED. No. I just gave that as an example. I think as time goes on these changes are bound to occur. They are basic and they are what our economy has thrived on. It hurts certain individuals in certain industries, it is true, but in the end it is better for them that they have a wider economy and a richer one. Your cotton production down on the Mississippi Delta is something I was looking into. I was looking into the cost of production, and using one-mule plow cultivation and hand picking, I believe, cost you 168 man-hours, for a bale of cotton. Today with a tractor and four-row flame cultivator and mechanical picking it costs you 28 man-hours.

Everybody benefits by that, including the Negro who goes to a factory and increases his standard of living in order to buy more of your

cotton.

Mr. PACE. Yes; I know that the general idea is fine, but the point I am making is this: That it seems to me from every angle the one commodity in this Nation_that is in greatest danger is cotton.

Dr. REED. I am afraid I would not quibble with you on that one. Mr. PACE. And I see the possibility that cotton in this country will be in the same condition that the silk is in Japan today. Substitutes will entirely take its market. If you will pardon me, I think it so easy for you to say, as so many of the others have said, "Well, maybe it is good for the South; it will get into something else." But the difficulty I have had over a period of years is that no one has yet told me what we can get into. We have a commodity there on which more people in this Nation today are dependent than any other single commodity. There is the man who grows the cotton, the man who gins it, the railroad that transports it, the mills that process it, the merchant who sells it; all across the line there are more people in the United States today dependent on cotton than any other single commodity in the Nation. Yet it seems to me that everything that is happening your whole trade system, your whole competitive system, is after one thing: They are after cotton. Not that they haven't the perfectly free right to do so. Do not misunderstand me there.