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HARRY WATSON:

I wonder if we could get back to that in a minute, and go back to when you were just starting with the company. What were the general problems of the textile industry in the late twenties and early thirties?

CEASAR CONE:

I touched on it in this previous recording. The textile industry in this country—it's true with most industries—started off… And it was that way in South America. I took a trip down to Brazil and Argentina just after the War. We had an opportunity to go in business down there, and I went down there to look around. We found that the structure down there was about like I guess it was in this country back in the middle nineteenth century. The mills would sell their product to big wholesalers. The big wholesalers would sell the product to small wholesalers. The small wholesalers would sell the product then to the retail stores. Practically all the fabric was home-sewn. There was very little needle industry, and there were no chain stores. Sears, Roebuck was just beginning to think about expanding into South America. This was right after the War. Back in the old days in this country, the same thing was true. The manufacturers sold to a handful of big wholesalers. There were several tiers between the manufacturer and the consumer. [END OF TAPE 1, SIDE A] [TAPE 1, SIDE B] [START OF TAPE 1, SIDE B]

CEASAR CONE:

In fact, I know there were attempts on the part of the independent merchants to try to get state laws passed against chain stores, food chains, general merchandise chains, because they were afraid it would put the individual retailer out of business. And it did, because those chains got to the point where they could buy in quantities big enough so they'd go direct to the manufacturer and thereby save the cost of the middleman. When I first went on the road, we had a good many large dry goods jobbers still in business, but there are no such anymore; they're gone. In those days, we wouldn't have thought about selling to retail, even to Sears, Roebuck. We wouldn't sell to a cutter, the needle trade. Even though maybe that cutter would buy in sufficient quantities, we'd sell to jobbers, and the jobber sold to the cutter the cloth he needed. A good many of the jobbers made their own garments, had their own few sewing machines to make overalls, work shirts, staple types of garments. About the time I got on the road in the thirties, those dry goods jobbers were just beginning to quit. There were several of them in Pittsburgh, several of them in Buffalo, Utica, Syracuse. Every town had at least one or two dry goods jobbers. They finally got whittled down to where about the only business they could still do was in consumer items, not in piece goods. As a matter of fact, the piece goods business in this country, pretty much, for staple stuff went to pot, because you could buy an overall or work shirt, a standard type of garment, much cheaper than you could buy the fabric at some retail store and the findings—the buttons, the thread, etc.— and make it yourself. That was not true in South America, you see. South America hadn't progressed to the point where we had, distribution-wise. But the wholesale jobbers went out of business. As a matter of fact, I doubt if Cone Mills today has as many customers on its books as it had… It's been ten years since I've seen any figures, but ten years ago we didn't, and I guess we've even got less today. You've got your Blue Bells here, the Wrangler brand, headquartered here in Greensboro, whose sales are over a billion dollars. You've got Levi-Strauss and Company out in San Francisco, whose sales are over two billion, I guess. That was unheard of when I first got into the business, even. I guess Blue Bell and Levi were big in those days, because they've been in business for some years, but I doubt if Levi's sales were over twenty to thirty million dollars. Five to ten million dollars, maybe. As a matter of fact, I called on Levi. When I was in Chicago, our salesman that ran the San Francisco office had a heart attack, and they sent me out there while he recuperated for some six or eight weeks. They had a few plants, but there were garment manufacturers all over the country making overalls, work shirts, staple stuff like that, you see. Anywhere from twenty-five sewing machines up to maybe a hundred or so was a pretty good-sized operation. Today I guess Blue Bell's got many thousands of sewing machines; so does Levi. And as they got bigger, a lot of our little customers went down the drain. Business has gotten terribly consolidated, and as a result, in my judgment, not just textiles, it makes our economy much more volatile. I mean the peaks and the valleys. If you have your business done by a great many small customers, you don't give a damn whether you lose one fellow's business or not. It doesn't affect you, the manufacturer. Where you've got these big customers, you can't afford to lose the guy's business, so he can beat you over the head. On the other hand, if things get tough and that one big fellow goes to pot, you see what it does to the over-all economy. As long as our economic activity was spread out—manufacturing, distribution, whatever—among many small operations, in my opinion it made the over-all economy much less volatile. Today, you see, a steel company closes a mill, or an automobile company, a textile company, and several hundred workers are put out. Several thousand, maybe. Chrysler Company goes bust; the government comes along and says, "We can't afford to let you go bust." Nothing like that was ever necessary back in the old days when our institutions were smaller.