price system. In that period, butter increased 25.9 percent; lard increased 9.3; other food fats, 18.6; soap fats, 13.8; drying oils, 14.5 percent; cottonseed oil, 12.5 percent; miscellaneous oils, 32.8.

This represents one of the most difficult situations that confront an attempt to keep prices within bounds [chart 16]. I have here the prices of cotton cloth, raw cotton, and mill margins, and this is a working chart. I might say it is an overworked working chart; because, as most of you know, we felt that cotton yarns and cotton print cloths were in a highly inflationary period and it was incumbent upon us, with the mandate I had from the President, to try to bring about a stable situation. In order to do that and to meet the terms that Woodrow Wilson laid down of a just price, it was necessary to consider the elements that make up the price of cotton cloth. Now, one of those, of course, is the price of raw cotton and the other, which represents the difference between cotton cloth and the raw cotton, is the mill margin, which comprises all of the other costs and profits, if any. I want to point out what happened to the price of cotton cloth. We are producing cotton cloth at the present time and I think we can very well be proud-at a rate of use of about ten and one-half million bales of cotton-not cotton cloth alone. That represents something like 3,000,000 more bales than we customarily use. It means, of course, that in addition to the demand of the Government for its military people, there is an increasing demand coming from civilians. There is probably some housewifely caution in this laying ahead a certain amount of supplies; but, more than anything else, it represents a feeling that there will be a great demand and there is liable to be a foreshortened supply. Now, the cotton cloth average price for the week ending July 25, 1941, was 36.25 cents. The raw cotton that goes into that—and keep in mind this does not represent the price of cotton as such-was 16.41 cents, while the mill margin was 19.84 cents.

That represents the highest cotton cloth price, the highest cost for raw cotton, and it represents a small decline for the mill margin. I want to call your attention to the fact that the mill margin in 1939 was considerably below 19.84, that it fell to something in the neighborhood of 11 cents in the middle of last year, and is now 19 cents.

But, more important than anything else, is this: We put a ceiling on cotton cloth some weeks ago. In the meantime, despite that ceiling, the price of raw cotton continued to rise. It was necessary for us to readjust our ceiling price on cotton cloth, and a part of this advance [indicating on chart], a substantial part of it, represents the 4 cents additional we allowed on the basic print cloth, which serves as a standard for the ceiling for all cotton cloth. Despite that also, the price of cotton has gone up. I show this chart to illustrate that it is not the price of the cotton cloth which governs the price of raw cotton. And I want to be very clear on that. You know that during this period when we were considering a ceiling on cotton cloth, and the trade knew we were considering it, the price of raw cotton that goes into that fabric was going up.

I have here a chart which, Mr. Chairman, is a confidential chart. It has not been released yet. It was prepared in the O. P. M., and is a part of the confidential circulation, but I wanted to discuss it to

1 Not reproduced.

CENTS

50.0

40.0

30.0

20.0

10.0

CHART 16

PRICES OF COTTON CLOTH,
RAW COTTON AND MILL MARGINS

AUGUST 1939 - JUNE 1941

1939

UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS

indicate why there is pressure on the price level and what we can expect, if the law of supply and demand holds, as far as pressure is concerned, and which therefore is one of the most sustaining reasons for asking for a price control bill at this time.

The CHAIRMAN. Mr. Henderson, I do not desire to interrupt you, but I assume you understand that this is a public hearing, and the press is here, and it is no longer confidential after it has been discussed here.

Mr. HENDERSON. I should like to draw on it, to discuss it, but not introduce the complete chart into the record.

It covers the supplies and requirements for 32 selected commodities needed in defense. At the top is aluminum. The emphasis in the chart, on the black line, is the demand estimated for military purposes, for the defense purposes.

If I were constructing the chart for the purposes of this hearing, I would have blacked out this blank part, which indicates the shortage we face for the balance of 1941.

In aluminum, we state here the estimated supply of that commodity, and compare it with the estimated requirements for defense and the estimated requirements for civilian use.

There is a shortage in aluminum. There is a shortage in brassThere is a small shortage in cadmium, in cork, in castings, and a small shortage in goat skin and there is a shortage in kapok. There is a large shortage, as you can see, in magnesium. The military demand for magnesium is many times as high as the total supply of it.

There is a shortage in neoprene, which is synthetic rubber. There is a shortage in nickel. There is a shortage in pig iron, and a shortage in potash. There is a shortage in wool and zinc.

I say to this committee in all seriousness, that if I had one chart to present to you as a reasoning basis for moving quickly to bring a substantial amount of control into industrial commodities and other commodities, I would rest my case on that chart.

Mr. KOPPLEMANN. What is the shaded line?

Mr. HENDERSON. The shaded lines represent production, imports, and other available sources of supply.

I have another chart here to indicate why prices have been going up.

Mr. PATMAN. I do not want to interrupt the witness, but I wish, Mr. Chairman, that you would call his attention to the fact that he only named 14 of those strategic commodities, when he said that there were 32.

Mr. HENDERSON. Mr. Patman, I took from the chart the names of the items out of the 32 on which there were indicated shortages for the balance of this year.

I have another chart1 here which reflects another compelling point. This shows the British and Allied shipping losses, compared with the losses in the last war, and also in comparison with the shipbuilding program. This is the line of the present war, reaching a peak [indicating], and then dropping, but shifting at all times toward that peak in the first World War. But more important, it seems to me,

1 Not reproduced.