and who will be able to give to this committee useful information on the comparison between these two institutions and their methods? The CHAIRMAN. You refer to the Bureau of Markets? Mr. FISHER. I do. Mr. SPENCER. Might I, Mr. Chairman, just call Mr. Reed's attention to a letter which was written and which I think will refresh his memory on one of the questions I asked him? It is a letter dated January 7, 1916, addressed to the Minnesota State Prison, Stillwater, Minn. [Reading:] MINNESOTA STATE PRISON, Stillwater, Minn. JANUARY 7, 1916. GENTLEMEN: We confirm the telegram sent you yesterday, as per inclosed copy, advising another increase in the freight rates which we are compelled to pay for shipment of sisal from Progreso across the Gulf, and which consequently makes the delivered price to you higher, without, however, increasing the return to us. On account of the movement of sugar from Cuba and the West Indies, tonnage to New Orleans, Mobile and Galveston is becoming very scarce and freights are con sequently very firm. Nevertheless we will continue in the future as we have done in the past to make every effort to keep the delivered price of sisal at the lowest level possible; but it is, of course, impossible for us to say how much further the advance in freights may go before the sugar movement ceases. Even the present increase does not cover us on the basis of current rates of freight, and it is only by averaging our costs, taking old contracts together with new engagements, that we are able to name the price quoted you in our telegram. We believe, however, that this matter of increased costs due to higher freight rates is not a novelty to you, as the markets for other fibers have advanced considerably more than that sisal for similar reasons. Very truly, yours, COMISION REGUladora del Mercado de HENEQUEN. Senator GRONNA. What is the date of that? Mr. REED. What is the date of that? Mr. SPENCER. January 7, 1916. Mr. REED. I do remember it, since it is called to my attention. [After examining copy of letter.] Mr. SPENCER. And then, again, on December 1, 1915. [Reading:) MINNESOTA STATE PRISON, Stillwater, Minn. DECEMBER 1, 1915. GENTLEMEN: We hereby beg to notify all cordage and twine manufacturers that on and after December 1 we will make an extra charge of one-eighth cent per pound for sisal which we are ordered to deliver from stocks in this country. You will readily understand that this small additional charge of one-eighth cent does not compensate us for the additional cost of handling and warehousing, it being very much more to our advantage to make deliveries from ship's side, and we are taking this step simply because of the attitude of some manufacturers who delay placing their orders until their stocks are absolutely exhausted and they are in positive and immediate need of receiving further supplies which they then want shipped at once from our stocks. We are in a position to offer shipment from Progreso within two weeks after signing a contract, and if we fail to make deliveries as stipulated in any contract we stand ready to make delivery from stock without extra charge. We hope you will see the reasonableness of the measure advised in this letter, and will, by placing your orders a little in advance, not make it necessary for us to apply the additional charge on sales made to you. We are, Very truly, yours, COMISION REGULADORA DEL MERCADO DE HENEQUEN. Mr. REED. What is the date of that letter? Mr. REED. I do not recall that letter. However, it may have reached me in the accumulation of mail. Mr. SPENCER. I just wished to call your attention to it, because I was quite sure you had forgotten about it. Mr. REED. Yes. Mr. SPENCER. Then, on January 27. [Reading:] MINNESOTA STATE PRISON, Stillwater, Minn. JANUARY 27, 1916. GENTLEMEN: It is now about six months since this office began actively to conduct the sale of hemp in the United States for the sisal planters of Yucatan. It is our impression that we have been reasonably successful in supplying the needs of the cordage and twine manufacturer and in satisfying his legitimate wants. Certainly we have spared no effort to abolish the disadvantages under which the independent manufacturer formerly labored by placing all cordage and twine mills on the same basis of price, by endeavoring to supply to each the grade of fiber it most fancied, and in spite of the great difficulty in securing sufficient tonnage, by making shipments at such times and in such quantities as were called for. Nor has the price of sisal been advanced unduly.as you must admit by comparison with other fiber. We have given you in each case good and sufficient reasons for every advance as made, and with manila selling over 6 cents higher, and other fibers in proportion, it is unquestionable that sisal is the cheapest fiber on the market to-day. However, we realize that to satisfy every one is impossible, and we do not believe that we are doing impossibilities. We are therefore writing you to ask for suggestions. If you are satisfied with the way in which your sisal business is being handled by us, please do not be modest about telling us so; the only effect will be to encourage us to continue in the same manner. If you are not satisfied, for any reason whatsoever, tell us about it, and you may be sure at least of an earnest effort on our part to remedy any complaints you may have to make. Very truly, yours, COMISION REGULADORA DEL MERCADO DE HENEQUEN. Mr. REED. I remember that letter. Mr. FISHER. How did that last letter impress you? Mr. SPENCER. He replied to it, I think. Mr. REED. He has my reply to it. Mr. SPENCER. I might as well read that into the record while I have it. This is dated Stillwater, February 3, 1916. This is a photograph of it, Warden [exhibiting photograph of letter to Mr. Reed]. Mr. REED. I have a copy of it. Mr. SPENCER (reading): COMISION REGULADORA, 120 Broadway, New York City. STILLWATER, MINN., GENTLEMAN: We are in receipt of your favor of the 27th, asking for suggestions as to whether we are satisfied with the way in which our sisal business is being handled by you. We feel that the price of sisal fiber is too high, as well as the price of other grades, more so than is warranted under the present conditions. As far as our 'relations with you with regard to business which has passed between us, it has been satisfactory, and so far we have no complaint to make. You ask for suggestions. Under this head we might suggest that some arrangements be made whereby more care would be taken with the cleaning and packing of the sisal hemp, so that the manufacturers could be assured of receiving a more uniform lot of fiber. I think this would be of advantage not only to the manufacturers, but to the producers, as the manufacturer has to pay for something that is worthless to him, as well as the freight, commissions, etc. Considering this fact, the manufacturer could well afford to pay proportionately more. We have in the past six months received some bales of hemp which seemed as though dirt must have been shoveled into the center of the bales, and we would certainly be willing to pay a small premium to be assured of getting clean fiber. The above is not meant as any criticism on the hemp received from you, but as a general suggestion called for by your request. Yours, very truly, MINNESOTA STATE PRISON, The CHAIRMAN. We are very much obliged to you, Mr. Reed. STATEMENT OF MR. HENRY WOLFER, OF ST. PETERSBURG, FLA., FORMERLY WARDEN MINNESOTA STATE PENITENTIARY. The CHAIRMAN. Please state your name, residence, occupation, and what familiarity you have, if any, with the manufacture of binder twine? Mr. WOLFER. My name is Henry Wolfer, and I am living at St. Petersburg, Fla. My home is in St. Paul, Minn. When I was doing prison work, I lived in Stillwater, Minn. I have been living in St. Petersburg since I left there. I resigned the position as warden of the Minnesota State Prison in October, a year ago, or it will be two years the coming October. Mr. SPENCER. October, 1914? Mr. WOLFER. October, 1914. The CHAIRMAN. After how many years' service? Mr. WOLFER. Over 23 years. I started the twine plant in 1892, and commenced manufacturing twine; we manufactured it out of American hemp-the Kentucky rough hemp, which is broken out and put up by hand in Kentucky. The price that we were obliged to pay at that time averaged around $108 a ton. We discovered, in the process of manufacture, that there was such a large amount of waste, that in competing with sisal fibre we were unable to make the right kind of a showing. The movement for the establishment of the twine plant started, as Senator Clapp here well knows, as he was prominently identified in the State's affairs as the attorney general of the State, and the machinery had been contracted for before I was appointed warden. The reason given at that time for the purchase of soft fiber machinery for the manufacture of twine from soft fiber, such as American hemp, both the long, rough hemp and tows, was that they could not buy the long-line machinery, because there was a certain contract that had been entered into between the manufacturers of the long-line machinery, which is used in the manufacture of manila and sisal twines, with the old National Cordage Co. That was the original trust in that line in the country, although it later went to pieces. By the third year after we started the plant, the old National Cordage Co. had failed, and we were then able to get long-line machinery, and I had at once made recommendations to the legislature that if we were going to continue in the twine business, we should get longline machinery in order to compete. They made an appropriation and authorized us to go ahead and buy the machinery, which we did very promptly. By reason of the failure of the old National Cordage Co., who had a corner not only on machinery but also on the raw material, when this trust went up in smoke, as a result, in 1895 I bought sisal at the lowest point I have ever heard of it being bought in the United States, at 2 cents a pound. The CHAIRMAN. Delivered at your place? Mr. WOLFER. No; in New York. It was not only the lowest price at which we bought, but the best sisal we ever bought. After we put in the hard fiber plant we began to prosper, and we were able to compete and we were able to undersell the other manufacturers and give general satisfaction to the farmers of our State and the dealers, although at first there was a sort of a fight with the dealers. They tried to keep us out, and we were obliged to get out on the road. I went out myself into the field. I went out into the different towns and made my contracts, and wherever it was fought hard I got the farmers together and got club orders, and in that way forced ourselves into the market, and when they saw we were coming after them right along they began to deal with us until now; I think Mr. Reed has understated the amount that we have been selling. I know it did, during the time I was there, direct to the dealers, for at least threefourths of all the twine, and I do not know that I ought to say a larger percentage than that, which was sold direct to the dealers; that is, outside of what goes to the farmers in club orders and in small cash orders. The carrying on of this business covering a period of 23 years resulted in a saving to the farmers of the State of quite a large sum of money. I think that it is safe to say, and after careful investigation, the Federal Department of Agriculture made a report some years ago, and they claimed that the amount was, I think, rather exorbitant. They claimed 3 cents, but I think that is unreasonable. I think it is safe to say that they have been saved at least a cent and a half on the average right straight through. I do not think, taking from the time we began until the present time, it would average more than that. The practice in making prices all the time I was identified with the twine from the beginning up to the time I left there-and I might say that the law provides that the board of control and the warden, jointly, fix the prices. These different features are discussed and carefully considered, and as a result of the consideration, the prices are made. There are three conditions taken into consideration. The price at which the raw material has been purchased, the cost of manufacture, and, as nearly as possible, about the amount of money that the State desires to make in profit; and I might say, also, in this connection, that in fixing this price, the benefits have been divided as between the farmer, the dealer and the State, on about the same terms, of giving the farmers and the dealers about or a little better than one-half of the benefit, and the State the other. The State had, when I left there, about $2,000,000 profits that had accumulated in the conduct of this business, covering this period. That also takes into consideration the profits derived from the establishment of the farm machinery department. The first experimental machines was turned out nine years ago. The amount that is turned out from year to year since has grown at the rate of 33 per cent a year. It has grown quite rapidly. The increase in the twine has been gradual from the beginning. We started with a system of 100 spindles. When I left the institution we had 500 spindles; that is the amount they have there to-day. As a manufacturing capacity, without running any overtime or extra time or night time it is about 19,000,000 pounds. By running overtime it made as high as 22,000,000. The manner of selling, which was organized as early after our start as possible, has been to dispose of the very largest part of the product by direct correspondence from the office. This has been true with reference to collections also. The largest part of the product has been disposed of without using traveling men. The use of traveling men to take orders has been the result of later business introduced which is farm machinery. In order to facilitate the taking of orders farm implements and placing the twine so as to accommodate those handling the machinery, and to facilitate the business generally, and the collection-the taking of paper, the passing on credits, I might say, run as high as $2,000,000 per year. Our losses have been, during that whole time, not exceeding $1,500, and our clean up each year has been very satisfactory. There have been practically no losses. The paper overruns a slight length of time after November 1. We always take paper. Sometimes they run over 15 or 20 days, sometimes 30 days, or 60 days, and after the paper matures it draws 7 per cent interest. In all such cases the interest that has come in by reason of this overlapping has taken care of the loss 10 times over. So the losses have been practically nil. The CHAIRMAN. I do not quite understand your statement about the benefit to the American farmer of from 1 to something more than 2 cents as a result of this enterprise. Mr. WOLFER. That is to say, that the sales of the product of the prison compared with those of other independent manufacturers; that is, outside of the prison, they get that benefit. And, of course, this competitive feature, I suppose, naturally would have some effect upon their sales. I want to say here, without any desire to criticize my worthy successor, that I think his estimate of the amount of twine used in Minnesota is rather low. I would say, for the information of the committee and the gentlemen present, that it is nearer 25,000,000 than nineteen or twenty million. The CHAIRMAN. You do not make enough then for Minnesota? Mr. WOLFER. No, sir. The CHAIRMAN. Was it the idea of the institution when it was started, Mr. Wolfer, to supply the demands of your own State, or just furnish labor for your convicts? Mr. WOLFER. The idea as first expressed in legislation was that it was for the benefit of the farmers of the State. It was strongly maintained at the time the law was introduced that it was class legislation, under the assumption that appropriations would have to be made and the business carried on was going to be expensive to the State; it was not going to be self-supporting, and they were appropriating money from some taxpayers and putting it into the pockets of others. Our State being strongly agricultural, they have usually had the say up there, even when it comes down to the election of a United States Senator. [Laughter,] The CHAIRMAN. It was not found to be a loss though, I judge, from what you said? Mr. WOLFER. No, sir. |