The CHAIRMAN. You say you two gentlemen have entered into an agreement?

Mr. FISHER. I do not quite agree with that.

The CHAIRMAN. Mr. Spencer, have you your letter?

Mr. SPENCER. No, sir; but I will prepare it and give a copy to the clerk.

Mr. FISHER. I am serving you with that because you said you would like to have it put in writing.

Mr. SPENCER. Certainly.

Mr. FISHER. And I put it in writing to please you, that is all. Mr. SPENCER. It seems to me I am entitled to the same privilege. The CHAIRMAN. We would think so normally; but since you have not yours in writing

Mr. SPENCER. I would like to have Mr. Fisher have those statements here when he brings his witnesses, because I am going to ask the committee to wait until we get them.

Mr. FISHER. I will try to be quite as fair as the gentleman on the other side.

Mr. FRENSDORF. I ask the committee if they believe they have sufficient evidence of the farmers' interests in this matter, the consumers, or should I go ahead and produce more men representing the consumers?

The CHAIRMAN. The committee thinks they have enough on that

now.

Mr. WOLFER. If the committee want any points from men up in the Northwest, there are plenty who want to be heard.

The CHAIRMAN. We understand the feeling of the farmers, and if we need more evidence we will give you notice.

Mr. FRENSDORF. Would it be of any advantage to have a petition signed by a hundred thousand and presented to the committee?

The CHAIRMAN. I do not think so. It would cost the Government a good deal to print it, and it would not be read. We know you gentlemen are truthfully representing the sentiment of the farmers out there.

We will now stand adjourned subject to call.

(Thereupon, at 1.56 o'clock p. m., the committee adjourned to meet at the call of the chairman.)

IMPORTATION OF SISAL AND MANILA HEMP.

MONDAY, MARCH 6, 1916.

UNITED STATES SENATE,

SUBCOMMITTEE ON AGRICULTURE AND FORESTRY,

Washington, D. C. The subcommittee met at 11 o'clock a. m. pursuant to adjournment. Present: Senator Ransdell (chairman), Senator Gronna, and Senator Wadsworth.

Senator WADSWORTH. Senator, just tell us in your own way your connection with the binder-twine industry.

STATEMENT OF HON. FRANK S. TALCOTT, WARDEN NORTH DAKOTA STATE PENITENTIARY, BISMARCK, N. DAK.

Mr. TALCOTT. Well, I will speak from the standpoint of being the warden of the penitentiary of North Dakota, which makes me manager of the binding-twine industry there, and say that although it affects us in the purchase of the necessary sisal hemp that we use in the manufacture of twine, the question really is a very much larger one, affecting the consumers, the farmers, of the State, and that any monopoly or organization that would control the price of sisal hemp would be a hardship not only in the State of North Dakota, but in any agricultural State.

Our little plant there, running at maximum capacity, without working nights or overtime, which is what is called the "one-shop" plant, that is, a preparing room and 120 spindles, has a maximum output in the neighborhood of 3,000,000 pounds.

Senator WADSWORTH. Per year?

Mr. TALCOTT. Per year.

Now, in the State of North Dakota, in an average crop year, in order to take care of the grain, it requires in the neighborhood of from 25,000,000 to 30,000,000 pounds. So that the effect of the output of our little institution is only about one-ninth or one-tenth of the total necessary to be used, and that is what I mean when I say that whatever I can do with my testimony, or in the way of substantiating the testimony already given, is not alone from the standpoint of the manager of that little plant, but from the standpoint of saying a word in behalf of the farmers of the State in regard to the amount of twine that they have to purchase.

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To apply it directly as to the effect this year, we are rather fortunate in having made our purchases July of last year. If it were not for that, we would be obliged to raise the price of binder twine, that is, of standard twine, which is made wholly out of sisal hemp, 2 to 3 cents a pound; in other words, to put it this way, if that plant was run for profit for the State, the board of control and the management of the institution could resell the fiber and make a greater profit than we are making in manufacturing the sisal hemp into standard twine and selling it to the farmers in the form of twine.

The average price of sisal hemp, delivered in Bismarck, during the past 10 or 12 years and I might say I have in my pocket a copy of the contracts entered into by the institution for those years, if you care to have them filed, instead of my giving approximately from memory the average price is from 5 to 6 cents a pound delivered at Bismarck.

Senator WADSWORTH. Five and three-quarters to six cents a pound?

Mr. TALCOTT. Five and three-quarters to six cents a pound.
Senator WADSWORTH. During what period?

Mr. TALCOTT. The last 10 or 12 years. I can give you this definitely or file a statement from our contracts.

Senator WADSWORTH. Senator, I think that would be a nice thing to have, as the other manufacturers have agreed to do practically the same thing.

Senator GRONNA. I suggested to the warden that it would be a good idea to have the whole statement go in after he has made his oral

statement.

Senator WADSWORTH. On the purchases made during the last 5 or 10 years, what would the prices you paid be?

Mr. TALCOTT. The outside maximum would be 6 cents, on the average.

Senator WADSWORTH. Could you give us the names of the people you purchased from?

Mr. TALCOTT. Yes, I have that.

Senator WADSWORTH. That information we would like to have.

Mr. TALCOTT. To show what the present situation is, affecting the output this year, early in last year we purchased a great deal more sisal hemp than was needed for 1915 factory run, for the reason that it struck 3.84, delivered in Bismarck. Of course none of us have any right to speculate for the State's benefit, but examination immediately showed us that 3.84 was the lowest price it had been in 16 or 17 years, so it was easy to play safe on it, and we purchased really about what I at that time thought was a million pounds more than we would need in the 1915 run. The tremendous harvest up there last year becoming evident, we ran nights and overtime and used part of that, practically half of it.

This year the highest we have paid was 7.21. If we were on the market to-day to buy sisal hemp it would cost us delivered in Bismarck 7.71.

If you would allow me to digress a little on that point a moment here is the situation: We are meeting Minnesota in its price, only with a little different system of discounts. The freight rate from Gulf ports-Senator Gronna I want you to kindly take this matter up for our people-to Stillwater is 36 cents a hundred; the freight to Bismarck, 400 miles farther, is 71 cents a hundred on sisal hemp,

Senator GRONNA. It seems to be a very high rate.

Mr. TALCOTT. The prices that we are selling at, is that of any interest to you?

Senator WADSWORTH. Yes.

Mr. TALCOTT. We are selling standard twine at minimum price, which is 8 cents, in carload lots, with a quarter of a cent discount for cash on purchases of 3,000 pounds or more, payable on or before October 1, which will really cover conservatively four-fifths of our total output, affecting that particular grade of twine. The manila, 600foot twine, we are selling at 11 cents, with the same discounts in carloads, and cash discounts; the pure manila we are selling at 12 cents, and the same discounts apply.

If you care to have me enter into manufacturing costs, does that enter into this question?

Senator WADSWORTH. Yes.

Mr. TALCOTT. Referring to the manufacturing cost of the twine, outside of the raw material and supplies which enter into the manufacturing element, the State law affecting the various penitentiaries has quite an effect on the price of twine. I will explain what I mean by that: In our State the prisoners are paid a per diem of from 10 cents to 25 cents a day, dependent upon the efficiency of their labor. We have but two industries connected with the institution, the twine plant and a brick yard, the latter of which runs a very short part of the year on account of climatic conditions, which prevents our running it the year around.

The law provides that all of the prisoners are paid their per diem, as fixed by the warden, out of the proceeds of the twine plant; in other words, wherever the prisoner may be working, in carrying on the daily life of the institution, whether it be in the kitchen or in the various departments, such as the laundry or the shoe shop, or on repair work, or whatever it may be that becomes necessary in carrying on the daily life of the penitentiary, wherever these prisoners are employed, they are paid out of the proceeds of the twine plant, which necessarily increases the manufacturing cost above that which would be required if only the men employed in the twine plant were paid by the twine plant.

Then, again, it costs us a little bit more than in a larger institution, 'for the reason that the overhead charges are proportionately a little greater in any small manufacturing industry.

The manufacturing cost for the last six or seven years has been from a cent and a half a pound to 1.8 cents, the increase being due to law which I have just referred to covering the compensation of the prisoners.

There is another question which enters into it with us: This is our own little private matter, and I have no objection to stating the facts in interest, but do not let me bore you.

Senator WADSWORTH. It is of interest, and just what we are looking into.

Senator GRONNA. We are very glad to have it.

(At this point Chairman Ransdell reached the room.)
The CHAIRMAN. How many operators have you?
Mr. TALCOTT. About 80 men operating in the plant.
The CHAIRMAN. When was it first started?

Mr. TALCOTT. It started 16 years ago. That was about what I was coming to, Mr. Chairman, and at that time the State was bonded for the funds to establish the plant, both as to the erection of buildings and the purchase of machinery and the raw material.

Two years ago the last of these bonds were taken up, and in the 16 years the plant has paid for itself, although furnishing the twine to the farmer at greatly reduced prices, in the last year or two at an estimated profit, when the price was fixed, of from three-quarters to a cent a pound, and the little plant stands there to-day, at a conservative appraised valuation, including material on hand and manufactured products, of about $400,000, without owing a cent, and cash on hand with the State treasurer.

In the development of the industry it seemed wise that the twine plant should be rather in the nursery stage, and that the penitentiary, through its appropriations, should help carry it and nurse it along. Now that it is entirely free from debt-I am referring to this labor proposition in particular-in other words, the guards were not charged to the twine plant for the first few years, but only the skilled operators. Now everything in connection with the twine plant in every way, inasmuch as it is a revenue-producing industry, is charged directly to it, and that of course is what has increased our cost of production from about 1 to 1.8 cents.

Senator WADSWORTH. Do you charge off anything for depreciation? Mr. TALCOTT. We have never charged off anything for depreciation.

Senator WADSWORTH. Or for interest on the money appropriated to build the plant and buy the machinery?

Mr. TALCOTT. No, sir; it simply stands there at the original appraised valuation, and the present value of the raw material and the manufactured product. The appraised valuation of the buildings and machinery is approximately $80,000.

The CHAIRMAN. Has that been paid back by the earnings?

Mr. TALCOTT. Absolutely. It stands there to-day, as I say, entirely paid for-an asset to the State.

The CHAIRMAN. And about $400,000 on hand in plant, twine sisal, and cash?

Mr. TALCOTT. That is it; yes, sir.

The CHAIRMAN. That is what I understood you. I am surprised at the small number of men you say you have engaged in that plant. Mr. TALCOTT. Eighty.

The CHAIRMAN. I understood you to say 18.

Mr. TALCOTT. We only have a one-shop plant and just about 80 employees, sometimes running from 75 to 85. Eighty is about the average in the shop.

The CHAIRMAN. What percentage of the needs of your State do you supply?

Mr. TALCOTT. I referred to that. It takes from 25,000,000 to 30,000,000 pounds to harvest a crop in an average crop year, and our maximum output, without running nights and overtime, will be about 3,000,000 pounds. Last year we manufactured and sold 3,200,000 pounds.

The CHAIRMAN. A little over 10 per cent of what you need, you make?