information on manufacturing, but when it comes down to the things going through the retailers and wholesalers, we have no real information about what is taking place. The CHAIRMAN. The only information you have is for these several cities. Mr. SURFACE. Yes. These are samples to see what could be done, and of what use it is going to be. The CHAIRMAN. I want to ask you a question: I see in Baltimore under kinds of business you have many things, among which are bakeries, boots, shoes, building material, candy, confectionery, tobacco, clothing, dairy products, poultry products, drugs, dry goods, notions, florists, and so on down to toys and stationery, soft drinks, ice cream, and plumbing and heating supplies, everything that is conceivable almost in the retail trade, and at the end of it you have miscellaneous, and the number of establishments canvassed in Baltimore was 1,327. You have the persons engaged in this work. These are the experimental figures, but I take it that in the distribution, in your collation of figures in regard to distribution, it will be somewhat similar to those plans. Mr. SURFACE. That is a sample. The CHAIRMAN. This was done by the Census Bureau in collaboration with the respective chambers of commerce in the cities mentioned? Mr. SURFACE. Yes. The CHAIRMAN. Here is Providence, Syracuse, New York, sample cities that you took. This is prepared in connection with the domestic distribution departments of the chambers of commerce of the United States; Seattle; Atlanta, Ga.; and Kansas City, Mo. They took, as far as they could, the different regions of the country. Mr. SURFACE. I think it should be said that these cities each requested the surveys be made in their particular cities and the Chambers of Commerce contributed very largely to the work and to the success of handling the work. In other words there is a demand for this kind of information. The CHAIRMAN. I am sorry to have interrupted you. Mr. SURFACE. The thing I wanted to get across to you was that there was a real demand and a real need for this kind of information. It is something we do not have, and there is nothing which fills the gap, and our whole distributive system at the present time is in a state of flux. We have chain store development, cooperative wholesale buying, hand to mouth buying, and we are trying experiments in this direction and that. We are getting chains of department stores, and it appears we are trying to find out how best to do these things. We have no information to guide these experiments. As a matter of fact it is working in the dark. If we could have real information as to the volume of business and the outlets, through which it passes, it would be of the greatest assistance to distributors in putting their house. in order, in aiding and lowering the margin between producer and consumer. The CHAIRMAN. What would be the special advantage of this knowledge, if obtained? Mr. SURFACE. It is always hard to answer that kind of question, Mr. Chairman. It is like the census of manufactures. You say what is the advantage of the census of manufactures. To my mind the biggest advantage of that is it gives us fundamental data from which to clarify our thinking about these processes; in other words, we have got measuring sticks in the manufacturing industry that we set up and see where we are going. Between 1923 and 1925 we increased the value of our production in the manufactures of this country by $2,500,000,000 and we did it with 400,000 less men employed. Mr. RANKIN. How long was that? Mr. RANKIN. The last two years? Mr. SURFACE. 1923 to 1925. Mr. RANKIN. Increased it how much? Mr. SURFACE. $2,500,000,000 of output. Mr. RANKIN. What was the reduction in the number of men? Mr. SURFACE. Approximately 400,000. Mrs. KAHN. Does that include the automobile industry? Mr. SURFACE. That includes the automobile industry, all manufacturing industries. Mr. RANKIN. Is that due to advancing prices or increase in the volume? Mr. SURFACE. There was no significant increase in prices between those two years. It was due to increased efficiency, labor-saving devices, improved management, and various features of that kind, in my opinion, at least. Those are the facts. Mr. MOORMAN. Who benefited by that outside of the manufacturers? Mr. SURFACE. I can not tell you who benefited by it. The manufacturer is complaining very much because he can not make any money at the present time. Mr. DEROUEN. Those experiments inured to the benefit of some business, but did they benefit the ultimate consumer. Mr. SURFACE. Ultimately those things reflect back to the consumer without any question, but immediately it benefits the manufacturer who is able to put in a better device to lower his cost of production. He gets an edge on the other fellow, but ultimately that whole thing reflects back to the consumer. Mr. MOORMAN. The $2,500,000,000 you referred to covers what period? Mr. SURFACE. Two years. Mr. MOORMAN. Does that mean up until this day? Mr. SURFACE. No, sir. That was between the last two censuses of manufacturers, between 1923 and 1925. Mr. MOORMAN. The effect has not reached the consumer so far, has it? Mr. SURFACE. I would not say that. I do not know but what it has. The CHAIRMAN. As a matter of fact, the manufactured cost has not increased the price. As I have understood it has kept level. Mr. SURFACE. We have had the phenomenon of a falling price during the last two years since 1925. Prices have been falling. The wholesale price index shows a marked decline. The CHAIRMAN. The magnitude of business has increased. Mr. SURFACE. Yes, sir. Mr. RANKIN. What about the labor cost? Has it increased or decreased? Mr. SURFACE. You mean the wage scale? I do not think there has been much change in the wage scale. Mr. RANKIN. I mean cost of turning out. You say you have increased the output $2,500,000,000. That is right, is it not? Mr. SURFACE. Yes, sir. Mr. RANKIN. And at the same time you have decreased the number of employees by about 400,000? Mr. SURFACE. About 400,000. That is right. Mr. RANKIN. I want to know whether the cost of turning out this great bulk of material has increased or decreased; in other words, I want to know whether that $2,000,000,000 is added to the profits that have been made? Mr. SURFACE. I think we are getting a very significant effect of that in our lowered wholesale prices at the present time. Mr. RANKIN. I understand, but has it cost more or less? Mr. SURFACE. I should say it has cost less. Mr. RANKIN. Then the increased profits to the manufacturers has been more than two and a half billion in the last two years. Mr. SURFACE. No, sir. I would not put it that way. Mr. RANKIN. Why not? Mr. SURFACE. We have not any evidence of that. The CHAIRMAN. You did not say profits. Mr. RANKIN. You said a while ago that the increased amount of the output in the last two years has been two and a half billions of dollars. Mr. SURFACE. Yes. Mr. RANKIN. That the number of employees have been reduced by 400,000. Now you say the cost of turning out this material, you think, is less than it was? Mr. SURFACE. Per unit. Mr. RANKIN. You mean per unit? Mr. SURFACE. Of course this increase of two and a half billion dollars means they produce that much more goods. That is the volume of goods. Mrs. KAHN. That does not determine profit. Mr. RANKIN. While you are turning out this material you are employing fewer men each year than you employed two years ago. Mr. SURFACE. Yes, sir. Mr. RANKIN. All right. If that is the case, unless your increased cost goes in the material Mr. SURFACE. We turn out more goods. We can not state our production in quantitative units. You can not get a picture of all manufacturing in quantitative units. So many automobiles are produced and so many barrels of flour. You can not add them together in these terms and get the total. Mr. RANKIN. If the number of laborers had decreased and material has not advanced, why that would indicate a considerable increase in profits that have been made. Mr. SURFACE. I do not see that it would. Mr. RANKIN. Why not. Mr. SURFACE. It would increase the volume of output. If we made 3,000,000 automobiles in one year and made three and a half million in another year, that would increase the volume of output. Mr. RANKIN. But if you are paying the same price for the raw material you paid two years ago and employing fewer laborers, which would mean a smaller expense, and at the same time turning out two and a half billion dollars more worth of manufactured materials, would not that indicate an increase in the profits? Mr. SURFACE. It does not necessarily. The saving may be passed to the consumer. We have no information on that. Mrs. KAHN. Suppose it does? The profits do not make any difference. Mr. RANKIN. I think it does. Mr. DE ROUEN. The replacement of that manual labor must also take into consideration the machinery. That to a certain degree is an expense to be added against the labor that goes into that manufactured article, as to the net profit and quality of those things. There may be a likeness between increase of man power, and machinery replacing man power. You want to determine whether or not it is effective? Mr. RANKIN. The profits of manufactures seem to have been increased in the last two years, and the profits to the agriculturalist decreased. Mr. DE ROUEN. Is it profitable to eliminate labor as much as we can by machine, and then what is the result? Where are we drifting? That is the point that occurs. Mr. RANKIN. What figures have you on the increased amount of machinery that has been used in this production? Mr. SURFACE. I have not the figures in my head, but we have the amount of horsepower used. It has increased very materially. Perhaps somebody from the Census Bureau knows. The CHAIRMAN. May I ask a question? Mr. SURFACE. Yes, sir. The CHAIRMAN. If this census of distribution is taken, could not Brother Rankin ascertain from that census exactly what he is inquiring about? Mr. SURFACE. He can come much closer to it, because we would have something on the value of the products distributed. That is the thing we are lacking. Now we only know where it is produced, the value when it is produced, and then we lose sight of it entirely. We do not know how it goes to reach the consumer, where stocks are piled up. We do not know the outlet through which it goes, or any of those features. There are some very interesting things that have come out of this census, and I have two gentlemen who happen to be in the city representing outside interests, whom I would like to have tell you something about that. Mr. RANKIN. I would like to ask you some questions, first: You want to take a census of distribution. How far do you want to go? Do you want to trace this distribution to its ultimate destination in foreign countries? Mr. SURFACE. No, sir. This refers only to a domestic distribution. We know something about distribution of foreign trade. That is the only part of our production that we do have figures on. We know absolutely where the products go that are exported from this country. We do not know about the products in this country, or how they reach the consumer. The point is to determine the amount of business, the amount of business done by retailers, by wholesalers, the number of them, distributors, and jobbers. Mr. RANKIN. What articles do you propose to include in this? I did not get here to hear your opening statement. Mr. SURFACE. It is a long list of articles. There are some 70. Mr. RANKIN. I am interested particularly in agricultural products. I want to know what agricultural products you have. Mr. SURFACE. Here is the list on the questionnaire that was used. Many of these are manufactured products. This is the way in which the products reach the consumer. Here is tobacco production, all of those things which come from agriculture are specified as groceries, hay and grain feed, etc. Mr. RANKIN. I glanced over that list and you left out America's greatest commodity, and that is cotton. Why was that done? Mr. SURFACE. Cotton does not go to the consumer as cotton. It goes as cotton goods. You have that here. Mr. RANKIN. Your proposition is to take the manufacturer and give his distribution, but you do not give the distribution as to the producer of raw material. Mr. SURFACE. We have that information fairly well. We know the consumption of cotton by the cotton mills. The Bureau of the Census already compiles that information. That is where your cotton goes. Nobody buys cotton to use as cotton. Mr. RANKIN. Take cottonseed production. That is about the third or fourth largest crop in America. What do you propose to do with that? Mr. SURFACE. I doubt if there is anything in here which will show that, because most of that does not go directly to the consumer. I think the Bureau of the Census compiles information on cotton-seed products, fats and oil. Mr. RANKIN. As to fats and oils everybody knows the quantity is not arrived at until it is extracted from the seed and becomes a commodity of the oil mills and manufacturers. Mr. DE ROUEN. I believe you are driving at the right thing. The distribution of products in your State is very important. You are beginning to go into a diversification, from the chicken to the vegetable and everything that the Department of Agriculture is advocating and fostering so much, and the distribution for instance, of vegetables. I do not know if it is in your district, but Mississippi cream and milk and all those things. To my idea there is lacking something in the entire distribution problems of our country. Where it is I do not know. I am too busy, and even if I was not busy I would not be able to find out. There is something lacking in that entire distribution. There is something wrong. We produce in one part of the United States so much that it rots. You can not do anything with it. How to arrive at the solution to prevent that I do not know, but if we could arrive at a solution it certainly would be helpful. I believe very much in the problem of distribution. Mr. RANKIN. I am not antagonistic to this legislation, but I have got to the point that I am going to demand that agriculturists be |
