Evening star., 1933-10-20
COTTON TAX WAR
CHARGED BY HOWE
A. A. A. Consumers Counsel
Calls on N. R. A. to Probe
Manufacturers.

Manufacturers Of cotton goods today
were charged with waging an organized
war against the cotton processing tax
by attributing to it the large increases
in the retail price of finished cotton
products.
The charge was made by DR.. Fred
eric c. Howe, consumers counsel of the
Agricultural Adjustment Administra-
ton, who called upon the National
Recovery Administration, particularly
through its Consumers Advisory Board
to investigate the price increases and
place the responsibility for the higher
charges at the proper place.
DR.. Howe made the assertion after
receiving reports from 10 representa-
tive cities, including Washington, where
it was reported that retail sales clerks
explained the mark-ups in cotton goods
to the processing tax. The conoltion
is not general, DR.. Howe said, nor Is 1t
as prevalent as 1t was few weeks ago,
before Washington merchants explained
to the administration that other factors
actually are responsible.
Tax Negligible Factor.
At the Washington hearing, called by
Administrator Peek, it was brought out
that the processing tax is negligible
factor and has not influenced the high
er retail prices. The merchants of the
Capital explained the boosts as at
tributable to smaller discounts allowed
by the manufacturers, increased costs
of manufacturing due to the N. r. A.
wage and employment agreements in
beth the textile mills and the finishing
plants, and to a slight increase in the
price of raw cotton.
DR.. Howe continued the investigation
by making checks in Chicago, Phila-
delphia. Atlanta, Boston, New Orleans,
Detroit, Kansas City, New York and
San Francisco. In some of these cities
no clerks were found who explained
the higher costs of cotton goods as a
result OF the processing tax. In others,
however, clerks were found who referred
to the AZ cents tax as "a 80 per cent
tax on cotton" and in one case "a
40 per cent tax on cotton"
Inc sum and substance of these re-
ports" DR.. Howe said, shows how badly
informed on the processing tax are
many sales clerks throughout the coun-
try, how they have been taken in by
the campaign against the tax.
The tax, as I have reiterated again
and again. is only 40 cents on a pound
of cotton, so that on finished articles
III which cotton is used it amounts to
an insignificant percentage of the price.
AS result of this country wide inves-
tigation 1t is our hope that the mer-
chants outside of Washington will fol-
low the example of those here and take
steps to make sure that the tax is not
used In their stores as a part of their
sales practice"
Statement on Campaign.
Referring to the alleged campaign
against the tax and the revelations at
the washington hearing, Dr. Howe de-
clared:
That meeting proved beyond bubble
that the processing tax is a negligible
factor in the price mark-ups on cotton
goods, and yet investigators disclose
that sales clerks are still explaining the
mark-upS by citing the tax as the only
cause, or as an important one. The
practice Is by no means a general one,
but the Investigators found enough in
stances to add grounds to our suspicious
that the organized drive against the tax
has not entirely subsidized.
Inc persistence OF ltS use In scat
tering cases may simply be the lingering
influence of the campaign carried on
by well organized manufacturers.
But even after the merchants have
become convinced that their sales
forces should not be parties to the
manufacturers campaign against the
tax. there remains the problem of in
vestigating the manufacturers levying
of surcharges due to increased costs
Such an investigation, as I said, is
rightly within the province of the N
R. A, particularly its Consumers Ad-
visory Board. except in so far as the
processing tax is concerned trust
such an inquiry will be made to supple
ment and round out the inquiries we
have been making of the retailers.