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Chapter 9 Cannon Mills in World War II World War II brought profitability to the textile industry. Even before the United States became directly involved in the fighting, the industry benefited from the conflict. American military preparedness and Lend-Lease solved the problem of overproduction more effectively than any New Deal policies had done. Textile mill activity increased greatly between 1938 and 1940. Based on an index of 100 representing textile mill activity for 1923–25, textile manufacturing activity grew from 108 in 1938 to 132 in 1939 and 142 in 1940.1 New government orders for all sorts of textile products fueled the boom. In October 1940, W. Ray Bell, president of the Association of Cotton-Textile Merchants of New York, noted that “since early May, the woven cloth markets have had their chief inspiration from the continuous and increasing demand of Federal purchasing agencies for supplies necessary in the preparations for National Defense.”2 U.S. Army orders filled the largest share of the growing government purchases. By June 1940, military orders, mostly for the army, amounted to almost 2.5 million blankets, over 4.5 million sheets, 4 million huck towels, and more than 1 million terry towels.3 U.S. government military appropriations continued to swell for the year 1941. Originally, Congress had set aside $102 million for textile supplies for the military for 1941, but it added $200,000 from an emergency supplement bill to supply eight hundred thousand new recruits.4 To facilitate the logistics of the buildup and assist textile manufacturers, Maj. Gen. Edmund Gregory, head of the Quartermaster 104 @ Cannon Mills in World War II Corps, announced that the army would alter requirements for some products , including sheets, to resemble commercial specifications more closely.5 Total income for cotton textile manufacturing firms grew tremendously from 1939 to 1941, rising from $37,270,000 in 1939 to $71,278,000 in 1940. By 1941, income had increased dramatically to $212,553,000.6 The strong growth in income, however, did not necessarily translate into equally strong profits. Beginning in 1940, the excess profits tax took a larger share of manufacturers’ income, rising from 2.3 percent of the industry’s income in 1940 to almost 21 percent by 1941. Coming on top of the normal taxes paid by manufacturers, the excess profits taxes increased the tax burden of the industry to more than 43 percent of income in 1941.7 Furthermore, the Office of Price Administration (OPA) limited textile manufacturing profits. Created in August 1941, the OPA set price controls in accordance with the General Maximum Price Regulation. The OPA used the base year of 1942 to set maximum prices, assuming that costs and labor would remain constant. Labor costs did not remain static, however, and the ratio of profits to sales fell. In short, the OPA attempted to control the price of textile goods while having no authority to control the rising cost of labor resulting from the labor shortage.8 Even so, Cannon Mills benefited from the defense build up. Sales and profits steadily increased after a brief dip during the recession in 1937 and 1938. Sales reached $38,302,930 in 1936 and increased to $40,252,620 in 1937. Profits, however, fell during the period from $5,587,630 to $3,252,290. With the recession deepening, both sales and profits fell in 1938 to $37,572,190 and $2,842,170, respectively. The end of the 1937–38 recession brought higher sales and profits for the textile manufacturer, with sales growing to $44,531,800 and profits to $4,354,980 in 1939. Despite Cannon’s negative predictions on the result of the minimum wage increase of 1939, sales and profits increased for Cannon Mills from 1939 to 1940. Company sales rose by almost $3 million, with profits increasing more than $800,000 in 1940. In 1941, sales continued the pattern of growth, reaching $65,151,910, but profits dipped to $4,487,820.9 In one month in 1941, the War Department placed orders for more than $1.5 million worth of towels and sheets from Cannon Mills.10 The trend of increased sales based on government contracts continued from 1942 to 1943. Sales grew during the two years from $78,944,230 in 1942 to $88,902,930 in 1943. Profits also increased from $11,970,720 to $14,070,980, respectively. The year 1943, however, was the best year for wartime sales and profits for...

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