Mr. LORING. That is a long period; yes, sir. The CHAIRMAN. Try to finish by half past 10. Mr. Loring has asked us to, and the committe wants to let him, catch the 11 o'clock train. Mr. ORTH. Have you any idea of the loans made by the Argentine Republic in this country? Mr. LORING. No, sir. Mr. ORTH. Would you regard, as a man of large experience, a loan to the Argentine Republic without any security other than the bond of the Argentine Republic, as being better security than sisal as collateral? Mr. LORING. No; not near as good. The CHAIRMAN. Do you have just one question you wish to put, Mr. Mayer? You indicated you wanted to ask just one question. Mr. MAYER. Yes. Mr. Loring, if the Yucatan Comision Reguladora had approached you and your banking associates in Boston with a view to making an arrangement to get $10,000,000, you guaranteeing to always lend them $10,000,000 at the lowest rate of interest, not less than 4 nor more than 6, with a penalty of $200,000 for every default, knowing the condition of the Comision Reguladora, knowing the conditions in Yucatan, and knowing the condition of Mexican uncertainties, would you, as a Boston banker, and your associates have exacted a higher compensation than you would ordinarily in dealing with an American corporation with a fixed and standing credit? Mr. LORING. Yes, sir. Mr. MAYER. You would not have been unwilling to have made a contract of the kind that Messrs. Wexler & Dinkins made if you had had the opportunity, would you? Mr. LORING. Personally, I do not suppose I have money enough, or control money enough, to make such a contract, or that the Plymouth Cordage Co. does. If the Plymouth Cordage Co. had money enough and it had had any inclination to corner the market, I should think they would have done it. Mr. SPENCER. I am glad to hear you say that. The CHAIRMAN. We are very much obliged to you, Mr. Loring. Mr. LORING. I thank the committee for hearing me. I thank all of you gentlemen. Mr. FISHER. Mr. Chairman, you will remember that during Mr. Loring's direct examination the question arose incidentally as to the power of this Pan American Commission Corporation to manufacture. May I call attention to the record as shown on page 182, part 1, of the printed record, in which it is expressly stated that one of the powers of the commission corporation is: (c) To carry on any or all business as manufacturers, producers, merchants, wholesale and retail, importers and exporters generally without limitation as to class of products and merchandise, but especially of sisal, henequen, hemp, and fibers of every class and kind, rope, twine, and cordage of every class and kind, and South American, Central American, and North American products of every class and kind, and to manufacture, produce, adapt, prepare, buy, sell, and otherwise deal in any materials, articles, or things required in connection with or incidental to the manufacture and production of, handling, selling, and dealing in sisal, henequen, hemp, and fibers of every class and kind, rope, twine, and cordage of every class and kind, and South American, Central American, and North American products of every class and kind. The CHAIRMAN. We had some gentlemen from the penitentiaries of the West, North Dakota, and Kansas, who were to be here this morning. Was there anything else, Mr. Frensdorf, that you wanted to say? Mr. FRENSDORF. Yes, sir. The CHAIRMAN. We will hear you now then. ADDITIONAL STATEMENT OF MR. EDWARD FRENSDORF, MEMBER OF THE BOARD OF CONTROL, MICHIGAN STATE PRISON, JACKSON, MICH. The CHAIRMAN. Please state your name, residence, and occupation, Mr. Frensdorf. Mr. FRENSDORF. Edward Frensdorf, member of the board of control of the Michigan State Prison, Jackson, Mich. The CHAIRMAN. Now, will you please state your connection with the sisal hemp industry? Give us your experience and any suggestions or statements that you deem pertinent to the subject. Mr. FRENSDORF. I was made a member of the board of the Michigan State Prison a little over five years ago. At that time the institution had an average annual deficit for the four preceding years of over $91,000. Last year our profits were over $98,000. I went there with an entirely new board and a new warden. The institution had made the year previous 2,400,000 pounds of twine. This year we expect to make 14,000,000 pounds. Our industries are somewhat more varied than those at Stillwater. I rather regret having to make a comparison of our institution with the splendid institution at Stillwater. There are only two penal institutions in the United States that are self-sustaining. The Stillwater institution stands in a class by itself and we come next. We are the two institutions that are self-sustaining. The CHAIRMAN. Tell us now something about your other industries, won't you, Mr. Frensdorf? Please do so briefly, as we have not time to go into it as fully as we would like. Mr. FRENSDORF. Well, we manufacture fiber chairs; we manufacture monuments; new granite work; we make some brooms in a small way; we have a large canning factory, operated in connection with a farm of over 3,000 acres. The CHAIRMAN. Vegetables of different kinds? Mr. FRENSDORF. Vegetables and fruit. Senator WADSWORTH. Do you make those for the commercial trade or for State institutions? Mr. FRENSDORF. The State institutions are first served. The CHAIRMAN. Have you any other manufacturing enterprises? Mr. FRENSDORF. Yes. Our brick and tile plant is a large industry. We sell that product direct to the farmer also; that is, the tile, which is the larger part. The brick is used in our own construction and in local towns where the freight rates are to our advantage. The CHAIRMAN. You say you are now manufacturing about 14,000,000 pounds of twine. Is that all sisal, or is a portion of it manila? Mr. FRENSDORF. Entirely sisal. The CHAIRMAN. Do you also manufacture some manila? Mr. FRENSDORF. No, sir.. The CHAIRMAN. Your industry, then, in the twine business is confined to sisal? Mr. FRENSDORF. Yes, sir. The CHAIRMAN. Do you make any rope? Mr. FRENSDORF. Only for our own use in binding the packages of twine for shipment for wrappers. The CHAIRMAN. How do you dispose of your product, Mr. Frensdorf? Mr. FRENSDORF. A large portion of it goes through an organization known as the Gleaners, which is similar to the Grange. The institution is cooperative in spirit. The appropriation for the binder twine plant came about by concerted action on the part of the farmers. Ours being an agricultural State, the situation is about the same as in Minnesota, not quite so extreme, and their representatives can dictate what the policy shall be with regard to appropriations. They made this appropriation to protect themselves from trusts and monopolies. The CHAIRMAN. Is this Gleaners Association an agricultural one? Mr. FRENSDORF. Entirely. The CHAIRMAN. And you sell the principal portion of your twine to them, you say? Mr. FRENSDORF. I think this year they will take about half of it. In years when our production has not been so large they have taken the greater part of it. The CHAIRMAN. What will you do with the remainder? Mr. FRENSDORF. We sell it on almost the same basis as the Stillwater institution does. The CHAIRMAN. I suppose the greater portion of it is consumed in your own State? Mr. FRENSDORF. Yes, sir; the greater portion of our product is consumed in the State." The CHAIRMAN. But you do sell it outside? Mr. FRENSDORF. Yes, sir. The CHAIRMAN. There is no law or custom even requiring you to supply your own State first? Mr. FRENSDORF. No, sir; there is no legislation such as they have in Minnesota. The CHAIRMAN. How do your prices for the sisal twine compare with those of the independent manufacturers such as the Plymouth Cordage Co. and the International Harvester Co., and so on? Mr. FRENSDORF. The splendid success of the Stillwater institution has really set us an example, and we act quite in accord with them. The CHAIRMAN. By that you mean you sell cheaper than the independents? Mr. FRENSDORF. Yes, sir. The CHAIRMAN. Could you give us a pretty accurate idea of the cost of manufacturing twine and how that cost compares with the cost to the independent manufacturers, if you know? Mr. FRENSDORF. I have listened to the testimony given on that point, and our cost is above that at Stillwater. They are making a larger amount, and their overhead is less. The CHAIRMAN. What is your cost, Mr. Frensdorf? Mr. FRENSDORF. There is a lot of detail to go into to get into that cost in a prison plant where we make so many deductions. For instance, only this year have we run our plant 50 weeks in a year in the day-practically 50 weeks-and then we run a night shift about 40 weeks, or 39 weeks. The overhead recedes as the number of hours per commodity increases, and I have not the exact figures on this year. However, we have, I think, come pretty close to getting it down to where the Stillwater people have it. I think we make that cost of production instead of 1 to 14 from 1 to 14. The CHAIRMAN. And in determining that, what elements do you take in? Mr. FRENSDORF. Well, we have to apportion to this department its share of maintenance of all kinds, such as hospitals, oculists, dentists, chiropodists, barbers, education, and entertainment. The CHAIRMAN. Do you include the wages of the people who are employed in the plant? Mr. FRENSDORF. Yes, sir. The CHAIRMAN. You pay them wages similar to those paid in Stillwater? Mr. FRENSDORF. I do not think we pay quite as high. We paid. out last year just about half of what they paid. The CHAIRMAN. Is your system substantially the same in regard to wages as that at Stillwater? Mr. FRENSDORF. The system is the same, but they have been able to be more liberal with their men than we have. We have only been operating along these lines for 5 years, and they have been operating for 20 years. We hope, however, to catch up with them. The CHAIRMAN. Do you like the system of paying the convicts? Do you think it is beneficial to the State and to the convicts themselves? Mr. FRENSDORF. Most assuredly. The CHAIRMAN. What are some of the benefits, Mr. Frensdorf, that come from that system? Mr. FRENSDORF. The very fact that any man must have an incentive. I do not think you can very well expect men to exert themselves to the extreme without some incentive. We use the same method of supporting the families. It is compulsory in many cases, in the cases of men who have been sent there for desertion and offenses of that kind. Mr. FISHER. You mean desertion of the family? Mr. FRENSDORF. Yes, sir; not from the Army. The CHAIRMAN. In cases of that kind you send the wages they earn directly to the family? Mr. FRENSDORF. Yes, sir. The CHAIRMAN. You do not give it to them? Mr. FRENSDORF. No; we try to be reasonable in that respect. If a man shows any desire to support his family and exert himself, we do not cut him off entirely from spending some money for his own comfort. The CHAIRMAN. Do you have the honor system at all? Mr. FRENSDORF. Oh, entirely. The smallest number that we have at any time on the honor system is one-eighth of our entire population. We have right at this time 123 men that live on farms right out in the open, like any other farmer, without a guard or a watchman, without a key, or lock, or chain, or gun. That number runs in summer, during the press of the season, to 285 men, but some of those are on the probation gang, and they have to come in at night. For one reason, we have not room enough to house them all. The CHAIRMAN. How do you like the working of the honor system? Mr. FRENSDORF. Oh, it is absolutely the only stepping-stone from the prison to the outside. The CHAIRMAN. Of course, I would like to go into that fully, but we have not time. Senator WADSWORTH. The witness at a previous session of the committee testified as to his relations with the Reguladora, as to the effect which the Reguladora would have on his facilities for purchasing. Can you go into that question? Mr. FRENSDORF. Well, our relations are the same as with everyone else, so far as that is concerned, so far as I know. When we want to buy sisal, there is only one place to procure it. Senator WADSWORTH. Did not you say something to the effect that you could not get it if you wanted it? I Mr. FRENSDORF. No. I do not think I could be understood as saying that we could not get it when we wanted it. I think that came about from the fact that I was asked why we did not make our prices. Senator WADSWORTH. My recollection of it was somewhat vague. Mr. FRENSDORF. Yes, and I said I did not know what the remaining sisal was to cost us for the balance of the season. Mr. FISHER. Was there a period when you had difficulty in- Senator WADSWORTH. I asked the question to refresh my own recollection. As I remember, there was some colloquy between yourself and some of the attorneys, and I gathered that you had some objections as to the method under which you are compelled to purchase. Mr. FRENSDORF. We do have serious objections, because we hate to be tied up and compelled to supply ourselves from one source. Senator WADSWORTH. How have you been purchasing in the past? Mr. FRENSDORF. In the same manner as the rest of them, through different avenues; almost the same men or concerns, Peabody, Hanson & Orth, Montes, and later, of course, of the Reguladora. Senator WADSWORTH. Did the quotations which you received from these private concerns vary as between them? Mr. FRENSDORF. Yes, sir; otherwise we would have submitted the proposition only to one concern. When we were in the market we asked them all to name us prices, suppositions. Senator GRONNA. Did you ever buy any from the International Harvester Co. or through the International Harvester Co. ? Mr. FRENSDORF. Never had a transaction in any way, shape or form, so far as I know, since I have been a member of the board. Senator GRONNA. Have you made the price for twine this year? Mr. FRENSDORF. No; we have not. At least, unless they have during the last few days. I have not heard from them. Senator GRONNA. Do you recollect what the price of sisal was last year? Mr. FRENSDORF. I think the price last year in car lots was 7 cents. Senator GRONNA. And that would be how much lower than the prices made by independent manufacturers? |