Mr. REED. One-half a cent. Mr. SPENCER. So that would be 81? Mr. REED. Yes, sir. The CHAIRMAN. What is the length of the sisal twine as compared with the manila twine? Mr. REED. Five hundred feet. Senatro GRONNA. That is the price to the dealers, is it not? Senator GRONNA. And it is based on what price per pound for sisal hemp? Mr. REED. You understand a great portion of the hemp we are using now in the manufacture of twine was bought early at a lower price than the current prices to-day; hence our ability to make this figure. Senator GRONNA. Could you tell us about what time that hemp was bought and also the price? Mr. REED. Yes, sir. Mr. SPENCER. And may I ask from whom bought, if he is willing to state? Senator GRONNA. Yes. Mr. REED. I have not that, but I can give it from memory, where it was bought. It was bought as far back as September, 1914. At that time it was 4.50. In September again the same year at 4 cents f. o. b. Stillwater. These are f. o. b. Stillwater. In January of 1915 we bought for 4.25; the next month at 5.08; April, for 5; in May for 5.91 and in June for 6.22; in July for 6.65; in August for 5.75; in September, 5.15; November, 6.86; December, 6.86; January, 7.36. Senator GRONNA. January, 1916? Mr. REED. 1916. February the 8th, 7.36. Senator GRONNA. Where did you buy the principal amount of this twine? Can you recollect that? Mr. REED. The principal amount of this twine-quite a portion of this twine was bought just before I became warden. A great portion of it was bought through Montes & Hanson and Orth & Peabody, and quite a considerable through the Reguladora Comision. Senator GRONNA. Was any of this twine bought through the Reguladora in the early part of 1915? Mr. REED. No; the Reguladora prices have been during the latter part of 1915. Senator GRONNA. The latter part of 1915? Senator GRONNA. Has the prison board at Stillwater an agent, or have you ever had an agent in Yucatan buying hemp? Mr. REED. We never have. As I recall, Warden Wolfer made a trip there a number of years ago, but we never have had an agent there. Senator GRONNA. In making the price to the dealer you take into consideration only the cost plus-that is, the cost of the material, plus the cost of the manufacture, and do you add anything else to it except bare cost of manufacturing? Mr. REED. That includes all overhead charges. I might say, so that the committee could understand, that the men in the Minnesota prison are paid wages. We will pay the men in prison this year over $80,000 in wages, and when a man is detailed to work in the twine plant, that industry is charged 85 cents for that man's work; that is for his support, and that is paid back into our support fund. The CHAIRMAN. Eighty-five cents per day? Mr. REED. Per day, besides his wages. Some of them earn as high as 75 cents a day, and the wages added to it. Of course, there are only a few. The average wage possibly would be 35 cents. The average wage would make anywhere from $1.15 to $1.60 a day, which you would have to pay for your inmate. Senator GRONNA. And that is added to the cost of the twine? Mr. REED. That is added to the cost of the twine, yes, sir; and all overhead charges are figured in. Senator GRONNA. So that when you sell the twine to the dealer you do not sell it at cost? Mr. REED. No, sir. Senator GRONNA. That is what I mean, at the actual cost. You take into consideration the cost of labor as well as other costs of manufacture? Mr. REED. We figure in all the costs of manufacture in arriving at the cost of the twine. Senator GRONNA. Now, supposing hemp cost you, say, 6 cents a pound. How much per pound do you add, including overhead charges and everything? What amount per pound do you add? Mr. MAYER. I think the Senator meant sisal. You said, "if the twine cost you 6 cents." Senator GRONNA. Yes; I mean sisal. Supposing the material cost you 6 cents, what amount do you generally add per pound? Mr. REED. We have arrived-you mean what is the cost of production? Senator GRONNA. Yes. Mr. REED. Well, in figuring as we figure all overhead charges, including everything, it will cost from 11 cents to 13 cents a pound. The CHAIRMAN. Would you mind describing overhead charges, because I do not know just how you get at that? Mr. REED. The cost per diem of the men, the wages, the officers, the light, heat and fuel, everything that pertains-oil, and all materials that go into the manufacture of twine. The CHAIRMAN. Anything for interest on the investment of the buildings and machinery, and the wear and tear of machinery? Mr. REED. No; we have not figured the wear and tear of the machinery. The CHAIRMAN. And nothing for interest on the cost of the plant? Mr. WOLFER. I do not desire to interrupt, but I would mention for Mr. Reed's guidance that the charging off does take place and enters into the calculation every year. Mr. REED. You mean the depreciation? The CHAIRMAN. Yes. Mr. REED. Six per cent for depreciation. Senator GRONNA. Is anything added for selling this product of twine in the overhead charges? Mr. REED. No. Senator GRONNA. How many grades of twine do you make? Senator GRONNA. Three grades. Mr. REED. No; four. We are making the sisal and the standard sisal at the same price. Senator GRONNA. Yes. Mr. REED. And then we have the 600-foot manila and the 650-foot manila, which is a pure manila. Senator GRONNA. That is all the grades you make? Mr. REED. Yes, sir. Senator GRONNA. Now, how do your prices compare with the prices of other manufacturers-we will say such manufacturers as the International Harvester Co? Mr. REED. Our contracts agree that we will sell as cheap as anyone else producing the same quantity of goods; as cheap or cheaper. Senator GRONNA. Is it not the fact that your prices have been cheaper or lower than the prices of independent manufacturers? Mr. REED. Our prices have been lower. Senator GRONNA. And you can tell the committee how much lower, on an average? Mr. REED. Our prices last year were over 13 cents to 24 cents lower than the trust. Senator GRONNA. So that would make a considerable amount, granting that you are manufacturing 20,000,000 pounds or more annually? Mr. REED. Yes, sir. Senator GRONNA. So that it has been a saving to the farmers of that community of a great deal of money, has it not? Mr. REED. It has. We figured last year if the farmers of Minnesota had paid for the twine at the prices sold by other concerns it would have cost them a little more than $330,000 more money than it did by buying through the State prison. Senator GRONNA. Yes. Has there been any other competition in twine except the competition caused by the manufacture of twine in your State prison? That is, in Minnesota, have there been any independent firms which have been competing in prices, trying to undersell the eastern manufacturers? Mr. REED. You mean any concern that manufactures twine within the State of Minnesota? Senator GRONNA. No; not in the State. Have there been any other concerns Mr. REED (interposing). I understand. They have. There are many concerns that sell twine within the State of Minnesota. Senator GRONNA. They sell twine, but as a rule are their prices higher than your prices? Mr. REED. Yes, sir. Senator GRONNA. Which firm sells the bulk of the twine in your State? Mr. REED. Outside of ourselves? Senator GRONNA. Yes. Mr. REED. I would say the International or the Plymouth. Senator GRONNA. The International Harvester Co. ? Mr. REED. Yes, sir. Senator GRONNA. So that they have been your largest competitors? Mr. REED. Yes, sir; and the Plymouth. Senator GRONNA. And the Plymouth Cordage Co. ? Mr. REED. Yes, sir. Senator GRONNA. As a rule Mr. REED (interposing). Pardon me. Senator GRONNA. Go ahead. Mr. REED. We used in round numbers in the State of Minnesota between 18,000,000 and 19,000,000 pounds of twine last year. We sold between 17,000,000 and 18,000,000. So the prison furnishes the very large amount of twine in the State of Minnesota. Senator GRONNA. You also manufacture reapers, binders, and mowers? Mr. REED. Yes, sir; mowers, rakes, and corn harvesters. Senator GRONNA. How many binders did you manufacture last year? We Mr. REED. We manufactured five thousand and some odd. manufactured them all; binders, mowers, and rakes, right at 12,000 machines. Senator GRONNA. Of course that would not begin to supply the demand in your own State, would it? Mr. REED. No, sir. Senator GRONNA. Are you permitted under your rules to sell to any other State until your own trade has been supplied? Mr. REED. Yes, sir. Senator GRONNA. You are? Mr. REED. No; when our trade is supplied we are permitted to sell outside of the State. There is nothing in our rules and regulations to forbid selling outside of the State. The CHAIRMAN. Do you have to supply your own demands first? Mr. REED. In twine, the statute provides that we must hold 3,000,000 pounds up to March 1, so that all of the farmers in the State of Minesota will be sure to be supplied. In the matter of machinery that same provision does not exist. The CHAIRMAN. So you can sell your machinery anywhere? Senator GRONNA. How are your prices on machinery compared with the prices of the International Harvester Co. ? Mr. REED. They are lower. Senator GRONNA. Can you tell us how much lower? Mr. REED. I can not give the exact figures, but in round numbers they are from $5 to $15 or $18. Senator GRONNA. I was told that the difference would be as great at times as $25 on a binder. Mr. REED. I think that is true. Senator GRONNA. I think that is all I wanted to ask the witness. The CHAIRMAN. You stated, I believe, that you made about 22,000,000 pounds of twine? Mr. REED. Yes, sir. The CHAIRMAN. And you are using between 18,000,000 and 19,000,000? Mr. REED. Between 17,000,000 and 18,000,000. The CHAIRMAN. So you do not have a great deal to sell outside? Mr. REED. Not a great deal. The CHAIRMAN. Is it the practice for you to supply the needs of practically all the Minnesota users of twine, or do they, many of them, buy from other dealers? Mr. REED. Not many buy from other dealers. We supply about eighteen-twentieths of the twine in the State of Minnesota. Seventeen to eighteen twentieths. The CHAIRMAN. Have you been able to find anything else that would make twine suitable for your users there except sisal and manila? Mr. REED. I have not experimented with different fibers. I think ex-Warden Wolfer, who will testify, has had experience along that line. I have not. I have only been in charge of the prison, might say, not quite two years. The CHAIRMAN. I was anxious to get some testimony in regard to it. I won't bother you with it, then. Tell us about what percentage of the 22,000,000 pounds is sisal and how much is manila? Mr. REED. About three-fourths. The CHAIRMAN. Three-fourths is sisal? Mr. REED. Yes; three-fifths-possibly three-fourths is a little high, but right in that neighborhood; possibly three-fifths. The CHAIRMAN. Now, from the prices you gave of the sisal and the manila, I would judge that the manila is considerably higher? Mr. REED. Yes, sir. The CHAIRMAN. How is it that you can sell so much of this higherpriced product? Mr. REED. Because they want it. The CHAIRMAN. It is a better article? Mr. REED. Because they want it. Many of them will specify that they will want pure manila, and if they do we try to give it to them. The CHAIRMAN. Yes; give them what they wish, of course. sisal, for practical purposes, about as good as manila twine? Mr. REED. I think so. It is a very satisfactory twine. Is the The CHAIRMAN. Just the fancy that some men have for a better quality that causes them to use the manila? Mr. REED. Yes, sir. The CHAIRMAN. There is no question about the manila being a little better, I take it, in tensile strength, and running a little farther than the sisal? Mr. REED. Yes, sir; it is considered a better twine; that is, it is more expensive. The CHAIRMAN. Now, what would be the result on the American market if we had no sisal? Suppose these people in Yucatan would put the price up so high that we could not afford to buy it at all, what fix would the American consumer of binder twine be in? Mr. REED. That would be only an opinion; I do not know. The CHAIRMAN. You could not tell whether we could be supplied out of the manila or not? Mr. REED. NO; I would not care to express an opinion on it. Mr. REED. No. The CHAIRMAN. As a matter of fact, though, in your own business, you are using between three-fifths and three-fourths sisal and the remainder manila? |
