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Full text of "Evidence study"

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NATIONAL RECOVERY ADMINISTRATION 

AKH 8 1936 — 



DIVISION OF REVIEW 



EVIDENCE STUDY 
NO. 2 

OF 



THE BOOT AND SHOE MANUFACTURING INDUSTRY 



Prepared by 

WILLIAM P. FALLON 



October, 1935 



PRELIMINARY DRAFT 
(NOT FOR RELEASE: FOR USE IN DIVISION ONLY) 



THE EVIDENCE STUDY SERIES 

The EVIDENCE STUDIES were originally planned as a means of gathering 
evidence bearing upon various legal issues which arose under the National 
Industrial Recovery Act. 

These studies have value quite aside from the use for which they were 
originally intended. Accordingly, they are now made available for confidential 
use within the Division of Review, and for inclusion in Code Histories. 

The full list of the Evidence Studies is as follows; 



1. Automobile Manufacturing Ind. 

2. Boot and Shoe Mfg. Ind. 

3. Bottled Soft Drink Ind. 

4. Builders' Supplies Ind. 

5. Chemical Mfg. Ind. 

6. Cigar Mfg. Industry 

7. Construction Industry 

8. Cotton Garment Industry 

9. Dress Mfg. Ind. 

10. Electrical Contracting Ind. 

11. Electrical Mfg. Ind. 

12. Fab. Metal prod. Mfg. , etc. 

13. Fishery Industry 

14. Furniture Mfg. Ind. 

15. General Contractors Ind. 

16. Graphic Arts Ind. 

17. Gray Iron Foundry Ind. 

18. Hosiery Ind. 

19. Infant's & Children's Wear Ind, 

20. Iron and Steel Ind. 

21. Leather 

22. Lumber & Timber Prod. Ind. 



23. 

24. 
25. 
26. 
27. 
28. 
29. 
30. 
31. 
32. 
33. 

1 - • 

36. 
37. 
38. 
o~j, 
40. 
41. 
42. 
43. 



Mason Contractors Industry 

Men's Clothing Industry 

Motion picture Industry 

Motor Bus Mfg. Industry (Dropped) 

Needlework Ind. of Puerto Rico 

Painting & paperhanging & Decorating 

Photo Engraving Industry 

Plumbing Contracting Industry 

He tail Pood (See No. 42) 

Retail Lumber Industry 

Retail Solid Fuel (Dropped) 

Retail Trade Industry 

Rubber Mfg. Ind. 

Ruboer Tire Mfg. Ind. 

Silk Textile Ind. 

Structural Clay Products Ind. 

Throwing Industry 

Trucking Industry 

Waste Materials Ind. 

Wholesale & Retail Food Ind. (See No. 

Wholesale Fresh Fruit & Veg. 31) 



In addition to the studies brought to completion, certain materials have 
been assembled for other industries. These MATERIALS are included in the series 
and are also made available for confidential use within the Division of Review 
and for inclusion in Code Histories, as follows; 



44. Wool Textile Industry 49. 

45. Automotive parts & Equip. Ind. 50. 

46. Baking Industry 51. 

47. Canning Industry 52. 

48. Coat and Suit Ind. 53. 



Household Goods & Storage, etc. (Drop-- 
Motor Vehicle p L etailing Trade Ind, ped) 
Retail Tire & Battery Trade Ind. 
Ship & Boat Bldg. & Repairing Ind. 
Wholesaling or Distributing Trade 



L. C. Marshall 
Director, Division of Review 



CONTENTS 



Page 



Foreword 1 

CHAPTER I - DESCRIPTION AND SCOPE 2 

Definition, of the Industry 2 

Historical Background 2 

Operations of the Industry 3 

Total Number of Establishments 4 

Size of Establishments 4 

Members of the Industry 

Classified by Size 5 

Number of Establishments 

by States 5 

Members of the Industry 

Having Plants in More Than One State 6 

Capital Investment 6 

Number of Failures 7 

Financial Condition 7 

Corporation Income Tax 

Re turns Data 7 

Dun and Brads tree t Data 8 

National City Bank Data 8 

Standard Statistics Data 8 

Value of Production 9 

Volume of Production 1© 

Productive Capacity 10 

Competing Industry 11 

Use of Product 11 

CHAPTER II - LABOR STATISTICS 12 

Total Number of Employees 12 

Seasonality of Employment 12 

Number of Employees by States 13 

Total Annual Wages 13 

Annual Wages by State s 13 

Percentage Labor Cost Is 

of Value of product 14 

Average Hourly Wages and 

Hours Worked Per Week 14 

Weeks Worked Per Year 15 

Employees Under 16 Years of Age 15 

Other Relevant Wage-Earner Data 16 



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CONTENTS (Cont'd) 

Page 

CHAPTER III - MATERIALS: RAW AND SEMI-PROCESSED 17 

Principal Materials Used 17 

Total Cost of Materials * 17 

Relation of Cost of Materials 

to Total Value of Product 18 

Source of Raw Materials 18 

Machinery and Equipment 19 

CHAPTER IV - PRODUCTION AND DISTRIBUTION 2C 

Value and Volune of Production 

in Leading Production States 20 

Geographical Shift in production 22 

Shipments Out of Each State 22 

Methods of Distribution , 22 

Exports , 24 

Nature of Advertising 24 

Trade-Marks 24 

Evidence of Interstate Commerce 24 

Standard Trade and Securities 24 

CHAPTER V - TRADE PRACTICES 25 

Unfair Practices Prior to Code 25 

Unfair Trade Practices 

Under the Code 25 

Spread of Unfair Practices 25 

National Price Structure 26 

CHAPTER VI - GENERAL INFORMATION ON THE INDUSTRY 27 

Trade Associations 27 

Labor Organizations 27 

Effect of Code 29 

Imports 29 

Foreign Competition 30 

List of Experts 30 



~o0o~ 



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TABLE I 

TABLE II 

TABLE III 

TABLE IV 

TABLE V 

TABLE VI 

TABLE VII 

TABLE VIII 

TABLE . IX 

TABLE X 

TABLE XI 

TABLE XII 

TABLE XIII 



TABLES 

Page 

Establishments Classified "by Value 

of Production per Establishment, 

1929 5 

Number of Establishments s by Leading 

States 6 

lumber of Failures and Liabilities 7 

Value of Production, by Principal 

Product Groups 9 

Volume of Production, by Principal 

Product Groups 10 

Estimated Average Number of Employees, 

by Months, 1933 and 1934 12 

Number of Wage Earners, by principal 

Producing States 13 

Annual Wage payments by States 14 

Average Hours Worked and Average 

Hourly Earnings, in 16 States, 

1930 and 1932 15 

Value of Production of Principal 
Eaw Materials Used, by principal 
Kinds 18 

Value of Production by Principal 

States 20 

Volume of Production by Principal 

States for Specified Years, 

1919-1934 21 

Relative Importance of Different 

Types of Distributing Agencies, 1929 22 



-oOo- 



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-lr 



[■HE BOOT' AND SHOE l.AKTJFACTURING- INDUSTRY 



Foreword 



Published government data for this Industry are relatively abundant, 
and a large part of the statistical information contained in this report 
comes from government sources. Chief among these are the "biennial and 
monthly data on manufacturing as prepared "by the Bureau of the Census, 
the distribution data of the Wholesale and Retail Censuses for 1939 and 
1933, the price and labor data of ±he Bureau of Labor Statistics, and the 
export and import statistics compiled by the Bureau of Foreign and Domestic 
Commerce. These data have been supplemented, where necessary, by those of 
private agencies. 

As explained in Chapter I, the Code and Census classifications are 
virtually comparable. Except for the usual qualification that the biennial 
Censtis data do not include establishments having an annual production of 
less than $5,000, and for other minor limitations which are noted at the 
appropriate points, the Census data are considered applicable to the Industr; 
as codified. 



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~2~ 
Chapter I 

DESCRIPTION AED SCOPE 



Definition of the Indus 1 try 

The Code for the Boot and Shoe Manufacturing Industry defined the 
Industry as, 

". . .comprising the manufacture of hoots, shoes, sandals, slippers, 
moccasins, leggings, over-gaiters, and allied footwear chiefly of 
leather, and also footwear of canvas 1/ and other textile fahrics 
* . . • 

The Census of Manufactures classification "Boots and Shoes, Other Than 
Rubber" covers establishments, 

"...engaged in the manufacture of hoots, shoes, sandals, slippers, 
moccasins, leggings, over-gaiters, and allied footwear, chiefly of 
leather, although footwear made of canvas l/ and of other textile 
fahrics is also included," 

With minor qualifications, due chief ly to the fact that the Census of 
Manufactures information does not cover estahlishraents having an annual 
production valued at less than $5,000, the Census data may he considered to 
describe the Industry as defined in the Code. 

Historical Background 

The Shoe Industry in America had its heginning at Salem, Massachusetts, 
where two expert British shoemakers landed in 1629. Others followed, and 
gradually little shoe shops were established in towns north and south of 
3oston. Soon after the Revolution, some enterprising shoemakers "began to 
employ others to work for them. During this period, the shoes were made by 
hand and usually to order for the individual customer. 

The middle of the nineteenth century marked the advent of machinery in 
the Industry. It had been the custom to attach heels to shoes with wooden 
pegs, and in 1833 a machine was invented to joint the outer sole to the 
inner sole "oy means of these wooden pegs. This machine came into general 
use in 1857. About the same time, the Howe sewing machine to sew the uppers 
together was introduced. In 1361, McKay developed a machine, invented some 
years before, which sewed the sole through the inner sole. This machine did 
more than any other to modernize shoe manufacturing. 



1/ There is a slight discrepancy between the Code definition of the Industry 
and the Census classification cited regarding rubber-soled footwear, 
particularly when made of canvas or other textile fabrics, but this does 
not seriously impair the conroarability of the two classifications. 



3760 



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Between 1871 and 1875, Goodyear developed the method of sewing a welt, 
or narrow strip of leather, to the upper by the use of a curved needle, and 
then attaching the outersole to the welt. The Goodyear welt method has 
since "become the most itniversally used in the Industry and produces a flex- 
ible, serviceable type of shoe. 

The United Shoe Machinery Corporation was formed in 1905, bringing 
together under one management the manufacture of the different types of shoe 
machinery. Today it dominates the shoe machinery field. Its machinery is 
leased to all boot and shoe manufacturers on the same terms, which is one 
of the reasons why the 3oot and Shoe Industry is made up of so many small 
units and is so highly competitive. As a result of this keen competition, 
prices on the finished product are low considering the value of the raw 
material and the skill required,]./ 

Another important development occurred in the Industry in 1929 when the 
Compo Shoe Machinery Corporation was organized for making and leasing machin- 
ery for cementing soles to shoe uppers. 

Operations of the Industry 

Leather is the principal material used in the manufacture of boots and 
shoes not made of rubber. The hides from which the leather is made comes 
from numerous states, particularly those west of the Mississippi River, and 
are tanned, curried, and finished in 30 states. Practically all of the sole 
leather and most of the upper and lining leather is produced in this country, 
but some is imported from European and other countries. Most of the imports 
are fancy upper and lining leathers. 

The vast majority of the leather is purchased by the boot and shoe 
manufacturers either direct from the tanning companies or from their sales 
branches or subsidiaries. The -principal leather markets of the United States 
are Boston, Chicago, New York, Philadelphia, and Cincinnati, probably in the 
order named. There is also a "middleman" who makes (from substances other 
than rubber) uppers, soles, top lifts, heels, tips, and other cut stocks, 
which he sells to the manufacturers of boots and shoes. The shoe manufac- 
turers purchase most of their other materials, such as rubber heels, pegs, 
stay, staples, counters, shanks, wooden heels, fibre, composition, and 
textile materials, show lasts, patterns, and welting, direct from the factorie: 
specializing in these supplies. On the other hand, some few boot and shoe 
manufacturing firms, following policies of integrating their businesses, 
have tanning facilities for a large percentage of their leather requirements 
and also prodn.ee most of the necessary supplies within their organizations. 

Shoe manufacturers in 1929 sold 44,8 per cent of the total value of 
their products direct to the retailers, 26,4 per cent through their own 
wholesale branches, and 6,2 per cent through their own retail outlets. Onljr 

1/ Few buyers realize that it takes two weeks to make a pair of shoes 

properly and that the average shoe passes through nearly two hundred hands 
in the making, ITo two pieces of leather are alike and various of the 
operations require skilled worlonen. 



8760 



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about 0,8 per cent of all boots and shoes in the United States were sold 
direct to users by the manufacturers, and 21.8 per cent were sold to outside 
wholesalers, who in turn sold to retailers and consumers. ( See Table XIII, 
Chapter IV, below.) 

Total lumber of Establishments 

The manufacture of boots and shoes other than rubber has become one of 
the nation's most important manufacturing industries. According to the Census 
of Manufactures it ranked seventh in 1931 in number of wage earners and six- 
teenth in value of product. As shown in Table I below, the biennial Census 
reports indicated a total of 1,341 establishments in 1929, 1,156 in 1931, 
and 1,132 in 1933. The 1934 figures which, as explained in footnote a/ of 
Table I is not strictly comparable with the totals for the three other years, 
is 974, This decline in the number of establishments is attributed to the 
abandonment of unprofitable units, failures, and consolidations. It should a? 
so be noted that since the Census data, do not cover establishments having an 
annual production of less than $5,000, establishments included in the 1929 or 
even the 1931 Census reports might be excluded from later ones because of de- 
clines in the value of their annual outputs. In 1929 about 750 operating com- 
panies owned the 1,341 establishments, whereas during 1934 around 700 concern: 
owned the 974 shoe-producing units. 1/ 

Size of Establishments 

Most of the Industry's establishments sre. relatively small and independ- 
ently owned™ Approximately one-fourth of the establishments have no more thai 
20 workers, more than one- third employ fewer than 50, and at least one-half 
have fewer than 100 wage earners. 2/ In most of the ohter plants, the number 
of employees ranges up 1,500. 

The Census of Manufactures for 1929 shows a classification of establish- 
ments according to value of production as shown in Table I below. It will be 
seen that nearly half the total number of establishments has an annual produc- 
tion of less than $250,000. 



1/ Number of companies estimated by National Boot and Shoe Manufacturers' 
Association; see Table I below for number of establishments. 

2/ These generalizations ere based on figures in Volume I of the Census of 
manufactures for 1929. 



8760 



—5— 

TABLE I 

Boot and Shoe Manufacturing Industry 

Establishments Classified "by Value of Production 
per Establishment, 1929 



Value of Production 
per Establishment 



lumber of 
Establishments 



Total Value 
of Production 
( Thousands) 



$5,000 - 19,999 

20,000 - 49,999 

50,000 - 99,999 

100,000 - 249 } 999 

250,000 - 499,999 

500,000 - 999,999 

1,000,000 - 2,499,999 

2,500,000 - 4,999,999 

5,000,000 and over 

Total 



110 
141 
132 
245 
238 
215 
182 
56 
22 

1,341 



$1,238 

4,791 

9,507 

41,300 

86,194 

151,152 

286 ,373 

187,206 

198,162 

$965,923 



Source: Census of Manufactures , 1929, Volume I. Census data do not cover es- 
tablishments with an annual production of less than $5,000. 

liombers of the Industry Classified "oy Size 

Ho accurate data are available which can be \ised as a basis for classify- 
ing the members of the Industry according to the value or distribution, or 
the number of establishments which they own or control. 

However, the annual output of the individual companies ranges from a feu 
thousand pairs, valued at less: than $5,000, to 45,000,000 pairs and over, 
valued at more than $60,000,000.1/ The number of factories owned or controlle 
by boot and shoe manufacturing ooncerns varies from one to almost 100. Sever 
al of the larger concerns owning more than one factory employ thousands of 
workers. The foremost of all, from standpoint of size, has almost 100 -olantc 
and employs about 30,000 men and women. 

Number of Establishments by States 

The Industry's establishments are located in 30 states and are, in both 
large and small communities. 

The number of shoe-making establishments in each of the nine leading 
producing states is shown in Table II, below. The states shown in this tabic 
were the location of 89.6 per cent of the total number of establishments in 
1929, 90.3 -oer cent in 1931. 90.2 -oer cent in 1953 and 88.1 ner cent in 1954. 
1/ Based on an examination of reports on large shoe companies published in 
Standard Statistics Co., Inc., Standard Corporation Records . 



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TABLE II 

Number of Establishments, 

b; _ Leading States a/ 



State 





Pumbe 


;r of 


Es tabli shine nt s 




1929 


1? 


)31 


1933 


1934 


1,341 


1, 


,156 


1, 


,132 


n *i n 

(974)b/ 


65 




60 




60 


47 


42 




33 




51 


48 


436 




397 




389 


211 


61 




49 




49 


76 


73 




63 




56 


59 


323 




265 




246 


loo 


43 




36 




33 


35 


102 




83 




91 


69 


57 




47 




46 


43 



U. S. Total 



Illinois 

Maine 

'. las sachu.se 1 1 s 

Missouri 

Mew Ham shire 

New York 

Ohio 

Penns3"lvania 

Wisconsin 

Other States 139 112 111 97 

Source: Data for 1929, 1931, and 1953 from Census of Manufactures , "Boots am 
Shoes, Other Than Rubber;" 1934 total from Bureau of Census tabula- 
tion for NRA, Research and Planning Division, giving data for the 
week ending October 3, 1934. 

a/ The biennial Census data do not include establishments with an annua" 
production of less than $5,000. The 1934 figures cover about 90 per 
cent of the Industry's total production. 

b/ This total is the average of the revised monthly figures of the Bur- 
eau of the Census, which cover about 99 per cent of the Industry's 
production. 

Members of the Industry Having Plants in More Than One State 

An examination of the Shoe and Leather Re-oortei- Annual for 1933 reveals 
that 23 shoe-manufacturing companies had factories in more then one state, 
as follows: 

22 companies owned 59 factories in 2 states 

S " » 14 " " 3 " 

1 ii ii i2 " " 4 ,r 

2 ii ii 44 ii ii 5 " 



Total 23 129 

Capital Investment 

Due to the practice of leasing machinery, the plant investment required 
in the Boot and Shoe Manufacturing Industry is relatively small, and most 
companies are conservatively capitalized. Estimates of capital investment 
in the Industy vary widely because of the conditions under which it operates. 
8760 



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The national Boot and Shoe Manufacturers' Association places the capital 
investment, i. e«, stock and surplus as reported on the balance sheets, less 
outside investments, at $400,000,000 for the years 1929, 1931, 1933, and 1934. 
The New York Trust Company, in its "Index" of January, 1934, stated with refer- 
ence to the Boot and Shoe Industry. "In properties and other equipment, the 
companies have invested approximately $175,000,000 figure remaining fairly 
stable, since depreciation or obsolescence on this type of investment is prop- 
erly figured at lower rates than is customary when machinery is included in 
the total of fixed investment," 

Number of Failures 

A special tabulation by Bun and Bradstreet contains the following infor- 
mation on failures among boot and shoe manufacturers: 

TAELE III 

Number of Failures and Liabilities 



Year Number of Amount of 

Failures Liabilities 

1929 " " 31 '" $1,384,429 

1931 67 2,075,435 

1933 38 1,987,109 

1934 43 ' 1,298.174 

Source: Bun and Bradstreet, special tabulation for NBA, Research and Planning 
Division, May, 1935. 

Financial Condition 

Corporation Income Tax Returns Data - That the average profit is snail 
in relation to the volume of business rnd to capital invested in the Boot and 
Shoe Manufacturing Industry, is indicated by a summary of corporation income 
tax returns which gives the average for the years 1926 to 1930, inclusive. Of 
1,255 concerns engaged in the production of boots, shoes, cut stock, and find- 
ings, 669 reported total profits of $51,149,000, representing 6.4 per cent rer- 
turn on their volume of sales before Federal ta;:es, or about 5.6 per cent afte: 
deduction of Federal taxes. Firms numbering 586 reported a total loss of $16,- 
814,000, equivalent to 7*3 per cent 'of their volume of sales. 

The five years' average profit for all reporting concerns represented a 
net profit of sales before deduction of Federal taxes, or approximate^ 8.5 
per cent on the invested caoital. After Federal taxes were deducted from the 
profits of concerns reporting a net income, the total net profit amounted to 
about 6.9 per cent of the total invested capital. 1/ 

Income tax returns of 1,127 comparable concerns for 1932 reveal that 298 
had a total net income of $15,167,000, whereas 829 reported an aggregate defi- 
cit of $26,912,000. 2/ Unfortunately the data which would permit computation 
of the -oercentage return r>n volume and invested capital are not available. 



l/ Token from statement made by J. F. KcElwain at public hearing in' 
September, 1933. 

2/ Taken from letter of March 14, 1935, from Office of Commissioner of In- 
ternal Revenue to the National Boot and Shoe Manufacturing Association, 



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Dun and Brads t re et Data - Although 'both gross and net income have diminished 
as a result of lower prices, "boot and shoe manufacturers, as a whole, have not 
fared so badly during the depression as most other industries. Production has 
been well sustained and lower costs of materials and increased efficiency of 
operation have tended partially to offset the trend toward reduced profits. 
Nevertheless, a survey completed "by Dan and Brads tree t early this year shows 
that though the shoe output of the factories in the United States ir 1934 and 
only 1.2 per cent under the 1929 total, profits in these two years were share- 
ly out of alignment. In fact, profits of some of the large manufacturers were 
smaller in 1934 than in 1933. This decrease was attributed in uart to Co6-e 
provisions which added to production costs, "but a more serious factor was the 
collapse in hide and leather prices during the early part of the stunner. 

National City Bank Data - The National City Bank of Now York, in its 
Monthly Letter of April, 1935, has summarized the profits of a representative 
sample of all branches of the Shoe Manufacturing Industry for the years 1953 
and 1934. This shows that the net profits of 18 concerns after depreciation, 
interest, taxes, and other charges end reserves, but before dividends, increas- 
ed from $12,359,000 in 1933 to $13,408,000 during 1934, or 8.5 per cent, while 
the net worth, that is, book value of outstanding preferred and common stock 
and surplus account at beginning of each year, declined from $180,618,000 to 
$169,243,000, or 6.3 per cent. The per cent return on net worth was 6.C in 
1933, compared with 7.9 in 1934. 

Standard Statistics Data - Standard Trade and Securities for May 22, 193 
present operating comparisons for the three largest shoe manufacturers. 7,1th 
regard to net income it gives the following date: 



Index of Net Income 



(1928 = 100) 



1929 



1931 



1933 1954 



International Shoe Company 
Endicott Johnson Corporation 
Brown Shoe Company 
Composite 



108.2 61.9 

77.0 78.2 

119.9 93.4 

101.7 77.8 



57.7 57.0 

59.3 60,2 

99.0 78.5 

72.2 65.2 



Ratio of Net Income to Sales 
(Per Cent) 



International Shoe Company 
Endicott Johnson Corporation 
Brown Shoe Company 
Composite 



12.9 11.2 

4.1 5.3 
4.7 5.1 

7.2 7.3 



12.9 11.6 

4.3 3.9 

6.0 4.3 

7.7 6.6 



Ratio of Net for Fixed Charges 
to Invested Capital 
(Per Cent) 



International Shoe Company 
Endicott Johnson Corporation 
Brown Shoe Company 
Composite 



17.3 


9.1 


10.9 


11.9 


6.8 


7.8 


6.6 


6.6 


12.1 


8.7 


9.4 


7.3 


12.1 


8.5 


9.0 


8.6 



8760 



Val u e of Production 

The total value of products for the entire Industry l/ decreased from 
about $965,923,000 in 1SS9 to about $553,425,000 in 1933. The total for 1934 
is estimated at $ 600, 000 ', 000, as explained in the source for Table IV, which 
gives the value oi production by principal product groups for the years 1929, 
1931, 1933, and 1934, It will be noted that since this breakdown is not 
available for the group of products "not normally belonging to the Industry" 
the totals given in tlrj.s Table are somewhat smaller (as explained in footnote 
d/) than the total value figures for all products given just above, 

Women's shoes accounted for nearly half the total value of production 
in 1929 and 1933, and mens 1 shoes were the next most important group. The 
decline in value between these two years was greatest for the youths' and. 
boys 1 group, the value of which dropped more than 50 per cent. 

TABLE IV 

Value of Production by Principal Product Groups a/ 

(in thousands) 



Product Group 


1929 




1931 




1933 




1934 


Men' s 


$312,511 




$203,503 




$171,243 




£/ 


Youths 1 and Boys' 


49,091 




31,112 




22,625 




1/ 


Women's 


432,262 




295,063 




238,119 




1/ 


Misses' and Children's 


77,707 




57,347 




45,517 




5/ 


All Others c/ 


91,291 




65,514 




74,629 




\l 


Total 


962,362 


SJ 


652,545 


4/ 


552,133 


&/ $ 


600,000 


Source: Data for 1929, 


1931, and 1933 : 


from Census 


of 


Manufacture 


is, " 


Boots 



and Shoes, Other Than P.ubber. " The 1934 figure is estimated from 
pairage production as reported in the monthly releases of the Bureau 
of the Census covering 99 per cent of the Industry's total produc- 
tion, and the Bureau of Labor Statistics wholesale price index for 
"Boots and Shoes" as published in its bulletins Wholesale Prices . 

a/ The biennial Census data do not include establishments with an 
annual production of less than $5,000. 

by Data not available. 

c/ Consists of infants', athletic and sporting, canvas and other tex- 
tile fabrics footwear, and slippers for housewear, leggings, over- 
gaiters, puttees, and ir 0ther footwear." 

&/ Does not include value of other products (not normally belonging to 
the Industry) and receipts for contract work. These items amounted 
to $3,060,666 in 1929, $1,334,898 in 1931, and $1,291,936 in 1933. 

l/ Including value of other products (not normally belonging to the Indus- 
try) and receipts for contract work. 



8760 



-10- 

Volume of Productio n 

It is important to note that in all parts of the world shoemaking is one 
■branch of the consumer goods industries which, although experiencing price 
declines, has presented a record of relatively constant production during the 
recent years of economic adversity. As shown in Table V, "below, the total 
number of pairs of "boots, shoes, and slippers produced was 371,208,000 in 
1929, 316,057,000 in 1931, 349,573,000 in 1933, and 357,119,000 in 1934, 
Table V also presents data for the principal product groups from which, it may 
"be seen that on a volume as well as a value "basis the most important group 
consisted of women's shoes, with the men's group occupying second place, 

TABLE V 

Volume of Production, "by Principal Product Groups a/ 
(in Thousands of Pairs) 

Product Group 1929 1931 1933 1934 

Men's 100,747 79,152 87,022 91,387 

Youths' and Boys' 22,616 19,524 17,001 17,348 

Women* s 136,010 115,261 126,985 133,045 

Misses' and Children's 44,206 42,352 44,805 34,521 

All Others b/ 67,629 59,768 73,760 80,818 

Total 371,208 316,057 349,573 357,119 

Source: Data for 1929, 1931, and 1933 from Census of Manufactures , "Boots 

and Shoes, Other Than Rubber; " the 1934 data from monthly rotoprint 
releases of the Bureau of the Census, 

_a/ The "biennial Census data do not include establishments with an 

annual production of less than $5,000. The 1934 figures cover about 
99 per cent of the Industry's total production, 

b/ Consists of infants', athletic and sporting, canvas and other tex- 
tile fabrics footwear, and slippers for housewear, 1933 includes a 
group "not reported in detail." Quantity figures are not available 
for leggings, overgaiters, puttees, and "other footwear", the values 
of which are included in Table IV. 

Productive Capacity 

Burdensome over-capacity and production beyond actual consumptive re- 
quirements is largely non-existent. In fact", it is understood that, due to 
the shortening of hours under the Code, the demand for key shoe machinery has 
recently been greater than at any time during the past 10 or 12 years. 

Rental payments on the machinery hired are based upon the output of the 
machines, and this is an important factor in holding production in line with 
consumption. Inasmuch as rental payments would rise proportionately with 
production, there is little incentive to manufacture shoes for stock, and a 
policy has been fostered of producing largely against orders. Moreover, be- 
cause of the seasonal character of the Industry, practically the entire in- 
stalled capacity is needed to meet the normally heavy demand during the 

8760 



-ii- 

spring and fall peaks, while there is little or no excessive production during 
the slow "between— season intervals. 

Late in 1933, a past president of the National Boot and Shoe Manufactur- 
ers' Association completed a careful study 1_/ of production and machine capa- 
city in the Industry during the years 1922 to 1933, inclusive. By taking the 
peak month's production for each year and raising it to an annual "basis, he 
arrived at an average production capacity of 396,000,000 pairs per year. He 
also obtained a production estimate "by adding the estimated daily capacity of 
all shoe manufacturers listed in the American Shoemaking Directory. The es- 
timate was 551-000,000 pairs per year. The listed capacities are known to "be 
high, however, as practically all the concerns, especially the medium-sized 
and smaller ones, tend to overestimate their capacity production. 

The actual highest monthly production on record — in October, 1929 — 
was 37,191,000 pairs, a rate of nearly 450,000,000 pairs per annum. Using 
this figure and the admittedly high capacity as estimated from the Directory, 
the Industry was found to "be theoretically over-machined "by a"bout 22 per cent. 
It was pointed out, however, that production peaks and valleys for all types 
of shoes must "be taken into consideration when estimating machinery require- 
ments of shoe factories. 

Practically all types of shoes require special machines in some stages of 
manufacture. In order, therefore, to handle production of all types, it is 
necessary to have sufficient machines of various classes. Seasonal demands 
for men's, women's and other kinds of shoes vary considerably, and manufac- 
turers are not in a position to determine in advance which kinds will sell 
"best or to estimate the quantities which will be needed. For this reason it 
is essential for them to have an excess of machinery on hand at all times to 
take care of sales requirements. 

The conclusions drawn from the above-mentioned study were that the Boot 
and Shoe Manufacturing Industry as a whole, from a practical viewpoint, has 
very little excess productive capacity and is not over-producing to any great 
extent. 

Competing Industry 

The only industry wbrjse products compete with those of boot and shoe 
manufacturers is the Rubber Footwear Division of the Rubber Manufacturing 
Industry, which produces M water-proof and canvas rubber-soled footwear," such 
as rubber boots, rubbers, gum footwear, arctics, and canvas rubber-soled 
foot-wear where the soles are molded on to the uppers. 

Use of Product 

The products of the Industry are finished articles, ready for use by the 
consumer and, therefore, are not used by other industries in the manufacture 
or marketing of their output. 



T7 Shoe Manufacturing - Production and Machine Capacity (December 28, 1933) , 



876© 



-12- 

Chapter II 

LABOR STATISTICS 



Total Number of IFVrr-.T oyee' 



The average number of wage earners in the Industry during 1929 was 
205,640, as compared with 181,374 in 1931, and 190,914 in 1933. For 1934 
the total has "been estimated at 199,700. (See Table VII, below.) 

Seasonality of Employment 

The seasonal demand for different kinds of shoes varies considerably, 
but generally the highest production peak for the Industry as a whole occurs 
in August and September and the next highest March. This variation in opera- 
tions arises largely from style requirements, particularly in women's shoes. 
Styles, leathers, and colors that will be in demand for a given season cannot 
be foretold long in advance. Between seasons, shoe manufacturers produce to 
some extent for stock, but confine themselves largely to staple lines. 

The effect of the seasonal fluctuations in the Boot and Shoe Manufactur- 
ing Industry on its employment may be seen in the following table: 

TABLE VI 

Estimated Average Number of Employees, 

by Months, 1933 and 1934 

(In thousands) 



Month 



January 

February 

March 

April 

May 

June 

July 

August 

September 

October 

November 

December 



Estimate 
Wage 



d Number of 
Earners 



1933 



Average 



175.6 
187.1 
186.7 
184.9 
185.3 
191.2 
206.1 
213.0 
20S.9 
202.3 
176.6 
174.0 

190.8 



1934 



185.5 
205.6 
211.6 
211.6 
209.5 
199.3 
204.2 
210,8 
196,2 
188.8 
183.0 
190.2 

199.7 



Source: Data derived from Bureau' of Labor Statistics index of factory employ- 
ment for "Boots and Shoes", as published in the Trend of Employment ; 
adjusted to 1933 Census totals by NRA, Research and Planning 
Division. 



8760 



-13- 

Number of Employees by States 

The average number of wage earners employed in each of the nine leading 
producing states is shown in Table VII. Manufacturers in these states em- 
ployed 92.2 per cent of the total wage earners in 1929, 92.3 per cent in 
1931, 90.6 per cent in 1933, and 89.7 per cent in 1934. 

TABLE VII 

Number of Wage Earners, 
by Principal Producing States a/ 



State 




1929 


1931 


1933 


1934 


U. S. Total 


205,640 


181,374 


190,914 


176,852 












(199, 700) b/ 


Illinois 




14,725 


13,526 


15,759 


14,180 


Maine 




9.967 


9,138 


11,695 


10,798 


Massachusetts 




55,093 


47,664 


46,739 


36,417 


Missouri 




24,903 


19,878 


22,138 


25,347 


New Hampshire 




14, 544 


13,847 


11,593 


11,511 


New York 




36,980 


33,804 


33,769 


28 , 783 


Ohio 




12,258 


10,739 


11,206 


11,449 


Pennsylvania 




10,429 


9,297 


10,077 


10,047 


Wisconsin 




10,755 


9,589 


10,037 


9,994 


Other States 




15,985 


13,892 


17,901 


18,226 


Source: Data 


for 


1929, 1931, and 


1933 from 


Census of Manufactures, "Boots 



and Shoes, Other Than Rubber 1 '; 1934 data from special Bureau of 
Census tabulations for ERA, Research and Planning Division, giving 
data for the week ending October 13, 1934 e 

a/ The Biennial Census data do not include establishments with an annual 
production of less than $5,000. The 1934 data cover about 90 per 
cent of the Industry' s total production. 

b/ This total is estimated from the Bureau of Labor Statistics index of 
factory employment for "Boots and Shoes", as published in the Trend 
of Emplo y ment adjusted to 1933 Census totals by NRA, Research and 
Planning Division. 

Total Annual Wages 

Total annual wages paid by the Industry fell from $222,407,732 in 1929 to 
$142,054,152 in 1933, but advanced to an estimated $166,920,000 in 1934, as 
shown in Table VIII, below. 

Annual Wages by States 

Total annual wages paid in each of the nine leading producing stages are 
presented in Table VIII, These states paid 93.6 per cent of the total annual 
wages in 1929, 93.8 per cent in 1931, and 92.1 per cent in 1933. 



8760 



,i ■ "■ : • 



-14- 

TABLE VIII 

Annual Wage Payments by States a/ 
(in thousands) 



State 1929 1931 1933 1934 

U. S. Total $222,408 $163,271 $142,054 $166,920 

Illinois 13,434 9.652 9,580 b/ 

Maine 9,289 7,515 8,141 b/ 

Massachusetts 64,205 45,679 36,559 b/ 

Missouri 23,265 16,193 14,785 b/ 

New Hampshire 14,943 12,511 9,245 b/ 

New York 49,266 37,764 31,133 b/ 

Ohio 12,300 8,638 7,232 b/ 

Pennsylvania 10,108 7,446 6,628 b/ 

Wisconsin 11,376 7,725 7,537 b/ 

Other States 14,221 10,147 11,215 b/ 

Source: Data for 1929, 1931, and 1933 from Census of Manufactures . "Boots 
and Shoes, Other Than Rubber." The 1934 total is estimated from 
Bureau of Labor Statistics index of factory payrolls in "Boots and 
Shoes," as published in the Trend of Employment , adjusted to 1933 
Census totals by NRA, Research and Planning Division. 

a/ Census data do not include establishments with an annual production 
of less than $5,000. 

b/ Data not available. 

Percentage Labor Cost Is of Value of Product 

Total factory payrolls of the Industry in 1929 were equivalent to 23.0 
per cent of the total value of product, 25.0 per cent in 1931, and 25.7 per 
cent in 1933. The percentage is estimated at 28 for 1934.1/ 

Average Hourly Wages and Hours Worked Per Week 

The average hourly wage decline from 49.3 cents in 1929 to 38.8 during 
1933, and then returned to 49.3 cents in 1934. The average number of hours 
worked per week fell from 44.3 in 1929 to 39. C in 1933, and still further to 
34.9 in 1934.2/ 

Bulletins issued by the Bureau of Labor Statistics give the following 
data on average hours worked and average hourly wages in the Industry in 
sixteen states. 

1/ Computed from data in Tables IV and VIII above. 

2/ 1929 wage and hour data from National Industrial Conference Board Service 
Letter; 1933 and 1934 data from Bureau of Labor Statistics, Trend of Em- 
ployment . The 1929 figures were adjusted by NRA, Research and Planning 
Division, so as to be comparable with the B.L.S. figures. 

0760 



-15- 



TABLE IX 

Average Hours Worked and Average Hourly Earnings, 
in 16 States, 1930 and 1932 



State 



Average Hours Worked 
Per Week 



1930 



1932 



Average Hourly 


Earn in 


gs 


( Cent 


s) 


1930 


1932 


49.9 


34.2 


35.3 


28.2 


44.2 


38.0 


41.8 


29.8 


57.9 


47.0 


45.6 


42.6 


42.2 


35.4 


45.1 


38.4 


43.7 


37.2 


62.8 


55.9 


56.9 


45.7 


47.7 


38.9 


44.3 


34.6 


35.9 


32.2 


51.3 


41.2 



Illinois 43.6 

Kentucky 50.0 

Maine 47.2 

Maryland and Virginia 37.1 

Mas sachusett s 40 . 4 

Michigan 44.9 

Minnesota 43,4 

Missouri 45.4 

New Hampshire 39»4 

New Jersey 42 3 

New York 43.6 

Ohio 35.8 

Pennsylvania 43.9 

Tennessee 4S.4 

Wisconsin 43.8 



47.5 
47.2 
46.3 
44. 8 
41.1 
3G.9 
44.6 
39.3 
37.1 

3i. e 

37.0 
40.7 
39.2 
3C.8 
36.2 



Average of above 
states 



42.4 



40.4 



51.0 



41.2 



Source: Bureau of Labor Statistics, Wages and Hours of Labor in the Boot 

s nd. Shoe Industry (Bulletins No, 551 and 579). These studies were 
based upon a 29 per cent sample, by number of wage earners, in 
1930, and a 28 per cent sample in 1932. 

Weeks Worked Per Year 

No reliable information is obtainable in the average number of weeks worker 
per year per employee. Moreover, if the data were available, it would be im- 
practicable to strike an average because of the wide variation of working 
hours within the Industry. Although 240 working days, or 48 weeks of 5 days 
each, are regarded by the Industry as a normal year, it is understood that the 
number of weeks worked ranges from 20 to 50. 

Employees Under 16 Years of Age 

There were 2,102 workers between 10 and 15 years of age, inclusive, list- 
ed in the Census of Occupations as employed in the Industry during 1930, of 
which 1,841 were operatives and 341 laborers. Comparable information for 
later years cannot be secured. It should be noted that these data do not 
refer to the number actually employed but rather to those reporting themselves 
as belonging, by occupation, to this Industry. 



8760 



-16- 

Other Relevant Wage-Earner Data 

Analysis of the monthly reports for February, 1934, and 1935, prepared 
"by the Bureau of the Census for the Industry' s formed Code Authority, re- 
vealed that male wage earners, while comprising only 55 per cent of the 
total number of employees and working slightly in excess of that percentage 
of all man-hours worked, received almost 64 per cent of the aggregate wages 
paid hy the Industry. It also disclosed that about 46 per cent of the 
total number of employees were located in towns of less than 20,000 popula- 
tion, 27 per cent in cities and towns of 20,000 to 250,000, inclusive, and 
22 per cent in cities with more than 250,000 inhabitants. Five per cent of 
the total were in the Southern States. Operatives represented approximately 
92 per cent of all employees; and 80 to 85 per cent of the total number of 
shoe workers were compensated in a piece-rate basis. 



8760 



-17- 

Chapter III 

MATERIALS: RAW AID SEi.II -PROCESSED 

Fri \c j-pal Hater ia l s Use d 

The principal materials used in the manufacture of "boots and shoes other 
than rubber are sole and upper leather produced from cattle hides; upper 
leather from calf, hip, and kid skins; "boot and shoe cut stock; leather, wood, 
and rubber heels; boot and shoe findings, such as counters, shanks, laces and 
pegs; and textile fabrics. In marketing the Industry's products, paper boxes, 
fibre and wood cases are used. 

It may be added here that there is a definite tendency in the 3oot and 
Shoe Industry toward greater use of fabric uppers, leather substitutes, rubber 
heels, and rubber and composition soles. 

Total Cost of Ilaterials 

According to the Census of manufactures, the total cost of materials, in- 
cluding fuel, containers, and purchased electric energy (which usually aggre- 
gates abon.t 1 per cent of the total) fell from $515,055,000 in 1929 to $357,- 
627,000 in 1931, and then to $286,303,000 during 1933. 

Data showing the total value of production of those materials used prin- 
cipally by the Industry are shown in Table X, below. (Volume data are not 
available.) As explained in footnote a/, these data, do not pertain to actual 
purchases of materials by the Soot and Shoe Industry, but to the total produc- 
tion value of the items listed as reported ~by the Census. Since the bulk of 
these materials is used oj the Boot and Shoe Industry, the data may be taken 
as a rough approximation of the "cost of materials used." 



8760 



-IB- 
TABLE X 

Value of Production of Principal Saw Materials Used, 
by Principal Kinds a/ 
(in thousands) 



Kind 1929 1931 193C 



Sole leather $97,906 $57,205 $40,472 
Upper leather, not 

including patent 135,202 107,985 102,661 

Boot and shoe cut stock 133,443 79,734 56,280 

Boot and shoe findings 58,625 37,366 37,014 
Patent leather, other 

than upholstery 24,840 11,430 7,400 



Source: Data assembled from sections of Census of Manufactures reports on 

"Leather Goods; Tanned, Curried, and Finished;" and "Boot and Shoe 
Findings." Establishments having an annual production of less than 
$5,000 are not included. 

a/ The figures do not actually represent the amount of materials sold 

to boot and shoe manufacturers. Part of the leather is sold to nanv 
facturers. Part of the leather is sold to manufacturers of cut stoc 
who process it and sell their finished product to boot and shoe mam: 
facturers. The cost of the leather so processed is thus included 
twice in the above tabulation. .Also, a part of the boot and shoe fin 
ings is sold to shoe repair shops. No data are available, however, 
on which to arrive at more precise figures for cost of raw materials 
in the Boot and Shoe Industry. 

Relation of Cost of Materials 
to Total Value of Product 

According to Census of Manufactures data, materials represented 53.3 per 
cent of the total value of product in 1929, 51.6 per cent in 1931, and 51.7 
per cent in 1933. No comparable information is available for 1934, 

A Dun and Bradstreet survey of 48 manufacturers of shoes in 1953 disclose 
that the average cost of "raw materials in sales" for the 33 firms which re- 
ported a net profit for that year was 43.3 per cent, while it was 48.9 per 
cent for the 15 companies reporting a net loss. 

Source, of Raw Materials 

About 90 -oer cent of the domestic production of leather is consumed in 
this country, of which 85 to 90 ^er cent is utilized by the Boot and Shoe In- 
dustry. A relatively small amount of leather, mostly calf, kip, goat, and 
kid for linings and uppers, and fancy leathers, is imported from France, Great 
Britain, Germany, and other countries. 

Of the leather produced in this country which is used by this Industry, 
it is estimated that "in 1931 Pennsylvania furnished about 22 per cent; i-assa 
chusetts, 19 per cent; Hew York, 12 per cent; Hew Jersey, 8 per cent; 
8760 



-19« 

Illinois, 8 per cent; and the other 23 leather-producing states the remainder. 
Massachusetts supplied approximately 34 per cent of the boot and shoe cut 
stock; Illinois, 4 per cent; Hew York, 1 oer cent; and the other 12 states 
which produced this material the remaining 61 per cent.l/ 

Massachusetts also "orovided about 52 per cent of the boot and shoe find- 
ings. Hew York was next in this production with 12 per cent, then Hew Hai.ro- 
shire with 10 per cent, Missouri with 7 per cent, and Pennsylvania with 5 pel 
cent. The 14 other states in which these items were were manufactured ac- 
count for the balance of 16 per cent.l/ 

Machinery and Equipment 

Approximately 90 per cent of all the actual shoe-naking machinery and. 
equipment is leased. Most of it is leased from the United Shoe Machinery Cor- 
poration which has gradually assembled under its ownership the McKay cowing, 
Goodyear welting, and other patents and processes essential to the Industry. 
Tental payments are in direct proportion to the output of each machine, and t 
the rates are fairly uniform throughout the country. They range from 4/10.,-' 
000 of one cent to i- cent per pair for each specific operation, and probably 
average about 5 cents per pair of shoes. 

Almost 7 years ago the Compo Shoe Machinery Corporation was organized fo: 
the purpose of manufacturing and leasing machinery, primarily for cementing 
soles to shoe uppers. The number of pairs of shoes produced on equipment of 
thi-s company has increased rapidly from year to year, and, in 1934, amounted t 
about 9 per cent of the total boot and shoe output of the United States. 2/ 

Practically all the machinery and equipment leased by these two corpora- 
tions is made in Massachusetts. 



l/ Estimated from Census of Manufactures reports for 1931 on "Leather 

Goods: Tanned, Curried, and Finished," "Boot and Shoe Cut Stock," and 
"Boot and Shoe Findings." 

2/ tfatio oi production on Corroo Shoe Machinery (as shown in a letter received 
by IIEA from the Company) to total production, as shown in Table V, above* 



8760 



-20- 



CHAPTER IV 

PRODUCT I Oil AMD DISTRIBUTION 

Value and V olume cf Pro du ct ion in 
Leading Production State s 

The tabulations below show the value and volume of production of hoots, 
shoes, and slippers, other than rubber, in each of the leading production 
states. The eight leading production states produced 87.2 per cent of total 
value of products in 1929; the nine leading production states produced 92.2 
per cent in 1931, and 90.8 per cent in 1933. 

TABLE XI 

Value of Production by Principal States a/ 
(in Thousands) 



States 


1929 


1931 


1933 


1934 


U. S. Total 


$958, 690b/ 


$650, 586b/ 


$553, 425c/ 


$600,000 


Illinois 


73,105 


51,994 


46,117 


§J 


Maine 


38,752 


27,415 


30,671 


§J 


Massachusetts 


239,820 


159,907 


128,074 


§J 


Missouri 


133,781 


86,232 


73,201 


§J 


New Hampshire 


66,630 


49,946 


35,168 


§J 


Hew York 


187,458 


127,493 


99,401 


a/ 


Ohio 


§J 


33,957 


30,971 


§J 


Pennsylvania 


41,492 


27,802 


25,009 


§J 


Wisconsin 


55,108 


34,897 


34,119 


d/ 


Other Sta/tes 


122,544 


50,943 


50,694 


§J 


Source: Data for 


1929, 1931, and 


1933 from Census 


of Manufactur 


es, "Boots 



a/ 



and Shoes, Other Than Rubber." The 1934 figure is estimated from 
pairage production as reported in the monthly releases of the 
Bureau of the Census covering 99 per cent of the Industry's total 
production, and the Bureau of Labor Statistics wholesale price 
index for "Boots and Shoes" as published in its bulletins Wholesale 
Prices. 

The biennial census data do not include establishments with an 
annual -oroduction of less than $5,000. 



b/ Does not include the value of leggings, overgaiters, puttees, and 
"other footwear" which were not distributed \>y states. 

c/ Represents value of all products of the Industry, including the 
value of products not normally belonging to the Industry and 
receipts for contract work. 



SJ 



Data not available. 



8760 



■21- 



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Geographical Shift in P roduction 

Since the beginning of the twentieth century there has heen a, movement 
toward a decentralization of hoot and shoe production, from the older, tra- 
ditional centers tc the South and Middlewest, for the purpose of estahlishing 
a closer proximity between sources of supply and the major markets to he 
served. ?or example, the percentage of the nation's volume of shoes produced 
in Massachusetts has decreased from 47.2 in 1829 to 22.3 per cent in 1925. 
Since then it has declined at a much slower rate, from 23.4 per cent in 1929 
to 20.0 per cent in 1934. 1/ 

The most significant change "between 1929 and 1934 is the 28 per cent 
increase in production in Maine while production in most other states declined. 
However, the comparison in Table XII, supra, "between 1919 and 1934 shows 
plainly the shift from Massachusetts, Pennsylvania, and Ohio to other states — 
particularly to Illinois, Missouri, and Wisconsin. 

Shipments Out of Each State 

¥0 data were secured on the value and volume of products shipped out 
of each state, or on the shipments of wholesalers in each state to retailers 
located in other states. 

Methods of Distribution 

The distribution of hoots and shoes is accomplished "by direct sales 
contact between manufacturers and independent retailers, wholesalers, and 
chain-store buyers, and by the operation of wholesale businesses and retail 
stores directly by the manufacturer. The relative significance of these 
outlets may be seen from the following table, which is based upon the value 
of factory sales ($964, 542,000) in 1929: 

TABLE XIII 

Relative Importance of Different Types 
of Distributing Agencies, 1929 



Per Cent 
Tyue of Total 



Eetailers 44.8 

Manufacturers' Own Wholesale Branches 26.4 

Wholesalers 21.8 

Manufacturers' Own Retail Branches 6.2 

Bulk and Household Consumers 0»8 

Total 100.0 



Source: Census of Distribution, "Shoe Retailing" 
(Distribution No. R-80) . 



1/ Based on Census of Manufactures reports. 
8760 



-23- 

In 1933 there were 496±/ wholesale establishments whose major line 
of merchandise was "Shores and other Footwear," compared with 756 in 1929.2/ 
Of those covered "by the 1933 survey, 363 were wholesaler merchants, 70 manu- > 
facturers' sales "branches, and 33 manufacturers' agents. The sales "branches 
disposed of approximately 46 per cent of the total net amount, while the 
wholesaler merchants were credited with 43 per cent of the aggregate. The 
remaining "business was transacted "by manufacturers' agents, selling agents, 
commission iiierchants, "brokers, and others. 1/ Of the total number of whole- 
sale establishments in 1929, 752, or 99.5 per cent, were located in 34 states. 
About 80 per cent of all wholesale establishments whose major line of mer- 
chandise Mas shoes and other footwear were situated in 8 states during 1933.1/ 

There were, in 1933, 157,816 retail establishments listed for the variour 
kinds of stores selling shoes and other footwear,^/ contrasted with 195,773 ir 
1929. i/ The 1933 total consisted of 85,839 country general stores, 34,122 
general merchandise and dry-goods stores, 18,836 shoe stores, 9,710^/ men's 
clothing and furnishing stores, 5,7S5 family clothing stores, and 3,544 depart 
ment stores. Shoe stores accounted for about 58 per cent of all sales of 
shoes and other footwear in 1929; department stores for approximately 17 per 
cent; country general stores, for about 9 per cent; general merchandise and 
dry-goods stores, 6 per cent; catalog mail-order houses, 3 per cent; and other 
stores the remainder. §J All states had shoe stores and department stores, 
the combined shoe sales of which aggregated $1,015,125,000 in 1929, or slightl 
more than 80 per cent of the total of $1,265,012,000 for all shoes and foot- 
wear, of which only about S ver cent consisted of rubber footwear. §J 

About three- fourths of the 24,259 shoe stores in existence during ±b><dy 
were operated by one, two, and three-store independents, and the other quarter 
by 320 chains.^/ Total shoe sales of the independents represented approximate- 
ly 54 per cent, 27 but more recent information indicates that an increasing 
ratio is being sold through chain stores. The 6,099 shoe stores operated by 
chains are divided as follows: local, sectional, and national, 5,250; manu- 
facturer-controlled chains, 375; and leased-department chains, 474.2/ Host 

1/ U. S. Summary of TTholesale Trade, Censn.s of American Business, 1933 ; data 
do not include establishments doing an annual business of less than $1,00C 

2/ Censxis of Uholesale Distribution, 1929 . 

3/ This and the following figures are for the total number of stores in the 
categories selected, but it must be remembered that not all the individua" 
stores within these categories — as, for example, men's clothing stores — 
actually sell shoes. 

4/ 1933 data from U. S. Summary of He tail Trade, Census of American Business . 
1933 , and 1929 data from Census of P.etail Distribution, 1929 . 

5/ Estimated. 

6/ CensLis of Distribution, Shoe Retailing (Distribution Ho. R-80) . 



8760 



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manuf acturer-controlled and leased-de-oartment chains are national in scope 
and, like the nation-wide chains, are operated mostly in large cities. 

Exports^ / 

Exports of footwear, other than rubber, from the United States had an 
aggregate value of $11,648,000 in 1929; $4,352,000 in 1931; $1,379,000 in ' 
1933; and $1,897,000 in 1934. The numbers of pairs exported in these years 
were 4,807,000; 2,321,000; 832,000; and 1,001,000, respectively. 

Nature of Advertising 

Boots and shoes are advertised in trade journals, magazines, news- 
papers, theatre programs, billboards, car cards and by other media, both 
nationally and locally. In many instances the manufacturer contributes all 
or part of the cost of his customers' advertising. 

Trade-Marks 

A small percentage of boots and shoes are tradesr.narked but there seems 
to have been an increase in the use of trade-marks during 1934. In the 
opinion of officials of the national Boot and Shoe Manufacturers' Associa- 
tion, not more than 20 per cent of all boots and shoes produced in the 
United States carry the trade-mark of the manufacturer. Moreover, there is 
comparatively little national advertising which contains these means of 
identification, and it is sporadic. 

Evidence of Interstate Commerce 

With regard to the interstate character of the Industry it might be 
well to note a few general statements taken from Moody's Manual of Indus- 
trials for 1934. A shoe-manufacturing firm in Massachusetts, maker of a 
well-known trade-marked brand for men and women, operated 51 retail stores 
throughotit the nation. Another concern in that state operated 125 shoe 
stores in various cities of the country and, in addition, did a steady 
business with 6,000 retailers in nearly every town in the United States. 

A shoe manufacturer in Hew York State has its own stores in different 
parts of the country, and sells the balance of its output direct to the 
retail trade. It maintains foreign distributing agencies in France, Norway, 
Cuba, and the Philippines. A manufacturer in Missouri sells under 8 names, 
a general line of men's, women's, and children's shoes, and operates 40 
factories in 35 cities in 4 states, as well as 9 tanneries in 5 states, a 
rubber plant, and a cotton mill. It also has 12 sales branches in 4 states 
which sell direct to more than 70,000 retailers in the United States. 

Standard Trade and Securities for May 22, 1935 cited a large manufac- 
turing company which at the beginning of 1935 had "333 stores in operation, 
in most important sections east of the Rockies." Another company, which 
purchased practically all of its shoe requirements from outside manufacturers, 
owned some 570 retail stores in all important markets east of Denver. 

1/ Compiled from Bureau of Foreign and Domestic Commerce, Foreign Commerce 
and navigation of the United States for the respective years . 

8760 



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Chapter V 

TRADE PRACTICES 

Unfair Practices Prior to Code 

The more important unfair trade practices which were prevalent in the 
Boot and Shoe Manufacturing Industry before the Code became effective were 
excessive discounts, --particularly to chain stores and other large buyers,— 
and long-term credits; numerous style shows promoted by various organiza- 
tions, which were costly to the manufacturers; contributions by manufactur- 
ers of all or part of customers' advertising, which in many cases were not 
used for advertising at all; supplying special cartons and labels to custom- 
ers without additional charge; unjustifiable returns; excessive claims, un- 
fair cancellation of orders; misbranding and misleading advertising; and 
selling below individual cost. 

Most of these unfair trade practices were detrimental to the manufactur- 
ers, many of whom were compelled to cheapen their products in an attempt to 
secure a fair margin of profit, for the Industry is known for its small 
average profit in relation to the volume of business and capital invested. 
In turn, the consumers were affected through the use of inferior materials 
and lower-grade workmanship. 

Unfair Trade Practices Under the Code 

The trade practice provisions of the Code were not very effective in 
eliminating the unfair practices set forth above. It is known that the 
maximum trade terms were subverted or evaded, that contributions to custom- 
ers for advertising were made, that special cartons were furnished buyers, 
and that misbranding and misleading advertising was used. Furthermore, 
there was only a small decrease in the number of style shows sponsored by 
the different regional and local groups. 

The practices of returning goods to the manufacturer without proper 
justification, of making excessive claims on him, and cancelling orders un- 
fairly were mitigated considerably by increased use of the National Boot 
and Shoe Manufacturers' Association' s credit information service. The pro- 
visions referring to selling below cost were ineffectual, partly because a 
large majority of boot and shoe manufacturers did not know how to figure 
costs. Moreover, necessary exceptions for obsolete and distressed merchan- 
dise and for other causes complicated the cost problem. 

One outstanding reason for the disregard by some members of the Indus- 
try of the Code trade regulations, — -was their feeling that others were not 
complying. This feeling in many instances was encouraged by the practice of 
retailers in telling manufacturers that they were the only ones in compli- 
ance; that other manufacturers did not comply. 

Spread of Unfair Practices 

An instance of an unfair competitive practice which spread from one 
area to another was in the practice of shipping merchandise 30 to 60 days or 



8760 



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longer, prior to the delivery date specified on the order. This practice 
was first adopted principally "by the larger mid-western shoe manufacturers, 
hut the trade soon learned the trick of obtaining orders marked for delivery 
two or three months ahead, "with privilege of shipping earlier" under-scored, 
meaning that immediate delivery would be insisted upon. This procedure 
gathered momentum quickly in all parts of the country. The practice has 
been ruinous to the small manufacturers, but advantageous to the large pro- 
ducers, it is claimed by members of the Industry. 

An instance of another unfair practice which spread was in the estab- 
lishment of vocational shoe-manufacturing schools and "cooperative factories." 
For example, a school was set up in Maine, and although it was aided by 
civic authorities, the control of output was in the hands of a shoe manufac- 
turer. This method of subverting certain Code provisions was subsequently 
adopted in other sections of the nation. Similarly, "cooperative factories" 
were set up, first in the New York area, then in New England and other 
regions. 

National Price Structure 

The Boot and Shoe Manufacturing Industry is known to be highly competi- 
tive, with each producing center rather complete insofar as kinds, types, 
qualities, and price range are concerned. In addition, the products of most 
manufacturers are distributed nationally and these products moet in the more 
important markets. In consequence, the prices of individual members of the 
Industry and of producers in a given area have a direct effect upon the 
national price structure of the Industry. 



8760 



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Chapter VI 

GENERAL INFORMATION ON THE INDUSTRY 

Trade Associations 

The National Boot and Shoe Manufacturers' Association is the only trade 
association in the Industry which is national in scope. It was organized in 
1905, the requirements for admission "being only that the applicant must he en- 
gaged in the actual manufacture of "boots and shoes in the United States. The 
membership fee is $25 and the annual dues range from $25 to $500, "based upon 
annual gross sales. In July, 1933, the Association had 248 members with 78 
branch factories, or a total of 326 establishments. Todaj' the membership is 
about 325 and represents approximately 400 establishments. The association 
claims to employ 85 per cent of the Industry's employees and production, the 
remainder being shared by some 375 enterprises. 

There are several other trade organizations in the Boot and Shoe Manu- 
facturing Industry, but none parallels or overlaps the activities of the 
N. 3. & S. M. A. Most of the others are local or regional groups, whose mem- 
bers in many instances belong to the larger, national body. The Associated 
Shoe Manufacturers, organized in June, 1933, has a membership of about 100 and 
claims to represent nearly 300 New England manufacturers of women's novelty 
shoes. The National Association of Slipper Manufacturers has approximately 
53 members, the National Stitchdown Shoe Manufacturers' Association about 37, 
the National Sheepskin Slipper Manufacturers close to 40, and the St. Louis 
Shoe Manufacturers and Wholesalers' Association nearljr 30 members. 

Other associations are the Auburn Shoe Manufacturers, Boot and Shoe 
Manufacturers of Philadelphia, Brockton Shoe Manufacturers, Council of Shoe 
Manufacturers of New York, Haverhill Shoe Manufacturers' Board of Trade, Lynn 
Shoe Manufacturers, New England Shoe and Leather Association, and the Shoe 
Manufacturers' Board of Trade of New York. 

Labor Organizations 

On the whole , the relationship between labor and management within the In- 
dustry has been comparatively harmonious. Labor controversies have been neith- 
er frequent nor widespread. In 1933, six or seven months prior to the adoptio 
of the Code, a serious "general strike" occurred in Massachusetts, the most 
highly unionized state in the Boot and Shoe Manufacturing Industry, which af- 
fected the shoe operatives in a dozen to^ns and cities. 

Leading manufacturers have been reported from time to time as saying that 
the Industry is not more than 25 per cent organized by union labor. This es- 
timate probably is nearly correct, although the total membership claimed by th 
variop.s unions would be equivalent to almost one-half of the country's boot 
and show workers, both those at work and the unemployed. The unions' figures 
may exaggerate, and may include duplications, and leather workers to some 
extent. 

The unions in the Boot and Shoe Manufacturing Industry have gained both ii 
numerical strength and bargaining power since the pre- Code days. At a public 
hearing in January, 1935, the labor leaders of the Industry made it clear that 
the shoe workers are solidifying themselves and that the day is near when there 
will be one large, national boot and shoe workers' union. 
8760 



A list of the labor organizations in the Industry during 1933-1934, othej 
than company unions and very small independent groups, together with their 
claimed .aenbership and the areas in which they are most active follow;!/ 

Membership 

Boot and Shoe Workers' Union (A.F. of L.) 40,000 

Largely in metropolitan areas. 

United Shoe and Leather Workers' Union 40,000 

Mostly in New England States. 

National Shoe Workers' Union 23,000 

Lynn, Boston, Chelsea, Brooklyn and other 
shoe centers of eastern United States. 

Shoe Workers' Protective Union 30,000 

Boston and eastern Massachusetts. 

Shoe and Leather Workers' Industrial Union 15,000 

New York, Philadelphia and vicinity. 

Salem Shoe Workers' Union 7,000 

Salem, Massachusetts. 

Brotherhood of Shoe and Allied Craftsmen 4,000 

Brockton, Massachusetts. 

Central Convention of Shoe Workers of 4,000 

Philadelphia, Philadelphia, Pennsylvania. 

American Shoe Workers' Union 2,000 

Lawrence, Massachusetts. 



International Shoe Workers' Union 

St. Paul, Minnesota. 

Note ; All of the above -named unions were not in existence at the same time. 
Por example, the United Shoe and Leather Workers' Union absorbed the 
"Protective" and half a dozen other independents and small unions near 
the end of 1933. 

The following discussion of unions in the Boot and Shoe Manufacturing In- 
dustry aopears in The National Recovery Administration , published by the 
Brookings' Institution in 1935; "As a strong and powerful comeptitor of the 
A»F. of L. • s Boot and Shoe Workers' Union, particularly in the New England 
manufacturing centers, there emerged during 1933-1934 the United Shoe and 
Leather Workers' Union. This union is a merger of independent labor organiza- 
tions, and professes to be more militant and more progressive than the Boot ant? 
Shoe Workers' Union; but it rejects the communist-led T.U.U.L.,2/ and is much 
more concerned with problems of collective bargaining than the propaganda of 
1 revoluhtionary class consciousness.' The United Shoe and Leather Workers' 
Union conducted a major strike in Haverhill, Massachusetts, during the spring 
of 1934. The membership of the United Shoe and Leather Workers' Union is 

1/-. Compiled from materials submitted and on file in the Code Record Section. 

2/ Trade Union Unity League. 

8760 



-29- 

probably as large as that of its A. P. of L. competitor - about 20,000." 

Effect of Code 

The effect of the Code of fair comoetition on the Boot and Shoe Manufac- 
turing Industry can probably be best presented in concise form by quoting fror 
a statement by the President of the National Boot and Shoe Manufacturers' 
Association and Chairman of the Planning and Pair Practice Committee of the 
Industry at the public hearing on January 29, 1935. 

His closing paragraph reads; "In conclusion, the statement may well be 
made that the Shoe Manufacturing Industry, operating under its Code, has ful- 
filled the purposes of the National Recovery Administration. Comnared with 
pre-code days, the hours of male employees have been reduced 12 per cent, 
their average earnings per hour have been increased 12.98 per cent, thereby 
maintaining their weekly wage income within one-half of one per cent; the 
hours of female employees have been reduced 15.69 per cent, their average 
earnings have been increased 28,25 per cent, and their weekly wage income has 
been increased 8.51 per cent; the hours of all employees have been decreased 
13.61 per cent, their average earnings per hour have been increased 17.96 per 
cent, and their weekly wage income has been increased 1.87 per cent. The 
number of employees enrolled in the Industry has been increased approximately 
12.5 per cent. " 

An analysis of the regular monthly reports, prepared by the Bureau of 
the Census for the planning and pair practice Committee, for comparable weeks 
during February, 1934 and February, 1935, i' covering 670 establishments last 
year and 775 this year, discloses that there has been a decrease from 20.3 to 
16^8 in the percentage of male employees receiving less than 37% cents per 
hour and an increase from 49.8 to 54.5 in the percentage of males receiving 
50 cents per hour and more. In the intermediate grouns there were slight de- 
clines. The percentage of female workers receiving less than 32.5 cents an 
hour decreased from 36.0 to 30.1 and the percentage receiving 45 cents and 
over increased from 19.2 to 22.9. The percentage in the 32.5 to 34.99 group 
declined a little, whereas the 35 to 44.99 group increased somewhat. 

The analysis also reveals that the percentage of males working 85 hours 
nad fewer advanced from 19.1 to 27.1; over 35, including 40 hours, increased 
from 43.4 to 45,3 per cent of the total; over 40, including 45, fell from 35. 
to 24.7 ^er cent; and more than 45 hours increased from 2.4 to 2.9 per cent. 
The percentage of females working 35 hours and fewer increased from 21.7 to 
28.6; over 35, including 40 hours, increased from 40.9 to 42. & per cent of tl 
total; over 40, including 45, fell off from 36.4 to 27.1 per cent; and those 
working more than 45 hours increased from 1.0 to 1.7 per cent. 

Imports 

Imports of leather boots and shoes are only a small fraction of the tot- 
production in this country. In 1929, imports aggregated 8,359,000 pairs, or 
2.3 per cent of domestic production; in 1931, 5,925,000 pairs; in 1933, 
4,279,000 ;oairs; and in 1934, 4,942,000 pairs, or about 1.4 per cent. The 
total value of imported leather footwear was $18,773,000 in 1929, $7,019,000 
in 1931; $2,390,000 in 1933; $2,703,000 in 1934. Czechoslovakia supplies 
more than one-half the number of shoes imported in 1931, Jpnan a little less 

1/ The Code was approved in October, 1933, 
8760 



-30- 

than one-third, and Germany, China, Great Britain, Switzerland, and Austria 
furnished, in the order given, -practically the entire remainder. 1/ 

Foreign Conine tition 

On the surface, imports of leather hoots and shoes do not appear signi- 
ficant, hut, from the viewpoint of domestic manufacturers, a serious prohlem 
is presented. The small dollar value in relation to the pairage indicates 
that leather footwear of low value is heing imported and sold in this country, 
to the disadvantage of American industry and lahor, "by creating unfair com- 
petitive conditions through its sale at prices which cannot be met by shoe 
manufacturers of the United States. 

The National Boot and Shoe Manufacturers' Association believes that 
practically every branch of the industry in this country, particularly the 
makers of women's, misses', and children's medium-grade shoes, ha.s felt the 
adverse effects of unfair competition of imported leather footwear. Not only 
does every imported pair displace a similar pair which could be produced here, 
this resulting in decreased employment and purchasing power, but the- prices 
quoted on imported footwear tend to disruot prices on the domestic products 
and damage the American Boot and Shoe Manufacturing Industry to a far greater 
degree than the number of pairs imported would suggest. 

Furthermore, the attempt to produce these low-price shoes tends to cause 
certain manufacturers who are engaged in that type of production to lower 
wage rates as much as possible. 

The Bata Company of Czechoslovakia is the most important single, foreign 
competitor. 2/ Thomas Bata learned mass production methods in the United 
States and returned to his native country to establish, with American machin- 
ery, a huge industrial plant which now wins out in many world markets, in- 
cluding the American domestic market. The United States Tariff Commission 
has shown that, duty not considered, it costs about 59 per cent mo; e to 
manufacture certain inexpensive kinds of shoes in the United States than it 
does in Czechoslovakia. The difference, according to American producers, is 
accounted for largely by a difference in wage levels. 

The Company's extraordinary growth may be seen from these data; in 1923 
its number of employees was 1,800 and the daily capacity was 8,000 pairs; in 
1930, 17,000 employees and 82,000 pairs; and in 1931, 20,000 employees and 
136,000 pairs. During 1932, America imported 611,474 pairs of McKay type 
shoes, an inexpensive shoe for women, from Czechoslovakia — Mostly from the 
Bata factories. In 1933, America took 1,016,307 pairs of the Company's shoes, 
and from all indications the 1934 figure was larger. Bata has developed its 
own retail chain in this country, with 20 stores in Chicago. 

List of Experts 

Five qualified experts in the Boot and Shoe Manufacturing Industry, to- 
gether with their addresses and affiliations, are named as follows; 

1/ Figures above compiled from Bureau of Foreign and Domestic Commerce, 

Foreign Commerce and Navigation of the United States for the respective 
years. 

2/ The statement regarding The Bata Company is based on an account in the 
Shoe and Leather Reporter (November 24, 1934) 

8760 



.31- 



Mr. Frederick A. Miller 

President, H. C. Goduan Co., Columbus, Ohio 
President, National Boot and Shoe Manufac- 
turers' Association 
Chairman, Planning and Pair Practice Committee 

of the Boot and Shoe Manufacturing Industry. 

Mr. J. P. Mcllwain 

president, J. P. McElwain Co., Boston, Massachusetts 
Past President, National Boot and Shoe Manufac- 
turers' Association 
Member, Planning and Pair Practice Committee of 
the Boot and Shoe Manufacturing Industry. 

Mr. Chrrles P. Johnson, Jr. 

Endicott- Johnson Corporation, Endicott, New York 
Vice-President, National Boot and Shoe Manu- 
facturers' Association. 
Member, Planning and Pair Practice Committee of 
the Boot and Shoe Manufacturing Industry. 

Mr. W. E. Tarlton 

Brovm Shoe Company, St. Louis, Missouri 
Director, National Boot and Shoe Manufac- 
turers' Association 
Member, Planning and Pair Practice Committee of 
the Boot and Shoe Manufacturing Industry. 

Mr. Harold C. Keith 

George E. Keith Co., Brockton, Massachusetts 
Past President, National Boot and Shoe Manufac- 
turers' Association. 
Member, Planning and Pair Practice Committee of 
the Boot and Shoe Manufacturing Industry 



8760-#