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JOINT HEARINGS
BEFORE THE
COMMITTEE ON EDUCATION AND LABOR
UNITED STATES SENATE
AND THE
COMMITTEE ON LABOR
HOUSE OF REPRESENTATIVES
SEVENTY-FIFTH CONGRESS
FIRST SESSION
ON
S. 2475 and H. R. 7200
BILLS TO PROVIDE FOR THE ESTABLISHMENT OF FAIR
LABOR STANDARDS IN EMPLOYMENTS IN AND
AFFECTING INTERSTATE COMMERCE
AND FOR OTHER PURPOSES
PART 2
JUNE 7 TO 15, 1937
Printed for the use of the Committee on
Education and Labor, United 8tatee Senate, and the
Committee on Labor, House of Representatives
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON: 1937
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PAGE II
COMMITTEE ON EDUCATION AND LABOR
United States Senate
United States Senate
HUGO L. BLACK, Alabama, Chairman
ROYAL S. COPELAND, New York
DAVID I. WALSH, Massachusetta
ELBERT D. THOMAS, Utah
JAMES E. MURRAY, Montana
VIC DONAHEY, Ohio
RUSH D. HOLT, West Virginia
CLAUDE PEPPER, Florida
ALLEN J. ELLENDER, Louisiana
JOSH LEE, Oklahoma
WILLIAM E. BORAH, Idaho
ROBERT M. LA FOLLETTE, Jr. Wisconsin
JAMES J. DAVIS, Pennsylvania
Kennbth E. Haigler, Clerk
COMMITTEE ON LABOR
House of Representatives
WILLIAM P. CONNERY, Jr., Chairman, Massachusetts
MARY T. NORTON, New Jeraey
ROBERT RAMSPECK, Georgia
GLENN GRISWOLD, Indiana
KENT E. KELLER, Illinois
MATTHEW A. DUNN, Pennsylvania
REUBEN T. WOOD, Missouri
JENNINGS RANDOLPH, West Virginia
JOHN LESINSKI, Michigan
JAMES H. GILDEA, Pennsylvania
EDWARD W. CURLEY, New York
ALBERT THOMAS, Texas
JOSEPH A. DIXON, Ohio
WILLIAM J. FITZGERALD, Connecticut
WILLIAM F. ALLEN, Delaware
GEORGE J. SCHNEIDER, Wisconsin
SANTIAGO IGLESIAS, Puerto Rico
RICHARD J. WELCH, California
FRED A. HARTLEY, Jr. New Jeraey
W. P. LAMBERT8ON, Kansas
CLYDE H. SMITH, Maine
ARTHUR B. JENKS, New Hampshire
Mart B. Cronin, Clerk
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The joint committee met, pursuant to adjournment, at 10 a. m., in the caucus room, Senate Office Building, Representative Connery presiding.
Present: Senators Hugo L. Black, James E. Murray, Rush D. Holt, Allen J. Ellender, Robert M. La Follette, Jr., and James J. Davis.
Representatives William P. Connery, Robert Ramspeck, Matthew A. Dunn, Reuben T. Wood, Jennings Randolph, Richard J. Welch, Fred A. Hartley, William P. Lambertson, Albert Thomas, Joseph A. Dixon, William F. Allen, and Santiago Iglesias.
Representative Connery. The committee will come to order. Senator Black will be delayed for a few minutes and has asked me to go ahead with the meeting.
This morning we will hear Mr. John L. Lewis, representing the Committee for Industrial Organization and the United Mine Workers of America.
STATEMENT OF JOHN 1. LEWIS, REPRESENTING THE COMMITTEE FOR INDUSTRIAL ORGANIZATION AND UNITED MINE WORKERS OF AMERICA
Mr. Lewis. Mr. Chairman and members of the joint committee, I have a brief prepared statement here which should not take me very long to read.
We, of the United Mine Workers of America, and of the Committee for Industrial Organization, wish to pledge our general support to the principle of a minimum wage and maximum workweek as contained in the legislation, Senate bill 2475 of the present Congress, which your committee now has under consideration. In commenting on the bill I shall have some constructive changes or suggestions which I deem vitally important and which I wish to place before you.
The basic reasons which impel us to support these principles of the pending bill are, as follows:
First. It will increase mass purchasing power, which is an essential condition to permanent economic recovery and stable prosperity.
Second. It will, through reduction in hours of work, make way for the employment of hundreds of thousands of industrial workers who are now without work or on relief.
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FAIR LABOR STANDARDS ACT OF 1937
MONDAY, JUNE 7, 1937
The joint committee met, pursuant to adjournment, at 10 a. m., in the caucus room, Senate Office Building, Representative Connery presiding.
Present: Senators Hugo L. Black, James E. Murray, Rush D. Holt, Allen J. Ellender, Robert M. La Follette, Jr., and James J. Davis.
Representatives William P. Connery, Robert Ramspeck, Matthew A. Dunn, Reuben T. Wood, Jennings Randolph, Richard J. Welch, Fred A. Hartley, William P. Lambertson, Albert Thomas, Joseph A. Dixon, William F. Allen, and Santiago Iglesias.
Representative Connery. The committee will come to order. Senator Black will be delayed for a few minutes and has asked me to go ahead with the meeting.
This morning we will hear Mr. John L. Lewis, representing the Committee for Industrial Organization and the United Mine Workers of America.
STATEMENT OF JOHN 1. LEWIS, REPRESENTING THE COMMITTEE FOR INDUSTRIAL ORGANIZATION AND UNITED MINE WORKERS OF AMERICA
Mr. Lewis. Mr. Chairman and members of the joint committee, I have a brief prepared statement here which should not take me very long to read.
We, of the United Mine Workers of America, and of the Committee for Industrial Organization, wish to pledge our general support to the principle of a minimum wage and maximum workweek as contained in the legislation, Senate bill 2475 of the present Congress, which your committee now has under consideration. In commenting on the bill I shall have some constructive changes or suggestions which I deem vitally important and which I wish to place before you.
The basic reasons which impel us to support these principles of the pending bill are, as follows:
First. It will increase mass purchasing power, which is an essential condition to permanent economic recovery and stable prosperity.
Second. It will, through reduction in hours of work, make way for the employment of hundreds of thousands of industrial workers who are now without work or on relief.
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Third. From a humanitarian standpoint it will bring a greater measure of leisure and economic well-being. It will mean at least a glimmer of sunlight to millions of submerged American workers who now live in economic darkness and despair.
Fourth. From the viewpoint of industrial democracy the pending measure will offer to these unfortunate victims of our existing economic system an opportunity to rise to industrial citizenship or, in other words, a chance through unionization to attain to collective bargaining with their employers and thus achieve industrial emancipation.
We are fully conscious of the fact that this bill is the first approach to the problem of extending the protection of the Federal Government to that submerged group of citizens who are the most distressed victims of commercial exploitation.
DEFINITE STANDARDS RECOMMENDED
It is unnecessary to state that before its enactment, definite standards as to minimum rates of pay and maximum hours of work should be incorporated in the present bill. My recommendation as to rates of pay is a minimum of 40 cents per hour. As to hours of work, the standard in my opinion should be 5 days of 7 hours each or 35 hours per week, with authority granted to the Board to expand to a 40-hour maximum, or to reduce to a 30-hour maximum, when the Board’s investigations reveal that a 30-hour maximum workweek in specific industries is practicable, or, on the other hand, where a 40-hour workweek would appear to be temporarily necessary.
Under these conditions the standard weekly wage, regardless of sex, would be $14, which should also obtain for the 30-hour week, and be increased to $16 for the 40-hour weekly maximum.
Personally, I am a firm believer in the practicability, under proper industrial policy and control, of a 30-hour workweek. My own organization, the United Mine Workers of America, was the pioneer proponent of a 6-hour workday and a 30-hour workweek. During the past 4 years both branches of the coal industry—anthracite and bituminous—have through collective bargaining reduced maximum weekly hours of work from 48 to 35 hours, a decline of 32 percent.
GEOGRAPHICAL DIFFERENTIALS
I am firmly opposed to wage differentials based on geography. Usually this is no more than a plea for the continuance of low living standards in the Southern States,. Such a differential has absolutely no justification. Its proposal is based on an alleged difference in cost of living between the North and the South. I maintain that this is pure allegation. There is not a scrap of evidence to support such a statement. Indeed, so far as data are available, they indicate that the prices of the various items in a family budget are, by and large, just as high in the South as in the North.
Of course, it is a matter of common knowledge that the standard of living of the average southern wage earner, particularly the cottonmill worker, is somewhat lower than that of the northern wage earner. This is so because wage scales on the whole are lower in the South, and in consequence the southern worker has less money to spend. The difference, in other words, is due not to the fact that prices of individual commodities are lower in the South, but simply to the fact that, be
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because of this lower income, the southern worker gets fewer of the good things of life.
His food may cost him less, but that is because he gets less milk, less fresh vegetables and fruits, and less fresh meats. His housing may cost less, but that is because he gets an inferior type of housing.
Certainly the Government cannot put its approval upon this unfortunate condition. The southern worker is entitled to as good a standard of living as the northern worker. And, if the standard is to be the same, I reiterate, there is absolutely no ground for believing that its cost would be less in the South than m the North.
SECTION 5 OF THE ACT AND ALL PROVISIONS RELATING THERETO SHOULD BE ELIMINATED
As to changes in the bill, I wish to say that in my judgment the pending legislation would be greatly simplified and more satisfactory if section 5 of the bill and other provisions connected therewith should be eliminated.
In its fundamental aspects and sanctions the pending bill, in my opinion, is really an extension in principle of the Wagner Act, which guarantees to labor the right to organize and bargain collectively through representatives of its own choosing. While an infringement of this right is defined by the WTagner Act as “an unfair labor practice”, as a matter of fact its sanction goes much deeper. It marks the beginning of an industrial bill of rights for workers as against industry, just as the so-called Bill of Rights in our political Constitution guarantees personal and civil liberties of the citizen or individual as against our State or Federal Governments. They safeguard the freedom of the citizen against arbitrary or tyrannical governmental action.
Similarly, the Wagner Act protects industrial workers as citizens of industry against arbitrary encroachments upon their freedom of association and action. They are assured the right of organization and representation in the determination of their compensation and working conditions.
The pending bill, as I stated, builds up or extends the industrial bill of rights inaugurated by the Wagner Act. It declares it to be a matter of public policy that, (1) no “oppressive wage” or wage below a designated “minimum wage standard” shall be paid by industry; (2) that no “oppressive workweek” above a designated “workweek standard” shall be established; (3) it prohibits as further “oppressive labor practices” the employment of strikebreakers or labor spies by industry; (4) it prohibits industry from employing any children under 16 years of age, or children between 16 and 18 years in hazardous or unhealthy occupations. In other words, the bill under discussion adds four more safeguards to employees as against industry, to the industrial bill of rights founded, as it were, by the Wagner Labor Relations Act. This is as it should be, and the organized-labor movement is profoundly grateful for these fundamental, constructive proposals.
In this connection, I also wish to say that Secretary Perkins in her testimony suggested a further industrial right, which I believe the committee should add to the bill, namely, that women doing the same work as men should receive the same pay as men.
Unfortunately, however, the pending bill, instead of setting up one “standard” or “right” as to minimum wages, provides for two standards,
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or, in other words, it provides two methods of establishing minimum wage rates, designated respectively “the minimum wage standard” (sec. 2 (10)), and “a minimum fair wage” (sec. 5 (a)), the first beig 40 cents an hour or approximately $800 per annum (50 weeks of 40 hours each), and the second covering a range, subject to the Labor Standards Board, from 40 to 60 cents an hour or maximum yearly earnings of $1,200.
The first or real minimum is based on a straight-out declaration that no employer in industries engaged in interstate commerce shall pay any employee less than 40 cents an hour. Expressed reversely it means that all adult workers are guaranteed the right as against industry, to receive 40 cents per hour. Such a standard is simple, clear, and easy of application by an administrative board.
The second standard set forth in this bill, or “a minimum fair wage’’, is defined as “a wage fairly and reasonably commensurate with the value of the service or class of service rendered.” It must needs be fixed by exhaustive investigation and administrative or judicial determination and after the Board has been advised by the parties in interest. It was perhaps intended to be a step forward from the “minimum- wage standard” in order to cover semiskilled or skilled workers, but | unfortunately it sets up standards that disclose it to be a wage-fixing measure.
The worker does not receive such a wage as a fundamental right which he can invoke against the employer. It can only be established by the Labor Standards Board whenever the Board shall have reason to believe that—
owing to the inadequacy or ineffectiveness of the facilities for collective bargaining, wages lower than a minimum fair wage are paid to employees in any occupation.
Manifestly the bill does not intend to lay down the principle that a minimum wage of 40 cents an hour is the right of employees, but should employees be not effective in collective bargaining or cooperation with their employers, the law, after proper investigation, will guarantee to such employees 20 cents more per hour, or approximately 60 cents per hour or $1,200 per annum. In reality, what is apparently intended by the bill is to set up two standards or minima of compensation to low-paid workers, the first as a general right and the second on an equivalent monetary payment for services rendered, to be determined by the Board through investigation after it has previously investigated the status of collective bargaining in any occupation and declared it to be inadequate or ineffective. It may be that the intent is the laudable one, based on British and Canadian experience, to require all workers in an occupation or industry to conform to the wage standards established by a substantial majority of workers in an industry.
Be this as it may, such a procedure, to say the least, is very confusing and extremely difficult of application. Moreover, what is of fundamental importance is that it is not in accord with American precedent or practice for, I repeat, it amounts to a wage-fixing by a governmental agency made in consideration of all the equities involved.
The history of all attempts to establish minimum wages in America are based on an estimate of the cost to single or married workers of providing themselves with food, shelter, and clothing essential to bare
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physical needs at least or, in a higher sense, to a standard of living for themselves and their families embodying elements of decency and comfort necessary to the proper performance of social and political activities in a self-governing republic.
Scientific budgetary studies have been involved to ascertain the costs of such standards. The lowest are usually designated as “subsistence”, “living wage”, “health and comfort”, and so forth.
The right of the marginal or unskilled to enjoy such standards is generally accepted in the United States as a matter of public policy.
The method of application is simple. The unskilled workers or those in the lowest grade of the scale of occupations in an industry are entitled to receive the subsistence or living wage, and above this guaranteed minimum, semiskilled or skilled employees are paid differentials established by precedent or through collective bargaining, based on skill, experience, and productivity and hazard.
THE IMPORTANCE OF THE LIVING WAGE
It is rather a sad commentary on American wage rates to say that no matter how low a minimum may be established, it will benefit great numbers of workers. For instance, suppose that the irreducible minimum wage rate is placed at 40 cents an hour such as provided in the pending bill, and the maximum working week placed at 35 hours. This would mean, under the assumption of steady employment, weekly earnings of $14, monthly earnings of about $60, and annual earnings—on the basis of 50 weeks of employment—of about $700. A wage scale such as this would be of material benefit to hundreds of thousands possibly even millions of American workers. For this reason I regard the adoption of such a minimum standard as provided by this bill as a most desirable step forward. It may be that at the present time, and in view of all the circumstances, even such a short step as this is all that is practicable.
But I think it would be a calamity if such a wage minimum as that referred to should in any way be construed as a living wage. The labor movement with which I am associated is interested in securing for every American unskilled or semiskilled worker a living wage— that is to say, a minimum income upon which he can maintain himself and his family at a level of healthy and decent living. The skilled worker should, of course, receive a higher wage in accordance with his skill and training. But every worker, no matter how humble his job, should be able to secure at least the essentials of what, for lack of a better term, we may term an American standard of living.
Nor should this wage be set by the standards in those industries in which a “family wage” prevails. It is possible, for instance, that a cotton-mill family, in which the husband, the wife, and say three adolescent children, are all employed in the mill, may obtain a very good income by their combined efforts. But this practice is destructive to all that we cherish most in our American institutions. Normally, a husband and father should be able to earn enough to support his family. This does not mean, of course, that I am opposed to the employment of women, or even of wives, when this is the result of their own free choice. But I am violently opposed to a system which by degrading the earnings of adult males, makes it economically necessary for wives and children to become supplementary wage earners, and then says, “See the nice income of this family.”
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For these reasons we must keep fighting for the principle of a real living wage. Nor is such a conception the nebulous thing that certain of its opponents would have one believe. On the contrary, the principle of the living wage has been quite generally accepted. Moreover, a series of studies by responsible public and other authorities of the amount of income necessary for a living wage has placed the subject on a factual basis. We now know, with sufficient accuracy for practical purposes, the approximate income which an individual or a family must have in order to maintain what may be described as a minimum standard of living for American wage workers.
This subject was gone into quite thoroughly by the United Mine Workers of America in their appearance before the United States Anthracite and Bituminous Coal Commissions of 1920, the Senate Committee on Manufactures in 1921, the Anthracite Board of Reference in December 1932, and before the National Recovery Administration in 1933 in connection with the Bituminous Coal Code then under discussion.
In this connection, it is my firm belief that we must hold to American tradition and precedent, and accept, as a basis of procedure, the fundamental principle or industrial right upon which precedent and procedure are based. This principle is that every worker should be protected by a minimum wage. Public policy has already sanctioned this standard or right through national and State action and through the decisions of impartial arbitration boards extending from the World War to the present day.
I, therefore, recommend that section 5, relative to "a minimum fair wage” and related sections be dropped from the act. Furthermore, as a representative of the United Mine Workers and the C. I. O., I wish to say that we are willing to stand, as a beginning, upon the “minimum wage standard” of 40 cents per hour.
We should adhere, I am convinced, to the minimum, basic wage as a fundamental right of employees, and not confuse or impede progress by experiments in wage fixing as such.
It is unnecessary for me to add further that it is my conviction also that any sanction for action by the Labor Standards Board such as “the inadequacies or the ineffectiveness of the facilities for collective bargaining”, as set forth in section 5, as a basis for establishing a “minimum fair wage” would be futile. Moreover, in my judgment, it would inevitably bring the administration of the bill into an unfortunate conflict with the Wagner Labor Relations Act, and, in this connection, I suggest that there should be an express provision in the bill that nothing therein contained shall be held to repeal, amend, or modify the National Labor Relations Act or any of its provisions.
ASPIRATIONS OF LABOR
I have emphasized this matter of a living wage and the elimination of section 5 and related sections, because I think it is essential that the bill now being considered be looked at not as an isolated piece of legislation but as one item in a much larger program which is being developed in this country partly through legislation, partly through a developing social consciousness, and partly through the activities of organized labor itself. This bill with its particular proposals will be successful only in the degree in which it fits into the larger program, and this program, in turn, will be successful only
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in the degree in which it meets the legitimate aspirations of labor. For this reason I think it is entirely pertinent and appropriate at this time to call attention to certain of these aspirations.
WHY LABOR IS ORGANIZING
The lack of understanding among the privileged and sequestered groups of our people as to the spontaneous upswing of labor today toward organization and collective, cooperative, constructive action is indeed one of the most deplorable aspects of contemporary American life. It is forgotten that our industrial workers of today—both young and old—were witnesses to the best, but entirely unsatisfactory, accomplishments of our industrial and financial system under the most favorable auspices of the late twenties. It is also forgotten that a large proportion of present-day workers experienced most disastrously the effects of the collapse of our much-vaunted financial and industrial structure in the year 1929. Furthermore, it is not realized that during the long years of depression which followed, some of our most eminent economists and analysists constantly, through periodicals and the daily press, entertained these same workers by taking our capitalistic system apart and putting it together again, for the purpose of showing its fundamental weaknesses in structure and objectives. And finally today, after these unprecedented opportunities for acquiring first-hand as well as secondary knowledge, our industrial workers are forced, by contemporary developments, to the conclusion that American industrial leadership has not grown in knowledge and wisdom and has nothing more to offer than a repetition of our deplorable experiences of the late twenties.
American labor has always believed that political democracy is a splendid thing. It now knows, therefore, from bitter experience and education that unless it is intelligently united with industrial democracy it will turn to ashes in its hand. Labor has, therefore, decided that our political institutions must be supplemented by sound measures of industrial democracy.
To do this, American workmen are convinced that they must have both political and economic organization and power. They believe their economic strength must be equal in bargaining power with the industrialists so that, through constructive collective bargaining or cooperation with enlightened capital, a stable and permanent prosperity for all groups in America may be secured.
The workers are also convinced that political strength is necessary so that industrial planning under Federal auspices may be made possible. They know that modern industries must be coordinated and correlated; that our objectives must be those of maximum productivity, not of restriction and monopoly; that the main emphasis must not be placed upon high prices and profits but upon low profits and low prices per unit of output and upon a constantly increasing mass income and a constant reduction in hours of work, together with complete reemployment of workers of all classifications who are able and willing to work.
It is for this reason that we feel that the minimum-wage and maximum-hour provisions of this bill are a modest beginning of genuine planning toward a better economic order.
Representative Connery. Senator La Follette.
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Senator La. Follette. Mr. Lewis, in connection with your suggestion for the elimination of section 5 and related provisions of the bill, I would like to call your attention to section 23 (a) and (b) on page 40 of the Senate bill, which reads:
Nothing in thia act, or in any regulation or order thereunder, shall be construed to interfere with or impede or diminish in any way the right of employees to self-organization; to form, join, or assist labor organization; to bargain collectively through representatives of their own choosing; and to engage in all concerted activities allowed by the law of the land, and the act shall be construed and applied to encourage and protect the self-organization of employees for the purpose of collective bargaining and mutual aid.
(b) Nothing in this act, or in any regulation or order thereunder, shall be construed to invalidate any contract, understanding, or collective-bargaining agreement whereby an employer undertakes to pay a wage in excess of the applicable minimum wage under this act or to require a shorter workweek than the applicable maximum workweek under this act or otherwise to confer benefits or advantages upon employees not required by this act.
Now, it is my understanding that section 5, or one of the purposes of the insertion of section 5 in the act—and if I am mistaken I would like to be corrected by the author of the bill—was for the purpose of meeting tne situation where you might find an agreement entered into ostensibly on the basis of collective bargaining, which might be below the minimum established, and therefore would give the Board the power to look back of that agreement and to ascertain whether or not it had been entered into under effective and bona fide collective- bargaining processes, and to take care of those situations, if there be any such, that might arise whereby an ostensible collective-bargaining agreement might prevail in a certain plant or a certain section of an industry which would not be bona fide in character and would tend under section 23 to prevent the Board from meeting the situation where a spurious agreement or one which had been entered into without bona fide or effective bargaining should tend to prevent the minimum from being established in that particular section or segment of the industry.
Mr. Lewis. If section 5 were to be accepted by the Congress and continued in the act, I would find myself quite in harmony with that provision which you have analyzed. I believe quite definitely that if that standard were set up and this machinery saved for the bill, any contract below that standard should be set aside.
Senator La Follette. That was the point I was coming to, Mr. Lewis. If section 5 were to be eliminated, would there not be danger under section 23, which as I understand it, is for the purpose of permitting the self-organization and collective bargaining and so-called industrial democratic processes to determine wherever it is effective and to prevent the Board from entering the field and disturbing bona fide collective-bargaining activities between employer and employee. Would it not be necessary, if section 5 were to be eliminated, to in some way provide the Board with power to look back of the agreement and make certain that it was not being used for the purpose of breaking down the maximum standard to be established by the Board?
Mr. Lewis. In my opinion, such a provision would not be necessary if section 5 were eliminated because then the bill would simply establish the minimum wage of the various classifications at the suggested rate of 40 cents an hour based on the workweek that would be fixed. And collective bargaining would then have an opportunity to perform its function over and above that minimum.
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I really think that the number of instances where, through collective bargaining processes, indefensible agreements might be made would be relatively few and would be the exception rather than the rule.
My objection to section 5 is based upon a little more broad premise. I think that section 5 would permit wage fixing as such, and that the four standards set forth in the section as being the factors to be considered by the wage-fixing board would result in the fixation of what would be called a fair minimum wage, and that rate, whatever it may be, whatever the finding of the Board, might come to be regarded by the public, by the Government, and by practically everyone as being a fair wage, a proper wage, a justifiable wage, and practically a legal wage.
Senator La Follette. Well, to phrase my question in another way, Do you or do you not see the need of some provision in the bill which will accomplish the objective which I assume that the authors of the measure had in mind when they incorporated section 5, and related sections thereto, in the measure?
Mr. Lewis. You mean should there be a provision in the bill to permit analysis and setting aside of what might be termed subnormal contract on the part of a labor organization?
Senator La Follette. Providing it falls below the minimum of 40 cents an hour, let us say, if that is established, or if it has a provision in it for maximum hours higher than those fixed in the bill.
Mr. Lewis. If the Congress should enact this bill and fix the 40 cents as the minimum, and whatever hours it fixes as the maximum, I would have no personal objection at all to having the Board given the authority to examine into any collective-bargaining agreements below those standards, with authority to modify those agreements if they found it justified. My objection, however, to section 5, does not run to the fixation of this minimum wage of 40 cents. It runs to the question of the determining of this fair minimum wage by the Board in consideration of the four factors or elements set forth in section 5 which, when published and decreed, would be accepted by the public at large and by industry and perhaps by the court as being a fair wage and a legal wage.
Senator La Follette. I understood the basis of your criticism of it from your opening statement, but I wanted to get clearly your feeling as to whether or not there was not a need for a consideration by this committee and incorporation in the bill eventually before it is reported of some provision which will take care of what I understand to be the objective of section 5, namely, to prevent ineffective collective-bargaining agreements or spurious collective-bargaining agreements between employer and employee from pulling a section or segment of industry or a particular industry below the minimum standards fixed by the Board.
Mr. Lewis. Well, I understand if section 5 is eliminated the bill would be much simplified. The work and the powers of the commission would be substantially restricted, that is its administrative work would be relatively simple. That is, if the minimum of 40 cents was fixed for all industries affected by the act there would be no objection at all on my part to having the Board given authority to examine into and modify, if it is necessary, any collective-bargaining agreement made with an employer below the 40 cents an hour standard or the 35 hours I suggest, or whatever the Congress may decide.
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Senator La Follette. It is my understanding that that was the objective of section 5.
Mr. Lewis. You do not mean that is the sole objective, Senator, of section 5?
Senator La Follette. I gathered, largely from the testimony that has been given here, and from questions which have been advanced by the authors of the bill, I understood that that was the primary objective, to meet that kind of a situation, especially in view of die intended objective of the activities of this Board under this law, that they should not invade the field where collective bargaining is effective as provided in section 23 (a) and (b).
Mr. Lewis. As I read the bill, Senator, that function is only an incidental function and a relatively unimportant function as compared with the major powers conferred on the Board under section 5. Section 5 gives the Board authority to set up entirely different wage standards from the minimum wage standard which is set forth in the other sections of the bill, and gives it authority to examine into those conditions, either on their own motion or on complaint of interested parties, and, after considering the equities, to fix a wage for that industry or plant.
Senator La Follette. But may I call your attention to the fact that both sections (a) and (b) of section 5 begin with the sentence, “Whenever the Board shall have reason to believe that owing to the inadequacy or ineffectiveness of facilities for collective bargaining, and wages below a minimum fair wage”, et cetera. Each one of those sections is limited by this opening phrase, and it was my understanding that the purpose of this section was to meet the situation where the Board had reason to believe that an agreement had been entered into where, as it phrased it, owing to the inadequacy or ineffectiveness of the collective bargaining, a situation had been created which produced wages below the minimum.
Mr. Lewis. Well, Senator, if you will pardon me, would that not include all industries in which the workers were not organized? All unorganized industries would come within that category, would they not?
Senator La Follette. Well, it would give the Board authority and power, wherever they believed that collective bargaining had resulted in the establishment of a contract which was below the minimum, to go in and look back of it, if you read section 5 in conjunction with section 23 which prohibits the Board from taking any action which is going to upset a bona-fide collective-bargaining agreement, because as I understand it—I do not want to take any more time than I have taken, and I have taken more than my share now—but as I understand it, the objective of this bill as outlined in section 23, one of them is to prevent the Board from going in and upsetting collective-bargaining agreements or entering the field where collective bargaining is actually functioning in a bona-fide manner, and thereby producing the result of the action of the employer and employee represented by genuine and effective labor organization.
Mr. Lewis. I agree they have that power under the proposal here, but I also think that the Board would have the power to enter into an industry or an area or a field where there was no organization of any character and no collective-bargaining contracts in existence and, on their own motion or upon complaint, undertake to fix in that industry a fair and minimum wage. The Board would have that authority.
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Senator La Follette. Assuming, however, that the purpose is as I have suggested in my question, you do recognize the necessity, do you not, and I think you have already indicated that you would not object or interpose any reasons for the bill providing a power on the part of the Board to look back of the collective-bargaining agreements and to ascertain their bona fide and effective character in cases where there shall be, as a result of contracts, wages which are below the minimum and hours above the maximum.
Mr. Lewis. My attitude toward that is negative. I do not think the Board should have that power in any broad sense. I said that if the Congress fixed the minimum at 40 cents in this bill, and section 5 were eliminated, I would have no objection whatsoever to the Board investigating any collective-bargaining contract which provided for lower than 40 cents or higher than the maximum hours, but I would not grant the Board the authority to fix that rate at 60 cents or 70 cents or 80 cents. Their power should be restricted to making those standards come up to the minimum standards declared necessary by Congress.
For instance, frankly I would not want this bill to convey power to a board to order an investigation into all of the wage agreements in the mining industry right now, or to give the board power to decide that the collective-bargaining agreements in the mining industry were not sound, not proper, were confiscatory, or not in harmony with the facts of the industry, and order a modification thereof. I think the power of the Board should be limited to cases which run below the level of the standards fixed by Congress. I see endless confusion in the adoption of section 5 now. I see a drift toward the complete fixation of wages in all industry by governmental action.
Senator La Follette. But if I understand you correctly, you would not object to the Board having the power in the case of collective-bargaining agreement being reached which was below the minimum so far as wages, or hours in excess of the maximum, of having power to step in and examine that particular agreement and to take action and to lift the agreement-----
Mr. Lewis (interposing). To the standard declared by Congress?
Senator La Follette. Yes.
Mr. Lewis. Now, in other words, if the United Mine Workers of America made an agreement on hours below the 35 or 40 declared by Congress as the standard, or on wages below the 40 cents declared by Congress as the standard, I would be very glad to have the Board come in and bring it up to that standard, but I would not want the Board to have the power to determine what a fair minimum wage for that industry may be, or for a section of that industry, and fix it at 70 or 80 or 90 cents, because that would destroy the efficiency of our collective bargaining and our voluntary action in the coal industry.
Senator La Follette. I think I understand your position.
Representative Connery. Mr. Jenks of New Hampshire.
Representative Jenks. I was not here to hear Mr. Lewis’ statement. There is only one thing I would like to ask. I assume, and I presume that you do, that the object of this bill is to raise the general standard of wages and to lower the hours of labor.
Mr. Lewis. That is right.
Representative Jenks. And do you feel that that is going to materially increase the cost to the consumer?
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Mr. Lewis. I think that this bill, in the manner that I suggest it be amended, would have a very inconsequential effect on costs.
Representative Jenks. For what reason?
Mr. Lewis. Well, because the amount of the increase is so modest, and I really think that the advantage would accrue to the consumers in the entire population by raising wage standards in certain areas, | and increasing the purchasing power of those people.
Representative Jenks. Do you favor including farm labor in this I bill?
Mr. Lewis. I favor including everything which comes under the legal theory on which this bill is prepared; in other words, all of those industries operating in interstate commerce are affected to the degree permissible by the court decisions.
Representative Jenks. Do you believe in carrying this point in industry without any limit to the number of employees?
Mr. Lewis. I think, frankly, that anyone who comes within the purview of the act should be covered by the act, regardless of the number of employees that he may have in his establishment.
Representative Jenks. Even though it might be as low as one employee?
Mr. Lewis. Yes. I see no reason to exempt one man merely because he is one, if he is covered by the act in its legal application.
Representative Jenks. Do you believe that the Board that is to administer this act should be larger or smaller, or do you think that a board of five that the bill calls for would probably be the best working board?
Mr. Lewis. Five is ample in my judgment. I think conceivably a board of three might do it.
Representative Jenks. That is all.
Mr. Lewis. I might say with respect to this cost item, if you would permit me just a further observation, that there are a great many industries in which I think the 40-cent minimum would not greatly increase the wages of the employees. My own idea of the industries in the South is that it would possibly be an increase from an average of now perhaps 32 cents an hour to 40 cents. That is about the range of the cost expansion.
Representative Connery. Mr. Dixon?
Representative Dixon. I yield.
Representative Connery. Mr. Griswold of Indiana.
Representative Griswold. Like Mr. Jenks, Mr. Lewis, I did not hear the first part of your statement, but I am principally interested in this bill for any effect it might have on existing legislation such as the Wagner Labor Relations Act and the Guffey Coal Act, so-called. If you will recall, in this bill it provides that the singular shall be the plural and the plural the singular, and in section 25 of the bill it provides there that an individual, which under the definitions of the bill would allow an individual to appeal, what in your opinion would be the effect if the United Mine Workers or even an unorganized group would comply with all of the provisions of the Wagner Labor Disputes Act, and under this provision had gone ahead and bargained collectively, and then under the definitions of this bill, whether or not one individual could not go in and attack that agreement arrived at under the Wagner Labor Disputes Act?
Mr. Lewis. Perhaps before you came in, I stressed that very point. I stated that in my judgment this section 5 would inevitably bring
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the administration of the bill into an unfortunate conflict with the Wagner Labor Relations Act, and in this connection I suggest that there should be an express provision in this bill that nothing therein contained should be held to repeal, amend, or modify the National Labor Relations Act or any of its provisions.
Representative Griswold. I brought this out because I brought the same matter up with Mr. Jackson the other day.
Mr. Lewis. I think there should be an express saving clause that would protect that situation. I think that the Wagner Labor Act by all means should remain intact, and that section 5 of this bill would inevitably come into conflict with the intent and spirit and letter of that act m many of its administrative impacts.
Representative Griswold. Under this act, as you read it and as I read it, under the provisions of this legislation, coal produced under fair labor standards in Indiana and sold in Kentucky would not have to compete with coal produced in Kentucky under sublabor conditions, even though the coal produced in Kentucky was sold entirely within the confines of the State of Kentucky; is that not correct?
Mr. Lewis. I am not just clear as to how that would affect the coal industry there.
Representative Griswold. Understand, I am taking into consideration the fact that you have now the Guffey Coal Act, but under the provisions of this act.
Mr. Lewis. I frankly think that section 5, if enacted by Congress, would also be in conflict with the provisions of the Guffey coal stabilization bill, and I am all for striking out section 5 and simplifying this act.
Representative Connery. Will the Congressman yield?
Representative Griswold. Yes.
Representative Connery. As I understand your question, if the coal mined in Kentucky under sublabor conditions, substandard labor conditions, came in competition with the coal mined in Indiana under fair labor conditions, the competition phase of the matter, in view of the decision of the Supreme Court in the Wagner-Connery Act in the Jones and Laughlin case, would make the Kentucky concerns come up on their wages or they could not ship in interstate commerce.
Representative Griswold. The purpose of my question was just, as a matter of fact, Mr. Connery. We will presume that the coal is produced in Indiana under fair labor conditions. Coal produced in Kentucky is not. But the coal produced in Kentucky under substandard labor conditions is sold entirely within the State of Kentucky.
Representative Connery. It could not even be sold in Kentucky.
Representative Griswold. Under this act, as I understand it, that coal produced in Kentucky could not even be sold in Kentucky in competition with Indiana coal.
Representative Connery. Until they came up to the wages set by the Board.
Representative Griswold. I do not know whether I am correct on that or not, but that is my understanding of the bill.
Representative Connery. That is right.
Representative Griswold. Mr. Lewis, you are familiar, I know, much more than I am with the set-up of the Board under the Guffey Act. It is composed of seven members, I believe?
Mr. Lewis. Yes.
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Representative Griswold. The Board under this act is composed of five members which shall be selected as nearly as possible with the geographical situation in mind, but there is not anything mandatory. Are the provisions of the Guffey Coal Act for the appointment of the Board practically the same as this other than that so many representatives shall represent labor, and so many representatives industry, and so many the public?
Mr. Lewis. There is no geographical restriction on the selection of the Board, and under the Guffey-Vinson Coal Stabilization Act there is the provision that no two commissioners shall come from the same State. It was to be composed of two operators, two miners, and three representing the public, and in order to give geographical representation to provide one operator from the North and one from the South and one mine worker from the South and one from the North, although that was not necessary as far as the mine workers were concerned. That is the reason the number is seven instead of five.
Representative Griswold. But, as a matter of fact, in the appointment of that board, the weight of the appointees went a little on the side of the operators, did it not?
Mr. Lewis. I would rather not comment on that at this time.
Representative Griswold. I see that the appointment of this Board, Mr. Lewis, is important, and, as I understand it, I was reading the lives of the appointees the other day in some magazines—maybe yours—where two of these operators are in reality operators at the present time, and one of them who was appointed as the representative of the public had been formerly connected with the operators; is that true?
Mr. Lewis. I don’t know that that is correct in any substantial sense.
Representative Griswold. I was just wondering if a man who had formerly been connected with the operators would not have his bias and prejudice and experience more with the operators than with the general public?
Mr. Lewis. Generally speaking, I think the Board is representative in having three of the public and two of the operators, one from the North and one from the South, and two men who have had practical experience as miners.
Representative Griswold. Don’t you think in the set-up of this Board which consists of only five members, and they are going to handle all industries and not just one such as the coal business but all industries in the United States and all labor practically will be affected by their decisions, don’t you think that it would be well to lay down mandatory regions or something from which these members of the Board shall come?
Mr. Lewis. I had not given any consideration to that. Of course, I appear here as an exponent of the proposition of lessening the amount of what the Board will have to do. Under section 5,1 think a board of three or five or seven or nine or eleven will have too much work to do, and that it can be simplified if section 5 is stricken out. And the duties of this Board are limited to the application and administration merely of a minimum wage act of 40 cents an hour and so many hours a week.
Representative Griswold. And that their powers not go beyond in any way the actual fixing of the minimum wages and the maximum hours. That is your position?
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Mr. Lewis. That is right.
Representative Griswold. That is all I have, Mr. Chairman.
Representative Connery. Mr. Welch, of California.
Representative Welch. Mr. Lewis, one of the purposes of this bill is to spread employment. Can you tell the committee how many men are unemployed in this country at the present time, or approximately how many?
Mr. Lewis. I cannot add to the committee’s knowledge on that question, aside from public information which everybody knows—the reports of the various agencies and the estimates that are made by the Works Progress and other governmental instrumentalities to Congress.
Representative Welch. I have not heard the last estimate. Have you?
Mr. Lewis. I could not recall it at the present moment.
Representative Welch. In your judgment, how many men are unemployed in the country at the present time?
Mr. Lewis. My judgment would be rather unimportant on that, because I have no actual knowledge, Congressman. I could only summarize the reports of these various agencies, the report of the American Federation of Labor, and the various governmental agencies and their reports to Congress, the reports of the various agencies of the manufacturers and employers. In other words, I don’t know how many men are unemployed and I don’t know anybody who does.
Representative Welch. Thank you.
Representative Connery. Mr. Lambertson, of Kansas.
Representative Lambertson. Mr. Lewis, would you rather see this bill reported adversely than see it reported with these sections 5 and 23?
Mr. Lewis. I did not quite get that question.
Representative Lambertson. Would you rather see this bill reported adversely than reported with sections 5 and 23 in?
Mr. Lewis. Well, I would not want to put it that way, Congressman. I think that the bill is entirely meritorious, eminently economically sound, and justifiable from every standpoint if we do not undertake in this measure to set up a board with power to fix the wage structure of industry.
Representative Lambertson. And do you fear that section 5 and the power given the Board therein, they might assume to make it similar to the Kansas Industrial Act of 1920 or something like that?
Mr. Lewis. Congressman, I am not sure what would follow the finding and publishing and fixation of a minimum fair wage in, say, the lumber industry by this Board. They would make an investigation and they would appoint an advisory commission, they would consider all of the factors set forth in section 5 and finally emerge with a recommendation for so much an hour and so much a month as being a fair minimum wage. If the men in that industry had an opposite view and felt that the wage found by the Board was inadequate and one with which they were in opposition, and resist that finding, I am not sure under this act what would be the action of some of our courts on that question. The employers would publicize the country and say that this is a fair wage that we are offering these men, who are arbitrary in their nonacceptance, the wage was found by a Government agency after fair analysis and proper examination, and would perhaps say, “We propose to go into a court of equity to
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restrain all and sundry from opposing that finding”, and I am not sure what some of our Federal judges would do under those circumstances, knowing some of the Federal judges. Then we would have the impossible situation of men being ordered by the Federal judiciary to remain at work under a finding that they regarded as unjust.
Representative Lambertson. In other words, you would rather see the labor have the power that it has today to strike and take care of itself whenever necessary, rather than under any Federal board which even might be appointed under the present President?
Mr. Lewis. I think it is perfectly meritorious and justifiable for the Government to step in to protect and lend its influence to improve the economic status of that submerged element in our working people who are incapable of helping themselves and whom the organized labor movement has not been permitted to serve, and to whom collective bargaining is unknown now or in the near future, and establish a basic minimum wage. I think that is entirely proper economically and legally sound, but I do not think that under section 5 of this act the Congress can afford to set up an instrumentality here and vest it with all of the broad powers that may be necessary to confirm wage fixing as such in the country, and then go through a struggle of some years with our Federal judiciary to determine whether, alter all American workmen are free men or indentured servants.
Representative Lambertson. If this bill is to be reduced to merely a minimum proposition, it is not hardly necessary to have a separate board to administer it, is it?
Mr. Lewis. Well, that is as the Congress may decide. I suppose that any kind of a minimum has to be at least policed by some agency. There has to be some central authority with whom complaints should be filed, and procedure with regard to enforcement will have to be worked out.
Representative Lambertson. That is all.
Representative Connery. Mr. Smith of Maine.
Representative Smith. Mr. Lewis, for the same kind of industry, do you believe in a minimum wage for all sections of the country?
Mr. Lewis. Yes; I believe in this minimum for all sections of the country and all industries. I think this minimum is so low that any industry that qualifies as an operating entity could pay this wage.
Representative Smith. What effect in your judgment will the raising of wages and the lowering of working hours have upon the small businessman?
Mr. Lewis. I think it will have a beneficial effect. I think the small businessman is dependent upon the income of his community for his profits and for the successful conduct of his business. Anything which will tend to increase the annual wrage income of the workers in his community will be a boon to the small businessman.
Representative Smith. I am glad to hear you say that, yet I am wondering a bit how with less capital, and perhaps less efficiency, how the small man can compete with the larger?
Mr. Lewis. Of course, the relationship of the small merchant to the large one is a matter entirely beyond the purview of our present discussion here, but I think that anything that will increase community income where the small merchant is operating, will operate to his advantage. Of course, he will still have the problem of his relationship with larger units in his own industry or field of service.
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Representative Smith. In your opinion, will it be necessary, if this bill is passed, to rearrange reciprocal tariff relations?
Mr. Lewis. I do not see how it could be done until this bill is passed, and until a record of performance is obtained that will show its effect upon commodity shipments, imports and exports. I do not see how any approach could be made to the question until a record has been made.
As a matter of fact, I think, under the proposals which I suggest, the impact on the possible tariff change in the structure will be rather insignificant.
Representative Smith. There should be, in your opinion, no allowances made for the factory that is equipped with inefficient machinery, and that the minimum wage should apply just as well.
Mr. Lewis. Do you mean to reward inefficiency in business by giving the inefficient employer the right to hire human beings at a lesser wage?
Representative Smith. I don’t think so, but that has been suggested and that is why I am asking.
Mr. Lewis. I think that is unsound from about every approach.
Representative Connery. Mr. Lewis, right along the line, so that they will not have to come back to it when I reach my own questions—if Mr. Thomas will yield—in the first 6 months of this year, there were about 400,000 tons of Welsh coal came in here from Wales and from Russia and can be delivered in the port of Boston for $3 a ton less than your anthracite coal from Pennsylvania can be delivered in the port of Boston after all of the landed costs have been paid on the foreign coal. If this bill comes into effect, suppose they went to a 30-hour week in the mines—I don’t know what your ordinary wage is— but certainly your wages in Russia and Wales are far below what they are here, and we opened the market that way to the foreign coal. Don’t you think you are going to suffer here unless something would be put in, either permissive or otherwise, to allow this board to or allow the Tariff Commission, after advising with the President, to take care of that situation of foreign imports?
Mr. Lewis. Are you speaking of the Welsh importations or the Russian?
Representative Connery. Both. About 400,000 tons since January.
Mr. Lewis. Three hundred and eighty-eight thousand tons of that was Russian coal which paid $2 a ton import tax. The Welsh coal comes in duty-free under the favored-nation arrangement. The imports from Wales are insignificant. The total production of anthracite in Wales is only 3½ million tons per year as contrasted with our present 50,000,000 tons. Obviously, England could not export her entire production of anthracite, and the amount that will be exported from Wales I think is not in itself substantially important.
Now, the question of the Russian importations—that ran up from about 250,000 tons in 1935 to 388,000 tons in 1936. That coal paid the import duty of 10 cents a hundred pounds, or $2 a ton. As a matter of fact, that is the only country against which the coal tariff runs, Russia. That $2 a ton does not stop the importation of Russian coal. $5 a ton would not stop the importation of Russian coal if Russia wanted to export that tonnage to build up its trade balance in America. Russian coal has no cost of production that can be
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translated or compared with our costs. One cannot find a cost of production in Russia and measure it against any tangible equations.
The answer to the question of Russian coal is not through the application, in mv judgment, of a greater coal tariff. It is a question of the State Department perhaps working out an arrangement of that question voluntarily with the Soviet Republic.
Representative Connery. Well, under the N. R. A. we had the proposition that the President, if he saw fit, if any imports interfered with the administration of the N. R. A., to put an embargo on it, or he could place a tax on the difference between the cost of production in this country and abroad. Would you favor that going into this bill, giving the President that power?
Mr. Lewis. I think something like that certainly is all right. I feel, perhaps, that this whole subject of the Russian importation may possibly be worked out by Government agencies, but in the event it cannot be worked out I surely would favor the right of the President to put an embargo on imports, if and' when it became necessary.
Representative Connery. I have one more thing. Mr. Thomas is next and I do not want to take his time. There were 500,000 pounds of canned beef brought in by the Chicago packers, and I forget how many head of steers that would amount to in Texas, but it is quite an amount. Now, the same thing applies to cattle as it does to your coal and that is why I ask these questions in reference to foreign imports. If something does not go into the bill to give the President at least the power to embargo it, to tax it, we might find ourselves in the situation, and do you believe we would find ourselves in the situation of where we would be opening our ports to cheap labor and long hours, driving our manufacturers and our cattlemen out of business?
Mr. Lewis. I do not know that some of our ports are not now open on that basis. I do not know that anything in this bill would materially complicate that problem. I think that the whole question of the tariff structure is a separate question which has to be considered by Congress and the administration, and I do not think that it can be well considered in connection with this bill.
I might point out, for instance, that the Bethlehem Steel Corporation annually imports 15,000,000 tons of iron ore free into this country. The Bethlehem Steel Corporation, which is the low-wage corporation of the steel industry, is behind the Republic Steel, the Youngstown Sheet and Tube, in resisting collective bargaining in that industry. The Bethlehem Steel is trying to protect this low-wage structure in its mill, and trying to protect the special privileges and special cost advantages that it has over its competitors in the industry by maintaining its right to have the 15,000,000 tons of iron ore enter duty-free. So if you are merely interested in the question of tariff equities as such there is an ample field for all of our minds to operate, independent of any consideration of this bill.
Representative Connery. You would not object to something going into the bill that would give the President the same power that he had under the N. R. A.?
Mr. Lewis. I would have no objection at all, Congressman. I merely suggest that this bill, as I see it, which creates a minimum wage of 40 cents an hour in all industry affected by the bill, would not of
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itself create a complicated tariff problem. The tariff problem, if it is complicated, and I rather think it is, is with us anyhow and perhaps is entitled to definite, separate consideration.
Representative Connery. Mr. Thomas.
Representative Thomas. Mr. Lewis, my question is somewhat similar to that of Congressman Smith, namely, do you see any danger in this bill of the concentration of business in strong hands?
Mr. Lewis. You mean this bill as such?
Representative Thomas. Yes, sir; as it is now drawn.
Mr. Lewis. It had not occurred to me that there was such a potentiality.
Representative Thomas. Let me ask you a hypothetical question and see what you think about it. Suppose we have here a business that is barely able to keep its head above water through one or more causes—maybe you have a poor management, maybe you have an insufficient capital structure, and for those reasons the business is just barely able to get along; consequently it has a long workweek, and it pays low wages; suppose this act goes into effect, and the effect of this act upon that particular business will be this—that that business will have to decrease its working hours 20 percent per week and increase its pay, say, 15 or 20 percent a week; do you think that the act then would put that business out of operation, or what effect would it have upon that business?
Mr. Lewis. Well, I would not know without a more particular knowledge of the business than you have indicated in your question. I think, by and large, that business would tend to increase its volume and probably increase its profits in that manner. However, the records are that nearly two-thirds of all the corporations and business enterprises fail and one-third survive. There is a constant change there. I could not undertake to say, with any degree of sound judgment, what would happen to a hypothetical business such as you describe there.
Representative Thomas. That question leads me to this one, Mr. Lewis. It is apparent to me that unless there was some elasticity in the act, which is not there now, if this act goes into effect, simultaneously the business that I have described would have to fold up.
Senator La Follette. Will the Congressman yield there?
Representative Thomas. Just a minute, Senator. Let me finish this, and I will be glad to yield. I am just wondering if you think it is at all possible and practicable to have a differential within the same industry.
Mr. Lewis. I do not think it is practical at all to have a differential on such a low minimum. I cannot conceive of what kind of business it might be that would fail under the reasonable increase of cost that this bill might apply. For instance, a man with two employees might have his wages increased $2 a week, a total cost of $4; the reduction in hours might cost him another $4, or $3. Well, if he is so near failure that $7 or $8 a week increase will ruin his business, I do not think he will be safe anyhow. If he is that close to the sheriff, I think the sheriff will get him.
Representative Thomas. The sheriff will get him sooner or later, regardless of this act
Mr. Lewis. Yes.
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Senator La Follette. I just want to call attention to this provision on page 12 with regard to the oppressive wage, which reads:
Having regard to the policy of the Congress to extend the applicability of the provisions of this Act with respect to an oppressive wage to all employments within the scope of this Act as rapidly as possible, the Board shall from time to time by regulation or order declare such provisions applicable to employments within the scope of this Act as rapidly as the Board finds that such provision can be made applicable to such employments without unreasonably curtailing opportunities for employment.
Does that not give the Board discretion as to the rapidity with which it puts these orders or regulations into operation, taking into account the possibility of closing up establishments and thereby- curtailing the opportunity for employment? In other words, is not the discretion there in the act?
Mr. Lewis. How does that impact on you, Congressman?
Representative Thomas. If that paragraph, Senator, will be construed to apply to whether or not the minimum wage itself shall go into effect, then I think that will save the situation that I pointed out ; but if the minimum wage goes into effect, ipso facto, and this particular sentence that you point out here is construed as giving the Board power to later come along and raise that standard set by the act itself, then I have some grave doubts as to the wisdom of it.
Representative Connery. Had you concluded, Mr. Thomas?
Representative Thomas. Yes.
Representative Connery. Senator Murray, of Montana.
Senator Murray. I have nothing.
Representative Connery. Mr. Iglesias? Do you want to question the witness?
Representative Iglesias. No.
Representative Connery. Mr. Wood, of Missouri.
Representative Wood. Mr. Lewis, there seems to be a great apprehension in the minds of a great many people that if this law is enacted and a 40-cent minimum is established, if wages were elevated and hours were reduced, that that will cause an undue rise in the cost of living. Now, the Ohio coal fields instituted a coal loader some years ago. As I understand, the coal-loading machine operated by 2 men took the place of some 30 or 40 coal miners who previously had produced coal without the application of the machine. Now, by the institution of that coal-loading machine, which caused the operators to raise their dividends, did that appreciably affect the wages of the coal miners? Did the coal miners’ wages suddenly go up?
Mr. Lewis. No; the wages did not go up, Congressman, because of that factor. As a matter of fact, mechanization in the mining industry proceeded at a faster rate in 1936 than the years previous, and the displacement of manpower that has taken place in the coal industry by the introduction of those modern appliances will be greater this year than in 1936, so much so that upon the demand of the mine workers the industry has appointed a joint commission to make a scientific study of all the factors involved in the increased use of machinery in the mining industry. As a matter of fact, one of the very great questions that affect our country at the present time is whether or not the workers are going to be permitted a participation in the increased efficiency of productive industry.
Right now our increased volume of business, our so-called prosperity, carries with it the seeds of much greater unemployment in this country,
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because as plants increase their volume and increase their sales realizations and their margins of profit they have more money and more credit to modernize plant facilities, buy new- machinery, utilize energy, and displace human hands. That is one of the great questions that affect our country now and it is one of the things for which no appreciable solution has been found either by Congress or by industry, or by labor.
Representative Wood. In other words, when the coal-loading machine was established the mine workers received no consideration with reference to a raise in wages and a reduction in hours, except by and through collective bargaining?
Mr. Lewis. That is right, Congressman. I might say right at this point that there has recently been demonstrated a coal-loading machine that loaded in one 7-hour shift more than 1,100 tons. That is the work of 110 men. It takes 11 men to operate the machine as a unit. That machine will stay, of course, and others will follow. Eleven men remain and 99 men go. Where do they go? That is the question that confronts the coal miner—where do they go? There is no answer to that.
Representative Wood. It seems to me like the greatest danger is that the workers are not permitted to share in the benefits that follow from science and invention in the application of labor-displacing machines, that the employer reaps the benefits.
Mr. Lewis. That is one thing that is uppermost now in the minds of all these millions of workers who are joining the unions of their industries. They are doing so with the hope and the determination on their part to insist upon a participation in the increased efficiencies of modem productive industry, that they have been denied in the past.
Representative Wood. Now, following the World War and during the World War the basic day for the mine worker was 8 hours, was it not?
Mr. Lewis. That is right.
Representative Wood. The average?
Mr. Lewis. Yes; 48 hours a week.
Representative Wood. That is right, Now, the mine workers have 35 hours a week. Can you notice any difference in the price of coal to the ultimate consumer in 1921 and 1920, during and following the World War and today, although the mine workers are working 13 hours a week less and probably drawing a higher wage than they did in 1921?
Mr. Lewis. It is substantially the same, Congressman. I might say that in the mining industry the shortening of a work day has always been accompanied by an increase in the per man per day production and a cheapening of the cost of production. From the 12-hour day down to the 11, down to 10, down to 9, down to 8, and down to 7, the per man per day productivity has always increased, and with respect to that reduction from the 8-hour to the 7-hour day in the industry a year or so ago, in 1935, the operators are unable to present any comprehensive figures to show increased cost of production, while, as a matter of fact, we have information which shows that in certain districts the operators made a profit and actually lowered their cost of production by reducing from the 8-hour day to the 7-hour day. One particular field that comes to my mind at present made a saving of 2½ cents a ton in the cost of coal by changing from the 8-hour day to the 7-hour day.
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Now? of course, there are many factors that enter into that question. The miners in our bituminous and anthracite industry are the most productive of any miners in the world. The British miner produces on an average of 1 ton per man per day; our mine workers produce 5 tons per day per man employed, on the average. Many factors enter into it. We have a faster tempo of operations, greater productivity of the American miner, utilization of energy and machines, fine engineering, and good management.
That merely indicates what industry will do. Industry can give a participation in greater leisure and shorter hours to the American workman, giving him a wage that will maintain his consumer buying power, but industry has not been doing it.
Now, that same argument is an argument that shows that the shortening of the hours is not, up to this point, a complete answer for the unemployment question, because as efficiencies increase displacement of manpower continues. The answer to that is nothing but a progressive shortening of the hours.
Representative Wood. Now, we agree that the passage of the Guffey coal bill did put out of business thousands of small so-called employers. It has been the experience in my State, and I suppose that was the experience everywhere, that we had thousands of small employers, so-called employers, that ran a cooperative mine, what they call wagon mines, and they produced coal, and the operator himself was practically an employee, and if he made from 75 cents to a dollar a day it was a tremendous profit for his effort, and he constituted the cutthroat competitor of the coal industry. Do you know of any reason why that sort of business should survive, a business that cannot pay wages, that cannot work its employees reasonable hours, that cannot maintain a sufficient dividend and profit to build up his capital structure so he will be in somewise substantial; that is, he will be able, in somewise, to guarantee reasonable steady employment to his few employees? Can you see any reason why the employer that I have mentioned, or in any industry, should have any good reason to exist?
Mr. Lewis. That sort of employers in the coal industry, of course: have had an economically demoralizing influence on the coal industry. Not only that, but they have been unable to protect the safety of their men and the butchery of miners in those mines has been something appalling, because those miners cannot buy timber, they cannot buy ventilating equipment, they cannot maintain reasonable conditions as far as the hazard is concerned. There are many reasons why their elimination is a distinct advantage to the community, to the industry, and the public at large.
Representative Wood. That is all.
Representative Connery. Mr. Ramspeck.
Representative Ramspeck. Mr. Lewis, as I understand it, in your work with the miners’ organization you have made a very careful study of the economic factors involved, have you not, in the coal business?
Mr. Lewis. Well, as I have been capable of making it.
Representative Ramspeck. Well, it is your policy, as a leader of labor, to study the economic factors of any industry that you attempt to organize, is it not?
Mr. Lewis. Insofar as I am capable; yes.
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Representative Ramspeck. Are you following that same policy with reference to the textile workers organizing committee?
Mr. Lewis. Yes; trying to.
Representative Ramspeck. Am I right in assuming that your support of the last Guffey-Vinson bill, with the labor provisions in it, was due to the fact that it was necessary to stabilize that industry in order that it might pay fair wages?
Mr. Lewis. Well, the Supreme Court emasculated the Guffey Act, invalidated the labor provisions, but the United Mine Workers are still of the opinion that the industry, from an economic standpoint, needed the legislation.
Representative Rambpeck. That is the point exactly that I was getting at, that in order to carry out their contracts with your organization they needed legislation to stabilize the industry?
Mr. Lewis. Not alone that. Congressman, .because we accepted the theory that they were entitled to a return on their investment and they were entitled to a price on their coal that would give them a reasonable return.
Representative Ramspeck. And also the further fact, I presume, that they could not pay fair wages unless they made a profit?
Mr. Lewis. Well, we wanted to escape from the years and years of economic demoralization of the industry. You see, that took a terrible toll of our people, because the average mining company could not keep up safety conditions and buy mining equipment and cut the risk hazard of the industry. Countless numbers of our people were killed and injured by reason of the fact that the company was just too poor and had no credit to buy ventilating machinery, sink new air shafts, properly timber their workings, and provide safety conditions in the mines.
Representative Ramspeck. Then it follows, does it not, that even though you have the utmost in labor organization within an industry, unless the conditions as to economic factors are properly taken care of that the organization does not get your men jobs at fair wages?
Mr. Lewis. That does not necessarily follow. It happens to be true of certain industries. It is definitely true in the coal industry and definitely true in the textile industry because those industries have such large numbers of operating units, each competitive with the other, and so little organization on the capital side that they could not work out their own salvation themselves. Not only they but the workers themselves become inevitably sufferers from this demoralization. Those are the two outstanding examples of American industry.
Representative Ramspeck. Now, with reference to section 5, is it your understanding that the elimination of that section would take away from this Board the right to vary the minimum wage?
Mr. Lewis. Yes.
Representative Ramspeck. And that is one of the reasons why you want it out?
Mr. Lewis. That is right.
Representative Ramspeck. Mr. Johnson, of Johnson and Johnson, who operate the Gainesville Mills in Georgia and Chicopee Mills in Massachusetts, testified before this committee the other day that it cost his company more freight to deliver cotton to the Gainesville Mills than it did to deliver the same cotton to the Massachusetts
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Mill, the raw cotton, and it also cost more money to ship the finished product to the market from Gainesville, Ga., than it did from Massachusetts. That being true what is the answer to the question of the economic conditions in the mill in Gainesville as compared with the mill in Massachusetts if we put them in a strait jacket as to wages?
Mr. Lewis. Well, I do not know about that specific proposition. I thought, in the first instance, that many of those mills were located in those areas to secure whatever advantages there were. If they do not have that advantage I suppose it means a readjustment for them. I have no answer to that. That is a special, technical problem, the question of relative freight rates.
Representative Ramspeck. I happen to be one of only two members from the South who are on the House committee. Personally I would like to see our employees in the South get just as high wages as anybody else anywhere, but I recognize the fact that we cannot uproot existing conditions overnight without dislocating industry and without throwing people out of work, and I want to say to you quite frankly that I think it is a mistake to take away from this board the right to vary these wages. I do not say varying them according to geographical sections of the country, but if an individual employer could show existing circumstances which would justify a lower wage scale, as provided in section 5,1 think he ought to have that right.
Further than that, I call your attention, Mr. Lewis, to the fact that Mr. Jackson, Assistant Attorney General, testified before this committee that a fixed minimum wage would not, in his opinion, be constitutional, that the board had to have authority to take into consideration the fair value of the services rendered and other circumstances in order to uphold the constitutionality of such legislation. I hope you may find it possible to reconsider your opinion.
Mr. Lewis. Would that be with the old court or the new one?
Representative Ramspeck. Well, we haven’t got the new one yet, and I do not know which one he was referring to, but that was his statement to the committee, that the minimum-wage law which the present court upheld, in the State law, was based on the right of the board to take into consideration the fair value of the services rendered.
Mr. Lewis. Well, did he recommend eliminating all the bill except section 5?
Representative Ramspeck. No; he did not recommend that, but he did stress the language on page 14 where it says, “The board shall take into account the cost of living and all other relevant circumstances affecting the value of the service or class of service rendered,” and particularly subparagraph (2) which reads, “shall be guided by like considerations as would guide a court in a suit for the reasonable value of services rendered where services are rendered at the request of an employer without contract as to the amount of the wage to be paid.”
Mr. Lewis. Well, that is what labor does not want to be guided by, “like considerations”, that would guide a court, because it does not relish its experiences with the courts, not in Maine nor elsewhere.
Representative Ramspeck. We have this situation in the South, and nobody deplores it any more than I do and nobody wants to see it corrected any more than I do, but the average annual per capita spendable income in Georgia in the year 1935 was less than $300. Now, we cannot uproot that condition overnight. I am willing to
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go along with you just as fast as I can to correct it, and I think most of the liberal-thinking people in the South are also anxious to go along on that policy, but we do feel that the board ought to have some latitude in bringing this low standard up, so that we will not destroy our industries and throw people out of work. I know you do not want to throw people out of work because you are trying to organize them now. That is all I have to say.
Representative Connery. Mr. Dunn?
Representative Dunn. There is one question I would like to ask. Mr. Lewis, our progressive President has said many times that one part of our people in the United States was ill-fed, ill-clothed, and ill- housed. Do you not believe if we adopt the 5-day 30-hour week that it would help that situation? For example, when we see one-third of our people needing the necessities of life that would mean approximately 11,000,000 of people are out of work. It is my opinion, and is it nor yours, that if we adopt the 5-day 30-hour week that that would help that situation?
Mr. Lewis. Oh, I think so, Congressman.
Representative Dunn. Beg pardon?
Mr. Lewis. I think it would.
Representative Dunn. I asked a former witness this question and I want to ask it of you: When this bill becomes a law, which I hope it does, do you not believe it will wipe out sweatshops, put an end to child labor, and make the working conditions for the laboring class of people better?
Mr. Lewis. Oh, yes, I do, Congressman. I am fully in harmony with that.
Representative Dunn. One more question. It is my opinion, and is it not yours, that the responsibility for the plight of the people of the United States is because of the legislatures of all the States, and Congress, failing to enact legislation to benefit the people of our country, the working people of our country? Is that not your opinion? It is mine.
Mr. Lewis. Well, unquestionably it is one of the very great factors in the whole situation.
Representative Dunn. I am going to conclude by making this statement: I am glad to hear you say, Mr. Lewis, that anybody who works, no matter what kind of work they do, they are entitled to a living wage, and that is the thing they must fight for, to wipe out sweatshops, put an end to child labor and make conditions better for the working people of the United States. If we w'ould give our people work and pay them a decent wage our slum nuisance will be eradicated and instead of spending $15,000,000,000 annually to reduce crime or to keep criminals in check, why, we will not be compelled to spend $5,000,000,000, because, after all, in my candid opinion, one of the things which is responsible for the crimes that are being committed and the $15,000,000,000 that we spend to keep it reduced is because we do not give the working people a decent wage, and I want to go on record as saying that all the State governments and municipal governments and Federal Government are responsible, because I know it is an absolute fact that many of the Federal employees do not begin to get a living wage but all the Members of Congress do. We should be actuated hy more humanitarian and less selfish interests so everybody in the United States will get along.
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Representative Randolph. Chairman Connery, I believe Senator Holt has several questions that he should like to ask but I asked him if he would yield to me for a few questions.
Representative Connery. Does the Senator yield?
Senator Holt. Yes.
Representative Connery. Mr. Randolph, of West Virginia.
Representative Randolph. Mr. Lewis, you stated that you could give no accurate figure on unemployment in this country. I believe no one can do that, as far as I have been able to understand. I would like to ask, however, if you will not state, from your experience, how many persons you believe would be given employment if the provisions of this legislation became operative in America?
Mr. Lewis. I would not make any accurate estimate on that, Congressman, because I do not have the figures to sustain the estimates.
Representative Randolph. Would you approximate it?
Mr. Lewis. I could not; not with any degree of intelligence.
Representative Connery. Senator, would you yield just for a moment? I must go over to the House to present the conference report on C. C. C. at 12 o’clock. There is a question that Senator Davis asked me to ask Mr. Lewis.
Mr. Lewis, Senator Davis was invited to the Interstate Commerce Committee on another labor matter which is of vital importance. He asked me to ask you as to whether the collective bargaining in one industry has eliminated the wage differential between northern and southern coal miners, and what was the lowest wage paid before collective bargaining in the coal industry?
Mr. Lewis. Well, collective bargaining has not yet eliminated the differentials. They do have reasonable differentials in the ooal industry which the mine workers have not as yet been able to eliminate. We hope to make greater progress toward the complete elimination as the industry becomes increasingly stabilized through the operation of the Bituminous Coal Stabilization Act.
The lowest wages in the coal industry pre-N.R. A. probably ran down in Alabama to 60 cents a day, 90 cents a day in certain mines on the average, ran up to $1.25 in Tennessee, Kentucky, and some of the nonunion areas paid as much as $2.25. The hours of labor were 10, 11, 12, and as high as 13 where they had the clean-up system. Those men now have a 7-hour day in that area and their wages are $5.60 for a 7-hour day as compared with wages of from $1.25 to $2.25 in that area for the 10-, 11-, 12-, 14-, and 15-hour day pre-N. R. A.
Representative Connery. Thank you, Mr. Lewis.
Senator Holt. Mr. Lewis, if section 5 would be eliminated from this bill and the bill would be adopted would not the Government have control of all the wages, whether in excess of $1,200 or not?
Mr. Lewis. Would not the Federal Government have control of all wages if section 5 is eliminated?
Senator Holt. Yes.
Mr. Lewis. Not as I understand the bill, Senator. I think it would only mean that Congress would fix the minimum standard of the wage, and that its control of those wages would not run above the standard.
Senator Holt. Is not section 5 the only section that contains the $1,200 minimum?
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Mr. Lewis. I suggested that all other sections that related to section 5 likewise would be amended or modified.
Senator Holt. Would you favor allowing the board to investigate collective bargaining agreements where the collective bargaining agreement was beyond the wage level?
Mr. Lewis. No; 1 see no point in it.
Senator Holt. If they have a right to investigate collective bargaining agreements below the wage level why should not they have the right to investigate collective bargaining agreements above the wage level?
Mr. Lewis. Merely because their right of investigation of agreements that were substandard would be for the purpose of ascertaining whether that was so and of modifying them to meet the congressional standards.
Senator Holt. I understood you to say you would object to the Federal Board investigating collective bargaining agreements of the mining industry. Why would the mining industry be exempted?
Mr. Lewis. I did not ask for an exemption of the mining industry, I merely used it as a cogent point. I ask for no exemption of the mining industry at all in comparison to any other industry. I merely referred to it because I was a little familiar with it.
Senator Holt. If it was above the level would you be in favor of exempting it?
Mr. Lewis. Exempting it from what?
Senator Holt. Investigation of the Federal Board.
Mr. Lewis. Well, as I understand it, if Congress fixes minimum wage standards of say 40 cents the only purpose of any investigation would be to determine whether or not that standard was enforced in the various industries, and if obviously it was enforced in the mining industry they would not need to investigate the mining industry. There would be no purpose in investigating the standard which was much higher than the minimum fixed by Congress, to all practical purposes.
Senator Holt. How far do you think the Federal Government should go in regulating industry?
Mr. Lewis. Regulating what?
Senator Holt. Industry.
Mr. Lewis. Oh, that is a subject that is as high as a church steeple and as broad as a barn door.
Senator Holt. You believe it should have complete authority on regulation?
Mr. Lewis. I would not say so.
Senator Holt. How far would you say it should go?
Mr. Lewis. I would not want to make a general reply to a general question of that kind because I want to discuss it with particularity as relating to a specific act proposed, which I do now.
Senator Holt. You believe the Federal Government should go at least as far as this bill goes?
Mr. Lewis. No; I suggested that section 5 be eliminated.
Senator Holt. In other words, the Federal Government should not go really that far?
Mr. Lewis. That is my suggestion, that section 5 should be eliminated here. I think the Federal Government in this instance should only undertake to fix a basic minimum wage.
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Senator Holt. You believe that this could be a first step toward complete control of wages and hours by the Government?
Mr. Lewis. I would not say so.
Senator Holt. Why?
Mr. Lewis. Because I definitely and specifically am in favor of merely the arrangement of a minimum wage.
Senator Holt. I was not asking as to your opinion, but could not this be a first step of Congress to do that?
Mr. Lewis. Well, it might be the first step of 50 steps or the first step of 3 steps. I do not know what Congress will do next week or tomorrow or next year, and I- do not know that there is any reason not to do a thing today because it might do something else next year. I think that is academic.
Senator Holt. What was your opinion of the National Recovery Act?
Mr. Lewis. Well, again that is a very large subject. If you mean with respect to the coal industry I will say that it was a very great aid to the coal industry.
Senator Holt. As a general rule would you think it was beneficial at all?
Mr. Lewis. Yes.
Senator Holt. Would you rather see a similar National Recovery Act passed than such a regulation as this?
Mr. Lewis. No; I am in favor of this bill with section 5 eliminated.
Senator Holt. And you do not believe there would be any danger in the change to a national recovery price-fixing policy?
Mr. Lewis. No; I am in favor of this bill to meet the present situation.
Senator Holt. That does not answer my question.
Mr. Lewis. I beg your pardon.
Senator Holt. The question is: Would not this bill follow naturally into a national recovery act of price fixing? In other words, would not they come and say, “We have high wages and low hours and we must have a price-fixing policy in order that we could meet these high wages?”
Mr. Lewis. Well, of course, Senator, that would depend upon what Congress thought about that. I cannot tell what Congress will do or what Congress might consider, naturally.
Senator Holt. Do you think it would have the right to do that ?
Mr. Lewis. Well, I could not answer that question because again that is hypothetical.
Senator Holt. You think industry should have the right to ask for it?
Mr. Lewis. Yes; I think the coal industry had the right to make its presentations in Congress and the Congress enacted the Guffey- Vinson bill, and it will mean price fixing in the coal industry up to the dead level of actual cost of coal, and the Congress fixed the standard where the maximum prices could be fixed by the Government commission to protect the Government interests. I am definitely in favor of that measure.
Senator Holt. Going back to another point, if there was a collective bargaining agreement below the wage level set by law do you think Congress should have the right to abrogate that agreement?
Mr. Lewis. I do not know' anything about abrogation. I think the Congress has the right, the definite right to fix standards, and if
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the rates in this agreement should be substandard it should have the right to modify them.
Senator Holt. Would they have the right to absolutely wipe it out, as far as it affected the wage level below that?
Mr. Lewis. Well, whatever modification meant, whether that is, to raise it or to lower it.
Senator Holt. If they had the right what would become of industrial democracy?
Mr. Lewis. Are you trying to be humorous, Senator?
Senator Holt. No; not with you.
Mr. Lewis. Well, you could not be with me, you know.
Senator Holt. No; I admit that.
The Chairman. Just ask another question, Senator.
Mr. Lewis. I am perfectly willing, Senator, to answer the distinguished Senator’s question.
The Chairman. I think it would be better to go ahead with the next question.
Senator Holt. Mr. Senator, I want to say as far as I am concerned that Mr. Lewis is not going to bulldoze me as he has bulldozed a number of other officials.
The Chairman. There is no effort of any bulldozing here, Senator. I think we will get along faster if we just ask questions and get the answers.
Senator Holt. I have no more,
Mr. Chairman. Mr. Lewis. Well, now, just for the record, I do not like the Senator’s language and I resent it. I merely suggest if the Senator wants to talk that way with me that he not burden the record here with it, just talk that way to me personally. That is all.
The Chairman. Have you any other questions, Senator?
Senator Holt. If Mr. Lewis does not care to answer the question, of course, it is perfectly agreeable to me. I appreciate the remarks.
The Chairman. I do not understand that he does not want to answer the question. If you have any other questions to ask, why, I am sure that the committee would like to have them asked. Of course, that is one of the objects, you know, in connection with the bill. I merely suggested that we leave out the asides for some other occasion, because the rest of us are not interested in that; we are just interested in this bill and in the things related to it.
Senator Holt. Of course, I would not want to burden the committee with any questions that would be not desired at all. Personally I would like to have them asked but I realize the situation, so I will yield my time.
The Chairman. There is no situation at all, Senator, with reference to asking questions. Anything in connection with the bill is perfectly pertinent and I think it should be asked. Do you have any more questions to ask?
Senator Holt. I yield my time.
Representative Allen. Mr. Chairman, I would like to ask one question.
The Chairman. Mr. Allen of Delaware.
Representative Allen. Mr. Lewis, how long have you been identified and affiliated with the labor movement in this country?
Mr. Lewis. You mean holding an official position?
Representative Allen. Yes; an official position.
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Mr. Lewis. I have been president of the United Mine Workers since 1919. I was vice president before that for 2 years. Prior to that I was occupying some important positions in the organization of the American Federation of Labor, back perhaps to 1911. Does that answer your question?
Representative Allen. Yes; that is all.
The Chairman. Mr. Hartley.
Representative Hartley. Mr. Lewis, I believe you said you consider this bill an instrument by which industrial democracy might be attained.
Mr. Lewis. Yes.
Representative Hartley. We have heard a great many people describe this bill as a step toward industrial fascism. I wonder if you would explain to the committee the difference between this bill and industrial fascism.
Mr. Lewis. I would prefer not to enter into any extended discussion of the relative merits of different forms of government, Congressman, but perhaps some of those critics have leveled their darts at section 5. I do not know. But, of course, it is true that in Germany and some other Fascist countries all wages are fixed as such by whatever instrumentalities are at the top. I think, however, that all criticism of that nature will be eliminated if section 5 is not enacted into law. I do not see anything that is not democratic and in harmony with our political principles.
Representative Hartley. How about section 16 with reference to the enforcement provisions of the bill? Do you interpret that provision to mean that not only is an employer required to live up to whatever rates and standards are determined by the Board, but is the labor organization at the same time, or any leader of labor required to abide by the Board’s decision, and has the Board the power, under your interpretation of section 16, to enforce its decision?
Representative Ramspeck. That is on page 32.
Mr. Lewis. Of course, if section 5 was eliminated that would modify the bill tremendously in its scope and its application, and it would simplify the whole problem of administration. It would then be merely a minimum basic wage. Of course, the penalties would run against anyone that violated that standard, if it was fixed by Congress.
Representative Hartley. Then you say you would interpret that to mean that a labor organization or a leader of labor would be required to comply with whatever standards are set up by the Board? I base that question on the definition of “person” in the act, and also that it says [reading]:
Whenever it shall appear to the Board that any person is engaged or about to engage in any act or practice which constitutes or will constitute a violation of any provision of this Act, or of any provision of any labor-standard order, it may in its discretion bring an action in the proper district court of the United States to enjoin such act or practice and to enforce compliance with this Act.
Mr. Lewis. Of course, that is what 1 referred to some time back when I said I was not sure that a court would not issue an order against workmen who might find themselves in resistance to the wages fixed as a fair minimum standard under this act in accordance with the factors set forth in section 5. An equity proceeding may run against the labor organization or the individuals there. I think that is extremely dangerous procedure.
Representative Hartley. That is all.
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The Chairman. Senator Ellender.
Senator Ellender. Mr. Lewis, did I understand you to say that you thought that the provisions of this act should cover agricultural labor?
Mr. Lewis. No, I did not say that, because I was not quite clear as to the interpretation made by the committee as to what elements of agricultural labor might come within the purview of interstate commerce or directly affect interstate commerce.
Senator Ellender. In other words, it would not be your desire to make this apply to cotton pickers, for instance, would it?
Mr. Lewis. Well, my own curbstone opinion was it would not, because they are not in that classification or category.
Senator Ellender. But that cotton that they pick of course would probably form the subject of interstate commerce.
Mr. Lewis. That may be. I just have not plowed that ground, in a legal sense, sufficiently to give an intelligent opinion on that.
Senator Ellender. Now, I understood you to say that the southern mills are paying at present an average of 32 cents per hour?
Mr. Lewis. That was my estimate on the average wages perhaps in all industry in the South, average common labor.
Senator Ellender. Is that all industry?
Mr. Lewis. Not the average of all industry, the average of common-labor prices.
Senator Ellender. Have you any idea as to what the average wage today is in all industry in the South?
Mr. Lewis, Not in all industry. I have been informed that a rough estimate of the common-labor wages paid in the South, all the States in the South, would probably run around 32 cents.
Senator Ellender. When you say “common labor” you mean factory labor, don’t you?
Mr. Lewis. I mean factory and ordinary construction labor, outside labor, but not agricultural labor.
Senator Ellender. I understand. Now, what other industry is there that is underpaid other than, let us say, the cotton mills of the South, and I suppose the steel mills of the South? The steel mills are paying above 40 cents, are they not?
Mr. Lewis. They are now, I think.
Senator Ellender. What other industries are there that are not paying the minimum, let us say, of 40 cents per hour; do you know?
Mr. Lewis. I do not know what your lumber industry in Louisiana is paying now, in the timber camps, but I know pre N. R. A. they were paying 6 cents an hour.
Senator Ellender. Well, we have hardly any more timber left so it does not make any difference whether the bill goes through or not.
Mr. Lewis. You have got some. I do not know, Senator; I have not made a census of the industry.
Senator Ellender. The point I had in mind was this, Mr. Lewis: I am just wondering at the necessity for this bill at this time if wages are today, as you say, almost to the amount that we will probably provide for in this bill. In other words, could it not be possible to bring about the purpose of this bill under the Wagner Act, by collective bargaining?
Mr. Lewis. Perhaps, in the fullness of time, but these people need some immediate consideration. Senator Ellender. That is. just the point,
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Mr. Lewis. I heard the gentleman from Georgia say that the average income of many people in Georgia is only $300 a year.
Senator Ellender. I think he had reference there to farm labor. Is that right, Congressman?
Representative Ramspeck. That is the average for everybody. Of course, it includes farm labor.
Senator Ellender. It includes farm labor; but if you left the farm labor out will not that yearly amount that you fixed be a great deal more than $300? I am addressing my question to you, Congressman.
Representative Ramspeck. It would possibly be somewhat more, but the average for the whole country, Senator, in 1935 was only $515.
Senator Ellender. Now, Mr. Lewis, you stated that millions of people would probably be affected if this bill were to go through, that is, in respect to their wages and hours, and I understood you to say awhile ago that although this bill would go through that it would not have a tendency of materially increasing the cost of living. Am I quoting you correctly, sir?
Mr. Lewis. I was speaking in not a substantial sense, in an outstanding way, because I thought the minimum here was moderate and there were so many industries that it would not affect, that the sum total of its impact on our whole economic structure would not be as great as some people believe.
Senator Ellender. I suppose you have made a study of it since you say a small amount would be affected, but have you any idea of how much would be affected?
Mr. Lewis. I could not give you the figures on it; no.
Senator Ellender. If this bill does go through and the Board does fix a minimum of 40 cents per hour and a maximum week, say, of 35 hours, as you have suggested, unless we put in this bill, or introduce a companion bill with reference to tariff regulations, how can we continue to cope with, let us say, Japan sending in its bleached cotton to this country, 75 percent, I understand, where they pay the labor at the rate of about 14 cents a day and they work 12 hours a day, how could we compete unless we do have a law permitting the tariff to be raised in order to offset that situation?
Mr. Lewis. Well, I am not quite sure how we compete right now, but that is a subject, I suppose, that Congress will have to consider in the future—the question of the whole tariff structure in relation to the American problem.
Senator Ellender. Don’t you think, Mr. Lewis, that it should be considered in connection with this bill?
Mr. Lewis. No; I do not, Senator, because I definitely think Congress would not have available that necessary amount of information upon which to base revised tariff schedules as affected by this bill.
Senator Ellender. Don’t you think it could obtain it?
Mr. Lewis. I doubt that it could, until there was some record of performance under this proposed act.
Senator Ellender. Suppose an investigation of the various industries was made so as to find out approximately what the present cost is, could it not be very well estimated as to what additional cost would be imposed by virtue of the passage of this act, and if so, could they not, in like manner, investigate the tariff situation so as to work the two hand in hand?
Mr. Lewis. Obviously estimates could be made, but who can guarantee the accuracy of estimates? Congress has had experience with
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estimates before and knows very well that some of the preliminary estimates oftentimes do not work out the way they are expected to work out. I think Congress has nothing to fear in this act, modified in the manner I suggest, on this tariff question, because I think long before there could be any injury to American products and the relationship with other countries Congress would have available a record of performance, an accurate statement of facts sufficient to guide us. I do not think it is well to build up a tariff atmosphere around this bill, because essentially it is an economic wage bill that has to do with increasing the living standards of people who now have subnormal compensation, and to bring in the whole tariff question and to say before we can enact a bill of this character we must have a more scientific tariff set-up I think would not get us anywhere.
Senator Ellender. I did not mean it in that light, Mr. Lewis. It strikes me that probably we could amend this bill—of course, I haven’t studied the tariff question—we could probably amend this bill so that the Tariff Commission could be given the right to raise the present rates in order to meet the increased prices caused by the passage of this bill. Now, of course, to be able to do that it strikes me it would require time, and I think time well spent, for this committee to go into that question and not rush through it so that we may be sorry later of what we are now doing.
Mr. Lewis. Of course, such a suggestion would bring the whole matter into conflict with the Government trade agreements with various countries on the question of whether or not there is room there for reduced schedules. It is such a large subject that I doubt this bill could wait while Congress satisfied itself on the tariff question from many practical standpoints. On the other hand, I think Congress always retains the right to give consideration to the tariff problem if, as, and when the conditions render it necessary and in the judgment of Congress it is wise.
Senator Ellender. In answer to a question, I think by Congressman Wood, if I am not mistaken, with reference to the effect of this bill on small business, I am sure what the Congressman had in mind was not so much the merchants as it was the businesses that would be affected by the bill. For instance, you have large steel mills and other industries wherein as many as 4,000 people are employed, and in a like smaller business there may be not more than 10, and of course, as you know, in mass production the cost of a commodity can be very much decreased because of more efficient machinery, better management, and things of that kind. Now, in the light of that, don’t you think that unless an exemption is made so as to protect these small industries that it might have a tendency of putting those small businesses out of the running?
Mr. Lewis. No; I do not, Senator. I think if Congress was contemplating the fixing of what might be called a living wage—and this 40 cents an hour by no matter of means is a living wage—as the minimum basic standard, there might be some of those factors to inquire into, but when Congress merely fixes a basic minimum wage so low that it will only yield $14 a week or $60 a month on a 35-liour standard, I do not think there should be any exceptions. I think that minimum is so low that the industries that cannot pay it would inevitably fail anyhow for other reasons. This wage of itself is not going to pull down any industry because it is too inconsequential, it is merely a minimum and I do not think there should be any exceptions.
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Senator Ellender. You remember one of the difficulties, I believe, with N. R. A. was the fact it hurt the small man, it kind of put him out of business. Do you agree with that statement?
Mr. Lewis. The N. R. A. could not hire enough clerks to keep the record of the requests for exemptions that came in.
Senator Ellender. How is that?
Mr. Lewis. The N. R. A. could scarcely hire enough clerks to file the requests for exemptions from everyone in business, high and low, that came into the N. R. A. As a matter of fact, it became merely a wild scramble for exemptions and broke down the compliance and enforcement entirely in the N. R. A. It was the noncompliance with N. R. A. that broke it down more than any other factor.
Senator Ellender. You may be right about that, but, as I remember it, the main complaint was that it really hurt the small man and helped the big fellow, which is just the thing that was not intended.
Mr. Lewis. Well, I heard that complaint but I was never conscious that that was true.
Senator Ellender. So you are firmly of the belief that this bill will in no manner hurt small business—and when I say “small business” I mean business of a like nature, not merchants or businesses that are apart from the business affected.
Mr. Lewis. I think the small businessman, whatever enterprise he may engage in, stands to profit most by increasing the purchasing power of the community where his plant is located.
Senator Ellender. I agree with you when it comes to the merchant, the one who has something to sell; but' I am talking about the manufacturer.
Mr. Lewis. Which manufacturer?
Senator Ellender. What is that?
Mr. Lewis. Which one?
Senator Ellender. Let us say, manufacturers that manufacture the same product, where as many as, say, 3,000 people are employed to manufacture a given commodity; now, the manufacturer that is able to employ that many people, and that can probably get modern machinery to make this commodity, as compared to a smaller man, say, with 10 people; in other words, mass production is much cheaper than production on a small scale, is it not?
Mr. Lewis. I agree with that, but I agree also that that small man would still have his problems relative to relationship with the mass-production producer even if this bill were not enacted and that probably in time he might succumb to that competitive influence. I do not think this bill itself would destroy him. I just cannot quite share your apprehension on that particular point.
Senator Ellender. I do not know myself. I am just trying to get some information on it. That is all the questions 1 have.
The Chairman. Mr. Lewis, I am just going to ask you one or two questions. We have already had evidence in the record taken from statistics of wages which show, for instance, that in one State in the entire business the average wage was $14.43; in another business it was $10.97; in another business it was $13.40; in another it was $10.54; in another State the average wage was $11.99; in another business it was $15.61; in another business it was $14.22; in another business $10.76, per week. Of course those averages would indicate that there were a great many workers who were drawing even less than the average, would it not?
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Mr. Lewis. That is right.
The Chairman. And so in those particular industries practically all the employees, a large number of the employees, would have wages lifted on a reasonable minimum wage bill, would they not?
Mr. Lewis. That is right.
The Chairman. Questions have been asked about what is going on now. Those are the rates now. I have a letter here in my hand— I picked several up at random from the large number that I have— I have a letter from a woman in a nearby city drawing $10.30 a week and carfare, lunch, and necessary expenses going to and from her work left her $7.85 a week, and she has three children.
Mr. Lewis. It is pitiful indeed.
The Chairman. That is the type that you said needed action now?
Mr. Lewis. That is right.
The Chairman. Without waiting for the long pull that you mentioned?
Mr. Lewis. That is right, Senator.
The Chairman. I have another letter here from a man in another section of the country who worked 91 hours a week at $15 per week, and he says all the men in his classification work the same number of hours.
Mr. Lewis. Ninety-one hours? The Chairman. Ninety-one hours. That is another one that you would say should not have to wait for the long pull while we deliberate and cogitate and think about it, is it not?
Mr. Lewis. I certainly think so, Senator.
The Chairman. I have another one here which shows at another place, where the men engaged in this man’s particular work, work 64 hours per week at wages ranging from $10 to $20 a week. That is another class of the same type that will not get much benefit by waiting for the long pull?
Mr. Lewis. I fully agree with that, Senator.
The Chairman. Those are simply letters taken at random that have come to me from every part of the country. I have a great many of them, as to conditions that exist all over the country in various types of work.
There was one other phase of this about which no inquiry has been made. I want to ask you two or three questions about it and then I am through. Your organization has had a great deal of experience in connection with unemployment from time to time, of course?
Mr. Lewis. Yes.
The Chairman. And you have had some kind of unemployment risk just for your men, have you not, where they paid a certain amount into the treasury?
Mr. Lewis. We have in various areas, but we have not ever been able to work it out on a national basis. The burden was too great for us.
The Chairman. But you have had considerable experience in connection with that type of work?
Mr. Lewis. Yes.
The Chairman. The Government of the United States at the present time has a social security law and you are familiar, of course, with the terms of that law?
Mr. Lewis. Yes.
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The Chairman. Is your experience such, from your observation of the effect of unemployment, to lead you to believe that a bill of this type would be beneficial to the United States Government in connection with the amount it would have to pay out on its unemployment and other insurance?
Mr. Lewis. Yes. I fully think that it is entirely a proper function.
The Chairman. With the social security law in effect the Government has a direct interest, financial interest, has it not?
Mr. Lewis. That is right.
The Chairman. And the Treasurer, in trying to see that every effort is made to prevent continuous unemployment?
Mr. Lewis. Quite so.
The Chairman. Is it your judgment that a bill which would bring about a reduction of the hours of work in various types of industries would tend to reduce the number of unemployed?
Mr. Lewis. Yes; and tend to limit the amount of money that needs to be collected and expended in support of the unemployed population. The Government, naturally, has a direct interest in that.
The Chairman. The Government is affected, not only in connection with feeding the hungry and unemployed, but it is affected in a direct way in connection with the Social Security Act?
Mr. Lewis. That is correct, Senator.
The Chairman. It is your opinion, from long experience in connection with the problems of labor—how many members do you have in the United Mine Workers of America?
Mr. Lewis. How many members?
The Chairman. Yes.
Mr. Lewis. We have a little short of 600,000 at the present moment, 583,000 or 587,000 last month.
The Chairman. And that membership has, of course, fluctuated from time to time?
Mr. Lewis. Yes.
The Chairman. But it has at all times been a substantial number?
Mr. Lewis. Yes.
The Chairman. So you have gotten in close touch with the unemployment situation, particularly in your industry, and incidentally that of others?
Mr. Lewis. That is right.
The Chairman. And it is your belief, from your experience and study, that the United States Government would be directly benefited by the passage of any law which would tend to bring a stability of employment, which would reduce the number of unemployed, is it not?
Mr. Lewis. Quite so. I know of nothing that is a greater burden on the mind of the employed worker and his family than constantly, day by day, to be facing the possibility of dismissal from employment through the introduction of labor-saving devices, or changes in industry, and facing the future with all the hazards of unemployment. It is a day-by-day worry that impacts heavily upon the wife, the children, and the wage earner himself, and I think that any legislation that can tend toward making a contribution toward the prevention of unemployment by creating more work by shortening hours is virtuous and will be welcomed by every wage worker in America.
The Chairman. And you are heartily in favor, of course, of laws which can be held to be within the powers of Congress?
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Mr. Lewis. That is right.
The Chairman. Which will tend to do that and will tend to prevent the continuation of wages that are so low that it is impossible for families to live in decency and reasonable comfort?
Mr. Lewis. I think a large portion of our population that were referred to by President Roosevelt several times in his public addresses, under their present conditions are economically valueless to the United States. As economic units, they can make no contribution to the well-being or the prosperity of the Nation. They have no buying power, they have no consuming power.
These people in Georgia that the distinguished Congressman talked about, that have an average of $300 a year, certainly cannot buy any furniture from Grand Rapids or elsewhere, they cannot buy a radio, they cannot buy a car, they cannot make any economic contribution above the bare basis of animal subsistence, and some contribution must be made to them to place them back in the status of economic units in our citizenship. I definitely think so.
The Chairman. As I understand your position, boiled down, with reference to the minimum wage—I want to be sure—it is that you favor a minimum-wage law written in such a way that it will preserve to the utmost the right of bargaining between employers and employees, but which will at the same time raise the low, substandard condition of millions of people, those who have been living in that sphere and have not as yet been able to elevate themselves either by their own bargaining or by collectively bargaining?
Mr. Lewis. That is correct, Senator.
Representative Griswold. Mr. Lewis, you have expressed yourself in connection with section 5. In relation to that I would like to call your attention to the language in paragraph 9 of section 2. It reads as follows:
“Labor disputes” includes any controversy concerning terms, tenure, or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee.
Now, as I read that language, keeping in mind that the singular and plural terms are interchangeable, that this would either repeal or at least give cojurisdiction of this Board with the Wagner Labor Board. They determine even representation there, and under the Wagner Labor Disputes Act the representation is determined by the election of a manager. This Board would have authority, under this section, to go into those matters of representation. I would like to know what your idea is as to keeping this in the bill or striking it from the bill, because it goes even further than the Labor Disputes Act. Under this definition, regardless of whether the disputant stands in the proximate relation of employer and employee, a man need not be connected with the industry, either as employer or employee, and yet could generate a labor dispute, under this definition.
Mr. Lewis. That is right. That is one of the sections that I consider as being related to section no. 5, and I asked that no. 5 and sections relating thereto be stricken from the act, and also suggested that there be a saving provision, a saving of the provisions of the Wagner-Connery Labor Relations Act. I think section 9, or paragraph 9 of section 2, would well come under the pruning knife on that
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proposition, because the implications of paragraph 9 are very, very broad.
Representative Griswold. There is another thing I would like to call your attention to in relation to this same matter, for the benefit of the committee, and that is that this paragraph 9 uses the word “tenure.”
Mr. Lewis. Uses the word what?
Representative Griswold. Tenure, t-e-n-u-r-e, “controversey concerning terms, tenure, or conditions of employment.” I do not know how it is with the United Mine Workers, but with many industries, in the case of a reduction of the force the man that is of least seniority is reduced.
Mr. Lewis. Yes.
Representative Griswold. Then under his reduction there, even as an individual he could come in, because it affects his tenure of employment, and under the terms of this act he would be a party to creating a labor dispute.
Mr. Lewis. Perhaps so, Senator.
Representative Griswold. That is all.
Senator Ellender. May I ask one more question?
The Chairman. Yes, sir.
Senator Ellender. Mr. Lewis, would it be possible for you through your organization, to furnish the committee with a statement showing this: If the minimum of 8 hours per week were fixed, how many more people would this bill take care of?
Representative Ramspeck. A minimum of what?
Senator Ellender. A minimum of 40 hours per week, and a minimum of 35 hours per week, and a minimum of 30 hours per week, how many more people would this bill take care of? I am sure you have the facilities.
Mr. Lewis. I think we could make an estimate on that, Senator. I will be very glad to furnish it to the committee.
Senator Ellender. Thank you very kindly, sir.
The Chairman. We will recess until 2 o’clock. (Whereupon, at the hour of 12:35 p. m., a recess was taken until 2 p. m. of the same day.)
AFTERNOON SESSION
(The hearing was resumed at 2:15 p. m., pursuant to taking of recess.)
The Chairman. We have two witnesses that we have asked to appear today. When we adjourned we had agreed at that time to go ahead with those witnesses. Mr. Hormel is in the city and would like to make a statement to the committee. I am informed that it will take about 10 minutes. Several of the members of the committee would be very glad to hear Mr. Hormel’s statement. I do not want to do any injustice to the witnesses who have been asked to come today. If Mr. Hormel makes his statement, however, as I am sure it will be very interesting, and it will probably elicit a great many questions, I am afraid it will delay the other witnesses to a point that would not be quite proper. I would like to know what the committee’s view is?
Senator Ellender. Let us wait until we hear those two that are fixed for today.
Senator Davis. Mr. Hormel won’t take more than 7 or 10 minutes.
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The Chairman. It has been suggested that we hear Mr. Hormel after the other two witnesses have testified. Mr. Hormel, can you wait until the other two witnesses have testified?
Mr. Hormel. Gladly.
The Chairman. If we do not all ask too many questions, we will finish with the two witnesses in time to hear Mr. Hormel.
The first witness on the schedule for this afternoon is Mr. Isador Lubin.
STATEMENT OF ISADOR LUBIN
The Chairman. The committee will be glad to hear you on this bill. Will you first state your name, address, and experience along the lines on which you are testifying, for the stenographer and the committee?
Mr. Lubin. My name is Isador Lubin, Commissioner of Labor Statistics of the Department of Labor. During the past 4 years I have been commissioner of the Bureau of Labor Statistics. In those 4 years we have been devoting ourselves to questions of wages, hours, living conditions, cost of living, and other matters that concern the welfare of labor. Prior to that time, for 11 years, I was on the staff of the Brookings Institution, engaged in research projects dealing with labor, and prior to that time I was assistant professor of economics of the University of Michigan in charge of the labor courses.
In going over this legislation I am convinced that something of this sort is essential for two specific reasons; first, to permit and protect the functioning of the competitive system as we know it in this country, and, secondly, to make possible a standard of living for the American workers which will meet the requirements of decent citizenship.
Discussing first the problem of the competitive system and the need for permitting that system to function effectively, it appears that behind this legislation is the single maxim; namely, that the welfare and profits of no private business shall interfere with the welfare of the Nation as a whole. Minimum wages, maximum hours are expressions of this maxim. They aim at eliminating from our economic order those who seek economic success at the expense of the health and decent living of other human beings.
If our existing industrial system is to flourish, the unfair competition of the past with its sweatshops and underpaid labor must be eradicated. For it must be substituted a competitive system which gives to every business enterprise an equal opportunity in the struggle for existence. And it is only this kind of a competitive system which has any claim to existence.
For more than a century and a half the western world has relied on the competitive system to furnish it with the essentials of life. For the most part we have refused consciously to regulate our economic activity. We have assumed that if we were all free to act on our own initiative those who can most effectively meet our needs will come out on top. In the race of economic supremacy we have assumed that the victory would go to the most efficient producer.
Now we know only too well that it is not necessarily those who produce most efficiently or those who render the greatest service to society that secure the lead in the race for economic returns. All too frequently the honors—profits—go to those who can take the greatest advantage of their fellow men. By cutting wages, compelling labor to work inhumanly long hours, employing children, many a producer
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has not only weathered economic storms but has actually profited from them. And he has usually done so at the expense of his competitor who has refused to stoop to similar tactics. In too many instances the ability to sweat one’s labor has supplanted efficiency as the determinant of business success.
Competition, in short, has failed to work in the way that the economists have prophesied. Instead of a well-ordered race with well- defined rules which enabled the best man to win, we have had a chaotic system in which the employer with high standards has too often been forced by unscrupulous competitors to adopt policies detrimental to his workers, his industry, and society as a whole. The plane of business morals has thus been forced far below that of the majority of those who comprise the rank and file of business and industry. Many an employer, with high moral sensibilities, has been obliged to yield to rules of business conduct he despises. He has been forced to live a dual existence. Despite personal indignation at the employment of children, long hours of labor, and low wages, he has been compelled to pursue such practices because of the pressure of competition from employers who lack a sense of social responsibility.
The outstanding feature of the proposed legislation is that it sets the rules of the industrial game. Employers with a social conscience are assured that they will no longer be compelled to conform to the standards of competitors with blunted social sensibilities. This is not to say that the proposed legislation will curtail competitive action; it only determines the manner in which competition will take place. It seeks to create a situation in which the ideals of the better rather than those of the worst employers shall prevail. It incorporates into law standards which, even though acceptable to the majority, could not be put into effect without governmental authority as long as a handful of men in any given industry refused to conform to them. It aims to establish by law a plane of competition far above that which could be maintained in the absence of Government edict.
Proof of the fact that the good employer has difficulty in meeting the competition of the employer who refuses to adhere to standards which are equal to those of the better employers is available as a result of the experiences of the past 2 years in this country.
Under the N. R. A. an attempt was made to put competitors on the same level as regards wages and hours, and by and large, although there were exceptions, there was a tendency toward uniformity of maximum hours, namely 40. By and large, despite differentials here and there, there was also a tendency for minimum wage rates to be more or less uniform in certain areas.
In May 1935 the codes which were the basis for bringing about this competitive level were nullified, and what happened? I think the evidence of the past 2 years will bring out very conclusively the fact that the wage cutter got the business away from the man who attempted to maintain better standards.
The Bureau of Labor Statistics recently completed a study of the situation that prevailed as regards wages and hours during the last month in which codes were in existence, and a year later. We have compared the same month of both years, so that our figures are not affected by seasonal factors.
A study of 16 important industries was made to see what happened over the period of 12 months following the Schechter decision. I
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will name the industries covered, so that you can get some idea of their importance. They are the following:
Blast furnaces, steel work, rolling mills, hardware, stoves, structural and ornamental metalwork, electrical machinery, foundries and machine shops, machine tools, furniture, millwork, sawmills, brick and tile, cotton goods, silk and rayon, cotton garments, paper boxes, and paper and pulp.
What did we find? We found first that in all of the 16 industries weekly hours had been increased substantially over those that prevailed under the codes. Some of the increase, of course, was due to business improvement, but generally there was substantial increases in the number of plants working above the 40 hours that tended to prevail under the codes.
As a matter of fact, we found that in the steel industry, for example, whereas only 3 percent of the workers had been working more than
40 hours during the last month of the code, 67 percent, or 20 times that many, were working more than the code hours a year later.
In the hardware industry, whereas 9 out of every 10 people were working under 40 hours during the last month of the code, nearly two-thirds were working more than 40 hours a year later. In the electrical-macmneiy industry, whereas one-fifth of toe people were working more than 40 hours during the last month of toe code, almost 90 percent were working more than 40 hours a week a year later.
And so on down through the list to millwork, where only 24 percent had been working more than 40 hours during the last month of the code and 74 percent were working more than 40 hours a year later. In cotton garments, where only 4 percent were working more than 40 hours in May 1935 and a year later 41 percent were working more than 40 hours.
A picture of the situation in the steel industry—blast furnaces and rolling mills—is shown in this chart. You will note that in May 1935,
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10 percent of the establishments were working over 40 hours, and 89 percent of the establishments were working under 40 hours, and a year later 64 percent of the plants were working more than 40 hours and only 35 percent under 40 hours. Only 3 percent of the wage earners in this industry were working over 40 hours under the code and 96.9 percent were working under 40 hours. A year later 67 percent were working more than 40 hours and only 32 percent were working under 40 hours.
The Chairman. I would like to have this chart inserted in the record.
Mr. Lubin. The second fact that was revealed by our investigation was that the establishments that increased their hours most, usually fell below the average for hourly earnings. In other words, the plants that were paying the lower wages were the most prone to increase their hours, thus forcing their workers to depend upon a longer workweek rather than on wage rates for maintaining their weekly incomes.
A third factor that was discovered as a result of this investigation was that the gains in business as measured by the man-hours of employment in individual establishments were greatest in the establishments that lowered their wages the most.
I would like for the purpose of the record, Mr. Chairman, to give a few examples of what happened in specific industries as the result of the lowering of wages.
In the cotton-garment industry, of 177 establishments that reported to the Bureau, in May of 1935 and a year later in 1936, the total number of man-hours worked increased from 938,000 in May 1935 to 1,068,000 in May 1936. This was a gain of 13.9 percent in actual number of hours worked in the industry. But the number of people who were employed in that industry increased only about 2.5 percent. The hourly earnings were cut so that despite the fact that the men in the plants worked 13.9 percent more hours, the actual pay roll fell 1.2 percent.
These changes were accompanied by drastic shifts of business within the industry.
Twenty-three establishments either maintained their wages or did not decrease them by more than 2% percent. These firms that maintained their wages or hardly cut them dropped 9% percent of their workers and worked 5 percent fewer man-hours than they did the year previously. In the establishments that reduced hourly earnings from 2% to 7% percent the number of employees declined; but in the plants that cut their hours by more than 37½ percent the number of employees increased by 34 percent and the average weekly earnings decreased from $10.88 to $8.23. The volume of business done by the firms that cut their wages by 37 percent or more increased by over 60 percent. In other words, the firms that did not cut their wages lost business, and the firms that cut their wages 37 percent or more increased the actual amount of business as measured in man-hours of employment for their workers by about 60 percent.
We find very definitely in the cotton-garment industry that over this period of time the business went to the wage cutter.
A second instance is the silk and rayon industry. In the silk and rayon industry the firms reporting to the Bureau, 144 in number,
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increased the man-hours of employment from about 1,150,000 to about 1,190,000, which means a 4-percent gain in the actual man-hours worked. However, the number of workers employed actually fell by 1.3 percent and the weekly earnings of the wage earners fell by 1.4 percent. Workers in the silk industry suffered certain immediate and obvious losses in the period under consideration.
To begin with, 1.3 percent of the number who had jobs in April 1935 did not have jobs a year later. In the second place, those who had jobs earned each week a few cents less than they did in 1935 but they worked almost 2 hours more per week. Their average hourly earnings fell from 45.06 cents to 43.1 cents, or about 5J4 percent.
The Chairman. May I ask you a question there?
Mr. Lubin. Surely.
The Chairman. That would indicate that an increase of hours of those particular workers, if I gather that correctly, did not increase the amount of production, necessarily?
Mr. Lubin. It may have, but what happened was you cut your wage rate and increased the hours, and by the end of the week, after working more hours, the worker had less money than he had previously.
Senator Ellender. That increased production, did it not?
Mr. Lubin. In terms of hours, production was increased.
Senator Ellender. And that is why the business also was increased, because they were able also to sell it cheaper.
Mr. Lubin. That is a question of the trend of prices in these specific industries, and the evidence is to the effect that prices in the industries that cut their wages the most did not necessarily go down. Where they did go down, they did not go down any more than for other products. I think we must bear in mind, too, that during this period there were plants in these industries that actually increased their wages and were continuing in business in competition with these other fellows. They lost some of their business, but they still continued in operation in competition with the wage cutters.
The manufacturers who maintained their wages in the silk and rayon business during this period suffered a loss of approximately 5 percent in volume. Those who cut their wages by an average of 2½ percent or more increased their business by approximately 48,000 man-hours.
In this industry, also, the wage cutter got the business.
I want to point out one further fact in regard to the silk and rayon industry. The largest wage cuts took place most frequently in the establishments that already paid the lowest wages in 1935 under the code, and took place most infrequently in the establishments - that had the highest average wages in 1935. This is another evidence of the fact that it was the low-wage firms that took advantage of the situation by cutting their wages still further.
The third case is the cotton textile industry. In this industry, the total volume of employment over the year increased about 15 percent. The average number of people employed, however, increased only 5 percent. The industry as a whole is to be credited with an attempt to maintain standards of hours and hourly earnings in the face of wage cutting that gave the wage cutter a competitive advantage. The total number of man-hours worked in the establishments covered
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by the Bureau increased from 7,200,000 in April 1935, to 8,200,000 in April 1936. All groups of establishments shared in this increase. Even those that increased wages showed an increase of 5 percent in volume, but the various groups did not share equally.
Relative to the total national volume of business in this industry, there was a loss of competitive position in the establishments that had increased hourly earnings. Their gain, 5.3 percent in volume of business, is to be contrasted with 23 percent in the volume of business for the 94 establishments that cut hourly earnings from 2^ to 7S percent. And the 18 companies that cut hourly earnings of their workers by 17 percent or more increased their volume of business by almost 58 percent.
I would like to point out incidentally that both in the cotton textiles and in the silk and rayon it was not the small firms that were always the great offenders. There were many large firms that cut their wages, and just as many increased their wages or left them where they were. And similarly, there were many small firms that increased wages. We cannot generalize on that in those industries it is the small fellow who has been solely responsible for cutting wages. You have good and bad among the small just as you have among the big.
Representative Ramspeck. What percentage in the cotton mill industry maintained the code hours and wages?
Mr. Lubin. You mean after the N. R. A.?
Representative Ramspeck. Yes; after the N. R. A.
Mr. Lubin. It is generally agreed that in regard to hours, something approximating 90 percent maintained standards. In regard to tne wage rates, it is impossible to say for the reason that many mills made up the difference between the $12 or the $13 code minimum and the actual earnings due to short time. That happened time and again, and there is no way of actually finding out just what the hourly earnings were.
We do know this, that the average hourly earnings of the workers in the textile industry have not fallen or did not fall during that first year sufficiently to justify concluding that apy certain large number had violated the standards. They made a very definite attempt to maintain them as far as they could.
In the brick and tile industry, which we also selected for examination because of the fact that it is a local industry with local markets and is not as much affected by competition from other points, we find a 36 percent increase in the business for the establishments that increased their wages from 7% to 17% percent. The firms that did not change their wages at all gained 45 percent in business. The firms that cut their wages from 7% to 22 K percent increased their business by 62 percent in contrast to the 36-percent increase for the firms that actually increased their wages. And 12 establishments that cut their wages by more than 22 percent gained 135 percent in the volume of business as measured by the man-hours of employment afforded to their workers.
And here again it was not the small firm that was primarily responsible for wage cuts. There were relatively as many increases in the wage rates of small firms as cuts in the small firms.
Senator Lee. May I ask a question there? The amount of the cut to the wage earners, was that passed on to the consumer in a
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lower-priced article? Was that so that thereby he was able to increase his business by that amount?
Mr. Lubin. Well, as a matter of fact, one cannot generalize. We find, for example, that prices of many of these commodities moved in different directions; in other words, in the industries where wage rates actually went up, pretty generally there was no marked increase in the price of the products. In some of the industries, on the other hand, prices went down as wages went up, and vice versa. There you have a situation which is based upon the competitive market at a given moment. In the price of brick, there was a gradual upward tendency in prices, and there is no evidence of the fact that the firms that cut their wages the most were operating in territories where prices were going down. In the case of silk and rayon, there was a downward tendency in prices for a period of time.
The significant thing is that after prices started up again last October you had that same differential. In other words, the firms that had cut their wages did not necessarily increase them when prices went up.
Senator Lee. The conclusion we ought to draw then is that we cannot depend upon voluntary action to support a minimum wage.
Mr. Lubin. Very definitely. If we depend upon it, there will always be a sufficient faction in an industry that will take business away from their competitors by exploiting their labor.
Senator Lee. And in order to protect the man who would pay a fair wage, we must by law compel the other fellow to meet the requirements that the good manufacturer lays down for his business.
Mr. Lubin. At least certain minimum requirements which will fix the minimum rules of the game below which the other fellow cannot go.
Among the other industries that I want to mention in this connection is hardware. In this industry, we find that firms that cut their wage rates by an average of less than 7½ percent increased their business by 21 percent, whereas those who cut them by more than 7½ percent increased their business by more than 54 percent.
Finally, I want to point to the situation that has prevailed in the saw-mill industry. In this industry, there were 37 southern establishments that decreased hourly earnings by more than 12 percent. For the group as a whole, the average decrease was 23 percent in the average hourly rate paid to the workers. The average weekly earnings rose however, even in those plants that cut their wages, because of the fact that the actual hours worked were increased so markedly. We find that in the mills that cut their wages by more than 12½ percent, there was an increase in weekly earnings of from $11.89 to $12.21, which means in effect that although the employees worked 10 hours more per week in May of 1936 than they did a year earlier, the extra money that they got for that work at the end of the week was equal to about an hours’ pay at the rates of the previous year.
Within this group of 37 plants that cut average hourly earnings by more than 12½ percent, there were 8 mills that cut the earnings of their workers by more than 32 percent. The weekly hours were increased from 37 to 47 during the year, and despite the fact that 10 hours of work were added each week, the workers received less for that week’s work which was 10 hours longer in 1936 than they did in 1935. The respective averages of the weekly earnings were $11.06 in 1935 for 37 hours, and $8.90 in 1936 for 47 hours.
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Senator Lee. All of these reductions you refer to in wages and extension of hours—I am not sure that I caught it correctly—that is the period following the nullification of the N. R. A.?
Mr. Lubin. The year after the nullification. We took the last month of the N. R. A. and a year later so that we would get the same month to avoid seasonal fluctuations.
Representative Schneider, Have you anything on the price of lumber in that period?
Mr. Lubin. During that period the price of lumber was going upward.
Representative Schneider. And wages going down?
Mr. Lubin. Yes. However, it must be pointed out that there were large groups in the industry, particularly in the Northwest, that maintained their wage rates, and also in the South, of course, there were some plants that increased their wage rates during this period.
These are but a few examples of what happens to the flow of commerce when wage rates and conditions of employment are used as a basis of competition, rather than permitting efficiency and the quality of the work to determine where products shall go and who shall sell them.
The second aspect of the problem that should be raised at this time, I think, is what effect this legislation will have upon the standards of living of the American wage earner. The standard of living is dependent upon two factors; first, money income, and, second, the cost of living. Now, what is the income of the American family?
Representative Thomas. May I interrupt you there?
Mr. Lubin. Surely.
Representative Thomas. Are the estimates you are about to give based upon workers in interstate commerce or intrastate commerce?
Mr. Lubin. It is impossible to distinguish workers that are engaged in interstate commerce and those that are in intrastate commerce. I would also like to submit for the record figures showing what percentage of the wage-earner families secure anything like a living wage.
Representative Thomas. Continue with your statement, please, and we will give you our questions later.
Mr. Lubin. The Bureau of Labor Statistics has recently been engaged in a study of the standard of living of the American wage earner. In addition, it has attempted to find out what happens to the expenditures of the wage earner as his income increases. We feel that if we can find a pattern which will show where the additional income of the family goes as incomes go up, we will be in a position to foretell where employment will rise in industry. If we find that a 10-percent increase means so many more dollars spent for automobiles, shoes, or clothes, we can tell with a fair degree of accuracy where employment is going to increase as a result of the rise in income. This study, incidentally, was a W. P. A. project.
The results of our study which are based on a sample of 133,000 families receiving incomes ranging from under $1,250 to $10,000, and which does not include any family that has been on relief in the course of a year, shows the following: I will mention the cities so that we can get an idea of the spread of these incomes.
In Columbus, Ohio, 30 percent of all of the white families that had not been on relief earned less than $1,250 in the year 1935-36.
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In Providence, R. I., 42½ percent of all of the families had an income of less than $1,250 a year.
In Atlanta, Ga., 30 percent of all of the white families had less than $1,250 a year.
In Omaha, Nebr., 31 percent had less than $1,250 a year.
In Denver, 35 percent had less than $1,250 a year.
In Portland, Oreg., 32 percent.
In Muncie, Ind., 40 percent.
Newcastle, Pa., 43 percent.
Haverhill., Mass., 45 percent.
New Britain, Conn., 43 percent.
Columbia, S. C., white families, 32 percent.
Mobile, Ala., white families, 44 percent.
Senator Hoit. For what year was that?
Mr. Lubin. 1935-36.
Dubuque, Iowa, 52 percent had less than $1,250 a year.
Springfield, Mo., 50 percent.
Butte, Mont., 20 percent.
Pueblo, 37 percent had less.
Aberdeen, Wash., 39 percent had less.
Bellingham, Wash., 45 percent had less.
Everett, Wash., 40 percent had less.
And so one could go through the various geographical areas. Incidentally this is the total family income—it is not the income of a wage earner but it is the income of all of the wage earners in the family.
Senator La Follette. May we have that table inserted in the record, Mr. Chairman?
The Chairman. Could we have this record and have it inserted?
The Chairman. Without objection, the table will be inserted in the record.
Memorandum to Accompany Table on Distribution of Families by Income (Families With Both Husband and Wife)
The accompanying table on the income distribution of families surveyed in the urban study of consumer purchases are based upon a random sample taken in each city. The data pertain only to white families in which both the husband and wife were born in the United States, except for the cities of Atlanta, Columbia, Mobile, Albany, Gastonia, and Columbus. In the latter cities native-born Negro families were also included and the data for them are shown separately. Families which did not contain both husband and wife are not included in the table.
The income data refer to the total net income received from the members of the family from all sources during the year 1935-36. The income of home-owning families includes the increment which the rental value of the home constitutes over and above the expense of ownership, so that the income of home owners may be comparable with that of families which rented their homes.
The columns headed “Number” refer to the number of families included in the sample which have the characteristics above specified. The proportion which the sample bears to the total of such families in each city is as follows:
Large cities (cities with populations of 250,000 to 300,000)
| Percent | Percent | ||
| Columbus, Ohio | 40 | Portland, Oreg | 40 |
| Atlanta, Ga | 80 | Denver, Colo | 20 |
| Providence, R.I. | 60 | Omaha, Nebr | 32 |
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Middle-size cities (cities with populations of 30,000 to 75,000)
| Percent | Percent | ||
| Muncie, Ind | 60 | Mobile, Ala | 100 |
| New Castle, Pa | 60 | Abdereen-Hoquiam, Wash | 100 |
| Springfield, Ill | 60 | Bellingham, Wash | 100 |
| Springfield, Mo | 60 | Everett, Wash | 100 |
| Haverhill, Mass | 100 | Butte, Mont | 100 |
| New Britain, Conn | 100 | Pueblo, Colo | |
| Columbia, S. C. | 100 | Dubuque, Iowa | 100 |
Small cities (cities with populations of 4,000 to 7,000)
| Percent | Percent | |||
| Peru, Ind | 100 | Willimantic, Conn | 100 | |
| Logansport, Ind | 100 | Wallingford, Conn | 100 | |
| Beaverfalls, Pa | 100 | Albany, Ga | 100 | |
| Connellsville, Pa | 100 | Gastonia, N. C. | 100 | |
| Mattoon, Ill | 100 |
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Mr. Lubin. We find that in New York City approximately 20 percent of all the wage-earner families had less than $1,250 a year. In Philadelphia, 29 percent of all the wage earner families had less than $1,200 a year.
In Los Angeles, approximately one-fifth had less than $1,200 a year.
In St. Louis, approximately one-fourth had less than $1,200 a year.
In Pittsburgh, approximately 26 percent of the white families had less than $1,200 a year.
And so on. In a city like Littleton, N. H., 63 percent had less than $1,200 a year.
These latter wage-earner families were all what we call a full time wage earner. This means that at least one person in the family had at least 36 weeks of employment during the year. When we say that something like a quarter or one-third of the wage-earner families earned less than $1,200 a year, we are talking only about those families that had a full time employed wage earner, and not families where people worked part time or did not get an average of 36 weeks of employment.
The question arises as to what these wage earners get for their money. What can a wage-earner family in a moderate sized family get for his $1,200, $1,300, or $1,400, assuming the family income is that large?
The Chairman. May I interrupt you there? I do not want to ask you any questions, but I want to be sure on this family wage that you are speaking about. Do I understand that in each instance that is the joint wage of all of the employed members of the family?
Mr. Lubin. Yes; the total income. In order that the picture of how the American wage earner lives on an income of $1,200 to $1,500 may not be too complicated, I will break it down into four parts. First, the type of house he gets for his income; second, the amount and kind of food that he gets; third, the clothing; and fourth, transportation.
As to housing, the average worker’s family, with full-time employed worker bringing in an income, pays in the neighborhood of $20 a month for rent and an additional $15 a month for fuel, light, and other household supplies. For the $20 that these families pay in rent, by and large in the average moderate-sized city, he will usually get a flat or a half of a double house or a four- or five-room frame house. He does not get steam heat in most instances and he must use coal for heating.
The sanitary facilities that are available to families in this income level vary greatly with city regulations. In some large cities as many as 5 percent of the families are today without those conveniences that anyone would regard as essential. In some cities only two-thirds of the workers’ families have running hot water inside the house. Almost every third family has no gas or electricity for cooking. Relatively few have electric refrigerators and many still use the window sill or the cellar to keep their food fresh.
Representative Allen. What comprises a wage-earning family?
Mr. Lubin. We take the family as it exists. If the father is the only income producer, and he works 36 weeks during the year, his income is the basis of our figures. If the wife and the husband both work, we take their total income.
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Representative Allbn. In summing up these figures, don’t you have an average amount?
Mr. Lubin. Do you mean the size of the family?
Represenative Allen. Yes.
Mr. Lubin. It runs approximately 4.5, by and large; in other words, approximately two and one-half children on the average.
Representative Allen. And a father and mother?
Mr. Lubin. Yes.
Representative Allen. Thank you.
Mr. Lubin. Food is the most indispensable factor in the family budget. The average family spends about one-third of its income on food. This means about $8 a week for an average family of four persons. Now, what can the worker’s family get for its $8?
We find that the market basket is heavily weighted with flour, potatoes, bread, and pork. It is only as family incomes increase that they can enjoy the luxury of green vegetables and fresh fruits, a greater variety of meats and larger quantities of milk and eggs. Despite the importance of milk to the health of our youngsters, let us not forget that 4 out of every 10 families consume less than 2 quarts of milk per person per week.
The fact is that when we compare the amount of money spent for food by families of employed workers, with the retail cost of the items that are necessary to maintain a minimum adequate diet, we find that in some cities a third of the employed workers’ families do not have enough money to buy the foods that are necessary for minimum adequate diet.
The third important item in a family’s standard of living is its clothing. The representative wage earner family spends about 12 cents out of every dollar for clothes. In a family with four persons this means less than $4 a month per person. This means that the husband must make his suit last for about 3 years. He can hardly get a new overcoat more often than once in 4 or 5 years. The wife cannot afford to buy anything better than $5 or $6 dresses, if her husband and children are to have the clothes they require for their jobs and for school. She must limit her millinery purchases to one winter hat and one summer hat every year. But we find, however, she will make almost any economy, as long as her husband has a job, to provide herself with silk stockings.
A fourth item which has become of importance in the standard of living of the average family during this generation is transportation. And in transportation we include the automobile. We like to believe that all of our workers have automobiles. Yet the facts for one large middle western city shows that over a period of a year only 15 out of every 100 workers’ families bought a car. Of these 12 out of every 100 bought a second-hand car; only three bought new cars. In a large eastern city only 4 out of every 100 workers’ families bought automobiles during the year; 3 out of every 100 bought a used car; and less than 1 out of every 100 bought a new car.
There is one further item in the American standard of living to which attention should be called. Neatness and pride in personal appearance have become an accepted part of our standards. And the importance of keeping neat and well groomed is shown by the fact that the average workers’ family spends 2 cents out of every dollar on
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barber shops, beauty parlors, and on the purchase of toilet articles and cosmetics.
Even with these limited expenditures it is no easy job for the American wage-earner family to break even, even when at least one member of the family has regular employment. Our study shows that about a third of the wage earners’ families find their incomes insufficient to meet the minimum requirements of their standard of living. The result has been that one out of every three families usually draws upon past savings, if they have any, or find themselves in debt at the end of the year.
One thing stands out in the American standard of living. Despite the fact that there is a close similarity in the general outlines of general standards from city to city, within each city there is a great variation in the standard of living of different income groups. At the lower levels there are no telephones, no running hot water, no electric refrigerators, no automobiles. Food claims so much of the family income that there is relatively little left for clothing, medical care, and house furnishings, leave alone education and recreation. It is only at the highest economic levels that the wage-earner families can afford frequent movies, a second-hand car, and clothing which meets the needs of winter and at the same time has some style. Even at these higher levels, however, after taking care of the family’s needs for food, clothing, and housing, it ,is only infrequently that the amount left over for other purposes is equal to one-third of the family income.
Now, Mr. Chairman, I have some data here that I would like to submit for the record. They show the percentage of families in the various cities I have mentioned, that have telephones, that buy an automobile or own one, that have radios, that have running water, that have inside flush toilets and things of that sort.
For instance, we find that in very few instances are there more than 20 percent of our workers that have telephones in their homes. In very few instances do as many as 20 or 30 percent of them buy an automobile in the course of a year.
All these figures, as I say, were based on this investigation that the Bureau has made.
The Chairman. Without objection that will be inserted in the record at this point.
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Senator Lee. These families that you have been discussing, as I estimate it, would consist of more than one-third of the population. Of those you read off, they ran from 30 percent up to as high as 50 percent. Were those families whose average income was $1,200?
Mr. Lubin. Yes.
Senator Lee. Then there must have been many of those who were below $1,200. Did that include all families below $1,200?
Mr. Lubin. The figures I gave were the percentage of families that had an income of $1,250 or less. These are broken down into $250 groups; in other words, the percentage of families that had under $250, $250 to $500; $500 to $750; and so on; so that you can get a picture of just how many earned $500 a year, how many earned $750 a year, and so forth.
Senator Lee. Do you have the figures to show whether that group increased following this period of the nullification of the N. R. A.?
Mr. Lubin. No. This was a huge job. It meant covering all of these thousands of families. It would have been impossible to do it had it not been for the fact that the Bureau of Labor Statistics, the Central Statistical Board, the Bureau of Home Economics, and the National Resources Committee persuaded the W. P. A. to let us employ some of the unemployed school teachers and professional people to do this work. They visited these homes and investigated their earnings and their budgets, and found out how they spent their money.
Senator Lee. I do not want to anticipate, but are you leading up to the point now to an estimate of about how much this law, if passed, would increase their buying power?
Mr. Lubin. In part. What I wanted to say in summing up was: What will happen if their buying power increases? We do not know just what will happen for each type of goods, but we know quite specifically what will happen to the demand for certain types. I can summarize as regards textiles, for example.
The percentage of money that is spent for clothing increases as the family income increases, and as we get into the higher income levels, the number of dollars spent as compared to the low income levels are almost twice as many. In Richmond, Va., white families earning $1,200 a year spent about $120 on clothing. The families earning $2,000, spent $254 on clothing. You see what that means. It means you have increased your expenditures by $134, which is over a hundred percent, although the actual increase m the family income is only about 60 percent.
I think we can say very safely as the result of these studies, that a 30-percent increase in the family income in wage-earner families means a 60-percent increase of expenditure on clothing. The textile industry is one which would be most immediately affected by this act, not only as regards hours, but also as regards wage rates. This industry has the most to gain from increases in the income of workers; because there is a very elastic demand for textiles, and expenditures for textiles increase relatively much more when incomes increase.
We find the same thing true in furniture. In Richmond, an increased family income from $1,230 to $1,700, which is a 40-percent increase in income, means a 50-percent increase in expenditure for family furnishings and furniture.
Senator Lee. What about food?
Mr. Lubin. In terms of percentage the food goes down, but the dollars go up.
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Representative Griswold. Mr. Lubin, manufactured goods produced in Indiana and some other States and sold in New York. Philadelphia, and the Boston markets, have a rather stiff railroad freight charge, and that is sometimes several times the charge of transporting competitive goods from European and Asiatic ports. I would like to know whether you believe this increases the cost of goods, made necessary through the operation of this bill through the increase in wages and the shortening of hours, if we still permit goods to come in here manufactured under substandard labor conditions, whether that will be really helpful to our labor in this country.
Mr. Lubin. Well, the question is really what effect a given minimum wage will have upon the cost of production in this country. As I understand you, you assume that this minimum will be above the minimum prevailing in certain instances in this country and will increase costs and make it more difficult for American producers to compete with foreign producers?
Representative Griswold. Yes. We know as an actual fact, if you read former hearings of the House Labor Committee, that they are produced, and the cost of transportation charges included, they are able to sell these goods produced under substandard labor conditions cheaper than we can produce them here.
Mr. Lubin. I think it is impossible to say that a minimum wage will increase the prices to the American consumer in all cases. After all, there is not an industry in this country that will be affected by the minimum wage that already does not have a large number of plants that are in business selling goods at a profit and paying a rate equal to or above the minimum. In other words, their costs are not going up because they are not going to be affected by this law. Costs of the fellow down below will.
The question is what will the firms that are now paying above the minimum that you are to set going to do? They have two alternatives. Keep their prices where they are because their costs have not gone up, and get more of the business from the other fellows, or raise their prices because the other fellow wants to raise his prices.
I think that is a problem that should not concern the labor-standards bill. That is a problem of the competitive system. It is also in part a problem of whether or not people get together and fix prices.
Representative Griswold. But there is a problem of facts involved here to this extent. We will presume that a firm manufacturing lamp globes in this country meets with your minimum standards here, maybe they do already, but at the same time that same firm owns a plant in Nagasaki, Japan, that ships goods in here in competition with these goods manufactured in this country, and manufactured under substandard labor conditions, very much worse than ours in wages and hours. What about your competition there?
Mr. Lubin. If this firm is competing with itself and is now paying a minimum wage rate equal to what you are going to set here it still can stay in business and maintain its plant in competition with its own goods coming from abroad I do not see that this bill will necessarily affect them. They will be in exactly the same position they are m now, because they are already paying a minimum equal to what you are going to set here.
Representative Griswold. Then you do not help American labor with this bill?
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Mr. Lubin. I think that is a very distinct problem-----
Mr. Griswold (interposing). But that does not cure the situation for those people who are in the lamp industry or the fishing industry or any other industry that is competing with these Japanese goods.
Mr. Lubin. It may not help it, but it won’t make-it any worse.
Representative Griswold. There was one other question. Section 6 (c) (4) of this bill, it refers to peak employment, and the Board created here shall have the power to fix rates and hours and so forth in periods of seasonal or peak activity. Have you ever made any studies, or your Bureau made any studies concerning these peak activities?
Mr. Lubin. We find very definite variations from month to month in certain industries.
Representative Griswold. For instance, I mean in this way. An industry—not the canning industries which are seasonal, but those which have a peak period as distinguished from the so-called seasonal industries. For instance, those that make most of their products during the first 6 months of the year, or the latter 6 months.
Mr. Lubin. Of course, the automobile industry is the best case of that sort. The automobile industry in the old days showed its new models in January, started taking orders and stepped up their production until they reached their peak sometime in April or May. Then employment started going down rather sharply. As the result of an investigation which was made under Mr. Henderson’s direction, and in which the Bureau of Labor Statistics had some part, it was recommended by the President that the industry, instead of putting out their models in January, put them out in November. The industry accepted the suggestion. We have noticed very definitely that the period of peak employment has been extended almost 2 months as the result of that. Every industry has a peak. Even retailing has its peaks.
You will always find periods in the year in which you produce more than you do in other months of the year, and the same will be true of your employment record. Every plant shows these variations from month to month, depending upon the seasonal nature of their goods.
Representative Griswold. Do you think it advisable under this bill to make provisions that would allow the Board to consider peak industries? Taking your statement that every business has a peak, where would you draw the line of demarcation as to peak industries? Wouldn’t it be just a matter to present to the Board and let the Board discriminate as they felt like?
Mr. Lubin. I would not necessarily say that. I think there are two things we have to consider. These peaks are not God-created except in certain industries that depend upon the weather, like lumbering, canning, and things of that sort. Many an industry which has always been considered seasonal has found it possible to either shorten the season or regularize. There arc plants scattered throughout the country which used to work full capacity for 4 months and then hardly at all for the next 8 months. They found that, by developing side lines or by giving special discounts to customers to order 6 months in advance, they could plan their production. Industry has learned in many instances, where it has attempted to find the solution, that it could eliminate or at least diminish peaks.
For that reason, I would go slowly in providing exemptions for seasonal peaks. I think they should be provided, because there are times that you just cannot get more workers. You may need them
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immediately and your plant may be located in. a place where you just cannot get them.
Representative Griswold. I am with you on your views on seasonal work, but I am talking about factories that work 4 months and then leave its employees on charity for the other 8.
Mr. Lubin. I would go very easy on any exemptions for a firm of that sort, because, as I say, industry can overcome it if it tries. It has been proven that some firms can do it. We have a shoe factory in the United States that guarantees 48 weeks of employment to its workers, and having guaranteed it, it has been forced to find a market for its shoes and dispose of its product.
Representative Griswold. And the shoe factories used to do it, just what you are saying, send their men out 6 months in advance to take orders.
Mr. Lubin. That is why I say I would go very slowly on exemptions.
Representative Dixon. You spoke about the white families. Have you any figures as to the colored families?
Mr. Lubin. May I pass this chart around, which has those figures for both white and black? [Presenting chart.]
Representative Dixon. Thank you. It was suggested by Mr. Lewis this morning that we take out of the law here, section 5. Would you read it over and what would be your advice on that?
Mr. Lubin. I am not a lawyer, but I trust the judgment of the folks who have testified on the constitutionality of this bill. I have heard the testimony of the Assistant Attorney General, and if the constitutional lawyers feel that it is better to fix the standards that shall guide the Board in the law, then I would say they should stay in. I think our experience in the past on the question of the delegation of authority makes it very essential that we be protected by fixing as many standards as are possible, so that nobody can accuse the Congress of delegating to somebody else powers that are fundamentally its own.
Senator La Follette. Have you any data or any studies of the experience in States or in other countries where minimums have been established, as to its effect upon the organization of the workers?
Mr. Lubin. Well, the experience of Australia and Great Britain and in Germany prior to 1933 are probably the best instances of the situations of that sort. It is pretty hard to tell how far social legislation stimulated collective bargaining, and how far collective bargaining stimulated social legislation.
There is no doubt that in Germany prior to 1933, the social legislation which went into effect during the latter part of the last century was an important factor in getting the workers to organize.
In Australia I would say it was more the reverse. They started in with trade unions, and the trade unions forced the legislation upon the nation, and that in turn reacted upon the trade unions and made them stronger.
In Great Britain the trade unions have stimulated collective bargaining, and the Government has also stimulated collective bargaining by making the trade unions their agents in paying of the benefits and things of that sort. On the other hand, the trade unions themselves have been behind social legislation which in turn strengthens their position.
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I would say, by and large, that legislation of this sort abroad has had a very beneficial effect upon bringing about a greater consciousness among the workers, and getting them the rights to bargain collectively.
Senator La Follette. Do you agree with Mr. Henderson’s estimates as to the numbers that would be affected by the minimums and maximums which may be established?
. Lubin. I won’t say that I disagree, but I think this is true, that putting it in terms of industry, the industries that will be affected to any large extent are relatively few in number. I have here a table showing the industries in which at the moment the average hourly earnings are 44.9 cents or less, and there are only 11 manufacturing industries and three nonmanufacturing. Of the latter, none of them probably would come under this act. You have the sawmill industry, cotton goods, silk and rayon, corsets, men’s furnishings, shirts and collars, confectionery, cigars and cigarettes, cottonseed, fertilizers, and one or two others. Those would be the industries where the big proportion of the workers would be affected.
In other industries, it would be scattered firms here and there.
Frankly, I would say that the number of workers directly affected by the minimum wage provision would not be in excess of 2,000,000. On the other hand, in regard to the hours, there it will depend entirely upon the regulations of the Board. If they permit overtime and pay at time and a half as the bill provides, there is no way of telling what the employer will do. Is he going to take on new people, or let his present people work overtime or time and a half?
Senator La Follette. May we have those tables in the record?
The Chairman. Yes. Will you give those tables to the stenographer?
Mr. Lubin. Yes.
Average hourly earnings per week in manufacturing and nonmanufacturing industries, February 1937
44.9 CENTS AND LESS
| Manufacturing | Cents | |
| Sawmills | 44.4 | |
| Cotton goods | 39.0 | |
| Silk and rayon goods | 42.3 | |
| Corsets and allied garments | 43.9 | |
| Men's furnishings | 32.9 | |
| Shirts and collars | 37.3 | |
| Canning and preserving | 44.9 | |
| Confectionary | 42.9 | |
| Cigar and cigarettes | 43.4 | |
| Cottonseed – oil, cake, and meal | 22.7 | |
| Fertilizers | 35.6 | |
| Nonmanufacturing | ||
| Hotels (year-round) | 29.9 | |
| Laundries | 37.7 | |
| Dyeing and cleaning | 4.5 |
45.0 CENTS AND OVER
| Manufacturing | Cents | |
| Blast furnaces, steel works, and rolling mills | 72.7 | |
| Bolts, nuts, washers, and rivets | 61.0 | |
| cast-iron pipe | 51.2 | |
| Cutlery (not including silver and plated cutlery) and edge tools | 56.1 | |
| Forgings, iron and steel | 67.3 | |
| Plumbers' supplies | 58.8 |
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Senator Lee. How much can we increase the buying power of this group of people by this law? Can you estimate?
Mr. Lubin. Frankly, I do not think that that can be answered at all.
Senator Lee. Not within a wide range or a percentage estimate?
Mr. Lubin. It will vary so much from plant to plant, also in terms of the number of people in each plant.
Senator Lee. By your figures there, there are great possibilities in increasing our markets by increasing the consuming power. Do you believe that we suffered so much from overproduction in the last few years as we did through this low consuming power?
Mr. Lubin. I do not believe that anybody ever suffers from overproduction.
Senator Lee. That is, by jacking up the wage level, we can absorb the whole production in cotton and wool, for instance?
Mr. Lubin. I think you stimulate consumption rather markedly.
Senator Lee. By your figures, over 100 percent on this group?
Mr. Lubin. As a matter of fact, I think the Bureau of Agricultural Economics once estimated that if every family in this country had a minimum number of sheets, towels, spreads, cotton shirts, and other textile products that go into making up our standard of living, our cotton crop would be about 30 percent short, in other words, we could use all of the cotton we produce and still be short about 30 percent.
Senator Lee. The same would be true, although you said the percentage for food goes down, but the actual dollars spent for food
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purchases increases. It would be true regarding food products but not on such a large scale, perhaps.
Mr. Lubin. Yes; but there would be a limit to it.
Senator Lee. Do you think we should try to write into this law the 30-hour week?
Mr. Lubin. I would rather not, myself. Personally I feel that there should be discretion in the Board, always, however, within certain definite limits of policy. In other words, if the policy is a 40-hour week, it should stay as close to that as possible, but make adjustments for emergencies or for shortage of labor in a given locality at a given time, or something like that.
Senator Lee. The minimum wage would increase the purchasing power of some of these people but not nearly all of them, would it?
Mr. Lubin. Everybody who is now getting below the minimum wage would be benefited by it.
Senator Lee. If the week is shortened and the same wages given, providing they are both of the minimum, their total income has not been increased, so we would not be helping the market there any.
Mr. Lubin. This thing is true, however. If you take the various industries and look at the number of hour that they are working, you will find that the industries that are employing the most people are working in excess of 40 now, and are for the most part paying overtime rates. That would be true of steel, automobiles, and agricultural implements. Under this law they still would be permitted to work in excess of the minimum.
Representative Thomas. Dr. Lubin, as a matter of fact, it is pretty much of a guess right now as to the number of people who would be affected by this increase in pay, is it not, because after all is said and done, what is interstate commerce is left entirely to the Board to define, is it not? So that after all, one man’s guess is as good as another’s on that subject, and until after the Board begins to define what is interstate commerce and lays a yardstick down for particular industries, it is pretty much of a guess, is that not so?
Mr. Lubin. Of course, I take it that pressure would be brought upon the Board to define interstate commerce at the very beginning. I would say, that personally I would feel that as the law is drafted now—I am not a lawyer—it would imply that almost everybody could come under it. The Board can say that almost anything is under interstate commerce or affects interstate commerce, but it may not feel, that retail merchandising comes under the provisions of the act. I think the Board probably would have to make the decision.
Representative Thomas. Is it generally understood by and between economists that, let us say, in the heydey period of 1929 and 1930, that if the people of this country had the purchasing power, that they could have then consumed anywhere from 25 to 50 percent more goods than was then being manufactured in the country? Is that more or less generally understood?
Mr. Lubin. I would say that there is a school of thought which is of the opinion that the productive capacity of American industry in 1929 was something like 20 percent above its actual output. There is another group that says in terms of the technical knowledge available in the country, capacity was something like 100 percent greater than output.
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Representative Thomas. You do not understand my question. I am talking about the consumption of goods based upon purchasing power. The question I asked is this: Is it generally understood between the economists that if the people of the country as a whole had a purchasing power that during the years 1929 and 1930 was— or in any other given period as far as that goes—they would have consumed anywhere from 25 to 50 percent more goods than they were actually consuming?
Mr. Lubin. I would not stop at 50 percent. I would say they could go way beyond that.
Suppose, under this bill, the general workweek is cut, say, 10 percent, would not that cut, in the final analysis, reduce the productivity of the producers 10 percent?
Mr. Lubin. No; I do not think so at all. One of your witnesses, Mr. Johnson, who testified here the other day, stated that in his plant, when he cut his hours by 20 percent the actual output per day per man hardly fell at all and he expected to get as much work done as before.
In the coal industry, as hours were cut during 1935 there is very definite evidence that the output per man per hour went up.
Representative Thomas. That explains the Brookings Institution theory, does it?
Mr. Lubin. I have a lot of faith in the ability of American industry, American technology and American engineers to offset any loss of productivity that might result from shorter hours.
Representative Thomas. Doctor, so far has that faith been justified by actuality?
Mr. Lubin. I think we have done it every time. Our experience has shown that the national output and the output per worker during the last two generations has been going up, despite the fact that the hours of employment per day have been going down.
Representative Thomas. Then following your theory one step further, suppose you have a particular industry that we shall call “A” here; if this law goes into effect we will say the workweek will be shortened 20 percent and the wages will be increased 15 percent; according to your theory it does not necessarily follow at all, does it, that the increased cost of that product will be 35 percent?
Mr. Lubin. Not at all. As a matter of fact you might increase wages 15 percent and if you could increase your market, you could take advantage of lower overhead cost, and taxes and interest per unit of output. There are a lot of savings that go with volume.
Representative Thomas. You may often cut your unit cost but that is somewhat speculative, is it not, Doctor?
Mr. Lubin. The proof of the fact is that during the period 1934 and 1935, ever since October 1933, you have had a gradual upward tendency in output. When wages rose the prices of manufactured products did not go up. They stayed stable for almost 2 years. How do you account for it? There is only one way to account for it: As business picked up you could afford to pay higher wages. Your savings in volume, your wider distribution of the lower cost of overhead per unit of output offset the increased cost of labor.
Representative Thomas. As I understand this bill, it will not affect agricultural workers. I am talking about the pay roll now. It will not affect the workers in intrastate commerce, it will not affect those
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too, so where is this increase in market coming from? Purely from the man that directly benefits.
Mr. Lubin. It starts there. If he buys more it increases the purchasing power of the other fellow, and the other fellow in turn having more purchasing power also buys more, so the thing goes like a snowball. If you add to the purchasing power of 2,000,000 people they will be able to buy so many more shoes, for instance, and it benefits the shoe worker, who in turn buys more clothes, and so on.
Representative Thomas. It 'will not start a forward movement in prices?
Mr. Lubin. It will depend entirely upon whether or not the competitive system actually is permitted to work. In view of the fact that there will be no industry in which there will be any plant which already does not pay the minimum, there is no necessity for those plants now paying the minimum increasing their prices.
Representative Thomas. Has it been your observation, or has it not, that when an increase like this comes along the average employer will say, “Well, if I am going to increase my pay roll 10 percent, I am going to decrease the hours of work 10 percent, that means I will have to add 10 percent to my cost”, is not that your experience?
Mr. Lubin. I would say that was true of the average, but my feeling is this: In view of the experience we have had in other industries, let us take automobiles, which is a good case in point, their wages had gone up markedly during the last year but prices of automobiles have not.
Representative Thomas. They had a nice, wide margin to play with to start with.
Lubin. So do other industries, at the moment. . The question is, Will they put prices up or will they be willing to leave them where they are and gain through volume and efficiency? That nobody can answer.
Representative Thomas. Thank you very much.
The Chairman. Mr. Schneider, any questions?
Representative Schneider. I just wanted to get your opinion about whether or not wages of all the textile workers would be increased by the establishment of the $16 minimum?
Mr. Lubin. No.
Representative Schneider. Why would not they?
Mr. Lubin. Because there are plants in the industry now which are paying 40 cents an hour as the minimum, with the exception probably of a few service employees. I think you can even find plants where everybody is getting 40 cents an hour or more, and there would be no reason why they should necessarily increase their wage rates.
Representative Schneider. The facts are that the average wages oi the cotton textiles is about $14 a week. Now, if we put the minimum up to $16 a week there would be a certain number of people getting above the $14 at the present time who naturally would expect an increase above the wage received under this act of $16 a week; they certainly would not continue on the minimum. If that were true would you have a flat $16 week for all the people in the textile industry? That just cannot be done for the reason that the employer would be forced to increase the wages of all those over $14 at the present time.
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Mr. Lubin. As a matter of fact, for the last month average weekly earnings were $16.11 in cotton goods. They have been operating at a very high rate.
Representative Schneider. That is the average?
Mr. Lubin. That is the average.
Representative Schneider. Now, you put all the minimums up to $16, you raise all those receiving $15 to $16, and naturally all those now above the average will expect an increase in wages.
Mr. Lubin. Yes; there will be a very definite movement, and there should be a differential between the different types of skill. Your loom fixer should be getting more than 40 cents an hour if 40 cents is the minimum that will be paid, just as the skilled mechanics in certain other industries will try to maintain their differentials. No doubt about it.
Representative Lambertson.
Mr. Lubin, I think Mr. Thomas asked the question about intrastate commerce. There is not going to be any industry in intrastate commerce if this bill is in operation, is there? A company is going to be construed as being in interstate commerce?
Mr. Lubin. I do not know. I am not enough of a lawyer to say. I do not know how far the Board can go in interpreting the law.
Representative Lambertson. That is practically Mr. Jackson’s deductions as he made them on the stand here in technical language, there is not anything left in this bill as intrastate commerce. I was wondering what your reaction would be to that.
Mr. Lubin. Mv opinion would not be worth anything on a matter of that sort. I do not see, for example, how my tailor who presses my suit could be interpreted as interfering with interstate commerce under this act. Theoretically, yes; I can conceive of a situation where some tailors in Baltimore might come down soliciting business, but I think, after all, by and large, as a practical matter, no board which takes its job and responsibility seriously would ever go that far.
Representative Lambertson. In answer to Senator LaFollette’s question you said nobody ever suffered from overproduction. You did not mean that, did you?
Mr. Lubin. I meant no country or no people ever suffered from overproduction.
Representative Lambertson. You do not think the farmers have suffered from overproduction in this country?
Mr. Lubin. The American people have not. Certain groups of the population, certain textile producers have suffered from overproduction, certain farmers have, but the American people never had so much food that the existence of that food in the country hurt them. It just happens that it was badly distributed and the people who needed it could not get it, but taking the United States as a whole we have never had too much food in this country, just as we have never had too much of anything else.
Representative Lambertson. The answer I got is that nobody ever suffered from overproduction.
Mr. Lubin. I mean the people as a whole.
Representative Lambertson. This act appears to be in conflict with the Wagner Act. If it is then why not let the Wagner Board run this Board?
Mr. Lubin. I think the functions are absolutely distinct. The Wagner Board has two particular functions to perform; first, to
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protect workers against discrimination, and, second, to determine who represents the workers in collective bargaining. Now, insofar as those functions have any bearing upon this act, I personally would like to see those functions centralized in the Wagner Board. Have the Wagner Board certify to the Standards Board that there is collective bargaining and whether union representatives had been designated. Beyond that I do not see that there is any relationship between the two, that is, in either the fixing of the hours or the fixing of the wages.
Representative Lambertson. That is all.
The Chairman. Mr. Wood.
Representative Wood. Mr. Lubin, experience with the workmen’s compensation law reveals the fact that a great majority of the accidents in industry happened after the seventh hour, and a great proportion of them happened after the eighth hour, where there was a 9-hour workday. Would not that seem to substantiate the fact that workers who work 6 hours a day could produce a great deal more in a given hour, and naturally the reduction of the hours to 6 would cause an increase in the productive capacity of the worker, because in this seventh, eighth, and ninth hour the worker is exhausted and the accidents occur, which, of course, means that he does not produce as well, he does not produce as rapidly, he is not as efficient as he has been in the first 5 or 6 or 7 hours a day?
Mr. Lubin. It can be proven by medical evidence that the amount of fatigue increases at a more than proportional rate as you go beyond a certain number of hours a day. Just what the optimum number of hours would be, whether 6 or 7,1 do not know. There is evidence to show that the eighth, the ninth, and the tenth hours do not result, in many industries, in as much output per man as any of the first 6 or 7 hours. I do not think there is any way of telling just what the preferred hours would be in terms of maximum output per man.
Representative Wood. Well, the experience in workmen’s compensation of some 25 years’ operation in various States has revealed the fact that fatigue occurred after the seventh hour, and of course the accidents in most cases were caused by fatigue, which would lead people to believe that the worker is not as efficient, he does not produce as well. Therefore, it goes without saying that he can produce a good deal more in a given hour if he only works 6 or 7 rather than 8 or 9.
Mr. Lubin. The question is: Would the increase in hourly output after a certain stage be sufficient to offset the shortening of the hours? I do not know.
Representative Wood. Now, if the hours of labor were reduced to 6 don’t you think that most of the employers that work the employees 7 or 8 hours per day, if they were required to reduce their hours to 6 or 7, that in a majority of the cases the employer would not reduce the hourly wage but would reduce the hours and pay the worker the daily wage he had been receiving before the reduction of hours?
Mr. Lubin. I really would not want to commit myself as to a majority of the employers. I could not answer that question. Frankly, I don’t know.
Representative Wood. Now, in the light of recent happenings do you know of any large industries in the last 5 or 6 years that reduced the hours of their workers and likewise reduced their weekly pay?
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Is there any industry, any large industry, where that has happened, that you know of?
Mr. Lubin. Of course, the fact that there are no instances of that kind does not necessarily tell the whole story because there may have been a lot of factors behind the situation. There may be some plants where hours have been cut, and wages had been increased to more than offset the falling hours. But there may be other factors in the background, such as for instance trade unions trying to get in, or there may be other competitive situations. You cannot always contribute it solely to the desire of the employer. I should like to know the factors existing in each case before I come to a conclusion on that.
Representative Wood. Of course, in the case where the trade unions are a factor, even though the men were not organized they would not only get a decrease in hours but an increase in daily wages. Don’t you think that the minimum wages established by this bill, if it became the law for workers in interstate commerce, that it would naturally influence the employers of workers in intrastate commerce to raise their daily standards?
Mr. Lubin. I think that always happens.
Representative Wood. It influences the intrastate wage?
Mr. Lubin. We have had that happen. Every time an important union signs a contract with an important firm certain other people get interested in the better-wage situation and the next thing you know there is a movement for a better wage in the barber shop, there is a movement for a better wage in the bakery, and things of that sort. It would pyramid.
Representative Wood. For instance, if the bill would affect two- thirds of the industry, or even half of it, that would become a kind of a going wage, a prevailing wage, and employers in intrastate commerce would be inclined to elevate their standards to that wage structure.
Mr. Lubin. I think there is something in that.
Representative Wood. You do not think there is any danger—this question has been often asked here—about the rise in cost of the commodity if the hours are lowered 20 percent and wages increased 15 percent?
Mr. Lubin. I do not think anybody can answer that question. As I stated before, theoretically it is not necessary that the price be raised at all. It depends upon the competitive situation in the industry.
Representative Wood. If the reduction of hours in a given industry would not affect the daily wage of the worker but the worker would receive his regular weekly wage, or daily wage, for 6 hours that he formerly received working 7 or 8 hours, it would tend to spread employment, would it not? Of course it would spread employment, because the employer would have to employ more people, and then, with the great group of workers whose wages would be elevated, it would give them additional purchasing power, and it likewise would give the employer an opportunity to have more continuity of employment, it would reduce his overhead, he could produce more per man-hour than he could by having lay-offs. Lay-offs in the industry are very expensive.
Mr. Lubin.
Yes. Representative Wood. And in many cases destructive.
Mr. Lubin. Yes.
Representative Wood. Would you think that an employer could produce far more at a lesser cost by paying a higher wage and having
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a continuity of employment than he could by paying a lower wage and having to be subjected to cessation of work every month or so?
Mr. Lubin. One cannot generalize on a matter of that sort. I think there are very large numbers of plants where, if you could regulate all employment and keep your plant working, say, 50 weeks in the year, or even 48, the savings in overhead per unit, resulting from increased production and so forth, would be very large, sufficient to make it possible to raise wages rather markedly.
Representative Wood. Of course your tax, interest, insurance, and all that also enters into it?
Mr. Lubin. Yes.
Representative Wood. It would cost a great deal more to keep the machinery in condition than if the machine was in operation and that would naturally add to the cost of the commodity?
Mr. Lubin. Yes, sir.
Representative Wood. That is all.
The Chairman. Congressman Ramspeck.
Representative Ramspeck. Doctor, have you made any study on what happened to the employees when wage agreements were put into effect under the N. R. A.?
Mr. Lubin. I personally have not made such a study, but the N. R. A. did make a study on the effect of the P. R. A. agreements.
Representative Ramspeck. Are you familiar with that study?
Mr. Lubin. If I remember the result correctly—I am rather vague because it is at least a year and a half since I have seen it—there was a very definite increase in the number of people employed as the result of the P. R. A.
Representative Ramspeck. I wonder if you have any information with reference to the discharge of less-efficient employees and those who were getting a rather low pay because of the minimum wage under that agreement?
Mr. Lubin. I have no information on that subject. We know that complaints to that effect were made to the N. R. A. I would not know how many of those complaints were substantiated.
Representative Ramspeck. What is the idea of this comparison of the white and colored wages here in your chart?
Mr. Lubin. Those are not wages. They are actual family income. In making a study of the cost of living in those areas where the colored population was an important part of the population we made studies of both the black families and the white families.
Representative Ramspeck. Did you find any difference in the cost of living?
Mr. Lubin. The actual cost of living?
Representative Ramspeck. Yes.
Mr. Lubin. Well, they both pay about the same price for a loaf of bread, they both pay the same price for the same suit of clothes, they both pay the same price for the same pair of shoes. In terms of the prices they paid for the things they bought they had to pay the same prices as the white people.
Representative Ramspeck. What about the rents?
Mr. Lubin. For the same kind of a house that the white families got they had to pay the same rent.
Representative Ramspeck. Well, of course, that is no information. What did they buy in the way of houses?
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Mr. Lubin. When we talk about the cost of living, we talk about the costs of specific things. You can buy a suit of clothes for $5 and you can buy a suit of clothes for $10, but that does not mean that the suit of clothes that you paid $5 for is half as cheap as the other. It may be equally as expensive because of the difference in quality. That is true in housing also.
When we studied the cost of living of the Negro population we studied the cost of living of the life they led, their standard; what they paid for the things they bought.
Representative Ramspeck. Wen, the figures that you gave us on the cost of living, are they based on actual expenditures for living costs, or are they theoretical?
Mr. Lubin. Actual expenditures, the amount actually spent by these wage-earner families.
Representative Ramspeck. Then I will ask you the question as to what is the difference between the cost of living for the Negroes and the cost for the white on the basis of what they actually paid?
Mr. Lubin. In other words, the Negroes spent a lot less on living than the whites did, but they got a lot less than the whites did.
Representative Ramspeck. But it is an actual fact that under the President’s Reemployment Agreement a great many Negroes in the South lost their jobs entirely, and if Mr. Lewis’ suggestion this morning were to be followed and the Board should have no authority to make differentials the same thing would happen under this law, so instead of being benefited they would be hurt by it; is that not a fact?
Mr. Lubin. Of course, the law specifically provides, as I read it, that in the event of fixing of a rate which shall cause undue unemployment, or undue restriction of earning power on the part of the workers, that a differential can be provided.
Representative Ramsfeck. That is all.
The Chairman. Mr. Murray, have you any questions?
Senator Murray. No; I haven’t any questions.
The Chairman. Senator Holt?
Senator Holt. Dr. Lubin, do those tables that you presented break down into 700 or 800 hours the cost of living?
Mr. Lubin. It gives the family income, what the family gets for its expenditures.
Senator Holt. The reason why I ask that, those two figures being given, the 700-hour year and 800-hour year, and your statistics prove to me that we have not reached prosperity yet by any means; in other words, it is not just around the corner. What I wanted to ask you was: Did these manufacturers in any case substitute machinery for men when the wages went up?
Mr. Lubin. In some cases they did. In most instances, however, what happened was that they either made the existing machinery move a little faster or they reorganized the routing of their goods, so that there was less waste motion. They also eliminated other types of waste in the plant, and in many instances overcame the difference in cost in that way.
Senator Holt. That split up the unit production?
Mr. Lubin. Yes.
Senator Holt. In other words, if that would be the case, then this bill would not help to employ any additional persons, would it?
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Mr. Lubin. The fact is that all of them cannot do it. Here and there we find a plant that did it. In most instances, they had to take on new people to get the output.
Senator Holt. In other words, the smaller plant would be the one that would bear the burden of the increased number of employees?
Mr. Lubin. No ; it would depend upon the industry. For example, we find some industries where the smaller plants work on the same basis as the bigger plant. You have as many big plants doing these things as smaller plants, and vice versa.
Senator Holt. Do you have any figures in the Department—and I want to say I enjoyed very much your factual presentation—do you have any figures on the migration of industry to territories where low wages were paid?
Mr. Lubin. No; we do not. Ab a matter of fact, a study was made in the past year and a half of the migration of industry, and I think there was evidence of a large migration from certain markets into certain parts of the country, out of high-wage areas. The study was made by Carter Goodrich. The one thing that it showed was that migration was not so much into new areas, it was usually to the periphery of the existing industrial area, within 5 miles of the city that the plant was in, or within 5 miles of where the labor supply was available. However, there has been a large amount of migration of certain industries towards lower-wage areas. Cotton garments has been one of the cases.
Senator Holt. Under the bill this board can lower the wage if the cost of living is lower. In other words, that must be taken into consideration. Would that reward a section where they had a low cost of living?
Mr. Lubin. That depends entirely on how you define cost of living, Senator. I never could believe that my cost of living, living out in the country on a farm, is less than it is in the city. My rent is lower, but in the city I had an elevator in my apartment, I had telephone service 24 hours a day, I had hot water—I did not have to worry about fixing my own hot water in the morning—I had all the things I cannot have in the country. In other words, if I had identically the same standard in the country that I had in the city it would cost more in the country.
Senator Holt. You do not think the price level would increase with the wage level in this bill?
Mr. Lubin. I do not see that that must necessarily happen.
Senator Holt. Has it been the case that it did happen?
Mr. Lubin. As I have already said, taking 2 years, late 1934 to late 1936, there was a tendency for average hourly earnings to go up, but the prices of manufactured products aid not go up. The savings were offset by lower overhead costs.
Senator Holt. And did that lower overhead unit cost mean less employment?
Mr. Lubin. In terms of total employment?
Senator Holt. Yes, sir.
Mr. Lubin. We increased the number of people on the pay rolls of our industry very markedly over that whole period.
Senator Holt. If labor produces as much in 30 hours as it did in 40 hours then the reduction of hours would not increase the employment, would it?
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Mr. Lubin. The question arises as to whether that necessarily means you are going to have a fixed total output. You might assume that as the income of these workers increases the demand for products as a whole will grow also. The trend is toward growth of output.
Senator Holt. Toward what?
Mr. Lubin. Toward growth in total output.
Senator Holt. In other words, the output increases with the level that goes with it?
Mr. Lubin. Yes.
Senator Holt. That is all.
The Chairman. Mr. Hartley?
Representative Hartley. Mr. Lubin, you painted a picture of deplorable conditions under which a considerable number of our population lives, and of course it is a condition which we are all anxious to correct. You also said that we were behind many of the other countries of the world in governmental regulation of hours, wages, and other social matters.
Mr. Lubin. Excuse me. I did not mean to say we were behind. When Senator La Follette asked me what the experience of other countries was in regard to labor legislation and its relationship to collective bargaining I stated that in some countries social legislation had stimulated it. I do not think there is any basis for saying that we are behind or ahead.
Representative Hartley. I will put my question in this form then: In any of those countries where such decrees or legislation has been passed can you point out any one of them where conditions are better than even the deplorable condition that you painted here today?
Mr. Lubin. In terms of physical goods available to our population; no. In terms of certain types of security, in terms of public-health services that are available, in terms of recreational services available, in terms of houses available to the lower income group; yes. It depends on how you measure those standards. Prior to the passage of the Social Security Act they had a very definitely greater protection against old age and unemployment.
Representative Hartley. That is all.
he Chairman. Senator Ellender?
Senator Ellender. Just two questions. Dr. Lubin, as I understood you to say a while ago, this bill, if passed, would produce a more healthy competitive system among American manufacturers. I have asked this same question of several other witnesses. How are we to guard against or protect the American manufacturers from foreign competition where they permit from 10 to 12 and sometimes 14 hours per day, and as low as 14 cents per day wages? What is your idea on that?
Mr. Lubin. I do not feel, Senator, that the passage of this act would necessarily make it more necessary to protect these American manufacturers against that competition, that is, any more than is necessary to do it today, because the assumption, as I see it, that you make, is that this is going to increase costs.
Senator Ellender. I cannot see it otherwise. I am no economist, but I cannot see it otherwise.
Mr. Lubin. May I ask you a question?
Senator Ellender. Yes; if I can answer it.
Mr. Lubin. Here is John Smith who runs a plant and is working 36 hours a week, paying 50 cents an hour today, and he is meeting
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that competition today. Wherein would it be difficult for him to meet that competition tomorrow if this bill passes?
Senator Ellender. I am not talking about the fellow whose business is above the standard fixed here, because the 50-cent man will not be affected under this bill, but I am talking about the fellow whose standard is far below this.
Mr. Lubin. But the fellow who is paying 50 cents is meeting the competition of the fellow who is below it today, and staying in business.
Senator Ellender. Well, I do not have any facts and figures on that.
Mr. Lubin. In every industry there are employers who are paying much more than the minimum fixed by this bill and yet they are staying in business, they are meeting this competition by greater efficiency.
Senator Ellender. Well, a while ago you said the factory man who lowered his wages increased his sales, oh, to an enormous amount.
Mr. Lubin. Proportionately more than the other fellow.
Senator Ellender. Was not that partially due to the fact that he was able to sell his goods cheaper and provide, maybe, a bigger market?
Mr. Lubin. That is very true, very definitely so.
Senator Ellender. All right. If he was able to take it away from this fellow over here, the fellow who paid high wages, would not that affect the fellow who does pay the high wages materially and probably have a tendency to put him out of business?
Mr. Lubin. 1 think the whole problem, of meeting foreign competition is a question of relative labor costs. It is surprising that in those industries where wages are highest we do not have to have any protection. I think that is a rather significant thing. We do not have to have any protection for automobiles, and the rate there is as high as in any other industries. There are dozens of industries in this country where we do not have to secure ourselves against foreign competition.
Senator Ellender. I suppose that is because of the patents that we have here in specialized industries. You take, for instance, a cotton manufacturer—it has happened on several occasions—competing with Japan; I understand today Japan supplies this country with 75 percent of the bleached cotton. Of course, it can afford to do that on 14 cents and 12 hours work per day, and 72 hours per week. Now, how are we to meet such competition on a 35-hour week and 40 cents an hour?
Mr. Lubin. If I may, Senator, I would like to differ with you on the question of the ability of Japan to sell these goods. I do not think the sole reason is the fact that they have a longer day and low wage rate. I think there are a lot of other factors in that situation, such as, for instance, the rate of exchange; the fact that Japan, in order to keep industry going, is willing to go out and develop these world markets almost at any cost in order that she may be able to import certain foodstuffs that she needs. All of those things enter into the picture. Wages are a factor, but the wage rate itself is not the only factor. It is the wage cost per unit of output, and many American firms can pay American wages because of our unit of output cost is much lower than that of the foreign competitor who pay a half, one-third or one- tenth of the rate. I do not think we can generalize, I think you have to take it plant by plant.
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Senator Ellender, Now, a while ago you mentioned something about the Board having to go very slowly in factories of a seasonable nature, that is where they may be in operation about 5 weeks, or 90 days per year. Just exactly what do you mean by that?
Mr. Lubin. If a firm comes along and says, “The bulk of our output is produced between January and March, therefore, we must be permitted to work 50 hours a week during that period”, my answer is that before making such exemption the Board should look into that situation very carefully. Experience has shown that employers who have worked on that basis have found, after they have tried, that they can extend the period of production to 6 months, or up to 8 or 9 months. I mean it is possible to eliminate some of these seasonal factors. There are a whole series of cases over the country, I mentioned a case a minute ago as to one of the shoe factories. The shoe industry is very seasonal.
Senator Ellender. Doctor, for instance, we have in this country, I know we have in my State, canning factories that produce, let us say, the canned beans. They have a run of 4 weeks and after that they have to close their factories the rest of the year. Do you think any exceptions should be made in regard to them?
Mr. Lubin. You would have to make some, absolutely.
Senator Ellender. Do you think they should be excepted entirely, or what would your views be on that?
Mr. Lubin. I think there the question is of an overtime rate, and I think that a very definite relationship should exist between the size of the crop, let us say, in a given year, and the amount of overtime that should prevail, and that may vary also from State to State. You could have a drought in one State and a fairly good crop in another. However, I would not do it in a blanket way; just because they wanted it. I would try to find why they wanted it, how necessary it is for them to have it.
Senator Ellender. That is, a standard lower than the standard fixed in the bill.
Mr. Lubin. Just so it will not be any lower than the standard that is absolutely necessary to get the crop packed.
Senator Ellender. That is all.
The Chairman. Senator Davis?
Senator Davis. Nothing.
Representative Connery. I have just one question or two, because the Department of Labor is very much interested in the I. L. O. Why would not it be a good thing for the I. L. O. to have a group of American representatives when they go over there and try to get France and Germany to go on the 40-hour week, to have somebody say, “If you do not go on a 40-hour week the President of the United States can embargo you, or he can tax the difference between the cost of production”?
Mr. Lubin, I do not know that I am revealing any secrets, Congressman, but I got a wire the other day asking just the reverse, as to whether or not we would undertake to change this law if our standard was lower than the I. L. O.
Representative Connery. How many places in Europe do you know, for instance, that have got a 40-hour week?
Mr. Lubin. By and large there are relatively few, there is no doubt about it. I think very definitely that our having a 40-hour week would
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be a big factor in getting other countries to accept it, thereby making it possible for us to meet their competition more effectively.
Representative Connery. Senator Ellender asked you about the effect of competition on the manufacturer who was forced to come up to the minimum wage, who is below it now.
Mr. Lubin. Yes. Representative Connery. He said he is getting along all right now, but he may be close to bankruptcy and if you bring him up to the minimum wage it may put him out entirely. There are the Japanese on textiles, the Czechoslovakians on shoes, somebody else on electric light bulbs, or something else, they can work long hours, cheap wages and come into the American market if we have a differential that is very low. Is not that a distinct handicap to American industry?
Mr. Lubin. I would want to be sure that the competitive advantage of the foreign producer was entirely, or for the most part, attributable to a lower wage rate.
Representative Connery. Bat’a, we know, in Czechoslovakia works 70 hours a week, with wages of $7 to $9 a week, and in Lynn the wages are $25 a week in that industry, and in St. Louis. With 6,000,000 pairs of shoes coming in as they were before the tariff, how could you possibly expect the American shoe manufacturer to exist against Bat’a competition?
Mr. Lubin. I could not answer that unless I knew how many shoes our American workmen put out at 60 cents an hour as compared to the Czechoslovakian at 20 cents per hour. The answer lies in the actual output per man.
Representative Connery. With Bat’a shoes coming into Macy’s, New York, and they undersell the Lynn shoes 60 cents or 70 cents, how can you sell Macy? Who is going to sell Macy?
Mr. Lubin. The only answer I can give is the fact that despite the foreign competition the production of shoes in the United States in 1935 and 1936, and during the first quarter of 1937 was equal to the most prosperous years in American history. In fact, I think it passed all records last year.
Representative Connery. That is in production?
Mr. Lubin. Yes.
Representative Connery. There are an awful lot of shoemakers walking the streets in Lynn, Brockton, and Hatfield. Then another thing, you said they were going out 5 miles. They do not go out 5 miles on an average, they go from Massachusetts to Maine, to these other places. They go from the big cities way off into the big country towns where they can get the cheap labor.
Mr. Lubin. That was true, Congressman, for a number of years. In other words, in the early part of this century they went to St. Louis and from St. Louis they went to Columbia, Mo., and little towns scattered throughout Illinois.
Representative Connery. That is right. Mr. Lubin. In recent years the trend has not been anywhere near as marked. In the cotton-garment industry there has been movement into the Southwest and into the South, but I think in your own part of the country you find fewer shoe factories that move great distances, or have in the past 4 or 5 years than in previous years.
Representative Connery. All our crowd goes up to Maine.
Mr. Lubin. Yes.
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Representative Connery. Here is another thing. Every time I ask this question they always talk about tariff, as if it was a tariff proposition. I do not hold that it has anything to do with the tariff at all. I hope it hasn’t, because 6 months ago I asked the Tariff Commission, I protested to the Tariff Commission against a brush which is made in Japan that comes free in here, there was an infringement of an American patent, and of course the same cheap wages and long hours work against this brush manufacturer in the United States, and they haven’t done anything about it since. This was 6 months ago. So if we have to count on our Tariff Commission the Lord help us. Why, if this is a good thing—never mind if Bill Connery wants it—why did not a southern Senator put that into the N. R. A. and write into it the provision that the President should have the power to protect the administration of this act from foreign imports, if it was interfering with the N. R. A. that he could embargo them or tax them the difference in cost of production to protect the American industry that way? Why did it go into the N. R. A.? I did not put it in.
Mr. Lubin. I do not know, but I do know that, by and large, the number of cases that have come under that clause were insignificant. I think Mr. Henderson could tell us the number. It is probably less than 50.
Representative Connery. And it was supposed to be on the recommendation of the Tariff Commission, and the Tariff Commission does not know what is going on in the United States as far as the textile industry is concerned, about the unemployment, the shoe workers, the mine workers—but never mind that. Could you see any objection to that going into the bill, to give the President of the’ United States power to embargo or to tax or to do whatever he saw fit for the protection of this minimum wage and maximum hour bill?
Mr. Lubin. I would hate to open up an avenue of further protection that might be misused against the public welfare. I would rather treat it as an outright international trade matter.
Representative Connery. Do you think the President would use it against the American people?
Mr. Lubin. I am thinking of it in terms like this: Here is an industry that says: “At first blush our costs have gone up 20 percent. , We cannot stay in business any longer. We must meet this.” They go to the President. If they had waited 6 months they might find things different, as frequently happens. After you have been at it 6 months it does not look half as bad. They said that industry was going to be ruined under the N. R. A., industry would go to pieces. But after 6 months they found they liked it. Some of them did not want to go back to the old days again. As I say, there is that potential ; danger. Frankly, I see in further tariff protection right now a threat against the American consumer getting products as cheaply as he ought to get them under American costs of production.
Representative Connery. Listen, I am not talking about the tariff, and I am not talking about Mr. Hull’s reciprocal trade treaties. Mr. Hull and I are warm personal friends, but that is one of the few things I do not agree with him on. Now, the question is: How would anybody have any objection to putting a provision in this bill saying that the President of the United States be authorized to place an embargo, may place an embargo if the conditions warrant it? Are we only going to worry about what Europe needs, or are we going to
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take care of the American people through the President of the United States?
Mr. Lubin. I am thinking only in terms of the American people. Frankly, I do not know enough about the matter to say to whether of not even the President should be told that he can raise or lower the tariff rate without, say, the recommendation of some other body.
Representative Connery. Well, he is doing that now in the reciprocal trade treaties. Probably I should not ask you that, if it is connected with the Department of Labor. I do not want to put you in the hole.
Mr. Lubin. No; very definitely I am a great advocate of the policy of trade agreements. I am in favor of them. I think they have increased our imports in places, but in many instances they have been more than offset by increases in exports. I think it has stimulated international trade and we have all benefited by it. I do not know how these agreements are drawn up. Does the President just sign the treaties?
Representative Connery. It goes into the Senate, does it not?
Senator Holt. No; they are not even accepted by the Senate.
Representative Connery. I think it is outside of the Senate. No; they are just signed by the President and then they become effective. That is all I want to ask.
The Chairman. We have two other witnesses. I would like to crave the indulgence of the committee to ask two or three questions.
Representative Connery. Senator, I think you are entitled to be recognized.
The Chairman. I want to ask two or three questions. If you were considering the case of this Lynn, Mass., shoe manufacturer you would also want to know whether or not they had any water in their stock, would you not, or in their shoe factory? That would enter into it, would it not?
Mr. Lubin. Yes; very definitely.
The Chairman. You would want to know whether they pay exorbitant salaries to their officials?
Mr. Lubin. Yes.
The Chairman. You would also want to know whether or not they were operating on an efficient basis for the interests of the public, or whether they had a lot of associates, affiliates, and holding companies, would you not, in considering whether or not they were getting a fair profit? That would enter into it, would it not?
Mr. Lubin. Certainly.
The Chairman. You would have to go into the whole matter of that whole industry when you took up the tariff matter?
Mr. Lubin. Yes, sir; I would want the whole story.
The Chairman. I had personally hoped that this was one measure that could go into Congress that maybe we would not have to discuss the tariff. It always comes up on each private claim in almost every other bill that occurs. Now, I heard a man speak here the other day in a whisper about something that he went to a store and bought and it had a sign on it, “Made in Japan.” Do you know whether or not they have anything in Japan that was made or grown in America?
Mr. Lubin. I would say virtually all of their automobiles.
The Chairman. Do you know whether or not it is against the law for them to buy American automobiles?
Mr. Lubin. I do not think it is.
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The Chairman. Do you know whether or not they buy any other American products?
Mr. Lubin. Oh, yes.
The Chairman. Do you know whether or not they constitute one of our best purchasers in all the world?
Mr. Lubin. They are big consumers of all sorts of agricultural products from this country.
The Chairman. Are you willing to give to a labor board the right to pass on tariffs?
Mr. Lubin. No.
The Chairman. Do you think they should have it?
Mr. Lubin. No.
The Chairman. With reference to the tariff, do you think it should be granted just because somebody wants it done or because they have more pressure from the Manufacturers’ Association or various other groups or that it should be done after careful study?
Mr. Lubin. After a careful study of the facts. I think that has been a great weakness in our tariff policy in the past. Certain schedules have been determined more by people in the industry than by knowledge on this part of Government.
The Chairman. What have been the profits of the textile industry during the last year compared to the previous years?
Mr. Lubin. They have been much larger than in the previous years.
The Chairman. Much larger than they have been in how many years?
Mr. Lubin. Offhand I would say since 1927.
The Chairman. And that is in the face of 75,000 or 7,500 yards of bleached cotton that came into this country, whatever that was?
Mr. Lubin. Very definitely.
The Chairman. Do you know what percentage of the total textiles this 7,500 or 75,000 yards, or whatever it was, is?
Senator Ellender. Seventy-five percent, Senator, of the entire consumption.
The Chairman. Of bleached cotton. Do you know what the percent of the textile industry bleached cotton is?
Mr. Lubin. I do not know, sir. It is a small percent.
The Chairman. Has anybody ever told you what percent it was?
Mr. Lubin. No.
The Chairman. When we get 6,000,000 pairs of shoes—how many people live in America?
Mr. Lubin. 130,000,000.
The Chairman. Is it assumed that people of America can only wear one pair of shoes a year?
Mr. Lubin. My youngster cannot.
The Chairman. About how many does she usually wear?
Mr. Lubin. She is a year and a half old and this is her third pair.
The Chairman. Do you know whether or not the fact that 6,000,000 pairs of shoes came in here destroyed the shoe industry in America?
Mr. Lubin. The only test, Senator, is what happened to production, and production kept going up in the face of that.
The Chairman. Production of everything kept going up?
Mr. Lubin. Yes.
The Chairman. Production of everything has been going up ever since we started the movement of shorter hours and better wages, has it not?
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Mr. Lubin. Yes.
The Chairman. And so far as you know has it destroyed American industry or American life?
Mr. Lubin. At least I haven’t seen it. I haven’t seen any evidence of it.
The Chairman. Let us get back to one other question just a minute, about this cost of production. There are some who take the position that the cost of production has increased every time wages go up. Is there anything else that goes into the cost of production and distribution besides wages?
Mr. Lubin. Raw materials, rent, taxes, insurance, interest, and a lot of other things of that sort.
The Chairman. Profits?
Mr. Lubin. Profits.
The Chairman. From the way I usually hear that spoken of I have almost been compelled to reach the conclusion that there is nothing that ever enters into it except wages. Now. may I ask you whether or not, under economic law, we being under the capitalism system, whether or not everything is supposed to go through the three channels of wages, interest, and rent? That is correct, is it not?
Mr. Lubin. Judging by experience of certain public utilities, yes: exceedingly so.
The Chairman. Do you know whether or not investigations have shown from year to year that a large, a huge percentage, goes to pay for watered stocks and that dividends are declared and obtained on those stocks in American industry?
Mr. Lubin. That is very true.
The Chairman. Do you know whether or not in some instances it has been shown that the stocks had water in them to the extent of 3,000 to 5,000 percent? That is correct, is it not?
Mr. Lubin. Yes.
The Chairman. And do you know that some of those industries that have had their stocks watered from 3,000 to 5,000 percent are drawing dividends on those stocks today?
Mr. Lubin. The fact is I know of one firm in particular in which it happened.
The Chairman. That is a part of the cost to the consumer as well as the wages of the man that works for $300 or $400 or $500 or $600 a year, is it not?
Mr. Lubin. Definitely so.
The Chairman. So that when you begin to consider the price of goods you do not have any right, do you, to always see that every time the wages go up the price has to go up in accordance with that?
Mr. Lubin. The proof is that it does not always go up when wages go up.
The Chairman. It does not. Would it not be possible, if it is necessary to give people a decent living wage at a fair human hour, where they will not be borne down by gruelling hours of toil, increased price might be absorbed by that which goes into the financial interests and into the profit interests, and into the rent interest, is that not correct?
Mr. Lubin. Very definitely.
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The Chairman. And so have we any right to say, every time we raise the wages of the poor, underpaid worker who is drawing $500 or $600 a year, who has to work, as some of them do, as the evidence shows, long hours, have we any right to assume that that necessarily is going to make the American public pay more?
Mr. Lubin. No; definitely it does not necessarily follow that they must pay more.
The Chairman. Now, a question was asked you of this type: If you raise wages 10 percent, if you lower hours 10 percent would not that reduce the production 10 percent? Now, let us assume that it would reduce the production of those particular workers, let us take the impossible assumption that it would, the Brookings Institution and no other person denies, do they, that there have been anywhere from 8 to 15 or 16 million people out of work for a number of years?
Mr. Lubin. Not that I know of.
The Chairman. If it would be possible that they did reduce the hours so as to require an increase of 10 percent in the number of employees, they could easily get more American citizens who are anxious, willing and able to produce the goods?
Mr. Lubin. Yes.
The Chairman. And the goods produced by them would be just the same kind of goods as produced by those who worked the long hours?
Mr. Lubin. Yes.
The Chairman. So then it is true, is it not, that if we reduce hours in this country for those who are working long hours we have an ample reservoir of labor from which we can draw in order to supply the workers to produce those goods?
Mr. Lubin. Yes.
The Chairman. That would not bring on any scarcity because it is done by people who are now out of work, cannot get a job, instead of being done by people who are working long hours and at low wages, would it?
Mr. Lubin. The fact is it would make a place for people who are now out of a job; it would increase employment still further.
The Chairman. So that they would have money by reason of the very element that you mentioned, because of the fact that the rent goes on the same, the insurance goes on the same, and the other regular charges go on just the same?
Mr. Lubin. Yes.
The Chairman. Are you able, as an economist, to reach the conclusion that we will create any kind of economy of scarcity by reducing hours sufficiently to put people out of work?
Mr. Lubin. No; I do not believe you would necessarily lower the standard of living of the average American family by doing that. I cannot see any reason to think that you would.
The Chairman. Do you know anything that makes the wheels of American industry to turn except purchasers with money who are able to buy that product?
Mr. Lubin. Those are the only ones who are able to buy that product.
The Chairman. Having to depend on purchasers with money it is not going to destroy the American system of producing goods to give them more purchases with more money to buy more goods which they can produce if they have the demand, is it?
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Mr. Lubin. No.
The Chairman. That is all I care to ask.
Representative Connery. Senator, may I ask one question? Mr. Lubin, Mr. Lewis this morning testified that there was a machine put in, a labor-saving machine put in that would unload 1,100 tons a day, as I understood it, and that that machine threw 100 men out of work. Do you think, if this legislation goes into effect and labor- saving devices are put into factories, we will have to come to some- think like a tax on power machinery and use that for unemployment insurance?
Mr. Lubin. No; I would oppose most violently any such action. If you are going to put a tax on the power who is going to get the advantage from the displacement of the 99 men? If by supplanting 99 men and saving that much labor you have cut your cost then there are two ways of handling it: Either you sell the coal cheaper and the buyer has more money to buy something else with, which means more employment, or you put it into profits. If you put it into profits, if you keep the profits, then we ought to put an excess-profits tax on it. I would not put a tax on the machinery.
Representative Connery. I say the power tnat goes into the machinery.
Mr. Lubin. I would not put a tax on the power that goes into the machinery.
Representative Connery. Why not?
Mr. Lubin. Because I feel that nothing should be done to interfere with the ability of the American consumer to get his coal at lower costs. If he does not get his coal at lower costs as a result of technological advance then somebody else is getting it, somebody is getting it as profits, and I would take some of it away and redistribute it.
Representative Connery. What would you do with the 100 men who did the work?
Mr. Lubin. What you would have in effect is this: You would have the excess-profits tax to take care of it, through unemployment insurance.
Representative Connery. Now, you tax the pay roll under the Social Security Act, you tax the pay roll on unemployment insurance. It puts a premium on having as little help as possible. The man would discharge 100 men if he can save money on the tax.
Mr. Lubin. Take the plant that shuts down for 3 or 4 weeks because orders are slack, or because of repairs, or because of one of a dozen reasons, that is the cause of the unemployment that is most general in this country. You have a very large turn-over in your unemployed. Previous to 1929 we had about 1,800,000, but one month they were shoe workers, the next month cotton workers, and the next month automobile workers. It varies all the time. But the average, we figure, was about 1,800,000. That is the type of unemployment that your unemployment insurance makes provision for. If you have the actual loss of a job which results from displacement, which means machines have been put in to take a man’s place, you have, as I said, one of two effects; either lower prices, and then you and I as consumers get the advantage of it and we should bear part of the burden, or higher profits, and I would take those away through the profits tax. Either that or reduce the prices.
Representative Connery. Instead of taxing the power you would take it out of their profits?
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Mr. Lubin. Absolutely; through the excess-profits tax, or differential tax.
Representative Lambertson. Mr. Lubin, you were asked by the ' chairman near the end about the purchasing power being increased gradually. It sounds to me more like the argument for the Townsend plan than anything I have heard recently. I want to know whether you acquiesce in the chairman’s question about the importation of foreign products. Do you suppose we would be benefited if we would increase them in any respect?
Mr. Lubin. If by increasing them we could sell goods to pay for them we would increase employment in our export industries.
Senator Ellender. May I ask one question?
The Chairman. Sure. Senator
Ellender. In line with what Congressman Connery has been asking you, suppose the man that bought the machine, that got rid of 100 people, would choose to sell the product cheaply, what would become of the smaller group that was not able to buy a machine? What would become of the smaller group that would be compelled to use labor?
Mr. Lubin. Well, as a matter of fact the only advantage he has in putting in the machine is either to save labor costs or to undersell his competitors, one or the other, very definitely. If, for example, he did it through lower prices it means that I, as a coal consumer, who use an average of 15 tons a year, if I could save a dollar a ton on my coal I would have $15 more to spend on clothing, for food, or something else of that sort. That means then that although these people in the coal industry may have been displaced you are going to reabsorb other people in the shoe industry and other industries because of the greater purchasing power that I have as the result of those lower prices.
Senator Ellender. I am not talking about men who work, 1 am talking about the men in business that have to sell at a certain price to get fair returns. You say the man who has the ability to buy this machine could sell the product cheaper?
Mr. Lubin. Yes.
Senator Ellender. Now, what I want to know is about the man in a like business who is not able to buy that machine and who has to employ labor and who cannot, of course, undersell the fellow who is able to buy the machine; what are you going to do with him?
Mr. Lubin. That is part of your competitive system. That is why we permit the competitive system to exist. If a man, through efficiency, whether that means the use of men or anything else, can produce s better product, or the same product at a cheaper price, we assume the business is going to go to him. Unless you are willing to acknowledge that fact you must admit you are against the competitive system.
Senator Ellender. Then you draw this conclusion: A manufacturer, let us say, that is able to buy the machinery and produce a commodity on a large scale will have a tendency of putting the fellow who cannot do that, the smaller man, out of business, is that true?
Mr. Lubin. If, as the result of the fact that he can produce more efficiently, he can undersell the other fellow.
Senator Ellender. And having that in mind, reaching that conclusion, you are still of the opinion that we should not put anything in this bill to protect the small man?
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Mr. Lubin. Very definitely.
Senator Ellender. That is all.
Representative Ramspeck. Senator, may I ask if this is going into the record, this chart presented by Mr. Lubin?
Senator La Follette. I want it in the record.
Representative Ramspeck. Mr. Lubin, you have cities where you have both the white and Negro figures, while you have certain other cities where you have only one set of figures. For instance, take Louisville, Ky., does that include both white and colored?
Mr. Lubin. That is the total for the city as a whole; yes, sir.
Representative Rambpeck. Both white and colored?
Mr. Lubin. Yes.
Representative Rambpeck. Wherever you do not divide it it includes both?
Mr. Lubin. Yes.
Senator La Follette. Mr. Chairman, Dr. Lubin has given this committee some very interesting material here which I think has not previously been available and I would like to have Dr. Lubin understand that for the purpose of the record the committee would like to have incorporated any of the material that he had here today supporting this very excellent statement. I would like to have that incorporated in the record so it will be available to the committee and to those who may want to read it.
The Chairman. Is there any objection to that?
Mr. Lubin. 1 would like, Mr. Chairman, with your permission, to add a memorandum which will specifically state just what the data covers.
Senator La Follette. That is what I had in mind.
The Chairman. That will be fine, Doctor, and we appreciate your evidence very much.
(The chart referred to is as follows:)
The Chairman. Mrs. Elinore M. Herrick.
STATEMENT OF ELINORE M. HERRICK, REGIONAL DIRECTOR OF THE NATIONAL LABOR RELATIONS BOARD, NEW YORK
The Chairman. Mrs. Herrick, will you state your experience in work relating to labor legislation, for the benefit of the committee?
Mrs. Herrick. I was for 4 years the executive of an organization which over 35 years had studied and worked for enactment of minimum-wage and maximum-hours legislation. I led the campaign which resulted in passage of New York’s minimum-wage law in 1933. I served as a member of the first minimum-wage board created under that law and jointly with the president of the New York State Federation of Labor I led the public discussion at hearings held by the second minimum-wage board. I lived through the N. R. A., serving with the National Labor Board. For the past 2 years I have been the regional director under an administrative and quasi-judicial body, the National Labor Relations Board. Prior to 1929 I was production manager for a company that voluntarily established a maximum 54-hour week in the State of Tennessee when the law permitted 66 hours, a company that voluntarily adopted an hourly scale to maintain a $12 weekly wage, when every other woman-employing industry in the State was paying less than $8, and, as the company’s representative
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on various committees of the Chamber of Commerce, I had to defend these voluntary standards. And I had to keep my unit costs of production lower than those of our chief competitor, whose main factory was also in Tennessee, but who was paying even less than $8 a week and whose spinning room—even in 1927—was still operating on the archaic 12-hour shift.
These 16 years of experience have led inevitably to certain profound convictions. We can and must raise the work standards for many millions of Americans. I am sure that no one quarrels with the purposes of this bill. There are a few diehards who believe that government should keep its hands off industry except when they want a protective tariff—but those who believe that government must act to protect the high standards voluntarily set by numbers of employers j are in the vast majority today. We really want to see economic oppression lifted from the backs of children and the countless men and women who are working early and late for miserable wages— wages so low that they will not support life and must be supplemented by public or private relief. America can no longer endure these conditions and now our chief anxiety is how to lift oppressive wages and hours from the backs of these toilers.
In the newspaper comments and published reports of discussions and hearings on this bill, I have been impressed by several common misunderstandings. A lot of people talk about minimum-wage legislation as though it stopped just short of fixing the salary of the plant manager or the president of the company. Such a misconception greatly confuses the issue. The proposed bill does not permit a minimum wage to be fixed under any circumstances which will yield an annual income in excess of $1,200.
In application it will be found that minimum wages have always been fixed for the least skilled and lowest paid workers. In the New York Laundry Wage Order, when the Board considered its recommended wage, we were thinking of wages paid to “shakers”, not the wages of the hand ironer, or the collar presser. Now—all that a “shaker” does is literally to shake the wrinkles out of the sheets and pillow cases before they go through the mangle. And all you need to be a shaker is two strong arms and the ability to stand for an 8-hour day without dropping in your tracks. When we set a metropolitan area minimum of 31 cents an hour we knew that this lifting of the bottom wage would result in adjustment upward for the rates of more skilled workers. Experience demonstrated that we were right. The initiative of the industry was left free to make necessary adjustments after the 31 cents and 27½ cents floors were put in. After the orders had been in effect some months it was found that approximately 30 percent of the women employees earned more than the minimum wage.
Our board was attacked for having recommended wages as low as 27½ cents and 31 cents an hour. But this very attack is an answer to those who now say they don’t want to give a labor standards board so much authority—it seems to me I have even heard it called “dictatorial powers.” The controlling reason for 27½ cents and 31 cents in that laundry wage order was the wage board’s realization that the industry could not afford to pay more. Labor was a large part of the total cost of the service and if prices were forced too sharply upward housewives would start doing their sheets and pillow cases at home and hotels would install paper towels. The wages fixed meant an
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increase of an average of 20 percent for approximately 60 percent of the industry. It resulted in stabilizing the industry and has commanded the support not only of those previously maintaining higher standards voluntarily, but also of those who were compelled to raise their wages and have since learned to operate more efficiently, now that they are protected from cutthroat competition. The cheap chiseler has been driven out, but the mortality in the laundry business has taken a sharp downward curve, for those firms that went through the readjustment period are now on a firm financial and managerial basis and do not live in fear of ruin by the coming of some fly-by-night competitor.
While this act borrows much from the experience of the States, it leaves to the States the obligation to deal with the service industries and retail stores which are strictly intrastate and where millions of low-paid workers are employed. But it is not entirely due to the lower wages paid in the service industries, that most of the State wage orders apply to those industries whose operations do not cross State lines. In administering State wage laws we have had to realize that a neighboring State holds open arms to an employer who feels the pressure of higher standards at home. A wage order for the furniture industry of Jamestown, N. Y., would simply make it still more vulnerable to the ruinous competition of cheap labor in the furniture industry of the Carolinas. But don’t jump to the conclusion that the low-wage areas are confined to the South. It is difficult for Rhode Island, for example, to set a fair wage in the jewelry industry until it knows what wages are to be set for its chief competitors in New Jersey and New York. It is because of this competition which extends beyond State boundaries that Federal regulation of labor standards in interstate commerce is necessary—not as a substitute for State regulation, but as an addition to it.
It would be stupid to minimize the economic and social and administrative problems involved in this legislation. One of the chief advantages of this bill is that it defines general standards to govern administrative action and does not prescribe rigid and inflexible rules.
Between those who shout “bureaucracy” and those who say the Board is given too much leeway it is a trifle hard to aim one’s answer without taking up too much time. “Bureaucracy” like “lobbyist” has an unsavory connotation, thanks to the muck-raking era of Teddy Roosevelt. But we are closer today to building a tradition of Government services in the British sense, than we were in Theodore Roosevelt’s day. I believe that we must recognize the necessity for increased governmental expenditures for the people's services. This bill intends to utilize existing agencies such as the Children’s Bureau, Women’s Bureau, and existing State agencies wherever possible. It is deliberately designed not to erect a huge superstructure of expensive administration. Among those who protest most loudly about expense of administering the Federal law are many who say “leave it to the States.” Well, a State law if it is any good, costs money. We have just increased our New York minimum-wage budget by $175,000 this year, and our whole department of labor gets over $2,000,000, not including costs of workmen’s compensation, which are recoverable items. New Jersey enacted a minimum-wage law at the same time that New York did, but it never had a nickel of appropriation until a year ago, when it got $12,000—a mere drop in the bucket—and it has only within the past few months begun to acquire
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a staff for administration. Four years ago the New Jersey law was passed but no wage order has yet been issued and only one industry investigated. The regulation of wages either by States or the Federal Government costs money. It is not true economy to leave to the States tasks which can be better performed by the Federal Government.
What have you got left after you apply the minimum wage law to the veiy lowest group in the industry? Those who cannot or will not adapt their business methods to sound business and social procedure are the fellows that you cannot afford to have, who are a community risk. The other day when we checked up on emergency relief rolls we found workers who were getting relief. That is not supposed to be done. Well, when we looked at the wages that they were earning in their private employment in industry we knew they had to have it or starve.
Now, it is that kind of a situation that we are trying to tackle in an orderly way. Certainly I cannot minimize the difficulties, either of administration or of all those complex social and economic situations that a minimum wage law must operate in. It is hard and it is difficult, but it does give a direct approach to a problem that is too often hidden by such things as relief rolls where you never know what a certain kind of employer is costing your community. The costs are hidden. This way we will have a direct knowledge of what the costs of administration are.
While talking of costs of administration I’d like to point out one aspect that those who have likened this bill to the N. R. A. have conspicuously failed to point out. Under the N. R. A. system code authorities which were in the main wholly dominated by the business interests, even though labor was supposed to be represented, assessed themselves huge sums of money for code enforcement. Just for fun I spent a hot Sunday in 1934 tabulating some of these code budgets. It sickened me. Allen Raymond had an article in the Outlook Magazine in 1934 on this subject—you might like to look it up. Millions and millions were collected ana the costs passed on to the consumer.
Each little code had its own budget. I remember starting to add up the budgets for the various ramifications of the building industry, the plumbing industry, brass pipe, the vitreous enamel bath industry, lead pipe, the lamp socket code, and so forth. I had not reached the end of the industry and the codes for the subdivisions of the industry, yet the cost was stretching toward the $35,000,000 mark. But how much was spent to enforce labor standards and how much to enforce fair—perhaps I should say restrictive—trade practices we shall never know. It happens, however, that the Consumers’ League of New York did a little study of code enforcement in certain sweated trades. That study was never published, but in certain industries notorious for industrial homework, for low-paid occupations for women, we found as little as 10 percent of the total code budget being spent for enforcement of labor standards. It was only in those well-organized trades where the unions were powerful that the labor provisions of the codes were really enforced.
Now, at least, in the set-up proposed by this bill. Congress and the people will know the full cost of administration, the full cost of securing better working conditions for all our people.
I do not deny that it will cost money to administer. I say that the law had better not be passed unless you are prepared to spend
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money to enforce it. But I do say that you will have a chance to get value received in a way that we did not get under the N. R. A. whose code authorities did not have their budgets pass through Government auditing departments, but merely had to have them approved by the N. R. A. itself. The composition of the N. R. A. code authorities was such that they naturally spent more time, money, and effort enforcing price-fixing provisions than they did on minimum wage and hour provisions. It is only fair to say that bureaucracy in N. R. A. did not consist of the hard-working Government officials but in the code authorities chosen by private interests. N. R. A. suffered from a private corporate bureaucracy.
It is complained that the law is complicated. Actually the techniques for administering this law have been borrowed from laws enacted in nine States, in eight of which we have had some years of experience by which to assay the method and the results.
How does such a board as is proposed in this bill function? First, it must investigate. The importance which administrators attach to this preliminary work can best be shown by telling you that when the board convened to fix the laundry wage it was given a full, complete picture of wages and hours in over half the industry, carefully weighted as to size of establishment. It might be argued that a study of over half an industry is more than a “sample”, but administrators prefer to err on the side of caution. Nor can one regard the cost of these investigations provided for by the proposed bill as initial new expenditures to be created, for we already have the United States Bureau of Labor Statistics, Women’s Bureau, and various State agencies which can be utilized. These agencies are already and for years have been collecting wage figures although there has been little application of this knowledge to the regulation of wages.
This bill also profits by the happy experience that States with similar legislation have enjoyed from their advisory wage boards. Since I represented the public on our first New York State board I want to tell you some of the things that happened during our deliberations. First and foremost we had in mind the fact that the wage when set had to be one that the majority of the industry would and could support voluntarily. Every experienced administrator knows that labor laws are only designed to control the substandard minority. That elimination of substandard practices simply means that the better employers can more easily maintain their voluntary standards and that removal of the threat of cutthroat competition encourages the leaders to improve even their existing standards.
So we looked first at the wages in the upper quarter, the hours in the upper quarter, and gradually we limited our field—the wage could not be higher than the experience of the upper quarter showed was already in effect. But then we had to consider the economic condition of the industry, which was one in which a very little capital was needed, which was fairly mobile, which served direct to consumers. And that resulted in our lowering our idea as to what was right. The day came when we had agreed on 31 cents and 34 cents an hour, and were to meet the next morning to complete this part of the report. The morning papers carried the story that the N. R. A. bad just set a northern rate of 27 cents for laundries. The industrial members of the board agreed that we would have to lower our standards but they plead to keep it still higher than the N. R. A. code. So we fixed the 27½- and 31-cent rates. These rates were calculated
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to give a weekly wage of $12.40 in New York City. But remember that was in 1933, at the bottom of the depression. Again, during the course of our deliberations the industry members wanted to guarantee a flat weekly minimum and it was the public members of the board who told them they could not afford such generosity; that laundry work has its terrific weekly peaks, with overtime on Tuesdays and Wednesdays; and that this was too generous; that we were more interested in arriving at a wage which could be lived up to by the majority.
This kind of give and take in ideas, in practical experience, is the kind of thing which makes an advisory board composed of representatives of industry, labor, and the public so very valuable. We saved each other from mistakes. The bill under discussion today has the same kind of balance wheel in its provisions.
Now, our New York bill did not deal with hours as this bill does, but we innovated something which is much in line with what this bill permits the Labor Standards Board to do. Although our State hours law in 1933 allowed a 49½-hour week with flexibility up to 54 hours, we all knew that these were too long. So we provided in our recommended wage that, when hours exceeded 44, pay should be time and a half, and that the normal workweek should be considered 40, at which rate the hourly pay was designed to yield $12.40 per week, but that there should be a leeway between 40 and 44 hours for flexibility before the overtime rate became effective. We also provided an extra 10 percent per hour when hours worked dropped below 38 hours. This effort to stabilize the workweek has been eminently successful in an industry which was cursed with peak days and overshort or overlong weeks. The industry likes it.
The next important process of fixing the minimum-wage or maximum-hours standards comes in the process of holding public hearings at which representatives of all interested parties may appear to present their views pro and con. As a result of hearings on the laundry wage report we modified some of the provisions relating to the resort hotels in the Adirondacks and other places where they have a short season, and one that must meet the demands of a transient trade. There is a less tangible benefit, but an even more important one, derived from these public hearings. And that is the development of public interest and knowledge. They serve a very real educational function. We held them not alone in New York City but in more remote places where especially the need for public support was great, if the law was to succeed. The publicity given these hearings left its definite contribution to our success in enforcement later.
When the order is promulgated, how is it enforced? There has been much criticism of the provision in this bill requiring an employer subject to an order to keep records of his hours and wages in a form approved by the administration. This is attacked as dictatorship and official persecution. You would be surprised at the testimonials some employers have given us as a result of what they have learned from proper record keeping. I recall one employer of 250 persons—not by any means a small establishment—who learned how to run his business profitably from records-keeping. He used to offer a rough-dry laundry service, a puff-dry, a wet wash, a French hand-ironed, and plain hand-ironed, a mangle service, and each of them had to be kept separate throughout the entire process and delivered to the customer in different colored bundles so that the customer would realize there
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was a difference in more than price between the rough dry and the puff dry. We asked him how he knew whether he was making or losing money on each of these services, because there were really only three basic types of work involved. He had never figured it out, but said he simply took the day’s receipts and put them in a box in his desk, paid out expenses as they arose, and at the end of the week paid the salaries and then as he said, “What’s left over is mine.” Thanks to being forced to keep a pay roll by the Government he learned that he was losing money on his effort to use so many fancy names and wrapping papers, and he has stopped that performance. Certainly any administrator is going to make as few rules as necessary, and will ask for only the simplest possible records required for proper enforcement. As a matter of fact, countless employers have thanked our investigators for showing them how to keep a simple set of books that will let them know where they really stand on a profit and loss basis.
Investigators in this new field of Government are much more than mere inspectors. I remember once going through a candy factory, whose employer was having difficulty in maintaining the Consumers’ League White List standard of a $14 minimum wage. I saw his floor littered with fillings for chocolates. I looked at a moving belt and found it was going so fast that the small chocolate centers were too lightweight to keep their places on the moving belt. I asked him why he did not slow down the belt and thus avoid the waste on the floor. His answer was that he had “always run the belt that way.” Well, he had changed his size of chocolate to meet the new dieting fad of women. When he reduced the speed of his belt he found that he had saved enough money to continue paying the minimum wage.
Unless you have made countless factory inspections you would not believe how many simple things there are which can be done to save money legitimately. For about a year I was a trouble shooter for du Pont and visited mills using our rayon, to iron out their troubles in production. For all our vaunted business efficiency and the shibboleth we have made of Taylor scientific management—and I am a member of the Taylor Society—it is amazing how many blind spots there are in even a modern factory. I remember a hosiery mill where the looping department worked unholy hours of overtime every week, although other departments got through in time. One glance at the workroom supplied the answer. There was no regular system of delivery to the machines. Every girl had to run around and grab her own supplies. Nor was there any standard way in which the girls were trained to feed their machines. Some girls reached all the way down to a box on the floor which resulted in much lost motion, others had it figured out for themselves and kept their supplies on an empty box or stool where they could reach them more conveniently.
In another factory not long ago a strike had occurred over the piece rates. It did not take much study to find that the piece rates were all right but the system of routing work through the factory was poor. There were frequent gaps when machines were not stocked and this waiting time, of course, lowered the piece-rate earnings. You may think that these things have no place in this discussion but they are among the important byproducts which justify the system of Government regulation of labor standards.
When does one apply these full penalties of $500 fine and/or imprisonment or both? Only as a last resort, I can assure you. In the New
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York Labor Department we have for years had a system of departmental hearings when a persistent violator is called in, and his whole record gone over with him. He is reasoned with, warned, and then advised to go and sin no more. It is only if he again appears as an incorrigible, shall I say, that the full penalties of the law are invoked.
This procedure has worked so well in New York that it has been found necessary to prosecute but very few. The kind of employer who has been prosecuted under the minimum wage law there is like Joe Tipaldo of the now historic New York Minimum wage case before the Supreme Court. Tipaldo falsified his books, forced the girls to kick back their pay, and finally actually forged signatures to pay checks so that they would look regular to the inspector. He was no asset to any community. If he had been allowed to go unpunished he and his kind would have wrecked the successful administration of an order which had been wholly beneficial to the industry and to the community. But Tipaldo and his kind are happily in the small minority.
Tipaldo was the kind of a fellow that minimum wage laws, whether State or Federal, are made for. He would forge the names on the pay checks. There was nothing Tipaldo would not do to scrooge out a profit from the wages of his workers. Tipaldo went around the neighborhood with a vicious campaign of underselling to his customers, which is a menace in the industry. Tipaldo is out of business. I do not think “Tipaldo” in any industry is an asset to any community.
Fear has been expressed that the Labor Standards Board would exercise autocratic powers. May I speak now from my experience as regional director of the National Labor Relations Board? Our parent body exercises a restraining influence on its field agents? It scrutinizes our every act. Before we can proceed against any employer we have to prove our case up to the hilt with the Washington office. This is wholesome, although I have sometimes chafed under the consequent delay. But I cannot emphasize too strongly that the whole effect of a Federal board such as is proposed in this act is to make for cautious, thorough enforcement, for coordination of policy. We are constantly aware of the criticism, legitimate or illegitimate, and the necessity of making our reports to Congress and coming up for appropriations. As long as Congress continues to function and a board such as the National Labor Relations Board or the Labor Standards Board, both ultimately responsible to Congress, must report to that Congress I do not see how any true fear of a dictatorship can be charged. Such a Federal board is remote from the local pressure that is exerted on field agents and can and does take the long-range view, the view of public policy and public welfare. The whole effect of such a board is to restrain the temptation to too precipitate action in the field and in the scene of conflict. I cannot emphasize this restraint too strongly.
In conclusion let me repeat, this bill has borrowed from experience of the States, yet it leaves to the States the chief field which the States have ever found it practical to deal with, namely, the local service industries and small businesses. It is framed after mature consideration. Like all things human it probably is not perfect and no doubt can well be improved by this committee. But it should be remembered that the bill has been carefully drafted as a unified whole. No one can oppose the humane principles of the bill, so beware of criticism of hostile opponents or frightened friends which would result in dislocating the carefully designed unity of the structure. I
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remember in the last hectic days of passage of New York’s first minimum wage law when we had to resist pressure to change the bill, when a drive began to limit its application to cities of the first and second class. All sorts of pressures were bought to bear. Even friends of the bill were frightened into believing that we might be going too far. I had to hang up the telephone on one very influential supporter who lost his nerve at the last moment. It was not a nice thing to have done. But I am glad that I did. The proof that the New York bill should not have been amended lies in the fact that when the new bill was passed this year as necessitated by that first decision of the Supreme Court, the only changes made were such as experience showed would strengthen the administration of the act and not weaken it. Often seemingly slight changes throw the whole machine out of kilter. There is time to amend if in practice the act is found defective.
From my experience as a lobbyist I want to give you one word of caution. When a bill has been carefully designed a lot of people come along and they think they can improve it, ana very often their suggestions are good, or would have been awfully good if we had them 2 or 3 months ago, or 2 or 3 weeks ago even, but I am thinking back now to a time when I was leading the campaign for the New York State wage law. A tremendous pressure was put on us to amend a certain part of that law, and I will admit a very important and influential person, very close to the chief executive of the State, telephoned me—and I hung up on him. It was not the proper thing to do, but it stopped the move toward the amendment, and you know we have not been anything but glad ever since in New York, because the bill was drafted with due thought and care and consideration, and it has worked. Your minimum-wage provisions in this bill are so much like our New York bill that 1 am glad to have been able to tell you this one story of myself and of my own bad manners in this one case.
The Chairman. Thank you very much. Mr. Hormell, will you come around, please, sir?
STATEMENT OF JAY C. HORMEL, PRESIDENT, GEORGE A. HORMEL and CO.
The Chairman. Mr. Hormel, will state your business?
Mr. Hormel. I am president of George A. Hormel and Co.
The Chairman. A packing company?
Mr. Hormel. Yes, sir; located in Austin, Minn.
The Chairman. Do you have only one plant?
Mr. Hormel. We have only one plant.
The Chairman. That is in Minnesota?
Mr. Hormel. Yes.
Representative Ramspeck. You have branches all over the country, have you not?
Mr. Hormel. Distributing branches chiefly.
I am interested in the Black-Connery bill because I am very definitely in favor of adequate wage and hour legislation. My father, founder of our company, was one of the early advocates of shorter hours with higher pay as a cure for unemployment and as a means to provide every American with the opportunity to enjoy a high standard of living.
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In connection with this bill, I believe there are four propositions which should be especially considered.
The first proposition is that the American workman is entitled to the highest wage base which our national economy will afford. Surely within any grouping so selected as to be fair to both the employers and the employees therein the average wage which actually exists for any given class of work is the lowest wage which should be considered to be a proper base. The bill might well direct the Board that the minimums be not less than these averages.
If this thought is sound, I do not see why there need be limitations above which the Board be not empowered to prescribe bases. If we seek to secure for everyone the full opportunity which America can afford, it would seem that our guarantees should extend not only to every industry and to every region but to every class of occupation.
The second proposition is that no employer shall be permitted to profit by means of substandard wages. If minimum wages are to be established as high as average wages, it will probably be necessary to allow more exceptions than were originally contemplated by this bill. As a way to prevent abuses, it seems the bill might well provide that any exceptions should be on the basis of the inability of the employer to make a profit, and with the stipulation that during the year for which exception is granted, any profit which accrues shall be used to make restitution for any deficiency in the wages.
The third proposition is to provide security in tenure of employment. In addition to wage and hour protection, there is need for job protection. For this purpose, the bill might well provide that when an employer reduces his force, the employee not most recently engaged in any one classification shall be entitled to tenure of-employment in preference to the employee most recently so engaged, and that the employer shall provide and maintain adequate and satisfactory method of conducting fair hearings and making fair decisions with respect to any employee who is being discharged for cause.
The fourth proposition is to avoid violent seasonal fluctuations in employment and employee earnings.
Over a period of 10 years, George A. Hormel and Co. has developed one plan to avoid such fluctuation. We pay each employee a fixed weekly salary which is payable 52 times a year regardless of the volume of work handled. Whether we work 53 hours, which is the greatest number we work in any week, or 16.3 hours, which happens to be the low in any department so far this year, the weekly pay check is the same. Even when livestock supplies became seriously reduced during the past few years, no person working under this arrangement was laid off. No pay check was diminished. Just as we expect the averages to take care of the fluctuations during the year, so in the case of major variation in supplies we endeavored in that case to carry out our .averages over a longer period of time.
In our plant the average work week currently is 36.9 hours, which is an improvement of four-tenths of an hour over our last year’s average, and which in turn compares with an average of 41.9 hours for our industry. The average weekly pay cheek of our plant employees, men and women, is now $27.78. The minimum wage is $24.40 for men and $20.80 for women in all but 4 of our more than 100 departments, and we hope to extend these minimums to these 4 during the current year. Our average wage was some 44 cents per week less than the
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average in our industry last year, but our average work week was 4.6 hours shorter than the average, wherefore the average hourly earnings of our employees was 6 cents an hour more, which is 10.6 percent greater, than the average for the industry.
As is the case in many other industries, the packing business is subject to violent fluctuations in volume. For example, last year— when we had less fluctuation than in any other year in our history— the largest number of hogs slaughtered in any 1 week was 26,000 and the smallest number was 11,000. So far this year we already have had a peak week of 30,000 and a low week of 11,500, and we have not yet entered the slowest season of the year.
Because of these variations in volume, the N. R. A. which established 40 hours as a standard workweek for packers, allowed 8 tolerance weeks of 53 hours and 8 of 48. We still operate within those limits. This year, during our peak season, which was substantially shorter than normal, we operated our hog-slaughtering department 3 weeks of 48 to 53 hours, 5 weeks of 40 to 48 hours, 7 weeks of 32 to 40 hours, and, although we have not yet entered the season of lightest hog slaughter, 15 weeks of less than 32 hours, with a low thus far of 21.9 hours.
You will notice that I refer to wages in terms of dollars per week rather than in terms of cents per hour.
Our wage rate supposedly is based on a 40-hour week. Certainly, an hourly rate which provides a fair wage in 40 hours becomes totally inadequate in those weeks of less than 32 hours. It seems apparent, then, that wage and hour legislation should provide either a minimum weekly wage stated as such or a minimum number of hours per week to which the minimum hourly wage should apply.
It would also seem that wage and hour legislation should definitely provide the so-called tolerance weeks. If no person in our plant were to work more than 40 hours in any week, we estimate that our peak employment would be increased by more than 500 persons. If we were to then retain the year round only those employees to whom we could provide approximately 40 hours’ work in any week, we would be faced with a seasonal lay-off of not less than 1,200 people. Ours is a community of some 17,000 population. We have neither the capacity to house such an extra 500 to 600 families nor to absorb the 1,200 who would be unemployed in the dull season.
Although the language and policy of this bill seem to provide for it as the bill is written, I believe that the use of averages in limiting hours should be specifically authorized when accompanied by a fixed weekly income and a reasonable limit to the daily or weekly tolerances in hours thus provided.
Such a specification would not only tend to encourage continuance of wage and employment stabilization plans which already are in existence, but would encourage the development and extension of such plans.
The value of such a plan is illustrated in our own case. This practice has not only permitted the development of a stability of employees’ income, but has permitted the attainment of relative stability in employment. Exclusive of women, among whom normal labor turn-over seems to be greater in proportion, only 66 of our people have failed to have continuous full-time employment for more than 6 months, only 186 have not had full, continuous employment for
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more than a year, only 261 have not had continuous employment for more than 2 years, and only 371 have not had continuous employment for more than 3 years.
Representative Wood. This bill would not affect your wage structure, it would just affect your hourly structure?
Mr. Hormel. No; I do not believe we would be particularly affected by the bill in any way, that is, as it is now drawn. However, I do think it can be so drawn as to affect us. In other words, I think it can be so drawn as to raise everybody’s level.
Representative Wood. The 40 hours a week would affect you?
Mr. Hormel. I do not understand that the bill says that. I understand the bill now provides the time such as we have.
Representative Wood. How many weeks a year do you work 53 hours?
Mr. Hormel. I think it is 3 weeks this year.
Representative Wood. About 3 weeks?
Mr. Hormel. Three weeks. My recollection of the figures is that we had 2 weeks where we worked 53 hours exactly, 1 week where we worked 48.4 hours, something like that. In a normal year there should be over 2 weeks of over 48 hours in the business. Of course, the livestock packing business this year has been light.
Representative Wood. How many weeks did you run over 48 hours?
Mr. Hormel. We have now worked the first 30 weeks of our current fiscal year and of those 30 weeks 15 weeks were less than 32 hours, and seven were between 32 and 40, making 22 out of 30 less than 40 hours, and our average for the year to date is 30.9.
Representative Wood. That is all.
The Chairman. Any other questions?
Representative Connery. Mr. Hormel, I just want to ask you as to whether you would be affected by this bill under the 40-hour week as to time and a half overtime, when you work over that 40 hours?
Mr. Hormel. I understood the exceptions were very much in the spirit of what I recommended here. The only reason why I make the recommendation for the change of that part of it is that if it were specifically stated that, attached to a dependable weekly wage, average hours, instead of weekly limits of employment, become a proper standard so long as you attach to that some method of preventing abuses, or as I guess I heard the word used here, inhumanly long hours, I believe it would not only serve to encourage the stabilizing of such plans as are now in existence but would also encourage the development of further plans for employment and wage stabilization, and certainly any operation which is conducted on a basis of retaining the employees the year round is a constructive thing socially.
As a matter of fact, out of our entire employment we only have 371 people who have not had continuous employment 52 weeks a year for 3 years or more; we only have 186 who had not had 52 weeks straight for more than 1 year.
Representative Schneider. Mr. Hormel, how many people do you employ?
Mr. Hormel. I think our total last Monday was 3,960, something like that.
Representative Schneider. Are these average wages made up of the pay roll of the employees including the superintendents, and so forth?
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Mr. Hormel. No ; those averages I read you are the plant averages. Those are the figures which we report for statistical purposes to the National Industrial Conference Board and the Department of Labor, and made up according to their rules on covering the preparation of those figures.
Representative Schneider. Are your employees organized into labor unions?
Mr. Hormel. Yes, sir.
Representative Schneider. Are they under contractual agreement with you in any respect?
Mr. Hormel. Yes, sir.
Representative Schneider. They have an all-union-shop condition, where they all belong to the union?
Mr. Hormel. Yes, sir.
Representative Schneider. Who are your principal competitors, just a few of the principal ones?
Mr. Hormel. Everybody in the packing business.
Representative Schneider. Give a few.
Mr. Hormel. Usually the best-known packers, of course, are our stiffer competitors, such as Swift, Armour, Wilson, and Cudahy.
Representative Schneider. How do their wages compare with yours?
Mr. Hormel. I do not know specifically. I have once had occasion to justify our wages and we were able to show approximately 5 percent higher wages than our surrounding competitors, I mean in that Iowa district. I think that our wage rates were 3.5 percent ahead of theirs, but our earnings per hour, which is quite different than the hourly rate of course, our hourly earnings last March were 7 cents per hour higher on the average for the industry, and last year, for the average of the year, they were 6 cents an hour higher than the average for the industry. That is due to this stabilization plan of ours.
Representative Schneider. Just what do you attribute to it being possible for you to do this? What is there about your management in your industry that makes it possible for you to give such conditions?
Mr. Hormel. I was talking about the stabilization plan. One reason, I think, that this legislation can be made to be very useful is because so often a businessman wants to undertake some step which is unconventional and he is afraid to do it. Now, we started this wage-stabilization plan in a department of 19 employees. Actually when we tried it we found not only it could be supported but it seemed to pay us.
Representative Schneider. Are you meeting now any competition from foreign countries, the Argentine particularly, that would interfere with the markets?
Mr. Hormel. Not the Argentine particularly; no, sir.
Representative Schneider. Any other countries?
Mr. Hormel. You invited me to talk of Polish hams. I wish to say to you that we are the biggest canned-ham manufacturer and we are only doing a portion of the business that the Poles do. I do not think it is helping the American farmer or us.
Representative Schneider. Do you export much of your product?
Mr. Hormel. Our exports have almost completely disappeared, as far as meats are concerned. We still export some lard. We did a good export meat business
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For instance, speaking again of canned ham, we had a canned-ham business in England which we had to turn over to a Canadian firm to put under our brand, because we could not compete over there with their prices and quotas.
Representative Schneider. That is all.
Representative Connery. I did not quite get what you were saying about the Canadian company. You said you had a company in England?
Mr. Hormel. I said on account of the change in economic conditions we have been unable to maintain our exports, and where we had established brands over there we could not compete because of quotas and prices, and we had to turn our brand over to a Canadian manufacturer to maintain the market.
Representative Connery. In other words, you lost the export business in addition to what you suffered from imports of Polish hams?
Mr. Hormel. That is right.
Representative Connery. I think your statement is very constructive.
Mr. Hormel. I hope my four points are understood. First, I think minimum wages should not be as low as it sounds to me they are going to be under this bill. I think the average wage actually in existence is as low as the minimum need be, and to prevent abuse with the minimum as high as that, and to prevent having to make exceptions, I believe I heard Mr. Lewis say this morning in rather picturesque language what the scrambio for exceptions was under the N. R. A., in order to avoid abuses from exceptions you should provide that the exceptions cannot be granted except for the inability of the operator to proceed at a profit under those minimums, and then only if he agrees to make restitution for any deficiency in case he does make a profit. Those two points I believe are sound. I have not heard them talked of but I think they should. Then the third is, of course, as I say, having standards for conditions of employment without any security in tenure of employment seems to me rather futile.
Then the fourth point we have been discussing, to so set this law up as to encourage wage and employment stabilization.
Representative Ramspeck. Let me ask you this. I think you made a very constructive suggestion. What results have you found from this polity of continuous employment? Are your employees better satisfied? Are they more efficient?
Mr. Hormel. Well, I am sure that both are true.
Representative Ramspeck. I am particularly interested in that because I think the eventual solution of our labor problems is annual earnings rather than hourly rates. If this bill, as Mr. Lewis suggested that it be drafted, were applied to your business here is what would happen, would it not: You could not work longer than 40 hours, no matter what the conditions of your business were, and the result would be you would have to lay off a lot of people at times and take on 'e at times?
Mr. Hormel. Yes.
Representative Ramspeck. Because there would not be any discretion in the Board to vary the wage scale, and you could no longer afford to have this continuous pay policy under those conditions, could you?
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Mr. Hormel. I did not understand that the bill would discourage that continuous-pay policy as it is now drawn.
Representative Ramspeck. I do not think it necessarily would.
Mr. Hormel. If it should I think it would be a terrible thing to have happen to our town of 17,000 people, to have 1,200 periodically unemployed.
Representative Ramspeck. Your factory is located in a community where there is no surplus of labor available, as I understand it, not sufficiently to take care of this peak production?
Mr. Hormel. There would have to be a surplus of labor available if we were to work on a 40-hour week, right straight through, because we would have to go out and get a surplus there, we would have to import people so as to starve them when we get them there. They are not there now.
Representative Ramspeck. And there are no housing facilities there for them?
Mr. Hormel. No, sir.
Representative Ramspeck. And if you got them there they would not be regular employees? They would not have regular employment?
Mr. Hormel. That is right.
Representative Ramspeck. Therefore, if this bill is not going to work a hardship on your employees it must be flexible?
Mr. Hormel. I believe that; yes, sir.
Representative Ramspeck. That is all.
Mr. Hormel. I have a copy of a similar bill introduced in the Minnesota legislature.
The Chairman. It may be inserted in the record.
(The bill referred to is as follows:)
[State of Minnesota, fiftieth session, S. F. No. 822, introduced by Mr. Oalvln, Feb. 25,1987. Referred to Committee on Labor)
A BILL For an act to assure fair wages, fair conditions and tenure of employment, and seniority rights of employees in certain occupations in the State of Minnesota; providing for reports from employers and rights of employees to organize and bargain collectively; fixing certain powers of Industrial commission and courts; and providing an appropriation for administering this act.
Be it enacted by the Legislature 0/ the Slate of Minnesota:
Section 1. Declaration of public policy.—As a guide to the interpretation and application of this act, the public policy of this State is declared to be as follows: That under the complex economic and social condition now existing, wages, conditions of employment and tenure of employment become affected with public interest. The legislature, therefore, declares that in its considered judgment it is for the general public welfare, public health, and public good generally of the citizens of the State to promote and provide for under the police powers of the State a system for assuring fair wages and fair conditions of employment, and fairness and regularity in terminating employment throughout the State.
Sec. 2. (a) The word “commission” as used in this act shall mean the Industrial Commission of the State of Minnesota.
(b) “Going wages’’ shall be—
(1) The average weekly wage shown by the compilation of the commission for the properly applicable job designation of the employment of any given employee for the number of weeks which are material to the inquiry; or
(2) In any locality, the union wage, if there established; whichever is greater.
(c) "Going hours’’ shall be—
(1) The average hours worked per week as shown by the compilation of the commission for the properly applicable job designation of the employment of any given employee for the number of weeks which are material to the inquiry; or
(2) In any locality, the union hours, if there established; whichever are the lesser.
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(d) “Standard wages” shall be—
(1) Going wages or more, for going hours or less, by employers who make a profit; or
(2) Going wages or less, for going hours or more, by employers who do not make a profit, but with the provision that any profit which accrues will be used to make proportionate restitution to the employee for any deficiency in wages or excess in hours during the fiscal year in which said profit accrued.
(e) “Profits” shall be any taxable net income under the Minnesota income tax laws, after allowing for reasonable and proper salaries.
(f) “Employment" as used in this act shall mean the services rendered to an employer for wages in the State of Minnesota, but shall not include:
(1) Services performed in the employ of this State, or of any political subdivisions thereof, or of any instrumentality of this State or its political subdivisions;
(2) Services performed in the employ of any other State or its political subdivisions, or of the United States Government, or of any instrumentality of any other State or States or their political subdivisions or of the United States;
(3) Agricultural labor;
(4) Domestic service in a private home;
(5) Services performed as an officer or member of a crew of a vessel on the navigable waters of the United States:
(6) Service performed by an individual in the employ of his son, daughter, or Spouse, and service performed by a child under the age of 21 in the employ of his father, mother, or guardian.
(7) Service performed in the employ of a corporation, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of crueltv to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual.
(g) “Employer” means any individual, corporation, or type of organization including the partnership, association, trust, estate, joint-stock company, insurance company, or corporation, whether domestic or foreign, or the receiver in bankruptcy, trustee, or successor thereof, or the legal representative of a deceased person, which has or had for some portion of a day during 1937, or any subsequent year, but not necessarily simultaneously, in each of twenty different weeks, whether or not such weeks are or were consecutive, eight or more individuals in his employ.
Sec. 3. Each employer in the State of Minnesota is hereby required to report under oath to the commission with respect to each individual in his employment, the definite job designation or statement of the nature of the work performed, the amount of wages paid, the number of hours worked, together with such other information as may be properly required by the commission for effectuating the purpose of this act, ana in such form as may be prescribed by the commission. A report listing the name, job designation, ana rate or pay of each individual shall be made to the commission by each employer within thirty days after the beginning of any new fiscal year of that employer, or within thirty days after the date of any general change in wage rates or job designations. Reports of individual changes and reports of hours worked and amount of wages paid shall be made at such times and under such regulations as the commission may properly prescribe.
Sec. 4. From the employers’ reports, the commission will compile, and from time to time, not less than annually, but as often as and to the extent that may be necessary to effectuate the purposes of this act, will publish a compilation of’ the data afforded by these reports, showing the high, low, and average, or other pertinent scope of wages, hours and conditions of employment by—
(a) Various averages of industries or classes of business, each such classification to be so selected that comparison between the employers and between employments therein shall be equitable;
(b) Averages of individual employers within each of the above classifications;
(c) Averages of group occupations within each of these same classifications; and
(d) Specific jobs within each, together with such other groupings or comparisons as may be properly useful in effectuating the purposes of the act, and each employer shall post in a prominent place of public view within his place of employment a copy of those parts of the compilation which are pertinent to the employment performed in that place.
Sec. 5. Upon application of any employee or his agent, or any group of employees of one employer or their agent, or any employer, the commission shall determine whether that employer is paying “standard wages," or whether, during the past fiscal year, the employer has fulfilled the conditions of “standard wages”
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as defined In section 2 (d) (2), and shall issue an order setting forth its findings, furnishing copies to the petitioner and to the employer. If, within thirty days after the issuance of such order, any person affected wishes in good faith to challenge its findings, the commission shall hold hearings, take evidence and issue a revised order based thereon. For these services the commission may charge such reasonable fee (to be paid into the general funds of the State) or set up such conditions as will avoid frivolous applications.
Sec. 6. Unless a written employment contract specifically states that less than “standard wages” shall be paid, and states what that wage shall be, employers in the State of Minnesota snail pay “standard wages” as defined in this act.
Sec. 7. If, thirty days after the issuance of any order by the commission finding an employer not paying standard wages, the employer has not made full restitution for any deficiency, action for recovery of any existing deficiency and costs of action may be brought in the district court of the county wherein the employer’s principal place of business in the State is located.
Sec. 8. Unless a written employment contract otherwise provides, the rules of law set forth in this section shall cover employers and employees in the State of Minnesota; namely:
(a) When it becomes necessary for any employer to reduce the number of employees, the employee not most recently engaged by his employer in any classification of employment as designated under section 4 (d) shall be entitled to tenure of employment in preference to the employee most recently so engaged, and upon advancement from one such classification to another, the employee shall not lose the rights which accrued to him under previous classification.
(b) Any employer shall have the right to promulgate reasonable rules, regulations, and conditions to govern conduct and provide penalties for the violation thereof in any classification of that employer’s employment, but, after a qualifying period of eight weeks, any employee shall have the right to his employment in his classification free from prejudice as long as he shall conform to such rules, regulations, and conditions. Advancement with consequent failure to conform to the rules, regulations, and conditions of the new classification shall not prejudice the right of the employee to return to his previous classification of employment.
(c) Each employer shall provide and maintain adequate and satisfactory methods of conducting fair hearings and making fair decisions with respect to any employee who alleges unemployment in contravention to paragraphs (a) and (b) of this section. Within ten days after the commencement of his unemployment, any employee who alleges that no such hearing was held or that such hearing was not fairly conducted or that such decision was not fairly made, may appeal to the justice court of proper jurisdiction for such fair hearing and fair decision. For holding such hearing and rendering such decision, the justice court may assess a fee of $3.
Thereafter, upon five days’ notice to the other party, either party, if aggrieved by the decision of the justice court, may take its appeal to the district court in the county wherein such cause arises. Within ten days the district court shall hold its hearing and make its decision either affirming or disaffirming the find ng of the justice court. For this service the court may charge such reasonable fee as in its discretion it may determine. Fees herein provided shall be paid by the employer unless the court finds that the allegation of the employee was frivolous, in which case the fees shall be assessed against the employee.
(d) If, thirty days after any such unappealed finding of the justice court, or thirty days after any such order of the district court, such order has not been observed, action for redress and cost of such action may be brought in the district court of the county wherein the employer's principal place of business in the State is located
Sec. 9. Nothing in this act shall be so construed as to interfere with the right of employer and employee to contract individually or collectively. If the employer and employee have agreed upon shop rules or conditions of employment, then that, agreement, if made in writing, shall prevail over the provisions of this act.
Employees shall have the right of self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in concerted activities, for the purpose of collective bargaining or other mutual aid or protection, and nothing in this act shall compromise nor abridge any benefit now existing or hereafter to be gained by collective bargaining.
Sec. 10. This act shall be construed separably, and if any section or provision of tHu act, or the application thereof to any person or circumstance, is held invalid,
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the remainder of this act and the application of such provision to other persons or circumstances shall not be affected thereby.
Sec. 11. Any person who willfully furnishes the commission false information shall be guilty of a gross misdemeanor and be fined not less than $100 nor more than $1,000,
Sec. 12. There is hereby appropriated to the industrial commission out of any moneys in the treasury of the State of Minnesota, not otherwise appropriated, to be immediately available the sum of $5,000 or so much thereof as may be required during the current biennium to administer this act.
Sec. 13, This act shall take effect and be in force from and after July 1, 1937.
The Chairman. Thank you very much. The committee will recess until 10 o’clock tomorrow morning.
(Whereupon, at the hour of 5:40 p. m., the committee recessed until 10 a. m. of the following day, Tuesday, June 8, 1937.)
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FAIR LABOR STANDARDS ACT OF 1937
TUESDAY, JUNE 8, 1037
Joint Committee of the Senate,
Committee on Education and Labor,
and House Committee on Labor,
Washington, D. C.
The joint committee met, pursuant to adjournment, at 10 a. m., in the caucus room, Senate Office Building, Senator Hugo L. Black (chairman) presiding.
Present: Senators Hugo L. Black, James E. Murray, Bush D. Holt, Allen J. Ellender, Bobert M. La Follette, Jr., and James J. Davis.
Representatives William P. Connery, Bobert Bamspeck, Matthew A. Dunn, Beuben T. Wood, Jennings Bandolph, Bicnard J. Welch, Fred A. Hartley, William P. Lambertson, Albert Thomas, Joseph A. Dixon, William F. Allen, and Santiago Iglesias.
The Chairman. Miss Katharine Lenroot, will you please come forward?
STATEMENT OF KATHARINE F. LENROOT, CHIEF OF THE CHII- BREN’S BUREAU, UNITED STATES DEPARTMENT OF LABOR
The Chairman. You are connected with the Children’s Bureau of the Department of Labor.
Miss Lenroot. Yes, sir.
The Chairman. What is your position?
Miss Lenroot. Chief of the Children’s Bureau.
The Chairman. I understand that you have a statement in connection with the child-labor feature of this bill, which you have prepared?
Miss Lenroot. Yes; Senator Black.
The Chairman. We would be glad to have that statement and insert it in the record, and if you wish to say anything in addition to that, we will be glad to hear it.
Miss Lenroot. Thank you very much, Mr. Chairman. I have a statement here outlining briefly the very great interest of the Children’s Bureau in this bill, not only because of its child-labor features, but also because of its importance in relation to the whole problem of the health and welfare of children, I have outlined here some material with reference to the present extent of child labor, the standards of legislation, hazardous occupations, experience in the administration oi the first child-labor law, and the possibility of using State and local services in the administration of the pending bill. I will be glad to have this incorporated in the record.
The Chairman. We appreciate that very much, Miss Lenroot. I am sure it will be of great help.
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Miss Lenroot. Although the direct concern of the Children’s Bureau in this bill relates to the child-labor provisions, nevertheless the entire measure has profound significance with reference to the health and welfare of the children of this country. More than 20 years ago, in the reports of its earliest studies of infant mortalitv, the Children’s Bureau pointed out that the infant death rate varied in direct relation with the earnings of the father, being highest in those families where the earnings were lowest. In the majority opinion of the Supreme Court of the United States in Carmichael ei al. v. Southern Coal and Coke Company, it was pointed out that the evils of the social and economic wastage attendant upon unemployment permeate the entire social structure, and that unemployment results in deterioration of family life, impairment of the health of the unemployed and their families, and malnutrition of children. The same can be said of oppressively low wages and long hours.
Oppressive child labor is both a cause and an effect of low wages and sweatshop conditions, and legislative attempts to improve the conditions of employment have always begun with the regulation of child labor. Experience developed in drafting legislation and developing administrative methods with reference to child labor has afforded a practical foundation for other forms of labor law. So it is with the Federal Government, which enacted more than 20 years ago a child labor law declared unconstitutional in the case of Hammer v. Dagenhart, under which was demonstrated successfully the practicability of cooperative relationships between the Federal and State Departments of Labor in the administration of the law, with a minimum of Federal interference and overhead expense. The fact that the Federal Government has long been actively interested, through direct cooperation in administration or through research and advisory service, in the improvement of child labor standards has been without doubt a factor of major importance in the progress that has been made through the years in raising the age of entrance into industry and regulating the conditions under which children are employed. Ten of the 48 States have now adopted an age minimum of 16 years for some or all forms of industrial and commercial employment, and these include some of the leading industrial States of both North and South.
The child labor standards fixed in this bill are in harmony with the considered judgment of progressive employers of labor, and of the general public, and require little discussion. It may be helpful, however, briefly to review the need for Federal action in setting up Nation-wide standards which will operate to underpin and strengthen State action.
EXTENT OF CHILD LABOR
Child labor is still a problem in the United States. At the time of the 1930 census, when the depression had already reduced employment opportunities for children and adults alike, nearly 200,000 (197,621) children 10 and under 16 years of age were gainfully employed in nonagricultural pursuits in the United States. The decade of the twenties brought with it an increased impetus toward longer school attendance for children, as well as advances in State child-labor legislation, which had been stimulated by the Federal child-labor laws in effect during most of the period between 1917 and 1922. Nevertheless, the trend in child labor between 1920 and 1980, as indicated
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by reports to the Children’s Bureau of employment certificates issued to children leaving school for work, followed the general rise and fall of industrial activity. That is, in spite of a general decrease in the number of children employed during that period, each rise in general factory employment was accompanied by a rise in the number of children 14 and 15 years of age leaving school for work.
With the depression came a general break-down of labor standards, particularly in relation to child labor. In certain industries there was a revival of the old sweatshop conditions, with long hours of work and low wages for child workers. Then came the National Recovery Act, under which child-labor standards higher than those that had been generally in effect throughout the country were set. The minimum age of 16 years set by the N. R. A. codes met with the widespread approval of employers, employees, and the public, and the employment of children under 16 in industry and trade was practically eliminated during the period the codes were in effect.
In the last 7 months of 1935, after the outlawing of the N. R. A. codes, the number of children under 16 years of age leaving school for their first jobs was 53 percent greater than during the entire 12 months of 1934, when the codes were in. effect, according to reports of employment certificates issued to children of these ages in various sections of the country. The number of children leaving school for work in the 12-month period following the invalidation of the codes increased 182 percent over the preceding 12-month period in the areas for which information was received by the Children’s Bureau. That is, in the comparable areas (8 States, the District of Columbia, and 102 cities in 21 other States) approximately 18,000 children under 16 left school for work in a year when the restraint of a Federal minimum-age standard has been removed, compared with about 6,500 in the preceding year when the 16-year standard of the codes was in effect.
These figures by no means represent the total number of gainfully employed children in the United States but are only an indication of the trend as shown by reports from areas from which information could be obtained. This increase in the use of children is no doubt attributable in part to the increased opportunity for employment in all age groups, but it is most significant that the tendency of child labor to follow the general trend of industrial employment has again appeared.
The child-labor picture today shows a decided shift in the employment of boys and girls under 16 from factories, where child-labor abuses first attracted public attention, to miscellaneous occupations in trade and service industries, in which child labor is more difficult to regulate than in large industrial plants, and in which the old evils of long hours and low wages persist.
The Children’s Bureau of the United States Department of Labor has completed recently a survey of child labor in six States in 1936. Information was obtained for 2,017 children under 18 years of age in Alabama, Georgia, Indiana, Missouri, New Hampshire, and Massachusetts. Of these, 2,017 young workers 449 were under 16 and 1,568 were 16 and 17 years of age. The study did not include children working in agriculture or domestic service. These figures do not represent a complete census of employed children of these age groups but merely a cross section of the conditions of employment for young Workers in these six States.
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Preliminary findings of this survey show that approximately one- half of these young persons 16 and under 18 years of age were employed in manufacturing establishments; slightly more than one-fourth in trade, including both wholesale and retail establishments; about one- eighth were engaged in service occupations, including work in restaurants, beauty shops, and automobile service stations; and the remainder were in a variety of miscellaneous occupations.
Practically three-fourths of the 449 children under 16 who were interviewed were engaged in nonmanufacturing employment. Regardless of the kind of work, however, the hours of work tended to be long and the wages low. Nearly one-fourth of the children under 16 were found to working 60 hours a week or longer; and only about one-third had a work week of 40 hours or less.
Earnings were very low; the median weekly wage for children under 16 was only slightly over $4, and nearly one-fifth of the children earned less than $2 for a week’s work.
Information obtained by the Children’s Bureau regarding the conditions of work for boys and girls of 16 and 17 years indicates that in nonmanufacturing jobs, in which almost half of the 16- and 17-year-old workers were engaged the median weekly earnings were only $6.30, and even in manufacturing occupations half earned less than $8.30 a week. Of the entire group of 16- and 17-year-old workers, a fifth earned less than $4 for a week’s work. Hours of work tended to be long; 28 percent of the 16- and 17-year-old workers reported a workweek of 50 hours or more. It was significant, however, that hours of work were longer and earnings lower for the children under 16 than for those 16 and 17 years of age.
The provisions of the pending bill, administered on the principle of the same minimum for men and women, boys and girls, with properly safeguarded provisions for learners and apprentices, will not only eliminate the labor of children under 16 in the occupations covered, and under 18 in especially hazardous occupations, out will shorten the hours and raise the wages of many of those 16 and 17 years of age.
The large proportion of children engaged in intrastate industries makes it essential that the movement for completion of the child labor amendment be continued until ratification by eight additional States is completed.
STATE CHILD-LABOR LEGISLATION
Although 10 States have adopted a basic minimum wage of 16 years for factory employment and related occupations, and 4 have adopted a minimum of 15 years, 33 States and the District of Columbia have a 14-year minimum, and 1 has no general age minimum of this character. Thus practically three-fourths of the States permit children 14 years of age to enter gainful employment under certain conditions, relating to proof of age, schooling completed, physical condition, and other factors.
Child-labor legislation must be in harmony with compulsory school attendance laws, in order to make sure that there is no gap between the age when a child is permitted to leave school and the age when he may enter full-time gainful employment. The advocates of child labor legislation are not in favor of idleness for children or youth. The alternative to useful occupation should be constructive educational opportunity.
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Seven States now provide a minimum of 18 years under which the child is required to attend full-time school unless excused for work or other legal reasons; 7 States fix a minimum of 17 years; and 31 States and the District of Columbia, 16 years. Only 3 States have an age lower than 16. The standards proposed in the bill are admirably adjusted to the standards of the State school-attendance laws.
HAZARDOUS OCCUPATIONS
The pending bill proposes a minimum age of 18 years for work in occupations declared to be particularly hazardous or detrimental for boys and girls between the ages of 16 and 18 years. Accident statistics indicate that there is urgent need for more adequate protection of young workers from employment which presents special hazards to safety or health. Mining, for example, according to reports of the National Safety Council for the year 1935, has an exceptionally high accident rate, and far exceeds all other industries in severity of accidents. About 10 days’ time is lost on account of mine accidents per 1,000 man hours of exposure.1 A study of hazards to boys in the bituminous coal mining industry made by the Pennsylvania Bureau of Women and Children shows that the accident rate in 1930 for boys under 18 years of age in that industry in Pennsylvania was higher than for all workers in the industry. Of the boys under 18 employed in the industry, 19 percent were injured during the year, as compared with 15 percent of all workers in the industry. Approximately 23 percent of the accidents to boys under 18 reported, resulted in loss of time of 1 month or more, permanent disability or death.2
In general, young persons in industry meet with accidents from the same causes as adults, but power-driven machinery has been recognized as a cause of accident to which young workers are especially liable. In a study of industrial accidents to minors in three States made by the Children’s Bureau and published in 1925, it was found that machinery was the most frequent cause of injury, being responsible for over one-third (36.2 percent) of the accidents. Children under 16 years of age in these States were protected through laws or regulations prohibiting their employment in certain dangerous occupations, and some protection was extended to minors 16 and 17 years of age in two of these States. In the age group 16 and 17 years years of age a larger percentage of the accidents were due to power-driven machinery than in the younger age group, where more adequate protection was extended, or the next older age group, 18 to 20 years, inclusive. An analysis of the causes of accidents in one State where comparative figures for minors and adults could be obtained showed that nearly twice as many of the injuries to minors as of those to adults were due to machinery. The severity of accident was somewhat greater, as well as the frequency of accident, for the 16 and 17 year age group, than for the other two age groups. Of the injuries to workers under 16, 10.71 percent, of those 16 and 17 years of age, 13.4 percent, and of those to 18 to 20 years of age, inclusive, 12.7 percent resulted in death or permanent disability.3
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1 National Safety Council: Accidents Facts, 1936, p. 64.
2 Pennsylvania Department of Labor and Industry: Reducing the Hazards of Employment for Boys In the Coal Mining Industry, in labor and industry. August 1032.
3 U. S. Department of Labor, Children's Bureau, Publication No. 182, Industrial Accidents to Employed Minors in Wisconsin, Massachusetts, and New Jersey, pp. 87,88.
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In a review of available accident statistics made for the committee on child labor of the White House Conference on Child Health and Protection it was reported that in 5 States for which comparable information was available, 31 percent of those 16 and 17 years of age, as compared with 18 percent of those under 16, and 13 percent of the total persons injured, were hurt in machine accidents.4 A Pennsylvania study showed that 24 percent of the injuries to 16- and 17-year old minors were caused by power-working machinery, as compared with 16 percent of the injuries to minors 18 to 20 years of age, and 10 percent of the injuries to adults.5
Dr. Alice Hamilton is authority for the statement that available statistics on occupational disease indicate a significant correlation between age and susceptibility to various diseases and poisons. A number of cases studied by scientists in the United States and other countries are the basis for her statement. During the war young workers in munition factories were more susceptible to certain poisons than adult workers.6
The Women’s Bureau of the United States Department of Labor in a study of women engaged in vitreous enameling gives additional evidence that young persons are more susceptible to lead poisoning than older workers. Sprayers in this industry were more exposed to lead than those in other occupations. Two-fifths of the sprayers between the ages of 16 and 18 years, compared with only one-fourth of the sprayers 40 years of age and over, had symptoms of lead poisoning.7
Child-labor laws in 43 States have established higher age limits for employment of minors at dangerous occupations than for general employment. In 17 States substantial prohibitions extend up to 18 years of age; in one up to 17 years of age, and in 25 States, only up to 16 years of age. Many States have failed to prohibit occupations that are known to be extremely hazardous.
About two-thirds of the more than 500 N. R. A. codes required submission to the administrator of a list of operations and occupations ; hazardous in their nature or detrimental to health from which minors under the age of 18 should be excluded. A total of 166 industries were covered by such lists of prohibited employments. The Children’s Bureau cooperated with the N. R. A. in formulating and submitting such a list to the appropriate code authority. In this work the recommendations of the advisory committee of experts appointed by the Children’s Bureau in accordance with a recommendation of the 1930 White House Conference on Child Health and Protection were followed, supplemented by available information on accident records and interviews with representatives of the various industries. (The advisory committee included specialists in labor law administration, safety engineers, and industrial hygienists. It issued a report recommending the prohibition of the employment of minors under the age of 18 years in specified hazardous occupations.)
The general types of prohibitions which are necessary to the protection of young workers include the following: 1. Occupations involving general mechanical and other hazards.
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4 White House Conference on Child Health and Protection: Child labor, Century Co., New York, 1932. p. 329.
5 Pennsylvania Department of labor and Industry, An Analysis of Compensated Accidents to Minors for the Year 1924. Special Bulletin 17, p. 39.
6 Hamilton, Alice: Industrial Poisons in the United States; New York, 1925, pp. 12-13.
7 U. S. Department of Labor, Women’s Bureau: The Employment of Women In Vitreous Enameling; Bulletin 101, 1932, p. 33.
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2. Occupations involving specific mechanical hazards peculiar to the particular industry.
3. Occupations involving health hazards peculiar to the particular industry.
Experience in the administration of the Federal Child Labor Act of 1916. The Federal Child Labor Act of 1916 was based on the same constitutional theory as section 7 (a) of the pending bill. It prohibited the shipment or delivery for shipment in interstate commerce of articles or commodities the product of establishments in which children under specified ages had been employed or in which certain standards as to hours and prohibition of night work for children had not been observed. The act was in effect for 9 months and was administered by the Children’s Bureau, with a board of three Government officials empowered to make rules and regulations.
As pointed out by the Secretary of Labor—
the key to successful administration of child-labor laws is the employment certificate or work permit which is the child’s credential entitling him to leave school and enter upon specified employment from which, by the operation of the child labor law, he is not excluded.
The act of 1916 was so drawn as to provide that if certificates were procured by an employer in good faith and the children proved to be under legal age, he could not be prosecuted for shipment of goods. Provision for the use of certificates was included in the Federal act because previous State experience has clearly demonstrated that a certificate based upon reliable evidence of age and other qualifications is basic to uniform compliance with a child-labor law. With a good certificating system inspection serves as little more than reenforcement of respect for the certificate by both employer and child. The lack of an adequate certificate system giving assurance that a child has met the legal requirements for going to work makes it difficult, if not impossible, for even the most conscientious employer to employ young persons without danger of violating the law. Observance of hour and wage regulations are within the control of the employer; not so the observance of age minima unless he is assured of a method, given official approval, by which he can know the age of the child whom he employs.
Two kinds of age certificates were provided under the 1916 act— those issued by Federal agents and age or employment certificates issued under State authority in States designated for the purpose by the Federal Government. In the latter case a double certificating system under State and Federal law was avoided, one certificate serving both purposes.
Specialists experienced in the administration of State certificate systems were employed by the Children’s Bureau to study procedures in the States where State certificates were accepted and to work with State officials toward the improvement of local procedures where this was necessary. A specially trained staff was assigned to the issuing of Federal certificates of age in States where State certificates were not acceptable.
When the law became effective 39 States and the District of Columbia were designated for a period of 6 months as States in which a certificate issued under State authority should have the same force and effect as Federal certificates, and Federal certificates were issued in only 4 States. Later two States were added to the list in which it was necessary to issue Federal certificates.
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As in the matter of accepting State age or employment certificates whenever possible, the Children’s Bureau in developing its plans for inspections of establishments under the law counted upon, and received the cooperation of State labor officials in many States. With a view to the pooling of inspection resources and experience, a conference of State officials was called by the Secretary of Labor several months before the law became effective.
At this conference, attended by officials from 28 States and the District of Columbia, it was unanimously agreed that it would be mutually helpful if State officers authorized to enforce State child labor laws should be deputized as enforcing officials under the Federal act. Accordingly, State officials in 41 States were so deputized. The commission was given to the head of the Labor Department or other State department enforcing the child labor law, and it was thus possible for the responsible State official to authorize his assistants to inspect for the same purposes. The possibility of duplication of effort on the part of State and Federal officials and of friction between the two enforcing agencies was reduced to a minimum, and the costs of effective inspection machinery were found to be remarkably small.
Testimony regarding the assistance given the States by the Federal child-labor acts in the enforcement and improvement of their own child-labor standards is contained in numerous statements of State labor officials during the period after the nullification of the first child-labor act and the Child Labor Tax Act of 1919. This testimony was also embodied in resolutions passed by the Association of Governmental Labor Officials of the United States and Canada and at various national conferences on labor legislation attended by labor officials. For example, the eleventh annual convention of the Association of Governmental Labor Officials of the United States and Canada, in a resolution adopted in 1924 urging a child-labor amendment to the Constitution, “declared the belief that the enactment of Federal child-labor legislation will aid the States in the enactment and administration of child-labor laws.”
The entire Federal staff engaged in the administration of the first Federal child labor law totaled 51 persons, including 17 inspectors and 22 certificate-issuing officers. The staff requested for the fiscal year ending June 30, 1919, totaled 65 persons, and the appropriation requested tor administration was $164,140. Plans for this year were terminated by the Supreme Court decision declaring the law unconstitutional.
Possibility of utilizing State and local employment certificate services and State inspection services in the administration of the pending bill: The possibility of utilizing State labor departments and employment-certificate officials in administering the provisions of the pending bill are much greater than they were 20 years ago, because of the general improvement in State and local administration during the intervening period. In all but four States an employment certificate system exists under which certificates are required for children going to work under the age of 16 years. However, there is great need in a number of States for strengthening these systems and ringing them up to generally accepted standards of administration. In 13 States such a certificate is required for minors between the ages of 16 and 18 years, either throughout the State (10 States) or in places where continuation schools are established (3 States); in 7 additional States age certificates only, differing somewhat from the employment
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certificates required for the younger group, are required for minors 16 and 17 years of age entering employment. In a number of other States, either by law or by administrative practice, age certificates for children above the age of 16 years are issued on the request of the employer who may desire them for his own protection.
Thus it appears that in over half the States some kind of administrative machinery is in operation under the child-labor law for the issuance of age or employment certificates to minors up to the age of 18 years, and in all except four of the States machinery exists for the issuance of certificates to children under 16. Through cooperative arrangements these State systems can be extended and, where defective or inadequate, strengthened to serve the purpose of the Federal act.
The contacts of the Children’s Bureau with the State labor departments and employment certificate agencies preceded the enactment of the first Federal child labor law and have continued up to the present. Since 1921 the Children’s Bureau has systematically collected, tabulated, and published statistics of employment certificates issued to children going to work in an increasing number of States and cities. This material affords the only measure of trends in child labor during the periods between Federal censuses. Improvements in records and office procedure have developed partly from the stimulus given by the Children’s Bureau through this reporting system. There as been an increasing tendency on the part of State labor officials to consult the Bureau in regard to legislation and administrative problems.
In order that full use may be made of State facilities for issuing employment and age certificates as a protection to employers who desire them it would be desirable to make certain minor additions to section 2 (a) (13) and section 18 of the pending bill. The addition to the first section named should be to the effect that for the purposes of this act the employment of any person of the ages specified shall not be deemed oppressive child labor if the employer has on file, with respect to such child, an age certificate issued and held pursuant to regulations indicating that the child is of such an age that his employment does not constitute oppressive child labor. Section 18 should be slightly changed to make it clear that the authority of the Children's Bureau to inspect includes also authority to make such investigations as are necessary to aid in the administration of the child-labor provisions, and that in performing these duties and in the issuance of certificates of age the Children’s Bureau shall utilize, so far as practicable, the services of State and local agencies.
With these very minor changes the child-labor provisions of the pending bill should afford an adequate basis for Federal and State cooperation toward the objective of eliminating child labor from industrial and commercial employment.
The Chairman. Mrs. Larue Brown.
STATEMENT OF MBS. LARUE BROWN
Mrs. Brown. My name is Dorothy Kerchwey Brown, and I am a member of the board of directors of the National League of Women Voters, the organization which I represent at this hearing. I am also requested to represent indirectly a group of other national women’s organizations who wish to file statements that I have with me. I have
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a statement on behalf of the National Board of the Young Women’s Christian Association, the National Congress of Parents and Teachers, the National Federation of Business and Professional Women’s Clubs, and the National Council of Jewish Women. If I may, I will file these with the reporter.
The Chairman. If you please.
(The papers submitted by Mrs. Brown will be found at the conclusion of her statement.)
Mrs. Brown. The League of Women Voters, which I particularly represent, is especially interested in the features of this bill having to do with child labor. The league has taken no stand in regard to the other provisions of this bill, and therefore it is only the child-labor features that I wish to speak of today.
The League of Women Voters was, as I think most members of the committee know, formed during the time that a Federal child-labor law was in effect. It was formed in the year 1921, when the first Federal child-labor law had been declared unconstitutional, but while the Federal child-labor tax law was in effect. The league has always supported standards which were embodied in that law and later endorsed the so-called minimum child-welfare standards, which were adopted by the Nation-wide conference under the auspices of the Children’s Bureau in 1919.
After the second child-labor law was declared unconstitutional, the league took up wholeheartedly and pretty nearly unanimously the Federal child-labor amendment, first for passage of the amendment, and then for ratification, and has worked earnestly throughout the country for ratification of that amendment.
We want to make that clear, because we want it clearly understood that working for other Federal child-labor legislation does not weaken our attitude with regard to ratification of the child-labor amendment, which we still believe is essential as a protection for those children who, under the broadest interpretation by the Supreme Court, could not be considered as working in interstate commerce.
However, we have come more and more to believe that a new approach to the problem is wise, in view of the recent Supreme Court decisions particularly. Many of us who have been interested for a long time in this bill have felt that the approach which was the approach in the first Federal child labor law is perfectly simple and effective—the simple interstate commerce law forbidding the transportation of goods produced by child labor in interstate commerce. We believe that was not only the most simple and direct but probably the most effective means of reaching this undoubted evil. We felt that, as other speakers, I believe, have already said to this committee, the Supreme Court decision in that case, being a five-to-four decision and the circumstances having changed so that a wider definition of interstate commerce was not apt to be overruled by the Court, that the sensible and the simple thing to do would be to take over that principle again and bring it up to date, providing in it standards which the N. R. A. codes adopted for child labor. We approve, therefore, the 16-year minimum for employment in factories, and an 18-year limit for employment in the dangerous trades or hazardous occupations, such as mines, quarries, explosive factories, and so on.
In view of that, we specifically have endorsed the provisions embodied in the Barkley bill, Senate 2345, which carries the provisions that
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we have felt are the essence of an adequate and proper approach to the problem.
The exact name of the measure embodying these principles of child labor control is of no importance, naturally, to an organization such as the League of Women Voters, and if the end we are interested in can best be achieved by coming in as a part of a larger bill, such as this fair labor standards bill, naturally that will meet with our approval too, although as I say, we are not empowered and I am not empowered on behalf of the league to take any stand in regard to the other provisions of this bill.
However, we do feel very strongly that certain amendments should be made insofar as the features regarding child labor are concerned. We approve of the child labor standards, which are embodied in the bill; that is, the prohibition of the employment of children under 16 years in factories and children under 18 in special hazardous occupations to be determined by the Children’s Bureau. We do, however, very strenuously object to the provisions which adopt the prison-made goods principle of regulation. We believe, as I believe Mr. Jackson said in his statement, the wise thing to do is to put the thing we really want directly up to the Supreme Court, and I think what all all of us want, who are sincerely interested in child labor regulations, is an interstate commerce law which will prohibit children under 16 working on goods which are shipped in interstate commerce. We believe that should be done directly rather than indirectly.
There are various reasons for our objection to the prison-made goods principle. In the first place, such experience as we have had, and many of us have worked very closely with our own State labor departments in connection with State child labor laws, leads to the conclusion that the administration of the prison-made goods provision would be extremely complicated. The situation regarding goods produced by children is entirely different than that of prison-made goods. After all, there are comparatively few prisons in the United States and comparatively few of those prisons make goods which are actually shipped in interstate commerce commercially, whereas the number of factories which might be employing children, the number of sweatshops and so on which do employ children, might be legion compared to the number of prisons. We believe the enforcement of the prison-made goods part of this law would be an extremely difficult and complicated matter. We believe also that it is unwise, because it would require the enactment of new legislation in all but three of the States in order to become effective; in other words, the States would have to accept the provisions of this act, which again would cause the same kind of difficulty that we have had in securing ratification of the child labor amendment; and those of us who have been active in that fight in the States would very greatly prefer not to have to take on a new fight at the same time in order to get adequate child labor law enforcement enacted.
In addition, we believe that it would actually hamper ratification of the child labor amendment because of the fact that we would have to be working on getting laws through the State legislatures in order to accept the principles of such an act, and we finally believe that it is an unsound governmental principle to establish, because it is in effect further setting up tariff barriers between the States, an actual trade barrier, which seems to us leading in a dangerous direction.
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We, therefore, would greatly prefer to have the provisions regarding the child labor revised to be on the simple and direct basis of interstate commerce.
If you will pardon one rather frivolous comment, I think one reason I feel strongly on the subject of prison-made goods principle, is that it was perfectly obvious at the time of the hearings before the Interstate Commerce Committee that those of us who had. been in this fight for a long time for better child-labor laws had a lot to fear of the Greeks who were bearing gifts, because when the National Association of Manufacturers and the American Bar Association all came out for the principle embodied in the prison-made goods law, it makes me feel that there is something that those of us who are really sincerely interested in the abolition of child labor should at least be on our guard against.
If you will pardon one personal reminiscence, I will say that last summer at the meeting of the American Bar Association in Boston I had the pleasure of meeting the chairman of the Committee of the Association for Ratification of the Child Labor Amendment, and after considerable talk with him, I came without much difficulty to the conclusion that he was a real representative of the committee which he was the chairman of, that the interests of this committee were certainly not in establishing good child-labor standards but primarily in defeating the ratification of the child labor amendment, and I felt that this prison-made goods theory was distinctly a red herring drawn across the trail of adequate Federal child-labor legislation.
That, as I say, is purely a personal opinion, but when one suddenly finds one’s self on the same side as the people who have opposed child labor legislation for a great many years, one is naturally a little skeptical of the methods that are being advocated.
There are two other points which I wish to bring out briefly, Mr. Chairman. One is that I believe if the Federal labor-standards bill is adopted by the committee the exemptions from applications of the civil-service laws which are now listed in the bill should be materially reduced, so that the merit system would be applied to the appointments under the bill.
Finally, we ask with great earnestness that whatever amendment is necessary be made, that complete administration be by the Children’s Bureau. This is not a matter of emotion. This is a matter of long and very definite experience on the part of the League of Women Voters and the other women’s organizations which have worked in this field. Ever since the administration of the first Federal child-labor law in 1916, those of us who have been interested in this subject have been deeply impressed by the unselfish and the extremely expert work which has been done by the Federal Children’s Bureau. We believe that that could only be appreciated by those of us who have worked closely in this field who are familiar with it. We believe that the life of a child, all the problems in regard to the welfare of children are such that it is very difficult to separate health in one compartment, labor into another compartment, and so forth, but they should all be combined. It was on that theory that the Children’s Bureau originally was founded— that the life of a child was something that should be regarded as a unit even if the welfare of a child had something that could be put into different pigeonholes.
The Children’s Bureau has functioned effectively and with extraordinary lack of the difficulties that frequently beset Federal bureaus in cooperation with the States. I think that other people will submit
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to you evidences of such cooperation and I believe Miss Lenroot has filed a statement with you which gives some details of the previous experience of the Bureau in cooperation with the States, so that I will not go into that. I may say that those of us who have worked in this, field know that that cooperation has been effective in the extreme in the past. Under the first child labor law the appropriation to the Children’s Bureau for the enforcement of that law was almost fantastically small, that instead of the army of inspectors that was supposed to overrun the country to enforce the child labor law, there was something like 51 employees altogether in the entire Children’s Bureau for the enforcement of this act and only 17 or 18 of them were actual inspectors.
The reason for this was that the Bureau worked out so admirably a system of cooperation with State labor departments that in the States that had any adequate child labor law enforcement, no work by the Federal Government was needed except a certain amount of cooperation in the setting up of the actual detailed methods, and so forth. The result was really an extraordinary degree of cooperation and of friendly relations between the States and the Federal Children’s Bureau.
It is therefore on the basis of past experience and genuine confidence that this problem is one that should be dealt with as a whole in the light of the welfare of children, that we would like to see the Children’s Bureau made the enforcement agency for any Federal child labor law that is passed, whether it is on this principle or not.
I do not know, of course, what the committee has in mind as to the form of this bill. I believe the league had hoped, and there are other organizations that had hoped, that if this was included as part of another bill, that the whole question of child labor could be put in one section so that it could be regarded as a whole, as a separate problem, rather than part of the problem of wages and hours and so forth. If that is not possible, however, and I am not sure how important it is except that it is important to do it in some form so that it will not become unconstitutional if the rest of the bill does. We believe it is essential that these three things be considered—administration by the Children’s Bureau, the merit system of enforcement, and finally the abolition of the prison-made goods principle, and the adoption if possible of the principle simply of interstate commerce with the prohibition of the shipment of goods in interstate commerce.
Senator La Follette. Would you mind stating for the record the name of the gentleman who was the chairman of the American Bar Association committee?
Mrs. Brown. Yes. The name has slipped my mind for the moment. I will recall it in a moment. He comes from Birmingham, Ala.
Senator La Follette. Mr. Simpson?
Mrs. Brown. Mr. Simpson. He is an extremely charming gentleman. I think I am stating it fairly when I say that he did not know much about child labor law enforcement and the child labor amendment. He felt very strongly about it, however.
Are there any questions?
The Chairman. May I say to the committee that we have a number of witnesses today, and it is necessary if we are to carry out our plan that we adopted, to be brief in the questions we ask of the witness. Of course, if we do not finish with these today that we have, they can go over until tomorrow. We have a few more
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tomorrow than we have today. It is entirely up to the committee. The other day we adopted the program with the idea of trying to get them all this week.
Are there any questions?
Representative Thomas. Just one. Judging from your remarks, do you believe that if the question is again put up to the Supreme Court as it was put up in the Hammer v. Dagenharl case, that they will reverse their stand?
Mrs. Brown. I think it is highly probable. Of course, as you know, it was a five to four decision, and I think that among the constitutional lawyers-----
Representative Thomas (interposing). In short, that is what you advocate now?
Mrs. Brown. Yes, sir. I should like to put it up to the Supreme Court.
Representative Thomas. Urging us to put it up to them again, you believe they will, so to speak, change their position?
Mrs. Brown. That is what we believe.
Representative Thomas. Thank you very much.
The Chairman. Thank you very much. I might state also that in notifying the witnesses to appear, I have notified each one of the number of witnesses we have here today and stating that it would be necessary to have a limited time. If the committee looks, however, at the program for Thursday, it will be noted that we do not have so many witnesses on that day, because I was informed that Mr. Emery of the Merchants and Manufacturers Association would need a longer time to discuss the bill, to give their viewpoint of the bill. We have purposely left for that day a longer time. There were no particular requests made for length of time for these who are here today and tomorrow, and all of them have agreed to cooperate in an effort for us to finish.
May I state that the members of the committee have before them each, a copy of the statement of Miss Lenroot. It is a very important statement and was not read at this time, but I suggest that you take it with you and read it. It will, of course, appear m the record.
(The statement presented by Mrs. Brown follows:)
Statement or Mrs. Mart T. Bannerman, Chairman, Committee on Legislation, National Congress or Parents and Teachers
Since its organization in 1897, the National Congress of Parents and Teachers has been opposed to the exploitation of children in industry. It has throughout its history supported legislation to abolish child labor. It helped to secure the adoption by the United States Congress of the child labor amendment and its State branches have assisted in securing ratification by State legislatures.
No action has been taken on any of the bills dealing with child labor recently introduced, however, if the enactment of any of them would lessen or abolish the exploitation of children in industry, it would be cause for deep gratification to the membership of our organization.
The latest resolution on child labor adopted by the National Congress of Parents and Teachers and still in effect reads as follows:
“We reaffirm our stand in favor of ratification by the States of the child labor amendment and the enactment of such Federal legislation as will give the necessary protection to child workers and we urge that State branches work constantly for the improvement of State child labor standards and State enforcement machinery, with special emphasis on the establishment of (1) a basic minimum ags of 16 for employment, (2) a higher minimum age for the employment in hazardous occupations, and (3) minimum wage provisions for minors.”
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Statement in Support of Federal Legislation on Child Labor by the National Board, Young Women’s Christian Associations of the United States of America
Since the year 1919 the national Y. W. C. A., at its conventions composed of delegates from the local associations throughout the United States has expressed its conviction that there must be legislative enactment if the abolition of child labor is to be accomplished.
In 1922 the national board, acting for the national association, adopted a resolution in favor of “law establishing a Federal minimum of protection”, and joined with other national women’s organizations in working for a child labor amendment to the Constitution, authorizing Congress to pass such a law.
Since then the national association in convention, and its national board, have repeatedly reaffirmed the position that States alone are not able to bring about the abolition of child labor in the United States, and that through the Federal Government a minimum standard must be set up.
This position of the Y. W. C. A. is not a theoretical one. It is based on experience of hundreds of young industrial girls who are in Y. W. C. A. clubs throughout the country. Our first official action on child labor was based on the testimony given at a national conference of industrial clubs of the Y. W. C. A. We have given thorough study to various possibilities of improving conditions, such State legislation, Federal legislation, voluntary action on the part of employers. Year by year the situation has been canvassed, with the same result, namely, that although much improvement can be brought about through other methods, child labor cannot be abolished without the aid of a Federal law establishing a minimum standard below which no State shall fall.
Since there is delay in the ratification of the child labor amendment making possible a general child labor law, we are interested in measures that offer control in certain fields. We believe that a Federal law, based on the interstate commerce power, to give immediate protection to children employed in manufacturing estabishments, would be a step in the right direction. We would be interested in seeing at this time a law enacted which would bar from shipment in interstate commerce the products of any factory in which children under 16 are employed and a similar prohibition regarding employment of children under 18 years in highly dangerous occupations, such as mining, et cetera.
While such a law would not offer the complete protection which is needed, it seems to offer a genuine and enforceable remedy for one part of the child-labor problem.
Statement for the National Federation of Business and Professional Women’s Clubs, Inc., by Mrs. Opal D. David
The National Federation of Business and Professional Women’s Clubs has opposed the exploitation of child labor for many years and has been active in the campaign for the ratification of the child labor amendment. We believe that campaign must go on if all harmful child labor is to be adequately regulated, but we also feel that the present attempts to reenter the field of Federal regulation through congressional action offer a more immediate step in the right direction.
In considering the child labor provisions of the Black-Connery fair-labor-standards bill, we urge the committee to give careful thought to the problem of enforceability. We also favor, especially, provisions which will be effective in every part of the United States without the necessity for further legislation on the part of the individual States.
Statement of National Council of Jewish Women, by Mrs. Nettie Podell Ottenberg, Legislative Representative
The National Council of Jewish Women, organized in 200 cities and 40 States and representing 40,000 women, has consistently worked for the ratification of the child labor amendment, and in addition favors such Federal legislation as will adequately protect the children of our Nation.
In accordance with our policy of seeking for the best administration of legislation which we favor, we respectfully urge that in the Black-Connery bill, the child labor features be administered by the Children’s Bureau of the Department of Labor.
The Chairman. Mr. Courtenay Dinwiddie.
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The Chairman. Will you please state your name and occupation and residence?
Mr. Dinwiddie. I am general secretary of the National Child Labor Committee, in New York City.
The Chairman. Proceed, Mr. Dinwiddie.
Mr. Dinwiddie. I have no authority to speak for the National Child Labor Committee on the fair labor standards bill as a whole. It covers ground beyond that which the committee ordinarily considers its province, and there has been no opportunity for the committee to act upon it. But we are most emphatically opposed to substandard wages and hours as indefensible from the humanitarian standpoint and economically destructive. We are in hearty sympathy with your search for their elimination from the channels of interstate commerce.
As to the child-labor provisions of the bill, we can be quite specific, and hope that our 33 years’ experience with child-labor laws and their administration will make our suggestions helpful.
For over 20 years the committee has favored Federal child-labor legislation because the evidence is convincing that the grave injustice and inequities in the use of the labor of children for competitive advantage can be eliminated in no other way. We worked hard for the two Federal labor laws, of 1916 and 1919, which operated so successfully until they were declared unconstitutional. We believe that the Supreme Court, through recent decisions, has now opened the door to a new law which will be sustained, and we are, therefore, vigorously advocating a new Federal law. Let no one, however, think for a moment that such a law will entirely solve the problem. Child labor in interstate commerce, according to the best estimates, based on an analysis of work certificates, and a study by the United States Children’s Bureau of children at work in 6 States, includes only about 25 percent of the total of children employed today, excluding agriculture. For this reason it is extremely important to remember that, even though we are able, by such a law as Congress now has power to pass, to remove child labor from interstate commerce with a reasonable degree of completeness, we shall still have 75 percent of our task remaining.
The only permanent solution for this large area of exploitation is through the Federal child-labor amendment, which will give power to Congress to deal also with child labor in garages, laundries, hotels, restaurants, and other service trades which are local in character. Ratification of the amendment, therefore, by the eight States still required, is of prime importance, regardless of whether the fair-labor- standards bill, or any other form of Federal child-labor law which is possible under the Constitution, without amendment, passes or not.
PRESENT URGENCY OF THE PROBLEM
The marked reduction in child labor effected by the industrial codes began to disappear all too quickly after the codes went out. For example, reports to the United States Children’s Bureau showed that the number of work permits for 14- and 15-year-old children issued during the first 12-month period when the industrial codes were no longer in effect, was 182 percent greater than the number of such
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permits, from the same areas, with comparable figures, during the preceding 12 months, when the codes still operated to control child, labor.
In view of the return of child-labor abuses and of the fact that we cannot secure ratification of the amendment before 1939 at the earliest, we should seize upon the opportunity for a new Federal law which will do away with a substantial, even though only a minor fraction,, of these abuses.
THE WAY CLEAR FOR A NEW LAW
We believe the case is even clearer than generally supposed for such a new law. The Supreme Court in the Hammer-Dagenhari case denied the power of Congress to control the movement of child-made goods in interstate commerce by the methods prescribed in the 1916 law, on two assumptions: One was that the harmless character of the goods being transported was a significant factor. That assumption has been swept away by the Court’s own decision in the Kentucky Whip and Collar case in which it declared that the contention was “inadmissible” that the usefulness and harmlessness of the goods being transported invalidated the act forbidding their shipment. The Court’s second assumption in the Hammer-Dagenhart decision, namely, that the production of goods intended for interstate commerce was “a matter of local regulation”, and therefore beyond the power of Congress, seems clearly to have been put aside in the Court’s recent decisions on the National Labor Relations Act cases. In those cases it has held that the fact that the employees concerned were engaged in production (which it had previously declared to be a matter of local regulation) was not determinative. The question that remains, therefore, as the Court pointed out, is “as to the effect upon interstate commerce of the labor practice involved.”
THE EFFECT OF CHILD LABOR UPON COMMERCE
I believe that anyone who sat through many of the code hearings in Washington in 1933 and 1934 will support the statement that it was the practically unanimous opinion of those participating, whether manufacturers or representatives of labor, that of all substandard labor practices the use of child labor was not only the most unfair but the most destructive of good standards, out of all proportion to the number of children involved. That the economic injury of such practices reaches beyond the individual children involved and their families, across State lines to the States receiving the products of their labors, will hardly be denied by anyone today. May we, however, suggest a few items of evidence?
Governor Ely, when he was Governor of Massachusetts, illustrated the pressures resulting from such use of cheap child labor in the cutthroat game of taking away the business of rivals who operate in States that protect their children. During the winter of 1932-33, he publicly threatened that if certain competing States did not raise their laws for women and children, he would ask for a moratorium on the provisions of the Massachusetts law so that the manufacturers of that State would not be forced out of competition. There was also in 1933 further acknowledgment of the economic injury of child labor, in two sharply contrasting experiences of that year. First, a number of States refused to raise their child-labor
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restriction for industry generally to 16 years, although the legislatures were strongly urged to do so. Second, a few months later, in striking contrast to this refusal, these same States welcomed a general prohibition of child labor up to 16 in the industrial codes and proceeded to enforce them with a will, because they applied to all States and none were put at a competitive disadvantage because of exploitation of children in some other State.
Those familiar with industrial practices know that it has been a not infrequent occurrence for manufacturers to move across State lines either temporarily or permanently in order to take advantage of cheap child, labor and thereby to undercut their competitors who have remained in the States with more humane child-labor laws.
Practically every State labor commissioner, in a State with good child-labor standards, tells of cases known to him of movement across State lines to escape local requirements as to child labor. One finn, prosecuted in Kentucky for the use of child labor, was reported to nave been granted free taxes for 5 years by a city of another State, as an inducement to move there. Investigation revealed that in the latter city the firm thus favored was paying its girl employees starvation wages. Such movements across State lines may be of factories, of goods, or even of children, to escape the laws of the State from which the movement began. Governor Cross? of Connecticut, referred to sweatshops “which have come upon us like a cloud of locusts in order to escape the more stringent laws of neighboring States.” These sweatshops were using girls.
It is doubtful whether further argument is needed to convince anyone of the economic injury resulting from child labor in interstate commerce. Evidence on this point can be multiplied if need be.
Finally, granting the economic injury resulting from child labor in interstate commerce, the Supreme Court itself would seem to have disposed of the question of the power of Congress to deal effectively with it, when in the Kentucky Whip and Collar case it quoted approvingly from a prior decision in Brooks v. U. S. as follows:
Congress can certainly regulate interstate commerce to the extent of forbidding and punishing the use of such commerce as an agency to promote immorality, dishonesty, or the spread of any evil or harm to the people of other States from the State of origin. In doing that it is merely exercising the police power for the benefit of the public, within the field of interstate commerce.
The case for the passage of a new child labor law by Congress would seem to stand on its own feet and to be convincing on both legal and economic grounds. The National Child Labor Committee was engaged in advocating such a law at the time the fair labor standards bin was introduced. Do the provisions of that bill meet the requirements for sound child-labor legislation?
THE FAIR LABOR STANDARDS BILL AND CHILD LABOR
The procedures of the fair labor standards bill are designed to determine fair and also substandard conditions relating to wages and hours. Inquiries and hearings to those ends must take into consideration the cost of living, value of services, the existence of bona-fide collective bargaining, the presumptive effect of changes in wages and hours upon employment, and other matters. They are unavoidably time-consuming and involved.
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On the other hand the existence of child labor in an industry is a fact which can be determined with a degree of promptness and exactness that is in marked contrast with the determination of whether wages paid or hours of employment are fair or unfair in the light of varying economic and industrial conditions and the cost of living. The very nature of this problem, therefore, suggests that the attack upon it should not be delayed in order to gear it m with the investigations and orders and follow-up procedure necessary to effectuate the establishment of fair minimal conditions as to wages and hours. Fortunately we have ready to hand already existing machinery for dealing with the child-labor problem, which is of proved efficacy. Over many years the various States, with the cooperation of the Federal Government, have been building up a system of watchful care over their children which keeps check upon the ages at which children may go to work, under the varying laws of the several States, through a work-certificate system.
The inherent weakness of this system, if it is not built around a national uniform minimum standard, lies in the wide variation between State laws, leaving numerous and serious loopholes for abuse of child labor. The Federal child labor law of 1916 provided such a minimum standard and caused the rapid disappearance of large areas of child labor which it had not been possible to abolish through State action. That law gave authority under which the Children’s Bureau deputized States, which were equipped and ready so to cooperate, as agents of the Federal Government in the enforcement of the law. This enforcement was built, in turn, upon the issuance of work certificates, handled largely through the school authorities. The vital point to note here is that the children were actually prevented from going to work in the vast majority of cases and that prosecutions after the harm had been done were thereby reduced to a minimum. This law of 1916 was one of the soundest pieces of legislation ever passed by Congress in the field of cooperative relationships between the Federal Government and the States. It effected a tremendous saving in administrative costs. Because of decentralization of administration under good State and local standards only 51 Federal employees were needed for the task of enforcement for the whole country and, as Mrs. Brown pointed out, only 17 of these were required as inspectors, cooperating with the labor officials of the various States. The plan strengthened the dignity and responsibility of the States in the protection of their own children. It prevented children from going to work rather than put the emphasis upon punitive or corrective action. Finally it conformed to the wholesome philosophy of using the maximum of home rule consistent with the achievement of the purpose of the act.
Another notable fact is that this cooperative relationship in the administration of a uniform national standard for the protection of children from labor abuses not only proved a spur to the building up of State and local systems of issuing work certificates and supervision of child-labor conditions, but actually made the enforcement of State laws easier and more effective. To quote from the report of the Chief of the United States Children’s Bureau for 1919:
The immediate effect of the decision of the Supreme Court in States where the State child-labor standards were lower than those imposed by the Federal law was the prompt restoration of the longer working day for children under 16 and an increase in the number of working children. In addition, in a number of these States there was appreciable increase in the violation of these State laws.
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In one State, for example, in 53 factories visited, 430 children under 12 years of age were employed in violation of the State law as compared to only 95 children under 14 found in 49 factories while the Federal law was in operation, an enormous increase as you can see.
A number of reports of State labor departments, at that time, commenting on the contrast in experience under a Federal law with the return to separate standards for each State, confirmed this picture. So does the following excerpt from a resolution unanimously adopted by the representatives of the agencies for enforcement of labor laws from 40 States, meeting at Asheville, N. C., on October 5, 1935:
Through the child-labor provisions of the industrial codes great gains were made in raising child-labor standards, and eliminating child labor from certain areas of industry where it had not been possible to do away with its evils through State action. This experience has been similar to that under the two national child-labor laws before they were declared unconstitutional. It has been accompanied by widespread public approval of this notable advance in protecting children because it was on the basis of uniform national standards which outlawed the use of cheap child labor as a powerful weapon in industrial warfare. The general popularity of these national bans against the misuse of children has made enforcement easy through local work-permit agencies and labor officials with a minimum of Federal action.
All of this evidence points in one direction. The remarkable efficacy of the 1916 Federal child-labor law was due not solely to the fact that it established a national minimum standard, uniform for all States. Equally important was the fact that its enforcement was so largely through State and local agencies and that, its administration was built upon the solid foundation of the work-certificate system, handled chiefly by the schools and preventing children from going to work, rather than relying primarily upon investigations, orders, and prosecutions.
It is clear, therefore, that the administration of prohibitions against child labor in interstate commerce call for quite different procedures from prohibitions made under substandard wage or hour conditions. We know from experience just what those procedures should be. They will fit into and help develop an already existing plan of State child-labor control with a maximum of home rule and a minimum of Federal action. These procedures work admirably. They should be specified in any Federal law dealing with child labor, and their administration should be placed in the hands of the Children's Bureau which has made such an enviable record in its cooperative relationships with the States, notably in the administration of the 1916 child labor law. Any such Federal child-labor legislation should recognize the advance in our standards for protecting children so that they may be excluded from interstate commerce generally up to 16 and from hazardous occupations up to 18, as the fair labor standards bill wisely provides.
We have been working for the passage of a new child-labor law which would reenact the sound provisions of the 1916 Federal law. If it is now the judgment of Congress that the same ground should be covered in the fair labor standards bill, then these wise procedures which we have described and which have worked so well in the past should be definitely specified and clearly set forth in a section of that bill. If desired, we shall be glad to submit specific wording which would carry our suggestion into effect.
As to child labor in intrastate industries, which compete regularly and continuously with interstate industries which do not use child labor, the determination of this competition should rest with the board
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which the fair labor standards bill would set up for administration of the general provisions of the bill including the determination of such matters. Even in this case, however, the elimination of such child labor, once it has been determined to be illegal, should be carried out as far as possible under the cooperative procedures, involving the Children’s Bureau and State agencies, which have been mentioned.
May we now call your attention to certain paragraphs of the bill which have a special bearing upon child labor?
PRISON-MADE GOODS THEORY
We urge that you eliminate from the fair labor standards bill sections 7 (b), 11 (c), and 22 (b) which apply the method of dealing with prison-made goods of the Ashurst-Sumners Act to the interstate transportation of child-made goods. The assumption of a sound analogy between the control of prison-made goods and the control of child-made goods is a fallacy. As pointed out to you by Mr. Robert H. Jackson in his testimony a few days ago, such a method of handling goods when these goods are made by others than convicts, “is open to grave administrative difficulty.”
It has not yet been proven that this method will work successfully in the quite limited field of convict-made goods. In the course of testimony before a subcommittee of the Senate Committee on the Judiciary held May 29 and June 2, 1936, Mr. Howard B. Gill, expert in prison administration, representing the Association of States, which is made up of prison commissions and wardens of 27 States, made the following statement:
The officers representing the Association of States deplore the so-called bootlegging of prison-made goods which is being done in the States which prohibit their sale in the open market.
At the same hearing Mr. A. P. Frierson, chairman of the Tennessee Committee on Prison Competition, and vice president of the Regal Manufacturing Co., stated that:
The Ashurst-Sumners Act has proven wholly ineffectual, for the reason that it provides only that the outside of the container or package be marked “prison made.” When the original consignee receives the outside container, receives the package, and removes the covering, the articles are then placed for sale on the open market and bear no mark whatever to identify them as prison-made goods. The enforcement authorities, both Federal and State, have since the passage of the Ashurst-Sumners Act attempted to enforce it, but many of them have told me that it is difficult, if not impossible, to enforce the act until the mark of identification is placed upon the articles themselves.
The difficulty of enforcing the Ashurst-Sumners Act reported by the officials mentioned is particularly striking when it is considered that a report of the Bureau of Labor Statistics noted that in 1932 there were only 7 jails and 25 State prisons which had products sold in the open market.
Assuming, however, that the Ashurst-Sumners Act had worked perfectly to eliminate the shipment of convict-made goods to compete with articles made by free labor, what is its application to child-made goods? Such a plan calls for the enactment by every State in the Union of new and approximately identical legislation, something never yet attained in any field. Even for the first three States which have passed such laws in anticipation of a possible Federal law, the standards are entirely different.
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If the trend of such legislation as has been proposed, is followed, persons would be forbidden to ship goods into States if they were made m violation of the laws of the receiving States. With all 48 States having different law's and with wide variations as to details, such as refer to ages, hours, night work, and types of machinery on which children may or may not be employed, the vast complexity of conditions, with which the hundreds of thousands of manufacturers of this country would be supposed to be familiar, reaches a degree of absurdity which would, I fear, make a joke of the law.
Much of the claim for the effectiveness of such a law rests upon the requirement that the manufacturer who is about to ship child-made goods into a State in which their sale would be in violation of that State’s law would have to label them so that the extent and nature of the child labor employed could be clearly seen. It is proposed that this be supplemented by requiring that each person manufacturing any parts of a composite product shall also label each of those parts. It is highly unlikely that this labeling requirement would be generally followed. Under the administration of the first child-labor law it was found that in practically all cases where there were violations the dealer who was handling the goods had a guaranty from the manufacturer that no child labor had been employed in their manufacture. I have just quoted to you Mr. Gill’s testimony on the experience under the Ashurst-Sumners Act where the ease of proof that convicts have been used in the manufacture of goods is infinitely greater than in the case of children.
It is a sound maxim that a law that will not work is worse than no law. We believe that this application of the prison-made goods theory to child goods will not work satisfactorily.
INDUSTRIAL HOME WORK
The sending out of goods by hand, by truck, or by mail, to be worked upon in tenement or other homes, is one of the most vicious and persistent practices for sweating labor ever devised. The labor of whole families is secured for starvation pay and child labor is grossly abused in any process that children of any age can perform. Long consideration of this evil has convinced all who know the facts that the only solution is to abolish home work. It cannot be regulated or controlled by any half-way measures. We believe, therefore, that the language of section 6 (a) of the bill on this subject is inadequate and should be modified so that it will clearly give the power to do away with this sweatshop practice.
SIZE OF INDUSTRIES COVERED
Our observation is that some of the most flagrant and persistent violations of child-labor standards are to be found in the smaller and more scattered manufacturing establishments. They are often the most unstable, but are, nevertheless, capable of greatly injuring, if not of breaking down, labor standards among the other members of their respective industries. Notable examples are “fly-by-night” tie and shirt factories, so-called “wild” shrimp and oyster canneries, “grasshopper” sawmills, and small box and crate factories. We believe that the destructive effect of child labor conditions in such establishments demands that there be no exceptions to regulations on account of size or numbers of employees.
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We earnestly hope that these suggestions will prove helpful to this joint committee in drafting legislation which will effectively eliminate child labor from interstate commerce. You will also perform a most helpful service to the cause of childhood protection if, in the report which you submit, you call attention in no uncertain terms to the fact that Federal legislation, without a constitutional amendment, can control only a fraction of the child labor that exists today and that you, therefore, urge ratification of the Federal child labor amendment.
The Chairman. Thank you very much, Mr. Dinwiddie. I note that Miss Ann Davis is connected with the National Child Labor Committee also. Does she have a statement to be filed?
Mr. Dinwiddie. She has a statement and is here present. We wired you to that effect.
The Chairman. I wired you that we would take one statement and give you 20 minutes. I suggest that we go ahead with these other witnesses, and when we get through, if we have time, we will be very glad to hear Miss Davis.
The next witness is Miss Lucy Randolph Mason.
Miss Mason. I am very glad to speak on behalf of this bill, because it embodies principles in Federal labor legislation which the National Consumers’ League has worked for in States for more than 35 years. The league has oeen a pioneer in the matter of minimum wage and was the first to sponsor this type of legislation in this country in 1909, vigorously promoting it ever since. In the depth of the depression the Consumers’ League revived the movement for minimum wage which had been checked for a decade by the Supreme Court decision of 1923.
We held a national sweated labor conference in the depression year of 1932 to focus public attention on the break-down of labor standards, and immediately thereafter, our counsel drafted a new minimum wage bill which quickly became law in New York and seven other industrial States.
The new type of wage law sponsored by the league in 1933 is very similar in principle to the bill now before this committee. This bill before your committee does not seek to establish by unchangeable fiat arbitrary standards for maximum hours and minimum wages, but provides for flexibility and the rule of reason in its method of approach.
The league’s experience has now forced it to the position that national legislation is necessary in the field of hours and wages, as we have long believed it to be in the field of child labor.
The United States has lagged among industrial nations in setting minimum standards in hours, wages, and child labor, leaving it to the 48 States to deal individually with matters which are essentially of national concern. After nearly a century of effort to secure maximum-hours laws, today only 11 States have established an 8-hour day, while 8 other States permit longer daily hours but set a maximum week of 48 hours—and these laws apply only to women. Within that 48-hour week, the daily limits vary from 9 to 10 hours. With exceptions too negligible to mention, all States have limited the
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application of hours laws to women, and the laws of 29 States vary from a 9-hour day to 10 hours, 10½, and no limitation whatever.
The barrier erected by the Supreme Court in 1923 temporarily stopped the minimum-wage movement in this country, and when that barrier was removed in March 1937 so great an impetus was given to this legislation that there are now 22 States and the District of Columbia with minimum-wage laws. But all of these laws are limited to women and minors with the single exception of the Oklahoma law recently passed. Furthermore, the tendency is to apply minimum-wage decrees chiefly to occupations not affected by interstate commerce, such as service industries and retail stores. There is naturally great hesitation in setting minimum wages within a single State which may put its industries at a disadvantage with competing industries in other States. Consequently, few States have attempted in practice to apply their minimum-wage laws to manufacturing establishments.
Child-labor legislation in the States was given an impetus by the two Federal Child Labor Acts of 1916 and 1919, but the general standards in States still remain far below what is recognized as socially and economically desirable. Today, only 10 States have set the age minimum for industrial employment at 16 years, 14 years being the commonly accepted standard in the other States with few exceptions.
As at least three-fourths of the child labor in this country will not be affected by this bill, the National Consumers’ League will continue to press for ratification of the Federal child labor amendment.
STATE REGULATION NOT ENOUGH
It has long been obvious that State legislation alone is not sufficient to maintain reasonably good standards in wages, hours and protection of children from premature or hazardous employment. In the first place, the State cannot protect its industries from competition with the products of industries operating under substandard labor conditions in other States. In the second place, the movement of industry from one State to another and from one section to another means escape from the higher standards imposed by a particular State.
Surely our experience in the depression years should have taught us the devastating consequences of unlimited competition in lowering labor costs and the helplessness of the better element in industry to protect itself against ruthless competition in cutting wages and lengthening hours. I was interested yesterday, after I had already had this paper mimeographed, in hearing questions about average hours and long and short hours. One of the most amazing things during the depth of the depression was that with nearly half of the industrial wage earners without any jobs, and another large proportion on staggered hours, 30 hours a week and less, there were others working 50, 60, 70, 80, and 90 hours—the longest week we knew of was 104 hours. That, is what we have when unemployment and pressure of workers on job opportunities break down labor standards.
On the other hand, the total wages of our industrial wage earners early in 1933 were about a third of what they totaled in 1929. Conditions varied from those maintained by employers who tried to stay near 1929 standards to those under which workers received as little
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as 5, 6, 7, or 8 cents an hour. There were even wageless garment factories which hired people on the pretext of being learners and fired them when they demanded pay. Those are facts established by the reports of State labor departments, of the United States Bureau of Labor Statistics, and by our own researches.
During this period the movement of factories, particularly in the needle trades, from one State to another as employers sought to escape labor laws and labor unions, caused the coining of the term “Gypsy industries.” “Gypsy industries” certainly ought not to be tolerated in twentieth century industrial America.
Some years ago when adjacent States lagged behind New York in its labor laws, so great was the migration of the sweatshop type of garment factory from New York to those neighboring States that the commissioner of labor of Connecticut indignantly proclaimed that “Connecticut is becoming New York’s garbage can.” Only recently the minimum-wage director of New Hampshire said that serious problems are being created in that State by the influx of factories paying very low wages.
It is a mistake to believe that these “Gypsy industries” are an asset to any State in which they may temporarily pitch their tents.. But the migration still goes on. In his last report, the labor commissioner of Virginia wrote, and I am quoting now from my own State:
There has recently been an influx into the State of a substantial number of low- wage industries employing mostly female labor. These are apparently coming to Virginia to escape mainly the higher labor standards set by law in the States from, which they come—in other words, to gain a competitive advantage by working their employees long hours at low wages. Some communities are encouraging these industries to locate within their bounds by granting them tax exemptions for a period of years, providing them buildings rent free, or otherwise subsidizing them. Such concerns are generally inadequately financed, bring in and set up badly worn and obsolete equipment and secure employees during a so-called training period, often several months in duration, at a very small wage or no wage at all. Then when the period for which the community agreed to subsidize them nears an end or the time approaches when they must begin paying taxes into the community coffers, they move on to other communities offering enticing subsidies. Concerns of this type are an economic and social liability to the community and the State.
The Virginia commissioner’s story can be repeated with wearying monotony in State after State, and from Maine to Texas. In fact, today we have ample evidence of the bitter experience of communities which have invited in this type of sweating industry, and it shows their unwisdom in making these offers in subsidies of wages, rent, and taxes. The wages of the workers in these plants add nothing to the community wealth, nothing to the community purchasing power, and such profits as are made go off to enrich other areas.
FEDERAL REGULATION ESSENTIAL
Only an authority with power to reach beyond State lines can deal with this situation. Industry and commerce are conducted without reference to State boundaries. Every map showing production or trade areas is evidence of this. Both trade areas and production areas carve States into pieces and combine sections of adjacent States. There is also competition between areas for markets of the products of their industries. Substandard labor conditions prevailing to any great extent in one area tend to drag down standards in other sections.
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The setting of national minimum standards will be as beneficial to States which lag in labor legislation as to the more highly industrialized States with which their products compete. When a floor is put beneath wages and a ceiling to hours, decent employment practices will be protected. For instance, the hours, wages, and child-labor provisions of N. R. A. codes were often a boon to industry, workers, and communities in depressed wage areas.
The leading industry of the South, cotton textiles, was saved from chaos by labor provisions of the codes and the lives of the workers literally transformed by the short workweek and higher wages which suddenly came to them.
The Senator from Alabama is only too familiar with the struggles of the leaders of the cotton textile industry to get their operating shifts even on a 10-hour day and a 55-hour week, and to eliminate night work, in order to stabilize competitive conditions in their industry, and he knows and I know that at the time N. R. A. came, they had only 75 percent of the industry adhering even to these low standards. In other words, the code saved the cotton textile industry and that is why the Cotton Textile Institute came to Washington with the first N. R. A. code.
This industry also illustrates the present need of Government regulation in securing and maintaining desirable hours and wage standards. Through the efforts of the industries’ leaders code standards have probably been better maintained than in many other industries, but there are too many instances of longer hours and wages not sufficient to yield a decent living for the situation to be accepted as satisfactory and not needing great improvement. And I say this with all due respect to the magnificent efforts of the leaders of the industry to maintain it.
I use the South in illustration because I come from it and am thoroughly familiar with conditions there.
Many southern industries are operated on a sound and intelligent basis and enrich the region. But there are also altogether too many industries going into that area to take advantage of the cheapest possible labor and seeking subsidies in free rent and tax exemptions. This type of industry adds little or nothing to the community where it settles, pays wages insufficient to provide elementary decencies of living, and drains off the profits of the business to other areas. If industry is made to pay its own way in decent wages and other labor practices, it enriches the community and State—otherwise it is parasitic. The people of the South are increasingly aware of this fact.
ECONOMIC INTERDEPENDENCE OF REGIONS
The chief objective of the people of this Nation should be to do everything possible to promote the sound economic, industrial, and agricultural development of every section and every State. The economic welfare of the Nation is bound up in that of each of its units. Any area where great poverty exists is in a sense an economic swamp in the national economy. No State and no area is self-contained and self-sufficient, for the industrial and commercial life of all the States and all the regions of the Nation is interdependent. When Federal standards can be used to bring up the economic status of multitudes of wage earners in lagging areas, the States and regions can regard themselves not as rivals and competitors, but as what they really are— producers and markets for each other.
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REASONABLENESS OF THIS BILL
The method of establishing minimum standards in hours and wages provided in this bill is essentially reasonable and intelligent. There is opportunity for flexibility below the maximum hours which will be set by this committee and by Congress. There is also flexibility in extension of hours beyond the maximum to meet emergencies if time and a half is paid for all overtime. This will provide extreme care in the use of overtime, without setting up too rigid a system. Some industries may well operate on less than the maximum schedule of hours to be provided in the bill.
Equally great flexibility is provided in the matter of minimum wages, with provision for variations above or below the rate which may be set by this committee. Certainly in the administration of this act the board will have great concern to apply it with reason and discretion, and especially in the early stages to provide for time in making adjustments of the wage scale.
The bill especially provides that orders of the Board shall be made applicable without unreasonably curtailing opportunities for employment or unreasonably curtailing the earning power of the employes. It provides for democratically organized and representative advisory committees which may be appointed to study the findings in any particular industry and make recommendations.
We are familiar with the operation of these same principles in State minimum-wage legislation and from this experience believe that the approach made in this bill is sound, reasonable, and constructive.
I wish to add what is not in my written paper, that we greatly deplore the exemptions of plants employing less than a specified number of employees. It is unnecessary to reiterate what Mr. Dinwiddie and others have said in this connection, but it will be, I think, a very tragic thing to except any employers on the ground that they operate a plant which has a small number of employees. It is the market and not the number of workers with which we are concerned.
MINIMUM WAGE DOES NOT BECOME MAXIMUM
We have no fear that the minimum wage will tend to become the maximum wage or act as a drag on a rising scale of wages in the higher brackets. The Consumers’ League has studied this matter for 30 years and we are familiar with the effects of minimum-wage regulation in this country and in other countries. The experience in California where minimum-wage decrees apply to all industries and have been most consistently maintained over a long period of years is the outstanding evidence of this in State experience, though it can be supplemented by experience in a number of other States in more recent years. It is highly significant that both employers and workers in California were so well satisfied with the minimum wage law that it continued to be enforced throughout the 13 years during which minimum wage was in the judgment of five members of the Supreme Court unconstitutional.
At any time that law could have been taken to the courts and put in the wastebasket, but for 13 years, employers and workers of one of our great industrial States continued to enforce a law which would have no standing in the higher courts. I think it is unique testimony to the value of minimum wage.
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It is true that when minimum wage decrees are first applied the effect is to draw up the sagging line which represents the wages of the lowest-paid workers and temporarily narrow the differential between the higher-and lower-paid wage groups. We had evidence of that in the first 4 or 5 months under the codes when the lowest wages were suddenly pulled up and before the differentials began to climb. But in a reasonably short time wage differentials again assert themselves and the better-paid workers’ wages rise correspondingly above those of the lower paid. The National Bureau of Economic Research in its bulletin of December 21, 1936, which contains a study of the recovery of wages and employment, after giving many figures and charts on hours and wages, says:
While these figures are not the very best measures of the wage rates of employees affected by the provisions of minimum-wage legislation, they are a reasonably satisfactory sample of the average wages paid to classes of low-paid labor anti roughly indicate changes in wage differentials. They show that the increase in average wage rates achieved in the early months of the recovery and during the existence of the N. R. A. have been generally retained since then and that the increases gained by women and the unskilled have not been at the expense of the skilled.
That statement comes from a study of general wages and employment conditions throughout this country.
CHILD LABOR PROVISIONS
The elimination of child labor under the age of 16 in industries whose products move in interstate commerce is an objective which we know by experience under the 1916 Federal Child Labor Act can be readily obtained. The issue is clear-cut—a child is or is not 16 years of age. This fact can be definitely proved by a proper system of issuing work certificates. The elimination of young people between 16 and 18 years of age from hazardous occupations is also a clear-cut issue if the Children’s Bureau, as provided in this bill, is authorized to define what constitutes a hazardous occupation.
The method of protecting children from premature employment and at the same time of protecting employers from unintentionally employing persons below the prohibited ages of 16 for general employment or 18 for hazardous occupations, rests upon work certificates issued by duly constituted authorities under sound regulations. We are sure that the committee wall be in accord with suggestions for adding a clause to this bill providing for the issuance of work certificates under regulations established by the Children’s Bureau. In some States, work certificates issued by State authorities and kept on file by employers are absolute guarantees of the real age of children, while in other States the method of issuing certificates is so faulty as not to be a guaranty of age. Therefore, the Children’s Bureau should be empowered to set the standard for certification. The Bureau is the most appropriate agency for carrying out the child labor provisions of this bill.
CONTROL OF HOME WORK
We are glad to note that the bill contemplates some regulation of industrial home work. However, on the bash of experience of the States and of the N. R. A. we believe that more definite provision for control must be made in the bill if this system of unfair competition is to be eliminated.
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We believe that the most effective method of making inspections and investigations under the provisions pf this bill is through the Secretary of Labor and the bureaus of the Department of Labor. In view of the extensive investigations which are constantly carried on by the Department of Labor, often by request of State authorities, it seems advisable to expand this established and efficient service rather than to set up an independent one.
Incidentally, as I travel, so many employers say to me, “When will a way be discovered to make uniform reports and inspections so that we will escape quite so many investigations by different agencies and the making of so many reports?” Certainly it seems advisable to use the facilities of the department which collects statistics and makes frequent investigations rather than set up new machinery and send in a new set of investigators to supplement work that is already being done. This method is cheaper, it is more economical, it is more efficient, and it is going to please the employers who are inspected considerably more, I think.
It also seems advisable to give more definite authorization to the Secretary of Labor and the Chief of the Children’s Bureau to use the services of State labor departments wherever they are sufficiently developed to make this possible. Under the first Federal Child Labor Act a remarkably fine working relationship was created between the Children’s Bureau and State labor departments. In some States practically the whole administration of the Federal Act was delegated to State authorities.
Examples of Federal and State cooperation in inspection under the labor provisions of N. R. A. codes show what excellent results can be achieved by delegation of Federal authority to competent State labor departments.
For instance, Senator La Follette, as you know Miss Maude Swett, the Wisconsin minimum-wage director inspected for wage and hour violations under the codes for the State N. R. A. labor-compliance director. In New Hampshire, Miss Ethel Johnson, minimum-wage director, did this for the N. R. A. compliance director. In New York an outstanding example was in the excellent cooperation in the administration of the homework control provisions of some of the codes. There were other States which could show similar examples.
An increasingly fine relationship has been developed between the United States Department of Labor and State labor departments in the last 4 years. The regional labor standards conferences held by the Secretary of Labor and the services rendered State officials by the Labor Department have accomplished remarkable results in Federal and State cooperation.
I have attended most of these conferences, and have seen in the course of the last 3 years the development of an entirely new cooperative working relationship between many State departments of labor and the Federal Department of Labor. State departments of labor which were rather antagonistic to the Federal Department 2 or 3 years ago, are today wholeheartedly cooperating with it. Incidentally, this will be a tremendous aid to the States in improving their own State labor laws and their administration.
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We would like to see all reference to the application of the principles involved in the control of shipment or sale of prison-made goods in a State prohibiting the sales of such goods, eliminated from the bill because we are convinced that what is possible in the control of the interstate shipment of prison-made goods is impossible of application to private industry.
The Chairman. Thank you very much. Are there any questions?
(No response.)
The Chairman. Thank you very much. Is Dr. Howard A. Dawson here?
(No response.)
The Chairman. Fred M. Wylie.
The Chairman. Mr. Wylie, you are connected with the Wisconsin Trade Practice Commission, are you not?
Mr. Wylie. I am a member of the commission; yes.
The Chairman. We will be glad to have a statement from you in connection with this bill.
Mr. Wylie. I appear as a member of the Wisconsin Trade Practice Commission to present part of the problem dealt with, that it seems to us has been omitted from the Black-Connery bill. In order to make my official mission clear, I shall express a few personal opinions. These I will designate as such.
The regulation of trade practices including the prescribing of minimum wages and maximum hours and prohibiting selling below reasonable cost, did not lapse in Wisconsin with the demise of N. R. A., but continued, with modified conceptions, upon more definite legislative standards, and with more formal procedure.
The 1933 Wisconsin law was to a great extent a State replica of N. R. A., in the conception of power, the generality of standard, and the procedures of administration. It expressly provided, however, that codes should not be prescribed unless desired by a preponderant majority of the particular industry. By reason of this provision the act was declared unconstitutional by the State Supreme Court in 1935 shortly before the Schechter case ended N. R. A.
The legislature of 1935, however, reenacted the law with little change except to eliminate the invalidating optional feature and to meet one ground of the decision against N. R. A. by including a definite legislative standard, the prohibition of unfair methods of competition and unfair trade practices. The 1935 act has been before the Wisconsin Supreme Court in four cases.
The court has held this act a constitutional enactment, based upon an adequate legislative standard, and that minimum wages and maximum hours, selling below reasonable cost, and other methods of competition and trade practices may be regulated under that standard whenever, under the exclusive judicial review provided in the statute, the administrative record contains evidence of the relationship of the particular regulation to unfair methods and practices. None of the administrative records upon which codes have been prescribed have been before the State supreme court, so we have no decision or opinion of that court upon the showing of relationship made.
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The 1935 law has been attacked also in the Federal district court and there we have not been so successful and are now under temporary injunction, based on shotgun findings, in three separate cases; but the- more recent decisions of the United States Supreme Court have strengthened our previous confidence in the ultimate approval in the Federal courts of the Wisconsin statute as construed by the Wisconsin, court and as administered.
Early in 1936 the hearing and administrative procedure of N. R. A. pattern was abandoned. Thereafter hearings were formal, with sworn testimony and a stenographic report. Conferences were held, but only to aid in considering the formal record, which must support any action taken. Code authorities were abolished and advisory committees substituted, and the powers of administration were vested in a commission, with a review board to review its orders upon appeal, after which judicial review could be had upon the record, very much in the- nature of a certiorari review. All of these changes, except the provision for judicial review, which was in the statute, were made by the Governor, to whom the legislature had delegated the duties with power to redelegate all except the actual prescribing, amending, or revoking of a code.
Under the 1935 law and this revised and more orthodox administrative procedure, we have revised codes for nine industries only— barbers, cleaners, and dyers, building contractors, painters, shoe rebuilders, bowling alley operators, window cleaners, highway contractors, and sand and gravel dealers. We have a code for soft-drink bottlers that has not been put into operation very largely because of potential interstate competition, and a code for retail automobile dealers that is not in full operation pending certain surveys and reenactment of a law by the 1937 legislature, the present statute expiring July 25, 1937. We have pursued a policy of settling legal doubts and developing facts and ways and means rather than a policy of expansion.
We have pending now in the legislature a complete redrafting of the law, with delegation directly to a commission, and with provisions for that elasticity of application and administration, all upon grounds pertinent to the legislative standard, prohibition of unfair methods of competition and unfair trade practices, that will permit regulation when and where and to the extent that regulation is needed, and omit it otherwise. Included in these provisions for elasticity is authority to issue general or special orders with reference to unfair methods or practices instead of prescribing complete codes. Included also is authority to consider and approve submitted voluntary agreements, including labor agreements, thus making it a part of the plan to recognize voluntary agreements and collective bargaining, and to supplement them only so far as necessary to prevent unfair methods and practices which they may not reach by reason of incompleteness of terms of the agreement or of coverage in the trade area.
In view of the terminology of the Black-Connery bill before you, and of the N. R. A., and of both the 1933 and 1935 Wisconsin acts, and some of the reactions and fears, which I attribute in part to that terminology. I should like to point out the construction which the Wisconsin court has given to the 1935 Wisconsin act and how that construction has been made express in the terminology of the bill now pending in the Wisconsin Legislature. The recovery acts, both State
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and national, dealt with “fair competition” and provided for “codes of fair competition”, and the Black-Connery bill provides that the Labor Standards Board shall, under certain circumstances and within certain limitations, determine a “fair minimum wage”. As I have stated, the 1935 legislature enacted into the Wisconsin Recovery Act a prohibition of unfair methods of competition and unfair trade practices. This prohibition the Wisconsin court construed to be the standard of the entire act, so that no provision upon wages, hours, labor conditions, selling below reasonable cost, or other practices could be prescribed except as it was reasonably necessary to eliminate or prevent an unfair method of competition or an unfair trade practice.
In utility rate regulation, the regulatory body establishes the reasonable rate, which is binding upon all parties, and which the court will not set aside unless it is confiscatory and perhaps if it is extortionate. In dealing with this problem, the courts have readily admitted that the reasonable rate may be found in a considerable zone and that the finding is a legislative or delegated administrative function.
In trade practice regulation, as we have now worked it out in Wisconsin, the regulatory body does not determine the “fair practice” but determines what practices are unfair and makes such regulations as are necessary to inhibit “unfair practices.” In discussing this feature of this law, the Wisconsin court said:
There is a vast and fundamental difference between the power to make a rule and regulation which will eliminate an unfair trade practice or unfair method of competition in business, discovered upon investigation, and the power to prescribe a code of fair competition. This difference is adverted to in the Schechter case. For the reason that the provisions of chapter 182 indicate that the importance of this distinction was not realized by the framers of that act, we shall endeavor to point it out more specifically. An unfair trade practice is difficult of definition but the legal content of the term is well understood. For illustration see Bituminous Coal Conservation Act of 1935 (Guffey Act, sec. 4, part II (i)). A rule or regulation, whether in the affirmative or negative, may eliminate such a practice. However, there may be many parallel fair methods of competition and many parallel fair-trade practices. Suppose in a particular respect there are a dozen. The power to choose one among these fair-trade practices and fair methods of competition and require conformity to that practice or method and so denounce all others as unfair is to exercise the kind of legislative power that may not be delegated because there is no standard which governs the action of the administrative agency in making its choice. When it picks out one method or practice from a group of fair methods and fair practices it exercises pure legislative discretion. That particular method or practice so chosen cannot be discovered by any process of fact-finding.
The difference in conception conveyed by the terminology, “fair competition”, and by the terminology, for instance, “unfair methods of competition”, is apparent at first blush. Probably the difference in conception between the terminology, “a fair minimum wage”, and the terminology, for instance, “a wage to pay below which is an unfair practice”, is not so marked. But psychological reaction is important and sometimes controlling in our affairs and not infrequently in court decisions. Perhaps a terminology more precisely reflecting the limitation of power would allay some of the fears and enhance the chances of validity.
Applying these observations to our Wisconsin experience, for instance, we find that we have side by side in the same industries in the same communities a minimum wage under the statute and a higher wage by collective bargaining. We have dealt largely, of
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course, up to the present time, at least, with industries where neither the employers nor the employees are so organized that collective bargaining can eliminate, either in the State or in any community of the State, the unfair competition of the nonunion employer who pays a substandard wage. By the minimum wage under the statute, we narrow the differential between the nonunion employer and the union employer sufficiently so that the added productivity of the better workmen that usually are found in the union minimizes competitive wage differences.
Included also in the revision of the law pending in the present Wisconsin legislature are provisions against regulations that will place Wisconsin industry at an undue disadvantage in interstate competition, of Wisconsin products in other States or of the products of other States in Wisconsin in interstate commerce and so beyond State control. Coupled with this provision is provision for the exercise of such powers as the State may have, under her own police power, or by act of Congress in the field of interstate commerce, to enable the State to maintain standards without unfair and damaging advantage to interstate commerce competition in Wisconsin.
And that brings me to the particular and official reason for appearing at this hearing. We have in several instances been confronted with inability to maintain State standards of wages and hours and minimum cost prices because of interstate commerce competition, and we have no doubt that we will be confronted with many more instances as we meet the demands of numerous industries that have for months been knocking at our doors for standards and as more of the under standard operators become alert to and take advantage of the over-the-State-line method of evading the State standards.
In the cleaning and dyeing industry, operators from Illinois established Wisconsin agencies in two main cities of the southeastern part of the State, collecting the garments, transporting them for the service to Illinois, accepting them there, and transporting them back to Wisconsin. These agencies broke down enforcement of the State standards for this entire industry in those cities, while we stood helplessly by, under a Federal court injunction. The invasion threatened to spread to Milwaukee, the metropolitan district of the State, but the strength of the labor union so far has forestalled that and has helped to alleviate the break-down in the other two cities. How long the union can do what the State apparently is powerless to do, we do not know.
A somewhat similar threat to the standards of the cleaning and dyeing industry came in southwestern counties from Iowa cleaners and to Superior in the far northwest corner of the State from Duluth cleaners, but we have so far received sufficient voluntary recognition of business ethics to keep these areas in fairly good shape.
In the sand and gravel industry, an area in central western Wisconsin is in competition with Winona, Minn., and the Wisconsin standards can be maintained only so long as the Winona operators choose to comply. In the bottled soft-drink industry, as I have noted, we have been deterred from putting the State standards into operation because of some actual and a considerable potential interstate commerce under standard competition.
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Aside from the question of the wage and hour standards, that obtain with the various interstate commerce operators, the factor of added volume at less than regular prices enters the picture. All the strictly overhead costs and much of the labor costs that property would be allotted pro rata to the extra volume is a fixed cost, and the operator often figures little more than the acquisition and delivery cost in fixing predatory prices in Wisconsin territory to obtain the added volume. Some of this is due to ignorance of cost accounting, while some is close figuring from the purely individualistic angle that counts a dime in my pocket clear gain though it comes at a dollar’s loss to my fellow in the industry.
I personally support the principle of governmental assistance to labor and to industry in maintaining American standards of living and American prosperity, neither of which can return to or continue in America without the other, that assistance to be given by both State and National Governments, each in the field necessarily within its jurisdiction because of economic relationships and our system of government.
I personally support as a part of this assistance the prescribing of minimum wages and maximum hours and the prohibition of selling below reasonable cost when and where reasonably necessary and practicable and within adequate and needful legislative standards.
I personally support the proposition that the intricate and varying situations in both State and Federal jurisdictions cannot be dealt with effectively or competently by direct legislation, but must be met by adequate legislative standards within which an administrative agency shall act, with judicial review to ascertain that the agency actually applies and keeps within the standards.
I am not here to support unqualifiedly any particular bill nor even any particular provision which I myself may suggest to this committee. I recognize the limitations to which the thinking and experience of any man or group in this vast field must be subject. I recognize the need for budding a body of lasting remedies rather than blowing a bubble of fleeting reliefs.
I am here to advocate the giving of power to the States, within the field not occupied by Federal legislation and actual administration, to maintain their own standards. Whether this shall be in as far-reaching a manner as the Black bill, S. 175, and the Connery bill, H. R. 2880—which are identical bills—or whether it shall be more restricted in territory, as, for instance, contiguous States; or whether it shall be restricted as to industries; or whether an adequate congressional standard for application by a Federal agency can be enacted, is a matter for the consideration of the Congress. We would very much appreciate opportunity to confer with congressional draftsmen in this matter and to present later more definite proposals, perhaps in the alternative.
We want to have done with the No-Man’s Land where the Federal Government does not act, for whatever reason, and the States, because of the constitutional limitations, cannot act without congressional consent.
What man will attempt to predict where the lines between Federal jurisdiction and State jurisdiction, and between practical Federal action and practical State action, in this field, lies today, or tomorrow? Will the Federal power be sustained at all? Will it be sustained as to wages? Or hours? Will it be sustained beyond great national industries like that before the court in the National Labor Relations Board
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case? If sustained, how far will the Federal Government find it practicable to go? The present bill suggests some limitations; there may be others. Should those States that are anxious to maintain standards be required to sit helpless for 2, 3, 4 years while these questions are being answered? And then, whatever the answer, take another 2, 3, 4 years to ascertain what the States can do?
And so I urge that the Congress round out any bill it may enact to meet with the Nation’s part of the problem, with the necessary complement enabling the States to meet the States’ part of the problem wherever the dividing lines between State and Federal jurisdictions and applications m^y lie, from time to time.
The Chairman. Thank you very much, Mr. Wylie. Are there any questions of Mr. Wylie?
(No response.)
The Chairman. Is Dr. Howard A. Dawson here?
Dr. Dawson. Yes, sir.
The Chairman. Dr. Dawson, of the National Education Association.
Dr. Dawson, we would be glad to have any statement you may want to make on this measure.
Dr. Dawson. Mr. Chairman and gentlemen of the committee, I represent the National Education Association, which is an organization composed of about 220,000 school teachers and school administrators. The National Education Association of the United States has not through its representative assembly taken specific action regarding the bill under consideration. It has, however, for many years through its resolutions supported legislation to control or prohibit child labor. The resolution of the National Education Association adopted July 2, 1936, at the annual meeting of its representative assembly is as follows:
Every child, regardless of race, belief, economic status, residence, or physical handicap, should have the opportunity for fullest development in mental, moral, and physical health, and in the attitudes, knowledge, and skills that are essential for individual happiness and effective citizenship in a democracy. As a means to this end, the association among other things advocates that the child-labor amendment should be ratified.
I wish to speak specifically only on provisions of this bill definitely concerned with “oppressive child labor.” Regarding the provisions purporting to prohibit the use of labor of children under 16 years of age in the production of goods intended for interstate commerce, I would like to say that the National Education Association is in hearty agreement and urges the enactment of such legislation. The association, of course, is aware of the decision of the Supreme Court in the case of Hammer v. Dagenhart, but has always agreed to the dissenting opinion of Mr. Justice Holmes, and, in the absence of the adoption of the child-labor amendment, would prefer to see legislation such as that proposed in the pending bill enacted and resubmitted to the Supreme Court if necessary.
I would like to point out that legislation to prohibit child labor unquestionably represents the enlightened opinion of the vast majority of the American people.
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In the first place, enlightened people believe that the routine, blind- alley employment of children and young people in industry is detrimental to their mental, physical, and moral development, and that the period of childhood and youth should be spent in receiving the best training for full development into useful and happy adulthood. Early employment is believed to be a violation of the fundamental rights of children in the “pursuit of happiness.”
In the second place, the increase and improvement of mechanical production has made unnecessary the employment of children and youth.
For example, from 1890 to 1925 the physical volume of industrial production in the United States increased 174.5 percent, primary horsepower increased 256.1 percent, but the number of persons employed increased only 89 percent.
As a result of these changes the number and percentage of children 10 to 15 years of age employed in gainful occupations have decreased rapidly since 1910.
From 1910 to 1920 the number decreased from 1,990,000 to 1,061,000 and by 1930 had dropped to 667,000.
In 1910, of all children 10 to 15 years old 18.2 percent were gainfully employed; in 1920, only 8.5 percent; and in 1930, only 4.7 percent. The percentage of persons 16 years old gainfully employed decreased by nearly one-third from 1920 to 1930; the percentage of persons 17 years old employed decreased nearly one-fifth. But in the age groups above 20 there was an increase in the percentage of employment.
In the light of decreased opportunity for the employment of children and youth and of the increasing need for opportunities for employment of adults, there is small wonder that popular opinion has demanded legislation to meet the needs of society in this respect. To say that the Federal Government has no economic responsibility in this situation is to fail to see the economic unity of the Nation and to deny the national character of modern industry, commercial organizations, and competition.
That legislation regulating and even prohibiting child labor conforms to the popular opinion throughout the Nation is well illustrated by the development of State laws regarding compulsory school attendance and the requiring of work permits from public officials before children of certain age can be gainfully employed.
The maximum compulsory attendance age in 1934 was less than 16 years in only 6 States, 16 years in 31 States, 17 in 6 States, and 18 in 5 States. In 1914, 22 of the 42 States having compulsory attendance laws placed the maximum compulsory attendance age at less than 16 years; 19 at 16 years; and only 1 at 18 years.
The tendency has been to increase the number of years of required school attendance. Of the States that had compulsory attendance laws in 1914, 7 required children to attend school for 9 years. In 1914, 16 States required attendance for less than 8 years and 6 had no attendance laws; in 1934, only 5 States required less than 8 years.
The above data illustrates the fact that it is now almost universally agreed that children under 16 years of age should be in school. As a matter of fact, 88.8 percent of all children 14 and 15 years of age were attending school in 1930. The percentage has increased since that date. The percentages of children 14 and 15 years of age and up range from 73.7 percent in Georgia to 97.2 percent in California.
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In no State is there much more than one-fourth of the children who are not actually in school if they are under 16 years old.
Now, under such circumstances a law such as that proposed in the pending bill not only represents public sentiment but becomes necessary in order to regulate the small minority of employers and communities that continue to lag behind in most enlightened sentiment and practice. The point, I especially want to make is that always when public sentiment reaches the point of approving a universal, social, or economic practice, it is always in order to regulate the minority by legislation. We believe that child labor can be regulated successfully only by the Federal Government because of the effect of competition among States and regions in the production of goods, a great bulk of which does enter interstate competition.
That concludes the statement I wish to make, Mr. Chairman. If there are any questions I would be very glad to try to answer them.
The Chairman. Thank you very much, Mr. Dawson.
Mr. William H. Collins.
The Chairman. Mr. Collins, you are an attorney in Washington?
Mr. Collins. Yes, Senator.
The Chairman. You are here representing the Waltham Watch Co.?
Mr. Collins. That is correct, sir. I just have a brief statement that I would like to make.
The Chairman. You may go ahead.
Mr. Collins. I appear here on behalf, of the Waltham Watch Co., of Waltham, Mass., I want at the outset to state very distinctly that L do not appear here in opposition to the bill but, on the contrary speaking for myself and for the company that I represent, we think that the aims of the bill are most worthy. However, there is a condition that we think this committee, in the final drafting of this legislation, should consider.
The Waltham Watch Co. is one of the three remaining jeweled watch producers in the United States. The others are the Hamilton Watch Co. and the Elgin Watch Co. Some years ago there were more than 60 domestic producers of jeweled watches in the United States. However, the situation of competition with the Swiss importations of watches, watch movements and parts, has spelled death to all but the above three companies, and these three are now struggling to survive.
The 1930 tariff act imposed duties upon such importations that did not approach meeting the cost differential.
The Chairman. Do you have the amount of that duty?
Mr. Collins. Well, it varies.
The Chairman. Do you know the minimum or maximum? It would be helpful if you placed it in the record at this point.
Mr. Collins. It would be a tremendous task, Senator, because it varies.
The Chairman. Is it somewhat over 140 percent?
Mr. Collins. I was going to point out that the decrease, under the trade agreement which was entered into and signed by the President on January 9 of last year and became effective February 13, amounted to a decrease of about 40 percent.
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The Chairman. Did you call attention to the amount of the total tariff? You took about a 40 percent reduction. If you cannot give us the amount, I do not want to interrupt you, but we would be very anxious to have the figure, if you can give it to us. Is not the duty still over 100 percent on watches?
Mr. Collins. It figures 100 percent at the moment.
Representative Thomas. That is even including the 40 percent?
The Chairman. Since the President’s reduction it is still over 100 percent on watches?
Mr. Collins. Yes. Prior to the time of the execution of the -agreement that I just referred to, by virtue of this cost differential the Swiss producers had obtained approximately 50 percent of the American market. Since the agreement was entered into the Swiss producers, it is said, have obtained about 60 percent of the domestic market in the United States.
Now, to illustrate the point of the tariff—and I can show the committee definitely with the watch itself—the landed cost of the imported watch movements in the United States, even at the basis that has been suggested, with the 100 percent tariff represents a little above one-third of what it would cost to produce that similar article here in the United States, under the labor conditions that obtain in the three factories here in the United States.
For instance, I can show you a watch that I have here, an imported product, in which the landed cost of that watch movement to the importer in New York is a little better than $2, the duty imposed there is a little in excess of $2, making the approximate landed cost of that watch to the importer of about $4.50. That same watch is sold to the retailer by that importer for approximately $16, and is then retailed at a figure of about $37.50. That same watch, produced here in the United States, under the labor conditions that now obtain, independent of the additional cost, that will be entailed incident to this bill, would approximately cost to produce about $13 or $14. The American producer in a great many instances undersells the importer. The importer, however, creates his market by giving a larger margin of profit, as already illustrated in the example given, to the retailer and, of course, there is a natural tendency on the part of the retailer to promote the article that brings to him the greater profit. I do not say that that is true in all instances, but it certainly is true in a great many instances.
Now, we have no desire to embroil the committee in any tariff discussions. We realize, in the first place, that the committee does not want to be so involved, and, in the second place, that it is not the proper place to bring up tariff discussions, but we would like the committee to give thought to an amendment to this act that would require the board that is created hereunder to consider the situation of imported products where they are coming in competition with the domestic products. I realize that, in the first instance, it is going to be difficult to say in this act that no importations shall be permitted in interstate commerce unless such meet the conditions that I outlined, as far as the local producer is concerned, because that would entail policing foreign governments and their manufacturers; I realize that, but I do think that there should be an amendment to this act which would contemplate that in considering the application of this act to industries in the United States—and, of course, I am particularly appearing for
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one watch industry—that the board give consideration to the situation of competition from imported products. Having in mind that the bill itself provides that, over and above other duties imposed upon the board, it shall report annually to Congress for further legislation incident to conditions that they find, it is our thought that this board might well report to Congress the conditions that it finds and, with the influence of the board, there might be changes accomplished that would tend to lessen the differential that is involved at the present moment.
I realize also that if there is carried into this act a provision which, in effect, would attempt to make the importer comply with the domestic situation, that there would be a treaty situation involved and that, for that reason, undoubtedly the committee would probably not want to consider it. We are not asking this committee for any tariff changes. We are asking the committee merely to give thought, first, to the propriety of making this legislation applicable to importations.
If there be too many difficulties in that, then we ask that the committee give thought, in the final draft of this legislation, to a provision that would require the board created under the act to consider the importation situation in determining the applicability of the law to a domestic manufacturer.
That is all I care to say.
Representative Schneider. Mr. Collins, how do the labor conditions in your plant compare with other industries of a comparable character?
Mr. Collins. Of course, this being in Massachusetts, there is a limited labor law in Massachusetts which, in the main only covers the situation of women and minors, and it fixes a maximum of hours for women of 48 hours a week. That is the hour situation that is involved at the Waltham factory, except at the moment, during the summer period, that is reduced to 45 hours a week, so right at the moment the Waltham factory is working 45 hours a week.
Representative Schneider. Well, it could not be expected, under any circumstances, to employ people longer than that at as exacting a task as the making of a watch?
Mr. Collins. That is right.
Representative Schneider. What percentage of the cost of production, of producing your article, is labor cost?
Mr. Collins. I would say at least 50 percent. I am not identified with the technical aspect of it.
Representative Schneider. Could you get that?
Mr. Collins. I could get it, and 1 would be glad to submit it to the committee.
The Chairman. Are there any other questions?
Senator La Follette. What are the minimum wages paid in your plant?
Mr. Collins. I think that the general average would probably be 61 cents an hour, at the moment.
Senator La Follette. Do you know what the minimum is?
Mr. Collins. That is the average. The minimum fixed I believe is 40 cents an hour for women. There is no provision as to men.
Senator La Follette. Do you know of any men making less than 40 cents an hour in your factory?
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Mr. Collins. I do not believe there are any.
The Chairman. I think you can get the figures that the Congressman started to ask you for very easily from the department. When you do that I would appreciate it if you would send it this afternoon, if possible, and put it in the record. I am referring to the tariff rate on watches or parts of watches.
Mr. Collins. You mean the present tariff rate?
The Chairman. The present tariff rate.
Mr. Collins. I can give it to you in the agreements.
The Chairman. I thought you said you did not have it.
Mr. Collins. I do not have a copy of the 1930 act. Of course that has been changed under the treaty.
The Chairman. What I want to know is the tariff rate on watches now.
Mr. Collins. It is all right in this pamphlet that I have here.
Representative Schneider. That is the Swiss agreement?
Mr. Collins. That is the Swiss agreement.
The Chairman. What section of the act, do you know?
Mr. Collins. In the main it is predicated on measurements and not on advalorem.
The Chairman. It says:
Files, file blanks, rags, and so forth, 40 cents per dozen.
Watch movements and time-keeping, time-measuring, or time-indicating mechanisms, devices, and instruments, whether or not designed to be worn or carried on or about the person, all of the foregoing, if less than 1.77 inches wide and not having more than 17 jewels, whether or not in cases, containers, ot housings, if more than 1 inch wide, 90 cents each. If more than nine-tenths of 1 inch but not more than 1 inch wide, $1.20 each—
and then going to $1.80.
Any of the foregoing having no jewels or only one jewel, 90 cents each; if more than six-tenths of 1 inch wide, 75 cents each.
It is very difficult to get the exact percentages.
Mr. Collins. Because there are different sizes of watches, Senator. In the main the tariff is higher on the smaller-type watches.
The Chairman. It even has a tariff on parts.
Mr. Collins. That is right.
Representative Schneider. Will you state to the committee how many of your employees are female employees?
Mr. Collins. Well, I would say to you, Congressman, that I expected the president of the company to be here with me this morning, but he was delayed. He was down in Memphis, Tenn. I would be glad to submit that to the committee. The Waltham Co. has about 2,100 employees. Just what the proportion is I would hesitate to give at the moment.
Representative Schneider. Do many of the foreign watches come into this country in parts and are set up here?
Mr. Collins. Yes; some of them are brought in with the dials on them, some are brought in with just the bare movement, and in some very limited instances they are brought in in separate parts and assembled here.
Senator La Follette. The Tariff Act of 1930 did check that tendency in the industry, did it not, to bring in these parts that are assembled here?
Mr. Collins. I do not think so.
Senator La Follette. Was that not quite prevalent prior to the act of 1930?
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Mr. Collins. Of course, we had a very serious problem, which is still with us, and that is the competition incident to the smuggling of watches.
Senator La Follette. I think I remember that the Finance Committee had a good deal of testimony to the effect that one of the competitive situations that the domestic industry found most, difficult was the bringing in of watches in parts, which, as I remember, under the act prior to 1930, were lower than the duties on the thinnest watches or movements, and that there was considerable complaint, at least presented to the committee, that by bringing in these separate parts and assembling them here the industry was suffering a good deal of competition. It may be that my memory does not serve me correctly on that matter, but I thought that the act of 1930 had accomplished a great deal in preventing that practice.
Mr. Collins. Well, it is still being done, Senator. I know, for instance, Mr. Bulova has an assembling plant up in Long Island. He does a very limited amount of it, however.
June 16, 1937.
In re Waltham Watch Co.
Hon. Hugo L. Black,
Chairman, Committee on Education and Labor,
Senate Office Building, Washington, D. C.
Honorable Sir: In compliance with request made of me on the occasion of my appearance before your joint committee considering S. 2475 and H. R. 7200, I submit the following information:
1. Average number of employees paid between Jan. 1 and June 5:
Watch division..................................2,142
Clock division........................................56
Speedometer division.........................246
Total------------------------------------------------ 2, 444
2. Percentage females:
Watch division..................................... 53
Clock division.......................................56
Speedometer division..........................38
3. Hourly schedules: Factory works 45 hours a week between June 1 and Labor Day; rest of the year they have been accustomed to working 48 hours weekly.
4. Minimum wage for females:
Learners 25 cents an hour, maximum of 6 months.
Experience 30 cents an hour, after 6 months.
Average hourly earnings (Jan. 1-June 5):
Females.........................................$0. 386
Males------------------------------------------------- .55
Hoping that this information meets the desires of the committee, I am,
Very respectfully yours,
William H. Collins.
The Chairman. Mr. Oliver, you are connected with the Labor’s Non-Partisan League?
Mr. Oliver. Yes, sir.
The Chairman. You may go ahead.
Mr. Oliver. Labor’s Non-Partisan League favors the adoption of the basic principles of wage and hour regulation contained in H. R. 7200.
This legislation must be considered from several standpoints. It aims directly at certain intolerable conditions which exist in American
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industry. If it is successful in dealing with those conditions, however, it will have certain indirect effects which will be of tremendous value to the working people of the country and to industry generally.
The conditions at which this legislation is directly aimed include the payment of extremely low wages, the maintenance of an unduly long workweek, the employment of children, and the use of certain highly dangerous and destructive methods by employers in the combatting of labor organizations. It is perhaps unnecessary to indicate to members of the committee the nature or the extent of the conditions which this bill is designed directly to remedy. However, I should like to touch upon each of these general conditions very briefly.
The Women’s Bureau of the United States Department of Labor has made a series of studies of wages and hours prevailing in several of the States. A study published in July 1936, by the Women’s Bureau, gives the earnings of women in certain Arkansas industries. The median wages of those employed in manufacturing in the State were $9.60 a week. The median for separate industry groups varied: the highest, in printing and publishing, was $13.15 per week; the lowest, for miscellaneous products, was $5.55 per week. The products of some of these industries were in direct competition with industries of other States; in the manufacture of cotton garments, where competition is of course keen, the median of women’s earnings is given as $9.05 per week. The distribution of earnings about these median figures is especially instructive. Twelve percent of the women engaged in manufacturing earned less than $5 per week, and 54.5 percent earned less than $10 per week. The median of average hourly earnings for all women in manufacturing was 23.9 cents. The earnings reported for men in this study were also very low. The median wage for all men reported upon m manufacturing was $14.80 per week. The median in the manufacture of cotton garments was $11.65 per week. Seventeen percent of the men employed in manufacturing earned less than $10 per week.
In the State of Tennessee, a similar study shows that 50 percent of the women in the manufacturing establishments covered earned less than $12 per week. The median earnings of these women were 32.3 cents per hour. The median earnings for individual industries ranged as low as $8.80 per week. Eighty-six percent of the women employed in the manufacture of miscellaneous clothing earned less than $12 per week. Seventy percent of the women employed in silk and rayon textile mills earned less than $12 per week.
The Chairman. May I ask from what place you got those statistics, so we can have that in the record?
Mr. Oliver. The Women’s Bureau of the United States Department of Labor.
The Chairman. Go right ahead.
Mr. Oliver. Seventy-two percent of the women employed in the wood-products industry fell below this level. The median of annual earnings for all women in manufacturing is reported as $615. The earnings of men in Tennessee industries were somewhat higher but were still far below a tolerable minimum. The median wage for all manufacturing was $15.80 per week. For silk and rayon textiles the median was $10.40. Other industries for which extremely low median w'agcs were reported were in the manufacture of hosiery, clothing, food products, and wood products. The median of hourly rates ranged down to 24 cents among these Tennessee industries.
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A study made by the Women’s Bureau in the State of Delaware and published in 1936 showed that 41 percent of the women employed in manufacturing earned less than $10 per week. In the clothing industry, 69 percent of the women earned less than $10 per week; in the woodproducts industry, 49.8 percent earned less than $10 per week. The median earnings in the industries reported upon ranged down to $7.70 for the women engaged in the manufacture of children’s garments. Thirty-nine percent of the women employed in manufacturing earned less than 30 cents per hour, 10 percent being paid less than 20 cents per hour.
A study of the employment of women in Texas industries in 1936 showed similar low-wage rates. In the cotton-textile industry, 45 percent of the women earned less than 25 cents per hour. In the manufacture of children’s clothing, 58 percent earned less than 25 cents per hour. In the manufacture of cloth bags, 57.6 percent earned less than 25 cents per hour. In the manufacture of candy, 57 percent earned less than 25 cents per hour.
These studies are far from complete in both their geographical and their industrial coverage. They leave very little room for doubt, however, that large numbers and large proportions of the women working in American industry are paid extremely low wages. There are, unfortunately, few data dealing with men on the same basis. Such as there are indicate that although male wages are higher than those for women, they are still far below anything which could be considered a decent minimum.
The hours worked in the industries covered by the studies referred to were frequently excessive. Of the women in Arkansas industries covered by the Women’s Bureau study, 24.1 percent were working 48 hours or longer. An additional 27.4 percent were working more than 40, although less than 48 hours per week. Women employed in Tennessee manufacturing establishments had somewhat more favorable hour standards; only 17 percent were working more than 40 hours per week. In the manufacturing industries covered by the Women’s Bureau in its Delaware study, 50.3 percent worked less than 40 hours per week, 21.4 percent worked more than 44 hours per week, and 5 percent were working 52 hours or more in the week.
In Texas, where the figures are shown only by individual industries, 51.8 percent of the women in the manufacture of cloth bags worked 45 hours or more per week. Thirty-eight and nine-tenths percent of those in the manufacture of cotton garments worked 45 hours or more per week. In cotton textiles, 34 percent worked 45 hours or longer in the week. The variation in hours as between men and women will probably be less than the variation in wages. The hours worked by women are probably a fair indication of tne hours worked generally. Where there is a difference in the standard workweek, men are probably working longer hours than are women. This is borne out by a report on hours worked in Virginia manufacturing establishments, by the State department of labor and industry, showing that 21.8 percent of the men and 11.6 percent of the women worked 44 or more hours per week.
The May 31 Service Letter of the National Industrial Conference Board gives the hourly and weekly earnings and the average hours per week per wage earner for men and women in 25 industries. These figures show that there is a considerable variation in the hours worked; and that of the 25 industries, 21 averaged more than 40 hours per
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week for men employees. The hours of women were somewhat shorter; five industries, however, showed more than 40 hours as the average workweek. In dealing with these figures, it should be borne in mind that the hours given are averages of the time actually worked. There are still very large numbers of both men and women who are working part time. The inclusion of these part-time workers naturally brings down the average for the entire group. Moreover, there Is implied in the statement of an average the fact that a very large proportion of individuals, probably approximately half, are working longer than the average. It would be extremely difficult, if not impossible, to calculate even roughly the effect of applying any definite standard of hours to American industry. The figures quoted from the National Industrial Conference Board—which is an employer agency—indicate that the application of even a 40-hour maximum would affect a tremendous number of workers.
The extension of child labor is difficult to measure, but there can be no doubt that recent months have seen a serious increase in the number of children employed in American industry. The Children’s Bureau of the United States Department of Labor made public in November 1936 a study covering 10 States, the District of Columbia, and 98 cities in other States. In this area the number of 14- and 15-year-old children given employment certificates increased very substantially. There were 3,350 certificates issued in the first 5 months of 1935 and 8,400 issued in the first 5 months of 1936. There is little reason to doubt that this tendency toward an increase of the employment of children has continued during the latter part of 1936 and the early months of 1937.
The legislation before your committee, therefore, does deal with a serious problem in the fields of wages, hours, and child labor. Of a somewhat different nature, but hardly less serious, is the problem of what are called in the bill “oppressive labor practices.” The hearings before the La Follette committee have brought out evidence of a State bordering on civil war in many of our industries. The almost incredible tales of direct violence in some areas are matched by the evidence of the undercover activities of detective agencies operating in the field of industrial relations. The committee has well pointed out in its preliminary report that the detective agencies engaged in labor spying have a direct interest in promoting violence of word and deed in labor conflicts. The labor spy, though hired by the employer, has a very different interest from that of the employer; continuing use of the labor spy depends not upon mutual understanding or the development of peaceful collective bargaining in industry, but upon misrepresenting labor organizations and upon inducing, or actually engaging in, violence of the worst description. All labor will heartily endorse those sections of the bill before your committee, which prohibit the employment of any person in the capacity of a labor spy.
In each of these particulars the proposed legislation will deal directly with evils of the first magnitude; but its results will by no means be confined to the workers and employers directly involved. The competitive character of American industry results in the transmission of the effects of low wages, long hours, child labor, and industrial espionage throughout all industry. Where wages are lowest and hours longest, and where children are most employed, it is probable that the reason for these conditions is largely in the competitive pressure upon employers and workers. Maintenance of low labor standards
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by one employer may require other employers in these industries either to meet the prices of their substandard competitors or to suspend operations. These other employers, while they may not be forced or permitted to reduce wages or lengthen hours to the extreme standards of their unfair competitors, are still under great pressure. Despite the best efforts of labor organizations and the best intentions of the more enlightened employers, wages and hours are influenced adversely from the low-standard areas in industries. The markets for the products for most American manufactures are now national. Hosiery produced in Texas or Tennessee or Delaware is sold in New York and Minnesota and California. The wages of hosiery workers in Pennsylvania and Indiana inevitably reflect the pressure of conditions existing in the States with lower standards. In every industry, but especially in the basic manufacturing industries, wages and hours are considerably lower than they would be if the competition of substandard areas were less severe.
The depression which began in 1929 and which, unfortunately, is still “too much with us” has convinced the workers of the country that low wages and long hours are among the primary causes of our industrial instability It is unnecessary to offer to your committee the foundation for this conclusion; governmental policy has consistently reflected the idea since 1933. The purchasing power of American workers has lagged while their productivity rose. The employment of American workers has steadily declined while technological change has accelerated. Employers have sought to reduce their costs by flitting from State to State, and whole industries have migrated in response to unhealthy competitive conditions. Other employers have sought, by increased mechanization of their establishments, to reduce costs and meet low-wage competition. All of these changes have resulted in greatly increased unemployment, as well as in preventing the development of proper standards throughout industry. The first condition for establishing some sort of law and order in industry is to put a floor under wage rates and a roof on the hours worked.
Substandard conditions have had one other very serious consequence. The leaders of American labor have long since recognized what is now generally accepted as governmental policy, that the development of collective bargaining is the best protection not only of the workers but also of industry itself. The organization of labor and the setting of wages and hours and other standards by negotiations between representatives of employers and of workers is clearly the only sound foundation for our economic structure. The National Labor Relations Act was designed to remove, and is in fact removing, some of the major barriers to collective bargaining, but the existence of extremely bad employment conditions is almost as much of a barrier to collective bargaining as are the practices dealt with in the Labor Relations Act.
Employers under competitive pressure seek to invade the provisions of their agreements with labor unions; they sometimes seek to escape to regions where they feel that labor unionism cannot develop. Employers resist organization of their workers, often because they believe increased wages and shortened hours will follow and will make continued competitive operation impossible. Employer resistance to labor organization and to collective bargaining is always- intensified by the existence of substandard competitors. It should be pointed out also that there are in the plants of many of these substandard competitors, peculiar conditions which will long
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delay the organization of their workers. Many of these plants have drawn their work forces from rural areas. These new industrial workers do not understand that the wages and hours prevalent in agriculture are inadequate for the work of an industrial wage earner. In many of these substandard plants, newly arrived immigrants have been employed in the past; here, too, there is delay in understanding the wages required for healthful and decent living in our urban environments. Employers moving their establishments to districts where new labor supplies are available can and do move on again when these new workers come to realize the need for better standards and for collective action. It is thus particularly difficult for labor organization to reach the fraction of American industry operating under extremely low standards. In time, of course, all of these establishments and employees can be brought within the protection of collective bargaining, but in the meantime the competitive effect of these substandard conditions will be disastrous unless some type of governmental regulation is established.
The legislation as drafted, assuming that the wage and hours standards are properly set, will go far toward correcting the whole situation brought about by substandard employment. It would seem advisable, however, to give very careful consideration to those parts of the proposed measure which go beyond the regulation of labor standards. The National Labor Relations Act has set up a machinery for dealing with certain types of labor disputes. The experience under the act has not yet been great enough to permit a judgment of the need for revision; it is naturally to be expected that some such needs will develop. It would seem preferable therefore to keep the legislation now before the committee out of this field of handling labor controversies or their subject matter beyond the basic limitation of wages, hours, child labor, and “oppressive labor practices.” Those sections of H. R. 7200 which provide for setting of a minimum fair wage and a maximum reasonable workweek should be left for future handling.
If the Government were now to enter the field covered in section 5 of the proposed act, several of the specific provisions should be setion 5 (a) lists, for example, standards to be considered in fixing a minimum fair wage. The experience with such standards under the Transportation Act of 1920 in the railway industry was very unhappy; the break-down of the labor provision of that act was due in part to the provision of wage standards in the law. The vagueness of the phrasing of these standards and the setting up of some which are beyond the understanding of laymen, and probably of many lawyers, would interfere with the functioning of the proposed Labor Standards Board, if section 5 were to be adopted.
One other vagueness should perhaps be called to the attention of the committee. In section 2 (a)—(8) of the bill, the term “labor organization” is so defined as to include agencies which are not genuine labor unions. The definition seems to have been taken from the National Labor Relations Act, but since that act itself deals with the conditions for bona-fide labor organization, its definition did not need to exclude company dominated organizations. The definition in H. R. 7200 would be improved by adding after the word “work” on line 15 of page 4 of the bill as printed, the words “but shall not include any employee organization, association, agency or plant, established, maintained, administered, or assisted by an employer through anv illegal or oppressive labor practice.”
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The effects of low wages and long hours in American industry are many and serious. The worker and his family are the first and the greatest sufferers but every part of the Nation feels directly or indirectly the consequences of low labor standards. If we are to approach our housing problem upon a sensible basis’ if we are to attack the problem of crime, of disease, and of poverty generally, if we are to make any progress whatever in the stabilization of industry and the prevention or mitigation of the periodical depressions from which we have suffered, we must find some w'ay to raise the wages and hour standards prevailing in industry. Labor organization and collective bargaining are the natural and most desirable means for bringing about this improvement in standards, but experience has shown us that unethical employers have in their arsenals, weapons which can prevent, delay, or defeat labor organization. We are properly now guaranteeing to the workers those civil rights which open the way to collective bargaining. The bill now before your committee supplements the provisions of the National Labor Relations Act by protecting the ethical and enlightened employer, by protecting the worker who cannot be reached speedily and effectively through labor unionism, and by permitting the further improvement of wage and hour standards in that section of industry where labor organization and collective bargaining have been accepted.
The Chairman. Thank you very much, Mr. Oliver. That is very helpful. There are some statistics there that will be very helpful to us. Are there any questions?
Representative Ramspeck. Mr. Oliver, since you advocate the elimination of section 5, do I understand you advocate a flat minimum wage for everybody?
Mr. Oliver. I believe that a flat minimum below which no region of individual employer could go is the desirable way to fix that minimum wage; yes, sir.
Representative Ramspeck. Do you understand that Mr. Jackson, the Assistant Attorney General, said that he thought that would be unconstitutional?
Mr. Oliver. I was not here at the time he testified. I did not know that he had said that.
Representative Ramspeck. Do you not think, as a matter of fact, that if we are going to fix wages we must take into consideration facts and circumstances as well as the value of the services rendered?
Mr. Oliver. Yes, sir; but I do not believe there are any facts or circumstances of a character which would justify dropping a wage down below 40 cents per hour.
Representative Ramspeck. Well, suppose the facts and circumstances show that an employer could not maintain his business in competition with another employer at that wage scale?
Mr. Oliver. Well, I think that is the reason for all extremely low wages. Whenever the opportunity opened to such an employer of cutting wages and of decreasing labor conditions and thereby making a profit, brought him into business, he would avail himself of that. Now I believe that the setting of reasonable standards and a 40-cent-per-hour rate is certainly not unreasonably high.
Representative Ramspeck. I believe it is not unreasonably high, Mr. Oliver; but we had a man before the committee yesterday afternoon, who, I would say, is almost a model employer, Mr. Horinel, the
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packer, who operates in a town in Minnesota where there is practically no other chance of employment. Suppose we fixed a minimum rate that put him out of business; what is going to become of his 4,000 employees?
Mr. Oliver', I am not familiar with the conditions under which he himself operates, but, in general, I should say that if industry is relocated as the result of the operation of a minimum wage there will be put to work in those sections of the country where men have heretofore been thrown out by low standards, there will be put to work as many men as are displaced in other sections, and it will be at better wages, better working conditions, and generally more helpful for the economic structure of the country.
Representative Ramspeck. Then your idea is that these 4,000 employees would have to just move to some other place where they could get employment?
Mr. Oliver. I should say that would be the case. Under our lack of arrangement of our production, it would be the only course open to the workers who would be thrown out of work. Precisely that thing has happened when an employer moved or when, because of substantial competition, an industry moves from one State to another, the workers in these States from which the employers have moved are thrown out on the street. The fact is that has happened before. This legislation would reverse the trend and put back to work those who have been thrown out, and I do not believe you can consider it an objection to the legislation.
Representative Ramspeck. What are you going to do about freight rates? Have you ever touched those, in relation to what wages a man can pay?
Mr. Oliver. Some; yes, sir.
Representative Ramspeck. Do you know that the President sent a message to Congress yesterday calling attention to the fact that the average level of freight rates varied as much as 75 percent in different freight-rate-making sections?
Mr. Oliver. I did not see the message, but I know that is, of course, a fact.
Representative Ramspeck. That means, of course, that a manufacturer located in the high freight rate territory is operating under a handicap of 75 percent. The cost of transportation, according to your argument, we might not take into consideration at all; is that correct?
Mr. Oliver. I think Congress should take it into consideration, in dealing with the subject of freight rates. The general railway freight structure is chaotic and illogical, it needs revision. I do not believe the workers in those areas where freight rates are high should have to pay out of their wages or out of their working conditions for the senseless structure of our freight rates.
Representative Ramspeck. Neither do I, but I do not believe we ought to put a manufacturer out of business because of anything that he cannot control.
Mr. Oliver. I believe many manufacturers have been put out of business, and others have been encouraged who should have been put out of business, by the maladjustment of freight rates. Certainly the freight rates need revision, but I do not think we ought to refrain from the regulation of labor conditions because there are disproportionate
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freight rates in industry. That is a separate subject and ought certainty to be handled.
Representative Ramspeck. If you advocate a flat minimum wage you do not have to take into consideration the value of the services rendered, nor the efficiency of the employees, do you?
Mr. Oliver, I should say that that is implied in a flat minimum. The implication is that the services of the employee to the employer and to the community, that his value as a human being and his necessity as a human being requires that he be paid not less than that minimum.
Representative Ramspeck. That is all.
The Chairman. That is all. Thank you very much, Mr. Oliver. Miss Anne S. Davis, assistant chief of the minimum wage division of the Illinois State Department of Labor.
STATEMENT OF ANNE S. DAVIS, ASSISTANT CHIEF, MINIMUM WAGE DIVISION, ILLINOIS STATE DEPARTMENT OF LABOR
Miss Davis. I want to speak in regard to the provisions concerning child labor in this bill, and particularly on one phase of the enforcement of a child labor law.
The object of the Black-Connery bill as it pertains to child labor is. to reduce the employment of young persons under 16 years of age in the United States and to bar those 16 to 18 years of age engaging in hazardous occupations insofar as they perform work on products to be shipped or delivered for shipment in interstate commerce.
These are standards which those who have worked, over a period of years, to secure uniform standards for employed minors would like to see enacted for all gainfully employed young people including those employed at work on products which do not cross state lines—and which comprise about 75 percent of the child workers in the country.
The great weakness of the bill is that it does not specify the administrative procedures which we know are sound and essential to the enforcement of any child labor law. This bill will directly affect only 25 percent of the gainfully employed children excluding those engaged in agriculture. If the bill can be amended to the inclusion of administrative machinery that will reenforce and strengthen the State law through Federal-State cooperation in enforcement, it can indirectly affect many more.
State experience and that gained through the administration of the first Federal Child Labor Law have demonstrated that the successful enforcement of a child-labor law depends primarily upon a well- administered employment-certificate system. It was found many years ago that general prohibition of child labor relying wholly on enforcement through court action was not effective. It did not prevent the employment of children but punished the employers after it was discovered that children were employed in violation of the law. In many cases, underage children were at work for long periods and on dangerous machines before they were discovered by the factory inspector and injury to the children had been done. An employmentcertificate system seeks to prevent employment before the legal age. An employment certificate is evidence which the minor presents to the employer that he has met the requirements set up in the law as to age, education, physical fitness and employment, and is legally qualified
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for the work he is to do. It is evidence, too, which the employer may present to the inspector that the young person has been employed in accordance with the provisions of the law. If he has on file a work permit officially issued he is not guilty of a violation of the law for employing a child who is below the legal age. Without such evidence an impossibly heavy burden is placed upon the inspector as in order to be certain that no child is illegally employed the inspector would be obliged to determine the ages and other qualifications of all the children at work in an establishment. Without an employment-certificate system a much larger number of inspectors would be required to properly enforce the law which increases the cost of enforcement.
The employment-certificate system under the State laws protects the child from hazardous occupations for the certificate is not issued for occupations or processes prohibited to minors under certain ages as prescribed in the law and it protects the employer, for often the employer has to pay double or triple compensation if the minor is illegally employed.
The maximim age up to which certificates are required is usually as high as the maximum age up to which some regulation of the labor of minors extends. At present in a majority of the States administrative machinery is in operation for the issuance of age or employment certificates to minors up to 18 years; in nearly all the other States the machinery exists for the issuance of certificates to children up to 16 which through cooperative relations with the Federal Government might be extended to cover minors up to 18 years of age. This would be a protection to those children in the States where certificates are now required only up to 16 as in Illinois. For there are children who falsify their ages claiming they are over 16. They are put to work on dangerous machines; they run the chance of being injured and frequently are injured. If certificates were required up to 18 under any Federal act these children would have greater protection as well as the employer.
In the majority of States, certificates are issued by local officials, in most States, by school officials, in some, by labor inspectors. In some States there is State supervision of the issuance of employment certificates so that methods and procedures followed are uniform throughout the State.
NEED FOR ACCURACY IN SECURING EVIDENCE OF AGE
As child labor standards apply to children of designated ages in the various States and as in the case of the Black-Connery bill, their enforcement necessitates accurate knowledge of the age of the minor in order to determine when he may go to work legally and when his work is no longer subject to regulation due to his age.
Considerable attention has been given to the evidence which should be required to prove the age of a child applying for an employment certificate both in framing and administering State laws and also in connection with the administration of the two Federal child-labor laws.
In Illinois and many other States the laws specify the proof of age to be accepted and the order in which such proof is to be accepted. First, a birth certificate which is the most reliable proof is acceptable; if that cannot be procured, then a baptismal certificate may be accepted ; third, an insurance policy which is at least a year old; and then, other documentary proof such as a Bible record, a passport, confirmation
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record, and so forth, may be accepted. Evidence that the preferred documents were not available is obtained before the less trustworthy forms are accepted. Experience under the first Federal child-labor law which adopted regulations similar to these showed tike value of such regulations and practically the same ones were adopted under the second Federal child-labor law.
Improvement both in law and procedure as to evidence of age resulted from the emphasis placed upon the importance of these standards under the Federal laws.
In Illinois, about the time the first Federal child-labor law became effective, a new child-labor law had been passed which required substantially the same evidence of age contained in the Federal regulations. Up to this time, there was not much observance of the childlabor law in Illinois. After the new law was passed issuing officers were not careful about securing the evidence required in the new law-—parents’ affidavits were accepted or a school record which are not reliable. At the request of the State department of labor a Federal inspector was sent through the State to test the effectiveness of the certificating system. The requirements of the State and Federal laws and the importance of observing them were called to the attention of the issuing officers.
As a result of Federal-State cooperation, employment certificates were issued with more uniformity and Chicago developed one of the outstanding employment “certificate systems in the country, which reduced to a low minimum the number of children going to work before the legal age. Employers under the Federal law began to respect the employment certificate and the child-labor law of the State.
In some industrial centers in Illinois today and in many parts of the country little effort is made to get the preferred forms of evidence of age; in some States the evidence upon which certificates are issued is still inadequate under the law. The result is inevitably the employment of at least some children below the legal working age, before the age of 14.
In a children’s bureau study of child labor in canneries, in a State in which carelessness in requiring good evidence was especially noticeable, documentary evidence found by the agents of the Bureau showed that 43 percent of the employed children under 16 were under 14 years of age and of these, 38 percent had been issued certificates on which it was stated they were of legal age.
This proposed bill which includes child labor along with minimum wages and maximum-hour provisions does not provide for an employment-certificate system as a means to enforcement which is looked upon by those who have administered child-labor laws as the heart of such laws. It aims to prohibit the employment of children under 16 engaged in interstate commerce and to exempt from hazardous employment those 16 to 18 years of age. Unless employers are required under this act to keep on file certificates for minors of these ages, children will be going to work before the legal age and employers will be prosecuted. Frequent prosecution is not the objective of this act or of any child-labor law but the prevention of the employment of young children is the aim and for this the employment certificate is necessary.
Careful issuance of work certificates and enforcement of the rule that no child be employed without such certificates is the way child labor is prevented with a minimum of inspections and prosecutions. A Federal law reenforces this system in the States if it accepts for the
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purposes of the Federal act age certificates in States in which certificates are well issued. If they are not carefully issued and are revoked by Federal inspectors so that the employer is without this protection against Federal prosecution, it is to his interest that the local administration be made efficient. If the efficiency of administration is improved for the purposes of the Federal act, it is improved for all occupations covered by the State act and the State law and administration of that law is strengthened.
As it relates to minors 16 to 18 years of age who will be prohibited from certain hazardous occupations: Many States require that a certificate cannot be issued until the minor presents a written promise of employment from the employer stating the kind of work he is to do. A certificate is not issued if the work he is to perform is in violation of the law. The certificate is mailed to the employer and returned to the issuing officer when the minor leaves his employ. Employment certificates if required under this act would prevent minors from being employed in the hazardous occupations from which the act is attempting to exclude them.
If upon inspection the minor is found to be doing work which is prohibitive under the act and not as stated on the employment certificate the employer is liable.
I strongly favor the provisions relating to hours and wages. I should like to see, however, more definite mention made of industrial home work in the production of goods shipped to other States and the powers given to the Board to control it. Large numbers of children have always been employed in industrial home work and very young children too who work unbelievably long hours. As far as child labor in industrial home work is concerned it has been difficult to control—for the work may be given out to an adult but children in the home assist with it. If child labor in industrial home work is to be abolished and unfair competition eliminated, there should be definite provisions in the bill for control.
Coming from a State department of labor and engaged in the enforcement of laws pertaining to women and children which include minimum wage and hour laws I should like to see provision made for Federal State cooperation in the enforcement of these laws. Such provision would avoid two sets of inspectors going into the same plants. This arrangement under Federal supervision would strengthen enforcement and respect for State laws.
The Chairman. Miss Davis, would you put into the record that which provides for the different methods of procedure in the State and then give us your recommendations with reference to this bill?
Miss Davis. I will be glad to do that.
The Chairman. That part of it about the States handling it is most interesting and instructive, in connection with what should be done.
Miss Davis. I would be very glad to do that.
The Chairman. Thank you very much, Miss Davis.
Miss Davis. Thank you.
The Chairman. I have a note here from a gentleman who says he has come a thousand miles to offer evidence and that he represents 40,000,000 men and women. If it is all right with the committee, we will hear him. He says he only wants a few minutes.
Representative Ramspeck. If he is sure that he represents that many I would be glad to hear him.
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The Chairman. Mr. Maxwell, I believe you said you represent 40,000,000?
Mr. Maxwell. Yes.
The Chairman. Where do you live?
Mr. Maxwell. Chicago.
The Chairman. All right; you may proceed.
Mr. Maxwell. Mr. Chairman and fellow members of this committee, also fellow citizens, I represent the American Federation of the Unemployed, the Aged, and the Handicapped. We are on what we call the hunger march to Washington.
The Chairman. How many of these 40,000,000 are with you? How many came with you on the march?
Mr. Maxwell. I came alone, for the simple reason that we did not want to impose on the health of the people that would travel under such conditions, nor the populace in the country through which we were to travel. We did not want to impose on the citizens for support and help during the march. It was more of a humane spirit that prevented us bringing thousands of people to Washington, where one can do the work of presenting the petition. That is all we ask.
The American people will decide whether this petition is worthy of support. The petition, you might say, centers around the minimum wage and the maximum-hour law. It is very brief and I will only ask for 10 minutes of time to fill out our case, and I appreciate the kindness of Senator Black very much under the circumstances.
The starting point, Clark Street, Chicago, in front of the city hall, 12 o’clock noon. May 3.
The volunteers welcome rigid observance to law and order required. No intoxicating liquors and no lawlessness within our ranks. (Reading:]
We, the American Federation of the Unemployed, the Aged, and the Handicapped, respectfully petition the President and Congress that our God-given right to honestly earn our daily bread and to provide for our children and those who rightfully look to us for support and protection be fully restored to all as an inalienable right.
We further petition the abolition of the dole and subsistence wage as un-American, inhuman, and contaminating—a relic of serfdom and degrading pauperism.
We further petition that an annual minimum-wage law shall be immediately enacted into law, said annual wage to be the inherent right of all. Those able to earn the annual wage will be compelled to do so. Those not able shall receive full amount gratis.
We further petition that we, the American Federation of the Unemployed, the Aged, and the Handicapped, be accorded full and unrestricted right to bargain collectively in all matters which pertain to the life, liberty, and pursuit of happiness of our members.
(Signed) Willard A. Maxwell,
President pro tempore.
720 North Le Claire Avenue, Chicago, Ill.
I could take much more of your time, gentlemen, but I will not. I thank you for this opportunity.
I traveled from Chicago and stopped in some of the leading cities in Indiana, Ohio, and Pennsylvania on this journey, or pilgrimage, to Washington, and the tales of woe and sorrow that I could tell, and the tales of poverty that I could tell, would fill a book.
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I do not want to take any more of your time, but I could give you some very direct information in regard to this minimum wage. In the city of Wooster, Ohio, I stepped out on the corner. I had to be pretty careful in this march, because these people kind of look upon a stranger as being an organizer of labor; these people that control the smaller towns are deeply afraid of organization, of collective bargaining. They have got their property and all their interest wrapped up in these little towns, and to mention the word of organization or collective bargaining would blackball you in these towns.
I talked to this young fellow, a perfect specimen of American manhood and brains. I said to him, “How is it that you are not working, young man?” He was a young fellow about 6-foot tall and muscular, had every appearance of intelligence and willingness to work. He said, “I work whenever I can get it.” I said, “What do you work at?” He said, “I work out on the farms here. Mr. So-and-so owns a big farm here. He has got two or three boys, and he sends his boys into the factories to take factory positions: and then he hires cheap labor on his farm so as to get by, and in that way take advantage of the opportunity.” I said, “How much do you get?” He said; “I get 15 cents an hour behind a team and plow, working day in and day out, or as long as there is any work to be given; but the minute the work ceases, my job ceases. I get 25 cents an hour on a tractor. I can take a tractor apart; I know a tractor from A to Z.” He said that in such a way that I had no reason to doubt his sincerity.
These are the conditions that can be multiplied many times over in the richest land, they tell me, in the world—the richest farm lands in the world.
Through Ohio and Indiana there is a condition of poverty and misery that can only be reached by maximum hours and a minimum-wage law.
We also stress the fact that such minimum wage should be an annual wage. These high wages and high-sounding phrases mean very little to the man that they do not reach at all. They have to be accessible to all; that is, the minimum wage—the annual minimum wage.
Thank you.
The Chairman. All right. Thank you very much, sir. The committee will recess until 2 o’clock.
(Whereupon, at the hour of 12:45 p. m., the committee recessed until 2 p. m. of the same day.)
AFTERNOON SESSION
The Chairman. Mr. Comer, will you come forward, please?
STATEMENT OF DONALD COMER
The Chairman. Mr. Comer, I think it would probably be best before you read your paper, or your prepared statement, to state in what business you are engaged, for the record.
Mr. Comer. I am president of the Avondale Mills of Alabama, cotton spinning.
The Chairman. How many cotton-spinning mills are you associated with?
Mr. Comer. We have 14 separate plants.
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The Chairman. Fourteen separate plants?
Mr. Comer. Yes, sir.
The Chairman. Are they all located in Alabama?
Mr. Comer. Yes, sir.
The Chairman. I understand you are appearing individually and not as president of the association of which you nave recently been president?
Mr. Comer. My term expired on the 14th of May as president of the American Cotton Manufacturers Association, and I am here simply as an individual.
The Chairman. You were president of what association last year?
Mr. Comer. The American Cotton Manufacturers Association.
The Chairman. Mr. Comer, we would be very happy indeed to have any suggestions from you or any of your ideas in connection with this bill.
Mr. Comer. I am here speaking only for myself and to speak for the need of a few fundamental rules for industry. I have long since been convinced that there had to be Federal rules. I favor Federal legislation, fixing by enactment minimum wages, maximum hours, and a minimum age. I would have Congress go further and show concern over the continuous employment of women and minors on the so-called graveyard shift, and in this day of air-conditioning there might well be a growing concern over the temperature and humidity of our workshops as well as over hours and wages. Long ago I heard the following definition of industry. It expresses an ideal that I would like to feel that I was striving for. [Reading:]
The function of industry is to take certain things that grow on the surface of the earth, or are buried beneath the surface, and convert them into sizes, shapes, and colors that the public wants; and to do that at the lowest possible cost, without any exploitation along the route.
Before proceeding in my discussion, I would like to say that I think N. K. A. failed because we all tried to make it cover the earth. Certainly we must not make the same mistake now. Please also remember that our industry welcomed the opportunity that N. R. A. gave us to write a voluntary code of fair practices, and, as a whole, we have done a good job in trying to maintain those gains, though the N. R. A. is gone. Testimony to this has come from many, including the President’s Cabinet committee, Governor Winant, and the Department of Labor. Miss Perkins recently said that our hour rate had increased from 21½ cents per hour in 1933 to 39 cents per hour in February of this year—and there have been increases since. If Congress is to write a national minimum wage, it cannot be high enough to be the fair rate in every industry and of every section. It can be high enough to stop flagrant exploitation. It cannot be, per se, even an amount carrying your approval or mine as the correct minimum for any established task for any industry for any section. This is particularly true because of differences even in the same industry whether in different sections or not; differences in the quality of the raw material, in the condition of the machine, differences in. freight rates per ton-mile, in the degree of percentage of efficiency and of precision of the people engaged, differences in the distance to the markets, in climatic differences and its effect on quality and quantity, differences in literacy or illiteracy and pertaining that is brought to the job, and differences in the value of the unit of production,
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differences in the percentage of labor cost to the whole-cost, also differences in the cost of the raw material to which the labor is applied. This law cannot take care of everything; the people in the industry itself will look after some of these things—singly, in groups, and collectively.
The Wagner bill is available if needed. Minima fixed under N. R. A. for our code of fair practice were fixed only after the most comprehensive searching of the record. General Johnson called it a “goldfish-bowl” hearing. Those records are available as a guide. It must not be too high, for one all-powerful reason. The cost of the things industry makes must keep in step with farm-buying power. The whole force of this administration is in the interest of parity income for our farmers. We were 8 percent short of that last year. Farm income continues today to lag behind and this even after the hundreds of millions of dollars flowing from the Federal Treasury for farm benefits to help bring about this parity. I question whether even the present industrial costs are yet reflected at the retail counter. Our industry has cooperated with the Department of Agriculture in its effort to lift the price of cotton and, beginning with N. R. A. and since, have made quite some progress, relatively, in the matter of hours and wages. Where such a large percentage of our population is agricultural, where the farmers’ earnings and spendings so directly affect us all, shouldn't his prosperity be the prime concern of all of us? Shouldn’t we look more or our prosperity as an indirect sharing of his fatness instead of living off his leanness? Aren’t we all trying too much to clear the stream below before we first drive the old sow out of the spring above? There is a direct relation between farm income and industrial wages. When farm income is fairly established many of industry’s problems will settle themselves. The North helped her wage structure by stopping the flow of immigration. Increased farm income in the South will slow down the flow of farm boys and girls to industry.
The Bureau of Agricultural Economics’ report on farm wages, April 1, 1937, shows per day $1.10 for the South compared with New England’s $2.50, and the rest of the country’s $2.27.
Dr. H. A. Morgan, of T. V. A., in 1925 spoke on the need for decentralization of industry, and by comparing two Tennessee counties showed the tremendous value to all interests of a fair mixing of industry with agriculture. Is it beyond the realm of practicability to think that instead of shorter and shorter hours in industry, with the products of industry carrying the full labor burden, that the time may come when instead of just an 8-hour day in some industries there will also be a plan whereby 4 hours will be spent on the farms and 4 hours in industry, with industry only carrying half the burden. I was recently in Japan—a nation, as a whole, almost fanatically bent to a policy of making things cheap to undersell the world. In Italy and Germany the same thing is true. Our policy is different, and I wouldn’t have it otherwise; but when such legislation as this is before us, we have to take a broad view. When Congress proposes regulation of industry they should show concern for, and have provision against, encouragement of substitutes, which in our own industry is already of increasingly tremendous concern; protection against imports because of increasing costs of home goods; the question of the
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broad consumer interests; and lastly—the most important—the question of parity income as Detween farm and industry. I am not willing to admit that there is anyone more anxious than I am for the people who work in our cotton mills to have the very best working conditions that the traffic will bear. For me, no rate that the traffic will bear would be too high.
When you fix that rate you may be sure it will be put to the test of whether the traffic will bear it, because there is a constitutional right both to owner and worker involved—and your bill is dealing with both inter and intra State industry; and Gen. Hugh Johnson has just recently said about this point:
The South had better wake up to this pronto, or it will find itself sold down the river to a renewal of some of its problems of reconstruction days.
I don’t know that any of us can feel sure what should be the length of a workweek—the maximum hours to be set by law. Are five 8-hour days too long? In certain kinds of work it would be longer than if in other kinds of work. Interesting work would certainly prove less fatiguing and less monotonous than if it were uninteresting. The main concern is how far we can go in adding costs to goods a s a result of idle plants. Today our plants, our capital, are idle 52 Sundays and 52 Saturdays and some holidays. In Japan I think the law requires only three stops per month. They have no Sundays. If by law you fixed a week of more than 40 hours I would expect to continue my present 40-hour schedule. If you should fix less, my only concern would be: “Will the consumer pay the price and will our industry have full protection in our home market? I think child labor has long since ceased to be a problem in our industry. If I were in Congress I think I would favor a separate law prohibiting child labor. I think the chances are we would have a different decision today from the Supreme Court than we had before. I think this would avoid the need of the pending amendment on that subject.
Now, Mr. Chairman, I wish to discuss the machinery proposed in this bill for carrying out the purposes of the bill. I favor the purposes of this bill, but I want it by law and not by a commission. My reasons for the time may appear sectional; I hope to prove to the contrary before I finish. Since the invention of the cotton gin the South has continued predominantly agricultural, most of our cotton going export, and until the last few decades, the balance of it going to New England at the same world price. I have used the following figures before, but I wish here to quote them from the address or Senator John H. Bankhead before the American Cotton Manufacturers Association in Washington on May 13 this year. [Reading:]
Very few people in this country realize the outstanding part that the cotton industry has played in our commerce with the other nations of the world. Since our ports were opened in 1791, to and including 1930, our excess of all exports over all imports in value amounted to $37,360,700,000. Our exports of unmanufactured cotton, from the first records in 1802 to and including 1936, in value amounted to $31,138,496,000. Our exports of cotton manufactures since 1826 to and through 1936 amounted to $3,876,741,910. The total value of exports of raw cotton and manufactured cotton since the establishment of the Government amounted to $35,015,237,910. Thus, it will be seen that cotton is responsible for all of our favorable balance of trade with all the world since our Government was established, except $2,345,462,090; and but for cotton, all of our world trade would not have enriched this country more than the latter figure. No sort of sophistry, no effort to ignore the fundamental facts
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involved in our foreign commerce, can becloud the monumental record that cotton has made in increasing our national wealth and promoting American commercial prosperity.
David E. Lilienthal, of T. V. A. (formerly of Wisconsin) is keenly alive to our southern problems. At the University of Alabama last year he stated that these 35 billions of dollars that came into our hands for this exported cotton, as well as the billions that came from New England mills, had all been spent for tariff-protected things that came from the North, and that this money had been the foundation of the tremendous industrial and transportation development of that section. Then he added that this growing and selling of cotton at the world price had brought to our section die depletion of our soil and the impoverishment of our people. This same friend, just last week, before the University of South Carolina, said:
But things are happening to stop this drainage of wealth. First, the South now realizes that it cannot, in the future, rely so largely on cotton. What the agriculturists call diversification is taking place. The second step taken to staunch the bleeding of our wealth has been to stop shipping out all our Cotton as a raw material, but rather to process it. What I have said respecting cotton can be said quite as truly about other products of the South.
The machinery proposed for operating this bill (by the record) promises, to my way of thinking, a changing of these* very hopeful and vivifying beginnings mentioned by Mr. Lilienthal.
We have an Interstate Commerce Commission—the members from the several geographical divisions. Certainly these men are of the highest type that can be found for public service. There are 11 of these gentlemen—only three from the South. Today this Commission continues to pursue the policy that freight moving from the South into “eastern official territory” shall pay a higher rate than is charged for freight moving within that territory. This Commission requires that freight moving within the South shall pay a higher rate per mile than freight moving within the “eastern territory.” I am quoting below the argument submitted by the railroads in support of such a policy, and our Interstate Commerce Commission has apparently in support of this idea, built a barrier around this favored section:
Ex Parts No. 116—INTERTERRITORIAL RATE BASES
BEFORE THE INTERSTATE COMMERCE COMMISSION, MEMORANDUM BRIEF FOR CARRIERS OPERATING IN OFFICIAL TERRITORY NAMED IN APPENDIX A THEREOF: M. B. PIERCE AND OTHERS, COUNSEL, WASHINGTON, 1935
Official territory lines have perhaps the most vital interest in interterritorial competitive adjustments of any single group of carriers in the country for the reason that the populous official territory provides the markets for a large part of the traffic produced elsewhere in the United States. That territory is hemmed in on the South, the Southwest, and the West by territories, and carriers serving them, all seeking to market their products within the territory served by official lines. In many instances such commodities, sought to be marketed within official territory, come into direct competition with the commodities produced in that territory. Official lines, therefore, are in duty bound to protect the geographical or other natural advantages possessed by shippers or producers on their lines, and as a matter of justice and equity, they may not be required to join in such low bases of interterritorial rates as to nullify or neutralize these natural advantages.
The Chairman. Was that a 5-to-4 opinion?
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Mr. Comer. That was 6 to 3 or 7 to 3. There were three in the minority, and there are 11 altogether. I don’t know how many voted in the majority.
This position of the railroads and industries of official territory has the continued support of the majority of the Interstate Commerce Commission. The minority of the Commission,, in filing their dissenting opinion to this majority policy, said:
Cotton-factory products are of universal use; they are shipped in large volume; they are manufactured in hundreds of' mills scattered through the North, the South, and the Southwest; the basic material is one of our greatest agricultural products; practically every manufacturer is in keen competition with every other manufacturer; and the business has been built up largely on a substantial equality in rates
We repeat, therefore, that if rate equality on cotton piece goods is not justified on this record, it is not likely that sufficient evidence can be adduced to move the Commission to prescribe rate equality for any other commodity.
I would like to file with you this entire opinion of the minority. You know in a democracy we must have a minority, and they must be protected and allowed a voice. They may grow into a majority sometime. It is fair to state right here that today the Interstate Commerce Commission has granted to the committee of southern governors representing southern interests a rehearing on this question. But that can easily extend over several years, and cost many thousands of dollars.
In that official territory there is 51 percent of our entirepopula- tion, and 72 percent of our manufacturing in dollar value. The traffic in one day in official territory amounted to 23,060 car loads. In that same day from the South to official territory the shipment was 1,638 car loads, and from official territory to the south, 739 carloads. This section seems to feel self-sufficient as far as products from outside industries are concerned, and a Federal Commission erects a freight barrier hump in support of this idea. David Lilienthal says that our exported cotton, which had such a large part in the impoverishment of our section, played a major role in bringing about this present satisfactory status in official territory.
In recent trade arrangements with Japan we not only allowed them to send in large quotas of their cheap goods, but they will come in without any handicap of discriminatory freight rates.
In supporting the purposes of this bill, can you blame us for being somewhat timid about general Federal legislation in matters so vital to our section?
Cotton is the only agricultural product today without tariff protection ; and jute, its worst enemy, drawn from India with labor at 8,10, and 12 cents a day, is coming into this country in ever-increasing quantities, substituting for cotton yearly to the extent of 2.000,000 bales. Give us our home market for a large part of this. Half of it would help the dwindling exports of cotton, and would put over 50,000 more people to work in our cotton mills. Senator Russell reminds us that every other cotton country in the world protects its cotton from jute. We protect with tariff the potatoes of Maine; cheese and butter of New York, Michigan, and Wisconsin; the beet, sugar of Idaho; and the wheat and iruit of California. In fact, Mr. Edminster, of the State Department, says:
The unvarnished truth concerning this whole agricultural import matter is that the bulk of agricultural products which can be produced in this country
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at less than prohibitive cost have long since been barred out of our market by high tariffs. No one as far as I know seriously proposes that it should be otherwise.
This is true, excepting as to cotton in its competition with jute. Help us to improve our farm income to equal that of the rest of our country, and there will be higher wages in the South, and with in- •creased farm income and increased wages, we will buy more of your stuff than ever before. And when we ouy your stuff, it is as a rule of that kind where the percentage of labor costs entering in is high and the percentage of raw material low—just the reverse with us. When you buy our stuff, the percentage of raw material is high as compared with the percentage of labor cost entering in. This situation all the more intensifies the unfairness of the discriminatory freight rates.
To those of you who may feel that there has been too much sectional feeling expressed here, I would like to say that I borrow my dollars from your banks; I buy my equipment from your machine shops; I have friends and customers throughout your section; I sent my daughters to Massachusetts schools: I went to Pennsylvania for my wife; and while I am here today asking this committee in framing this legislation to protect the rights of our section, to treat us as a favored sister in a family of States, I feel sure that I am suggesting no program but that, in helping us, would help the Nation. I feel that I would like to ask again that you let this legislation proceed by enactment, and that there be no commission with delegated authority such as is proposed in this bill. If there is to be a commission, let it be fact-finding, and advisory, with power to publish the facts; and let the machinery be similar to that set up in our Federal Reserve Bank System, which has a national board in Washington but which also has regional boards under the direction of home people.
As a matter of interest, I think you will find that under normal conditions our Atlanta Federal Reserve branch generally prescribes higher rates of interest in that section than prevail m official territory.
Gen. Hugh Johnson stated that the textile industry in the South made more progress under N. R. A. than it had, possibly, in the last hundred years. There is no one more anxious than I for this progress to continue. Gen. R. E. Wood, president of Sears, Roebuck and Co., last December, in speaking to the American Farm Bureau Federation, said:
I have always like the definition of a liberal as a practical idealist. Let us try to have our ideals, let us be receptive to new ideas, let us put the best of our new ideas into practice; but in the application of these, let us be practical, hard-headed, and not too hasty in execution. Reform is an evolution and cannot be accomplished overnight.
I would like to say to this committee that whatever in their wisdom Congress proposes for our industry in the future, I shall do my best to make it work. In my annual address before the American Cotton Manufacturers Association on May 13, in speaking of industrial relations, I made this statement:
he people who work in the mills are going to decide these questions, and I have said before to the people who work in our mills that when, after mature
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and unheated deliberation, they make their choice, if it is something new, they will find me trying to help them work the matter out that way.
I would like to read just a tiny bit more. I want to read a paragraph of a letter that came from Senator Berry, and written to Dr. Alurchison, of the Cotton Textile Institute:
I want you to know how much I, personally, appreciate the cooperative spirit shown by a host of good friends of the cotton-textile industry, and I believe that Government records will support me in the statement that your industry has been outstanding among the great business groups of this country in its attempts to promote fairer competition and better conditions for labor during the entire New Deal drive along these lines. It is, of course, a matter of common knowledge that when N. R. A. was promulgated, your industry, the outstanding employers of labor in point of numbers, stepped forward as the first major group in the country to adopt a code of fair competition. Your record of code compliance compares favorably with other great industry groups. Following the Supreme Court decision, I am reliably informed that Government statistics show a significant voluntary continuance of adherence to code standards by the fair-minded employers and textile-mill owners who comprise a major portion of your industry.
Mr. Chairman, I had the pleasure of listening to Senator Black’s radio address last evening on the subject of this bill, and I was very glad to hear him mention the Democratic platform in Philadelphia, and the fact that he was a member of the platform committee. There is one plank in that platform that I would like to call to your attention, which reads as follows:
We shall continue, as in the past, to give adequate protection to our farmers and manufacturers against unfair competition and the dumping on our shores of commodities and goods produced by cheap labor and subsidized by foreign governments.
He also compared the present bill with N. R. A., and I would like to make a comparison also, in that in the present bill there is nothing comparable to section 3 (e) of N. R. A., which carried with it the promise to industries establishing codes of fair practices protection against competing articles being imported into the United States in substantial quantities or in increasing ratio to domestic consumption.
There is an old test that they say is used for new inmates in “crazy houses”—to see whether or not the newcomer is incurable. He is given a mop and bucket, and the spigot is turned on. If he begins to mop before he turns off the spigot, his case is said to be incurable. [Laughter.]
Those of us who have the job of processing, as we shorten our hours and increase our wages and costs, cannot help but be concerned over the increasing inflow of foreign goods that will surely result unless prevented. For the past 3 years we have been tremendously concerned at the alarming rate of increase of foreign importations. The increasing of our cost of production has the definite effect of decreasing tariff rates already established.
I am tremendously interested in a news item in the papers this morning headed Region Rates of Rails Called Trade Barriers. This is an account or a report submitted by T. V. A. to the President, and by him to Congress yesterday, and I hope that this whole report can be made a part of the record of this hearing.
The Chairman. The report is too long to be made a part of the hearing here, but it has been made a House document and is available. That is a very excellent report
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Mr. Comer. I have a small extract from it. May it go in the record ?
The Chairman. Yes. (The same is as follows:)
Regional Rates of Rails Called Trade Barriers—Roosevelt Submits Tennessee Valley Authority Report on Charges to Congress
(By the Associated Press)
Congress received from President Roosevelt yesterday a Tennessee Valley Authority report declaring the country’s regional freight-rate structures are arbitrary barriers to commerce, competition, and widespread industrial development.
The report, prepared by an economist for the Tennessee Valley Authority after a survey ordered by the President, said the United States has no national freight-rate structure.
It said rates in what is known as eastern or official territory are far less than in other regions.
Terming the average of rates In eastern territory 100, the report said southern rates average 139; western trunk line, 147; southwestern, 175; and Mountain Pacific, 171.
“Official territory shippers”, J. Haden Alldredge, the economist, said, “can come into the other territories on somewhat lower levels of rates, mile for mile, than shippers residing in those territories have to pay for shipping similar articles wholly within their own territories.
“Thus, one has here something remarkably similar to the working of a protective tariff, to the extent that certain favored Interests effectively strive to protect themselves at home while retaining privileges elsewhere."
Manufacturers or producers are at a disadvantage because of the lower rate available to competitors in eastern territory, where the largest markets exist, the report said.
The Interstate Commerce Commission, meanwhile, refused to suspend a new rate structure on textile products from southern territory but agreed to reopen the ease for further hearings.
The new rate structure, which the Associated Southeastern Textile Mills said will mean a 20-percent increase on products from Georgia and Alabama, takes effect today.
The textile association, joined by Governor Bibb Graves, of Alabama, petitioned for a suspension on the ground the industry would be “seriously crippled.”
Graves and lawyers for the association also filed a petition asking reduction of rates on southern manufactured and processed articles.
In both cases they complained particularly about the tariffs to official territory—the area north of the Potomac and Ohio and east of the Mississippi.
Mr. Comer. A news item of June 7. I should like to put this clipping into the record.
(The same is as follows:)
Du Pont Plant to Be Expanded
New York, June 7 (C. T. P. S.).—E. I. du Pont de Nemours and Co. will double its plant capacity 47,000,000 pounds, for the production of rayon automobile tire fabric; and the Viscose Co., another prime rayon manufacturer, also is completing plans for making tire cord, it was indicated today.
The Goodyear Tire and Rubber Co. and the United States Rubber Co. are preparing to put the new rayon cord tires on the market soon, principally for heavy duty usage on trucks and busses. As soon as production facilities are available, however, it is expected that the rayon cord fabric tires will be produced for general motoring, in view of the claimed advantages over the cotton fabric tire.
Rayon claims the advantage over cotton in its superior strength under high heat, which causes cotton fibers to break down, causing blow-outs.
Representative Connery. Mr. Comer, you are from Alabama?
Mr. Comer. Yes, sir.
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Representative Connery. Well, I am from Massachusetts, and Senator Black here yesterday made a very moving statement about watered stock in textiles and other industries, with a lot of which I agree, because we suffered greatly from absentee landlordism up in Lowell, Manchester, New Bedford, and other places; but regardless of all that, and considering a man who is not an absentee landlord and who does not water his stock and who is in the textile industry, do you think if this legislation passes without any protection against foreign imports, that that textile manufacturer can go along with his business as formerly without any worries or about being circumscribed or being possibly driven out of the business?
Mr. Comer. May I make a statement that will, I think, answer your question? I went with a commission of American spinners to Japan, because we felt that our home market was being taken away from us and that something had to be done. Before we went, we knew that one industry, largely in the East, on cotton velveteens, had been practically closed down because of Japanese imports. This country uses 6,000,000 yards a year of velveteens. Last year Japan shipped 6,000,000 yards of velveteen into this country—absolutely took the market 100 percent.
Now, anybody who thinks that we can make cotton goods in America with an average wage of somewhere around 40 cents an hour in competition with oriental manufacturers at 25 cents per day, and using their equipment every day in the year excepting 36 days—well, it just cannot be done.
Representative Connery. Then you agree with the provision which I have in my bill, and that is the only difference between Senator Black’s bill and my bill. My bill provides that this Board should apply this to foreign imports just the same as to interstate commerce.
Mr. Comer. I think the foreign imports ought to be stopped. What the machinery should be, I don’t know, Mr. Connery. Mr. Black has been very nice to me, and I ought to stick to him now.
The Chairman. You go ahead and express your views. That is what we want you to do.
Mr. Comer. I think, certainly, that protection should run concurrently with any bill seeking to increase American costs. Whether it should be in the same bill or a concurrent bill is another question.
Representative Connery. I am very glad to hear you say. Usually the cry goes up that only in New England we want protection; but you, coming from Alabama—I am glad to hear you say the same thing.
Mr. Comer. The Alabama farmer wants protection on cottonseed oil and his pecans; Florida wants it on their fruits and paper: and I think if we did not have that protection for them, California and Florida would lose their markets in fruits.
Representative Connery. Thank you, Mr. Comer.
The Chairman. Are there any other questions?
(There was no response.)
The Chairman. If Mr. Comer does not object, I am going to repeat a statement that I made some years ago in connection with the 30-hour bill. I understand that it has already been published, so it won’t do any injury now. My best recollection is that the first man in Alabama that ever suggested to me that the Federal
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Government should enact legislation to protect wage earners from long hours was Mr. Comer himself, and at that time we discussed the child-labor opinion, and he expressed the same opinion that he has today. He did not suggest that I offer a 30-hour week, but he did favor regulation of hours for the Federal Government just as he has done so today, because the States could not protect themselves from competition of other States. At that time he believed that the Supreme Court would likely not follow the Dagenhart case and so expressed to me on a number of occasions with reference to that bill.
Now, how many employees do you have, Mr. Comer?
Mr. Comer. About 6,500.
The Chairman. They are located at how many different places in Alabama ?
Mr. Comer. Ten.
The Chairman. As I understood your evidence—I want to be sure—you favor, as you said, a minimum wage and regulation of hours, but you do not believe that the machinery offered for the fixing of the administration of that program as in this bill would be the proper type of machinery to bring it about?
Mr. Comer. Senator, with the South’s experience with the Interstate Commerce Commission, I do not see how I could feel any differently.
The Chairman. What was the result in the southern mills, so far as you know, generally, on the wage standards and the hour standards that were fixed by the N. R. A.? Did it materially raise the wages and shorten the hours of textile workers?
Mr. Comer. I think the average weekly hour before the N. R. A. in the South was not under 55 and was up to 60.
The Chairman. Up to 60?
Mr. Comer. They were between 55 and 60. With the N. R. A. it almost doubled our wage costs.
The Chairman. You are still working in your mills on the N. R. A. standards, are you not?
Mr. Comer. Yes; higher.
The Chairman. Both as to wages and hours?
Mr. Comer. The hours, the same. I am working 40-hour shifts, but higher than the old minimum N. R. A.
The Chairman. And you have been supporting the tariff on jute for a number of years as a necessary thing to protect the cotton farmers from jute?
Mr. Comer. That is right. They say that I am crazy about it. Senator, but I am still talking about it.
The Chairman. You discuss it on each occasion you can?
Mr. Comer. Every occasion. [Laughter.]
The Chairman. Are there any other questions?
Representative Thomas. Mr. Comer, I was glad to hear you comment on the question of increased costs to the agricultural worker and to the worker who is engaged purely in intrastate commerce should this bill go into effect. I have had a feeling that there must necessarily arise from this bill increased costs to those two classes of workers. However, you are the only witness who has appeared before this committee who has taken that view. I am just wondering if you can give us any estimate of the increased cost or production in
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your industry, if any, should this hill carry with it a 40-hour maximum week or, say, a 35-hour maximum week and a 40-cent minimum wage per hour. Would that increase the cost to your industry?
Mr. Comes. Mr. Thomas, I believe any change in hours or rates from what they are at the present time would automatically and mathematically increase the cost in that same ratio.
Representative Thomas. Well, we have had a great many industrialists, Mr. Coiner----
Mr. Comer (interposing). I am speaking about our industry.
Representative Thomas. Yes; I am speaking about your industry— who point out to us, or rather claim that changes in business management will offset this increase in the cost of production.
Mr. Comer. I would like to hire that man; I don’t know where he is. I am speaking of my industry, the cotton-textile industry. We are operating an automatic machine that runs at a fixed speed. Its production is measured by the number of hours it runs.
Mr. Thomas. Is there anything to the theory that by reducing the workweek, say, 10 or 15 percent, that you are going to increase the efficiency of the workmen and thereby increase your production?
Mr. Comer. The machine will not be speeded up. It is possible that you will get some different quality of the work. The yards will fee about the same, but the quality may be somewhat better because of less fatigue that may come, the fatigue that comes from longer hours.
Representative Thomas. So it is your theory, then, that by reducing the number of hours per week in your industry—which we will apply this to—and by increasing the pay, that you are going to necessarily increase the cost of that product. It is inescapable, is it not?
Mr. Comer. Yes, sir.
Representative Thomas. How will that eventually affect your market, as far as the agricultural worker is concerned and the worker engaged in intrastate commerce? In other words, those two classes under this bill are exempt, and their purchasing power under this bill is not increased.
Mr. Comer. If you recall, under the N. R. A. the whole program was built on the basis that as we increased our costs in our mills under the first code, that just as other industries followed along also increasing their wages, and just as the farm program began to work, giving farmers more income, that this increased purchasing power would take care of our increased costs. It was all presumed to go hand in hand.
Representative Thomas. Do you think that that theory is accurate? Does it work out in practice that way?
Mr. Comer. It did not with our industry.
Representative Thomas. I beg your pardon?
Mr. Comer. It did not with our industry.
Representative Thomas. Well, is this piece of legislation here a wise piece of legislation from a national scope?
Mr. Comer. I am certainly definitely in favor of fixing by statute the control of hours and establishing a minimum wage that will stop exploitation, and fixing the age.
Representative Thomas. You voiced the hope----
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Mr. Comer (interposing). But the bill does not yet say how many hours or what the rate shall be. When you say “the bill”, we are talking about something that is as yet incomplete in those respects.
Representative Thomas. You voiced the hope awhile ago that something be done for the agricultural worker in order that his purchasing power may be increased in order to take care of this increase in costs. How are you going to do that?
Mr. Comer. I say they should go together.
Representative Thomas. Do you have any suggestions to that end?
Mr. Comer. I have a very definite idea that the farmer should get what we call parity of prices, even to the extent of giving it to him out of the Federal Treasury. If he has suffered as a result of the tariff I would take this money that comes from the tariff and pay it to the people who have been hurt by the tariff.
Representative Thomas. I thank you very much.
The Chairman. Have you read the bill which has been worked out by the farm organizations, Mr. Comer?
Mr. Comer. I have not.
The Chairman. I think probably most of the members of this committee agree with you that we should have definite farm legislation.
Mr. Comer. I do.
The Chairman. With the idea of bringing about a parity of prices between the two.
Mr. Comer. I do. I think it is going to take legislation to help the farmer bring his income to parity. I think when it ever got there, before, it was usually because of a short crop or crop failure.
The Chairman. I do not know whether you have the figures in mind or not, but I was wondering how the production of your mill compares in the year 1936 or this part of 1937 with the low year of 1932. Was that the low year in your production?
Mr. Comer. Yes.
The Chairman. Could you give us approximately the figures?
Mr. Comer. I think the American consumption of cotton of 1932 was maybe 5½ million bales of cotton. This year we are consuming 8 million bales of cotton, and I presume that my mills are about in that ratio with other mills. We are consuming 130,000 bales of cotton this year, which is the largest that we have ever consumed.
The Chairman. There is, of course, an advantage in operating constantly—I don’t mean by that 24 hours a day, necessarily—but there is, of course, an advantage insofar as your cost of production is concerned, in constant operation as compared with intermittent operation?
Mr. Comer. Oh, yes.
The Chairman. And therefore, as I understand you, you do subscribe to the idea that a well rounded general program which increases the purchasing power both of the farmers and the workers and sustains it in some way, which would effect a sustained program, would bring about cheaper production of goods?
Mr. Comer. Yes.
Representative Ramspeck. Mr. Comer, you said something in your statement about the North having helped its labor situation by
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stopping immigration, and that the South could help its labor problems by making life on the farm more attractive.
Mr. Comer. Yes.
Representative Ramspeck. I presume you had reference to the fact that most of our labor in the textile mills comes from the farms?
Mr. Comer. Yes.
Representative Ramspeck. And the reason that they come is because they make more money in the textile mills than they can make working on the farms, is that true?
Mr. Comer. Yes.
Representative Ramspeck. And this bill and all similar legislation has a tendency to increase that migration from the farms to the industrial centers?
Mr. Comer. Unless we stop the flow by building the income back there, too.
Representative Ramspeck. You are familiar, I presume, with the fact that taking the year 1935, for instance, the average per capita of spendable income in the Southern States was approximately 40 percent less than the average for the country?
Mr. Comer. I don’t know those figures.
Representative Ramspeck. Those are the figures used by Mr. Lilienthal in an address at the University of Georgia last year. How are you going to maintain our industry in the South if the Federal Government fixes our costs on the same basis as costs in other sections of the country, if our income continues 40 percent below the average, and our costs of transportation are 39 percent above that in official territory?
Mr. Comer. Mr. Ramspeck, you are getting very close to a matter that I think a heap about. I wrote to Senator Black a short while ago, or sent him a copy of the letter, that I did not want to come to any more committees in Washington and discuss here a bill that sought to give us in our mills for our employees, shorter hours and better wages than they were having, that I did not want our employees to feel that somebody somewhere wanted to give them something, and that if it were not for Donald Comer, they would get it; that does not make for a happy relationship for the man that has to go back and run the mill.
We had a southern college professor who was up North two summers ago and came back home and came to see me, and he told me that wherever he went in the North he found a general opinion that we should keep on in the South raising cotton and selling it at world prices and cutting down our pine trees and continue buying all of our stuff from the North as we always had. Well, we like to raise cotton in the South, it is our natural crop, and in some places particularly, they like to raise cotton, but so help me, our good friends in the North who ran the dairy farms and who sack potatoes and sugar and have a high duty on their particular products, won’t give us a duty on jute and won’t sack their stuff with cotton. If they want us to raise cotton down there, we will keep raising it, and we will buy our food from them, but it seems like they should sack their goods with cotton bags. That is not an unreasonable position for us to take.
I would like for the South to have an industrial opportunity— not any more cotton mills. We have too many cotton mills in the
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world already and in this country particularly, but I would like for us to make a few more of the things that we use, and sell a few things across the border also, and I don’t want to do it with any exploitation of our people. The North, when they began to industrialize, had a tariff barrier to protect them from the old sections of Europe. I think our section should have some sort of a protection. I don't know what it should be or how, and I won’t try to express it, but I think that we are entitled to have some sort of a protection in order to have an industrial beginning that will produce more wealth for us, and in the last analysis it will give us a larger purchasing power. We will ship a ton of pig iron and buy back a watch spring, or we will ship pig iron and buy back automobiles. We are still largely concerned in manufacturing the staple things.
Representative Ramspeck. Don’t you think, Mr. Comer, that the businessmen in the South are perfectly willing to pay wages and have work hours on a parity with other sections, providing the other competitive factors are more even.
Mr. Comer. Yes, sir.
Representative Ramspeck. I judge from your statement that you would prefer a fixed minimum wage and a fixed hourly limitation.
Mr. Comer. Yes, sir; by law.
Representative Ramspeck. And no variation by the Board?
Mr. Comer. Yes, sir.
Representative Ramspeck. That is all.
Senator Pepper. You mean, Mr. Comer, the same for all sections of the country?
Mr. Comer. That would depend upon what the amount was.
Senator Pepper. Did I understand you in answering Mr. Ramspeck’s questions, to say that you wanted the limitation to be arbitrary and not flexible, as would be true if it were applied according to varying conditions?
Mr. Comer. I say, depending upon what that minimum is.
Senator Pepper. Do you think that the same minimum should apply geographically to all sections in the United States?
Mr. Comer. I think Congress might write such a minimum.
Senator Pepper. And have only one minimum wage?
Mr. Comer. I think it is possible for Congress to write such a minimum.
Senator Pepper. Do you think that the minimum wage would be helpful in the North if it is appropriate for the South?
Mr. Comer. I don’t think that minimum is going to fix the wage, anyway, in my mill in the South, any more than in the North.
Senator Pepper. Let me ask you this. There are cotton mills, in Lowell, Mass.?
Mr. Comer. Yes.
Senator Pepper. Are the same wages paid for the same work in the same mills—the ones in Lowell, Mass., and the ones in Alabama?
Mr. Comer. There is no such thing as having the same work in the same mills. I have tried to make that clear in my statement. If you try to fix the right minimum wage, the right fair wage, the right fair-minimum wage, if there is such an expression, you have got to then go and fix the task.
Senator Pepper. Fix what?
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Mr. Comer. The task. You have got to measure everything if you are going to fix that task.
Senator Pepper. I am totally ignorant about the cotton-mill business, except that I have been through a few of them. But I thought the work was generally standardized in running a cotton mill.
Mr. Comer. No, sir.
Senator Pepper. What does a weaver do in a cotton mill?
Mr. Comer. He may weave anything from the highest priced silk down to nothing but a cotton bag.
Senator Pepper. There surely must be one job which is more or less identical in all cotton mills. I am not trying to be facetious, but I am trying to get the information whether or not you think a man doing the same labor in a cotton mill in Alabama should get the same price as a man doing the same job in Lowell, Mass.
Mr. Comer. I think if a man in Birmingham did exactly the same job with exactly the same result, as far as I am concerned, I would want him to have just as much as he could get anywhere else in the world, but I have mentioned one thing that stops that, if no other thing. He cannot ship what he makes down South to the market from Birmingham as cheaply as the man in Lowell can ship it.
Senator Pepper. That is what I am getting at. That is the first question I asked you about the payment of the same wage. The second one is this: What is the largest market for textile products for the Lowell mill and the Alabama mill?
Mr. Comer. I presume it is official territory. I say that is the largest market in this whole country. It is 51 percent of the people.
Senator Pepper. Where is that?
Mr. Comer. North of the Potomac and east of the Mississippi.
Senator Pepper. Is Lowell, Mass., further away from that market or closer to it than the Alabama mill?
Mr. Comer. Generally speaking, the rates are fixed putting a 10 percent higher rate on southerners than this particular territory you are talking about.
Senator Pepper. The cotton that produces the product is grown in the South, south of the Potomac River.
Mr. Comer. That is right.
Senator Pepper. The distance of the Alabama mill, though, is further away from the purchasing market than the Massachusetts mill?
Mr. Comer. Yes.
Senator Pepper. Which one, per mile, has the advantageous freight rate?
Mr. Comer. To the market?
Senator Pepper. Yes.
Mr. Comer. Lowell.
Senator Pepper. Lowell, Mass.?
Mr. Comer. Yes.
Senator Pepper. Which one, in labor skill, has the advantage? That is, in the labor that is skilled in the production of this kind of a commodity? Lowell, Mass., or Alabama?
Mr. Comer. Because of what?
Senator Pepper. I take it that you know something about the labor conditions in the South, and you must have made comparisons with the skill of the labor doing similar work in the North.
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Mr. Comer. No; I don’t know that.
Senator Pepper. Would you say that labor is equally skilled and equally competent in the two sections!
Mr. Comer. May I ask, who is this that is questioning me?
The Chairman. Senator Pepper, of Florida.
Senator Pepper. What I am getting at is this, Mr. Comer: I am very much interested to know whether there ought to be any differential. My people generally in Florida think that there ought to be a differential. I thought that you people in Alabama thought there should be a differential. You, I know, are vitally interested in a hearing here today, and so am I. You have answered me so far that they have the advantage of freight rates over us in reaching the market, and you have answered me that they have the advantage in reaching the market geographically because they are a shorter distance away from it than we are. Now, I am asking you about the labor. Generally speaking, is colored labor in the South as skilled as northern labor?
Mr. Comer. Would you mind if I would just read a little from my paper here again?
Senator Pepper. I would be glad to hear it.
Mr. Comer. I am speaking now of the differences in the labor costs, or the costs going into the manufacture of goods that might apply because of regional or sectional or geographical differences, and here is what I say—and that is, that you cannot make different minima unless you know a whole heap, and unless you make a rate low enough to be sure to cover the whole country; but then, if you try to cover it by sections, then you have to go into a whole heap, and I would not know how to advise you. This is what I said:
This Is particularly true because of differences even in the same industry, whether in different sections or not; differences in the quality of the raw material, in the condition of the machine, differences In freight rates per ton- mile, in the degree of percentage of efficiency and of precision of the people engaged, differences in the distance to the markets, in climatic differences and its effect on quality and quantity, differences in literary or illiteracy and pretraining that is brought to the job, and differences in the value of the unit of production, differences in the percentage of labor cost to the whole cost, also differences in the cost of the raw material to which the labor is applied.
Senator Pepper. You mean to imply there are differences in the skill of the people employed in different industries?
Mr. Comer. Yes. 1 may be making in one mill a piece of cloth that sells for 10 cents a yard. If I spoil it, there is not much loss; but suppose I am making a silk that is worth 50 cents a yard, and I spoil that with a greasy hand or tobacco juice? All of those things have to do with it.
Senator Pepper. If there are so many factors as those that you have just mentioned which enter into the cost of production, is it likely that you will find an identity of all of those factors in the different sections geographically of the United States? Is it likely that you will find the cost of raw material the same in the South as in the North?
Mr. Comer. They will be different.
Senator Pepper. So it is not likely that you will find identical conditions involving so many factors all over the United States, is it?
Mr. Comer. You will not.
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Senator Pepper. So if you apply a rigid standard, then are you not likely to get injustice?
Mr. Comer. I made the statement that it would have to be low enough so that it won’t do that.
Senator Pepper. If it is low enough to reach the bottom, it may be so low as not to help the top; is that possible?
Mr. Comer. If you were depending upon that only to do the helping.
Senator Pepper. That depends, of course, upon the degree of difference in the sections of the country?
Mr. Comer. Yes.
Senator Pepper. What percentage of the cost of textile products is attributable to labor?
Mr. Comer. It is anywhere from a half or three-quarters to a quarter in just the things that I know of.
Senator Pepper. That is all.
Representative Ramspeck. The whole purpose of your suggestion, as I understand it, was that the minimum be fixed so low that it would just simply be a bottom below which nobody could go and could cover the whole country that way?
Mr. Comer. And which would be high enough to catch some of the things that Senator Black mentioned in his speech last night.
Representative Ramspeck. Have you got any figure in mind?
Mr. Comer. No, sir.
Representative Ramspeck. You are not in a position to suggest a figure?
Mr. Comer. No.
The Chairman. You feel the same way about hours? Do you think that they should be fixed in the law ?
Mr. Comer. I do. I think you can arrive at an hour that would come nearer being right than a minimum wage you might fix.
The Chairman. You believe that the maximum hour could be fixed by the statute itself?
Mr. Comer. Yes. The Chairman. Do you care to express any judgment as to what that should be?
Mr. Comer. I think 40.
The Chairman. Do you believe, as this bill provides, that there should be any permission to work longer than 40 on payment of overtime?
Mr. Comer. No. Get another man.
The Chairman. Get another man.
Mr. Comer. Yes.
The Chairman. You believe in fixing the hours in the bill to get the full advantage of it?
Mr. Comer. That is right.
Representative Wood. The question has been asked of the witnesses what they thought about the effect of this bill, if it lowered the hours of the workers and raised the wages. What effect would it have upon the agricultural worker—if it would depress the agricultural worker? This or any other bill that would seek to raise the standard of wages and lower the daily and weekly working hours would tend to spread employment and increase the purchasing power or the buying power of the worker, and it is natural that
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that would increase the demand for farm commodities. Now, don’t you think it would bring farm commodities up relatively with the demand for that commodity?
Mr. Comer. Well, that is going at it one way.
Representative Wood. It would tend to level or equalize the price of farm commodities or elevate the prices?
Mr. Comer. I think you are starting at the wrong end of it. I think you ought to start the farm income up, and let that bring the wage up, instead of the other way. I think we certainly ought to start together, anyway.
Representative Wood. During the war, what caused wheat to go up $3 a bushel, and what caused the market price of livestock to go up $22 and $23 a hundred?
Mr. Comer. That was because of the war.
Representative Wood. Was that because of any particular special condition of the farmer? Was it not due to the fact that the worker had more purchasing power, and there was a greater demand for that commodity at home and abroad? The scarcity of wheat created a scarcity of livestock. Or, put it this way, that the greater demand existed for the commodities, both at home and abroad. If that did not bring up the price of wheat to $3 a bushel, what did raise the price?
Mr. Comer. I would not argue that. That is like the question of the hen and the egg.
Representative Wood. If you did not have a demand for your commodities, if you did not have demand for the output of your still, how would you go about raising the price? Certainly the demand for the commodity would regulate the price to a great extent, would it not?
Mr. Comer. I think that.
Representative Wood. You must have a demand first?
Mr. Comer. Yes.
Representative Wood. The ability of the people to buy that commodity.
Mr. Comer. I think that.
Representative Wood. Therefore, the ability of the people to buy the farm commodities would naturally, I should think, raise the price of farm commodities. Would it increase the ability of the farmer to buy, and would it make it more possible for us to bring about a parity of prices between industry and agriculture?
Mr. Comer. I think increased farm income goes more for industrial things than industrial wages go for farm things. I will put it that way.
Representative Wood. I think one affects the other.
Mr. Comer. I know that they affect each other.
Representative Wood. The farmer must have a demand for his commodity in order to sell and get any price for it at all. The depression ought to convince any reasonable fair-minded man or woman of that. Then, labor must have a demand for its commodity if it expects to get a price or a reasonable wage. One is dependent upon the other. So it occurs to me that this or any other bill—any bill that elevates the standard of wages of the worker in this Nation would increase the buying power, and a bill that will reduce the
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working hours would spread employment. It would enable the workers to buy more of the necessities of life, it would increase the demand for farm commodities, and then in turn the farmer, who is asking a better price as a result of a wholesome demand for his product, would be able to buy and create a demand for labor.
Mr. Comer. Are you willing to bar our doors against all these imports?
Representative Wood. Do what?
Mr. Comer. Are you willing to bar our doors against all imports, and give the American industry the whole market?
Representative Wood. I would like to see that done as far as humanly possible. I would not care to do it or see it done to the extent that it would interfere with the relations between this country and others, with the amicable relations that we have with foreign countries.
Mr. Comer. I don’t think that we can sit down and change wages and hours without giving that very serious consideration.
Representative Wood. Then you would be in favor of that embargo provision ?
Mr. Comer. I am almost willing to say that we will live it out by ourselves over here.
Representative Wood. Of course, that is a question that has a great deal of merit in discussion on both sides, but the thing that I am trying to get at is to clarify that point that has been made. Every witness has been asked, “Don’t you think that raising wages and lowering the hours would depress the condition of the agricultural worker?” If we agree that the demand for wheat and livestock and other commodities during the war raised the prices, then would it not go without saying that raising wages and lowering the hours would spread employment and increase the buying power of the workers, and would also increase the demand for farm commodities, and they would naturally go up in price?
Mr. Comer. No; I think I am going to still stick to my story. I believe I am going to raise the farm income first, and then let him increase the industrial wage by his buying.
Representative Wood. It does not make any difference which way it is done. I am satisfied to do it any way that you can. But how can we do that?
Mr. Comer. I just told you one way. Let us put a tariff on jute. I will come back to that subject again.
Representative Wood. Just one more question. You will admit, in view of the fact that we have never exported more than 8 percent of our output, that the tariff could not do that altogether? Something else would have to be done instead of just regulating the tariff. You could not regulate the tariff and regulate the prices of products in this Nation when we only export 6 or 8 percent of our output at any time. The greatest export we have is cotton and wheat.
Mr. Comer. From 1922 to 1930 the greatest industrial activity which we had, we imported in this country less than 105,000,000 yards of cloth a year from people who had been buying our cotton for years—England and Europe. And yet when we went to Japan this year and got there on January 8, Japan had already sold to this country 155,000,000 yards of cloth for delivery in 1937, and that in addition to socks and gloves and fishnets and underwear.
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Representative Wood. What do you consider raised the price of cotton in the last 4 years? Any change in the tariff? The tariff has not been changed on cotton since----
Mr. Comer. Do you mean cotton or cotton goods? We have no tariff on cotton.
Representative Wood. Raw cotton or cotton goods.
Mr. Comer. Cotton has no tariff. It has no tariff either for itself or for jute substitutes, excepting the cotton grown in California and Arizona and New Mexico. They got a nice tariff of 7 cents a pound when they began to grow cotton, and yet we cannot get a tariff on our cotton from Texas to the Potomac.
Representative Wood. What effect has the tariff had on raising or lowering any goods in the last 5 years? The tariff has not been changed since the Roosevelt administration came in.
Mr. Comer. He changed it 42 percent on Japanese imports last year.
Representative Wood. How are you able to account for the rise in price of commodities in the last 5 years? The tariff did not do it.
Mr. Comer. The Government has fixed the price of cotton and protected it itself. That is what fixed the price of cotton in the last 4 years.
Representative Wood. The tariff has nothing to do with it?
Mr. Comer. No; it could not. But the tariff could keep jute out by 2,000,000 bales, and we would have a much bigger cotton business in this country, and our cotton mills would be busy.
Representative Wood. That is all.
The Chairman. Thank you very much.
STATEMENT 0E JOHN M. KEATING
Mr. Keating. My name is John M. Keating, an attorney, at present practicing in New York. I appear here with Dr. Brissenden with authorization to speak for 700 manufacturers and 20,000 workers engaged in the millinery-manufacturing industry in the metropolitan area of New York and New Jersey.
This authorization was given at a meeting last Wednesday afternoon attended by the chosen representatives of these manufacturers and the officers of the United Hatters, Cap, and Millinery Workers International Union.
It gives me a great deal of gratification to be able to say that I am authorized to endorse whole-heartedly and without reservation the principles, policies, and ends intended to be accomplished by this act. I am still more happy to say that our authorization was unanimously given at the meeting I referred to. It seems to me that it speaks well for the future of American industry when enlightened employers in an industry producing a volume of $100,000,000 or more per year can sit at the table with union leaders and jointly ; endorse constructive, progressive legislation.
We understand that the presently proposed bill is intended to be a skeleton and that you have invited suggestions to strengthen and improve it. We have some suggestions to offer. These suggestions are friendly suggestions. We hope they will prove constructive. They are intended to strengthen the bill to the greatest possible extent. They are as follows:
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1. NO DIFFERENCE, EXCEPTIONS, EXEMPTIONS, LEARNER PROVISION, OR OTHER VARIATIONS OF FAVORITISM SHOULD BE PERMITTED EXCEPT AFTER AN INDUSTRIAL SURVEY AND AN OPEN HEARING AND AFTER A FINDING BY THE BOARD IN THE SPECIFIO CASE THAT THE PREFERENCES WILL NOT RESULT IN A COMPETITIVE ADVANTAGE IN THE LABOR OR OTHER COOT RER UNIT OF PRODUCT
By “differentials” I refer to the requiring of manufacturers located. for example, in New England to pay 80 cents per hour while permitting competing manufacturers located, for example, in the Rocky Mountain region to pay 40 cents per hour.
By ‘‘exceptions or exemptions” I refer to requiring one manufacturer to pay 80 cents per hour while his next-door competitor pays 40 cents per hour.
By ‘‘learner” regulations I refer to the practice of permitting a manufacturer to pay part of his help a subnormal wage under the pretext that they are inexperienced. The same thing relates to physically incapacitated regulations.
I predict that N. R. A. history will repeat itself when this act goes into effect. The ever-ready battalion of the real sweatshops will marshall their lawyers and descend on Washington to obtain by law the right to compete unfairly by underpaying their workers. They will not state their proposition as baldly as this. They will pick out some “small man” as a front to hide behind. They will then attempt by every means at their command to overpower what they hope will be a credulous board with arguments that employees in. for example, Kansas City, Dallas, or perhaps Birmingham, are less efficient than those, for example, in New York, that the cost of living is lower, or some other sham.
I was intimately connected with such a case during the N. R. A. High wages were being paid by the dress manufacturers of New York City. Chiselers united behind a Kansas City factory and argued that the workers in the West and South were less efficient than those in New York and that the law of the land should permit them to pay less. A credulous N. R. A. board was duped into amending the code so that it required, for example, a manufacturer in New York to pay his cutter $1.28 per hour while it permitted his competitor in Kansas City to pay the same cutter for the same hour’s work 89 and a fraction cents; $1.28 compared to 89 cents for the same hour’s work by the same cutter. There never was a more unjust order. To add insult to injury the Kansas City firm then obtained an exemption so that it did not have to pay even 89 cents. As a result, no manufacturer in America could compete with the workmanship and value for the same price of the dresses put out by the Kansas City manufacturer. There is nothing in the present act to prevent a repetition of it, and I predict that if the act is declared unconstitutional it will be in a case arising out of such a situation.
I resent the basis of the argument which was advanced. I am a westerner; my father and mother grew up in Kansas City. I know western people. I challenge anyone to prove that the third- and fourth-generation Americans with whom I went to high school are less intelligent or capable than the immigrant or first-generation American living on the East Side in New York. I know the New
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Yorker and know him well. He is efficient; he is intelligent; but no more so than my high-school mates in Denver. I further say that the same thing applies to the man or woman who grew’ up, for example, in Birmingham, Ala., or in Taunton, Mass.
I think all of these gateways for evasion should be eliminated. However, that may not be practical. In my proposal I give the preferential-wage advocate the benefit of the doubt. Maybe some of them can show justification. I say if he can prove to the satisfaction of the Board, and it makes a finding to that effect, that the differential will not result in a lower labor or other cost per unit of product, then, and only then, should it be granted. It is for the fair employer rather than for the worker that I make this plea. The fair employer who has paid 50 cents for making a pair of pants cannot sell them in competition with a man whom the law favored by permitting him to pay 30 cents. It is the unit labor cost rather than the hourly rate that affects competition and diverts the flow of interstate commerce. Unit labor cost is easy to calculate by a manufacturer. He has to know it to price his product for sale. If he contends his employees are so inefficient that he is entitled to special privilege he should be required to prove that he will not have a cost advantage which will wreck his competitor. No other guide can be applied. If the Board is given unlimited discretion it will be duped once and that exception will wreck the act while probably ruining honest businessmen.
II. THE LABEL PROVISION SHOULD BE AMPLIFIED TO GIVE THE BOARD THE POWER TO SUSPEND AFTER A HEARING THE RIGHT OF A VIOLATOR TO USE THE LABEL UNTIL AND UNLESS HE MAKES REPARATION
Manufacturers either want this law enforced universally against the chiseler or they do not want it enacted. They do not want the chiseler slugging below the belt while the law ties their hands.
I respectfully suggest that the United States Army and all the courts in America could not enforce the law on a basis of sheer force. Speedy and fair hearings of violations should be held by the Board. If the violator persists in refusing to comply with the standard in the industry he should be put out of business by suspending the right to use labels. No one should be permitted to buy products without the label. The hearing should of course be fair and in nowise arbitrary. The violator should be given the right to a speedy review in court.
With the psychological power of such a right there will be mighty little chiseling and we have enough confidence that a fair board will be selected that we think mighty few cases will go to court. We do not want another prohibition law enacted and not enforced.
III. THE ACT SHOULD PROVIDE THAT ANY EMPLOYER WHO D0E8 NOT KEEP PAY-ROLL RECORDS IS PRIMA FACIE GUILTY OF WAGE UNDERPAYMENTS
A shocking number of American employers do not keep pay-roll records. When they do not have records, enforcement officers find it almost impossible to prove violations. They should be forced to keep records by the above rule of evidence.
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IV. THE PROVISION PERMITTING SUITS SHOULD AUTHORIZE REPRESENTATIVE ACTIONS AND SHOULD REQUIRE APPROVAL OF THE BOARD UNTIL SUCH TIME AS BOARD PERMITS SUITS WITHOUT PERMISSION
The psychological factor of permitting an employee to sue is a good step in the right direction of enforcement. However, it is not sufficiently broad. The lawyers on this committee will understand what I mean when I state that the codes of procedure in most States would not permit the joining in one suit of all employees of a particular employee. I imagine what would happen if a thousand employees of one chiseler had to file a thousand separate suits. It just would not be done. The chiseler would know it would not be done. The psychological advantage to enforcement would be lost. Assignment except to the Board is prohibited. I feel one employee or his labor union should be permitted to bring a representative action for the benefit of all employees similarly situated. Such a provision would make the act semi-self-enforcing and would stop 90 percent of chiseling.
However, it is dangerous to permit promiscuous filing of suits until there has been a proper test of constitutionality. As drawn, the act would permit a test of constitutionality on a $2 lawsuit instituted by a friendly employee against an employer in some little town, for example, in Colorado who suddenly was tendered the services of a battery of New York legal lights. The Government would not hear of the case until the evidence was in and the record made and the damage done. After a proper test of constitutionality is had it will be time enough to permit unauthorized suits.
V. THE ACT SHOULD REQUIRE A SURVEY OF AMERICAN INDUSTRY; DIVISION OF INDUSTRY INTO AT LEA8T 10 BASIC DIVISIONS; AND THE APPOINTMENT OF 10 ADMINISTRATIVE ASSISTANTS TO THE BOARD TO ADMINISTER THE ACT FOR THESE BA8IC SUBDIVISIONS; SAID ADMINISTRATIVE ASSISTANTS TO RECEIVE AMPLE COMPENSATION AND TO BE SELECTED WITH THE ADVICE AND CONSENT OF THE STATE
The problem of administering this act is by far its most important aspect. Properly administered it can be a huge success. Improperly administered it will be a hopeless failure. The reaction resulting from the failure will set progressive legislation back 10 years. No one who has not had intimate experience with a problem of this kind can conceive of the gigantic task which will confront this Board. No five men in the world could be personally responsible for the duties assigned to them. There must be a methodical and logical approach. If my suggestion of a division into at least 10 basic subdivisions were followed you would probably have textiles and the needle trades in one division. The size of the task of the Board is illustrated when we realize that my industry of $100,000,000 a year and 30,000 employees would be a drop in the bucket in this one division. The dress industry with $600,000,000 a year and over 100,000 employees would be but a small part of this industrial subdivision. This subdivision would have an annual dollar volume of 2 to 3 billion dollars and would employ at least a million and a half employees. This whole textile division would not constitute one- tenth of the problem being assigned to the Board by this act.
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Representative Ramspeck. I just wondered if there was any particular reason why you said 40 rather than 35 or 45 or 50.
Needless to say the Board cannot do the job without delegating its functions in most instances. We want it delegated on a logical, methodical basis and we want the administration delegated to men in whom all the world has confidence both as to their ability and their integrity. We do not want to take the chance of a hasty or ill-advised selection. We would like to have the Senate examine their credentials before approving their appointment. It will be absolutely impossible to get such men for less than $10,000 per year.
The problem of executive personnel is far more difficult than popularly believed. It will be almost impossible to select a man to administer an industry who is experienced in that industry, whose appointment will not be looked upon with suspicion by some part of the industry. Charges will be made of favoritism to his former friends and associates coupled with charges of oppression to his former enemies. It makes no difference if he is doing an honest conscientious job—the charges will be made. On the other hand, it is almost folly to bring an uninformed outsider in to administer a law for an industry or which he knows nothing. This was a constantly recurring problem throughout N. R. A. Honest efforts were made to get good men but they were as scarce as hen’s teeth. As an example, under the N. R. A., the needle trades were administered for months by a construction engineer who for years had been building subways. He knew nothing of a style industry operating at startling speed, in a life-and-death struggle of competition where a nickle per garment meant the difference between ruin and profit. The selection of wise, able, experienced men on the Board and as administrative assistants is more important than anything that is written in the act. Needless to say, in addition to their other qualifications they must have the respect, of both labor and employer. The Board should have the right and power to delegate to the administrative assistant with the right of appeal to the Board from his decision.
VI. THE PROVISIONS RELATING TO CHILD LABOR AND “OPPRESSIVE LABOR PRACTICES” (STRIKEBREAKING AND ESPIONAGE) SHOULD BE ELIMINATED FROM THE BILL
The administrative problem confronting this Board with reference to minimum wages and maximum hours are such that the Board will be entitled to a separate page in American history if they successfully cope with it.
The people whom I represent are unanimous in condemning child labor. We want it exterminated. We likewise condemn the so- called oppressive labor practices. Because we do want them exterminated we think that the administration of their extermination should not be thrust on this overburdened board.
It seems to me that strikebreaking should be handled by the National Labor Relations Board. If the provisions of the Connery- Wagner Act are not sufficiently adequate, that act should be amended.
A subcommittee of the Senate Interstate Commerce Committee is now considering the problem of child labor. Incidentally, I will depart from the prepared statement. I understand the Interstate Commerce Committee has now reported out a child-labor bill which,
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if not completed at this time, should be amended so that it would be properly complete, and the administration of the act should be placed in the Children’s Bureau of the Labor Department, where it belongs, rather than burdening this Board with it.
These suggestions are tendered in the hope that they will be helpful. They are based on some little experience with these problems. Although formerly practicing law in Denver, I was assistant counsel of the N. R. A. for its first 6 months. I resigned to become general counsel and chief enforcement officer of the Dress Code Authority for the entire United States. The segment of that industry located in New York employs over a hundred thousand workers. It is New York’s largest industry. I supervised the collection of a quarter of a million dollars in wage underpayments in that industry.
At present I am general counsel to the millinery stabilization commission, an impartial body jointly selected by the union and employers to stabilize the industry. The commission is composed of three men. Max Meyer is chairman; he is a banker. Since 1910, when he worked with Judge Brandeis in writing the first collective agreement in New York City, he has devoted his life to the solution of industrial problems. Prof. Paul E. Brissenden, of Columbia University, is vice chairman. He is an economist of note who will testify concerning his knowledge and experience in this, a fair example of the ordinary American medium-sized industry. O. W. Pearson is executive secretary. He is a long-time businessman with a wealth of practical experience. We have been engaged for over a year in actively working on the very problem that you are now studying. It is the only body of its type of which I know in America.
Representative Connery. Any questions?
Representative Ramspeck. Yes, Mr. Chairman. I would like to ask the witness what goes into the determination of unit-labor costs.
Mr. Keating. The labor cost which it costs the man to manufacture his unit of product.
Representative Ramspeck. Does that include transportation to the market?
Mr. Keating. No, sir; it does not.
Representative Ramspeck. Does it include taxes and insurance?
Mr. Keating. No, sir; it does not.
Representative Ramspeck. Does it include capital investment?
Mr. Keating. No, sir; it does not.
Representative Ramspeck. What is the difference between unit labor cost and the cost of labor, then?
Mr. Keating. Every manufacturer has to pay his taxes and has to pay his transportation.
Representative Ramspeck. Yes; but they are not all the same.
Mr. Keating. Well, there is no reason why labor should pay it for the employer.
Representative Ramspeck. Yes; but there is no reason why labor should not benefit if his costs of transportation are less than some other men. Why should not labor get part of the benefit?
Mr. Keating. Unfortunately that is not the way it happens.
Representative Ramspeck. That may be true.
Mr. Keating. It is the low-cost product which sets the standard in the industry rather than the highest-cost product. It would be very desirable if that did not happen.
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Representative Rambpeck. If one manufacturer has a 40 percent differential in his favor in reaching the market don’t you think labor ought to get the benefit of it? Don’t you think labor ought to share in the benefit?
Mr. Keating. Along with other factors: but labor should not bear the burden, it should not pay the freight for the man who has to pay the higher freight.
Representative Ramspeck. Let us put it in another way. If he has a lower freight rate why should not he pay more for his labor?
Mr. Keating. I understand the philosophy of this bill is to establish fair competition in labor. Now, I think the freight rates ought to be considered by the Interstate Commerce Commission, rather than taking up the cost of freight in connection with the amount per hour that the worker will receive. In other words, in my proposal I would require that no manufacturer get a competitive advantage by reason of any differential given in this act. The basic minimum in section 4 should be the standard for everybody. When they get into section 5, in the event that there are any differentials those differentials should be made only after an industrial survey, so that no man is getting a competitive advantage by reason of any differential which he receives.
Representative Ramspeck. In other words, you would not apply the same minimum everywhere, if it could be shown that a lesser minimum would not give him an unfair advantage?
Mr. Keating. If such a survey is actually honestly made—and I have made them and I know you will find that the advantage does not result. You will have people get on the stand when they are not under oath and tell about their excessive costs and the reasons why they should be allowed to pay a lesser labor cost, but if you send an accountant in to find their costs and compare them with the cost of the employer who is paying a decent wage you will find they are not justified in requesting these exceptions. You will find they are not justified, that they can just as well pay as decent wages as the man who is located at some other place.
Representative Ramspeck. Let me ask you another question. What do you think the fair minimum wage should be?
Mr. Keating. Well, I think that the lowest should be 40 cents an hour.
Representative Ramspeck. Why do you reach the figure of 40 cents?
Mr. Keating. Certainly American industry at this time, if it justifies its existence, should be willing to pay labor at least 40 cents per hour.
Representative Ramspeck. I just wondered if there was any particular reason why you said 40, rather than 35 or 45 or 50.
Mr. Keating. Only that apparently most people are willing to go to 40 cents an hour. They believe that is not going to he so revolutionary as to upset American industry at this time. If a study of the industry will show that more than 40 cents per hour is justified, certainly the manufacturers ought to pay it, when other American manufacturers pay decent wages so that they can buy the manufacturers’ products.
Representative Ramspeck. That is all. Representative Connery. Any other questions? If not, I would like to ask a question or two.
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Mr. Keating, you spoke about the procedure, you said “State courts.” Under this procedure, as I understand it, we go into the district court. If a group of manufacturers disobey an order of the Board on its fair labor standards, the Board, on its own motion, could go into the district court, a Federal court.
Mr. Keating. That is right; but the act also authorizes an employee to bring suit in the State court against his employer for the underpayment which he has received.
Representative Connery. What remedy would you suggest, as far as the multifariousness is concerned there, when a thousand men are involved?
Mr. Keating. I think until there has been a proper test of the constitutionality any employee should be required to get permission of the board before he could sue his employer. After that the board could make a rule vacating that provision. In other words, if you do not do that somebody can sue for 1 day’s pay in the municipal court in New York and go to the court of appeals on the constitutional question, and it will be in the Supreme Court of the United States on an improper record, improperly tried, and there will not be a proper test of the act before the Supreme Court. After there has been a proper test then that rule can be vacated so any employee could sue for his wages. I do not think merely letting him sue is enough, I think he ought to be able to sue for himself and for the benefit of any other employees of the same manufacturer similarly situated.
Representative Connery. Do you think there should be a process something like permission to intervene in the suit?
Mr. Keating. That is right, until there has been a proper test.
Representative Connery. One man representing all the organized workers to do the suing?
Mr. Keating. Yes.
Representative Connery. Instead of one man simply suing a small employer just to get it before the Supreme Court?
Mr. Keating. That is right.
Representative Connery. Mr. Thomas.
Representative Thomas. Mr. Connery, you recall the act specifically provides that the board shall act as a sort of trustee and take an assignment, so to speak, from all the members in the organization that have a suit against the Government and this trustee will then sue for these beneficiaries.
Representative Connery. But he points out that there is also a provision that will allow him to go into the State courts and sue for themselves.
Representative Thomas. Yes; the State court gets concurrent jurisdiction. If he does not have the proper form it says some member of the Board shall act as assignee for these various claims. The gentleman, from my observation, still does not meet my objections to it. We are going to have a thousand and one suits. It seems to me that the better method would be—and you recall that these suits arose by virtue of the fact that the employee has worked more than the maximum work week and has worked at a salary less than a minimum, and it appeal’s to me that at least the less hazardous method to handle that situation and to rectify it is to let the board come into the suit—to condemn the merchandise, because, after all,
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this very section is only a deterrent to prevent the manufacturer from paying less wages, to prevent him from working long hours, and certainly when you go to sue and condemn the goods that the employee worked on, that would have a tendency to stop it and would be a lesser burden and expense.
Mr. Keating. I do not think the board should even have to sue about it. I think the board should be given the power to suspend the right to use labels by the employer if he does not meet the provisions of the act.
I would couple with that, and I think it is perfectly proper, that the employees act as enforcement agents by suing for their wages, but they should not be required to sue only for their individual wages, they ought to be able to bring in other employees in that plant.
Representative Thomas. How is that employee going to gain the information to go to court and sue on? The burden of proof is entirely on his shoulders when he brings an action. This is a legal action, not an equitable action. Where is he going to get the evidence?
Mr. Keating. If you adopt my rule, if the employer has no payroll records that is prima-facie evidence of a pay-roll violation.
Representative Thomas. The bill specifically states that the board shall have power to put in an inspector.
Mr. Keating. In the needle industries in New York not one manufacturer in 10 has pay-roll records that are adequate to prove that there was no pay-roll violation. You place a prima-facie case for the employee in his hands by making a rule of evidence that in the event the manufacturer does not have pay-roll records available he is, prima facie, guilty of wage violations and the employee can recover the wages that are due him.
Representative Thomas. You just make it a rebuttable presumption ? The presumption is the employer has the burden of proof ?
Mr. Keating. That is right. The employee working right in the factory is in a better position than the board to institute suit, and if there is a possibility of his instituting suit there will be mighty little violation. In other words, if one employee can go out and sue for all of the body of employees in that factory, against the same employer, the employer will stay in line, he will not violate the act. It is a sort of a psychological weapon that you can put in the hands of enforcement officers, whether they be employees of the manufacturer or whether they be employees of the board. That is very desirable for the purposes of enforcing this act, because there are not enough accountants in the United States to enforce the law by power.
Representative Thomas. If I may interrupt you there, do you think the employees should have the right to go into court and sue without consulting the board, or the agent of the board?
Mr. Keating. Not until there has been a test of constitutionality.
Representative Thomas. Suppose that the act has been held constitutional, then what about it?
Mr. Keating. Yes; I think they should. I do not hesitate to say that the machinery of any board is going to be cumbersome in some of these industries in New York. Take, for example, in this industry, one manufacturer out of five goes broke every year. The
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employee should be able to go in and start his suit and protect his rights rather than going through a long, drawn-out procedure in the Board, but I would not give him that power until and unless there had been a proper test of constitutionality.
Representative Thomas. You are overlooking a very practical angle of the situation. The employee must necessarily, to win his suit, depend upon the proof that the Board is able to furnish him.
Mr. Keating. No.
Representative Thomas. Is that not true ?
Mr. Keating. No ; I do not think so.
Representative Thomas. Assuming that it is true, suppose the Board would take the position in court that the manufacturer had complied substantially with its rulings but the employee disagrees, certainly the employee would have no chance in the world to win the suit in court, if he took that position.
Mr. Keating. I think he would. All he has to do is to go in and show how much he was paid, how much the other employees were paid, and how many hours they worked.
Representative Thomas. He would be in a position, you think, of showing how many hours the other employees worked, without the assistance of the Board?
Mr. Keating. Yes; I think so. He could do it better than the Board, because he was there.
Senator La Follette. Any further questions?
Representative Thomas. No.
Senator La Follette. Thank you very much, Mr. Keating. Prof. Paul F. Brissenden.
STATEMENT OF PROF. PAUL F. BRISSENDEN, REPRESENTING THE MILLINERY MANUFACTURING INDUSTRY
Senator La Follette. Please state your full name, address, and your present position for the record.
Mr. Brissenden. My name is Paul F. Brissenden. I am a student and teacher of economics at Columbia University in New York City. I am also vice chairman of the millinery stabilization committee in New York City.
Senator La Follette. Please proceed.
Mr. Brissenden. I am here to represent the millinery stabilization commission except insofar as I may have comments to make which are purely personal to me, in which case I shall endeavor to earmark them as such.
As Mr. Keating has said, the commission which we represent was set up by a joint agreement between the millinery workers union and the employers association in the industry, representing the New’ York and New Jersey markets, and charged with the task of effecting, insofar as it possibly can, the stabilization and elevation of standards in the industry.
It is unnecessary to go over in detail the matters which our attorney, Mr. Keating, already has set out in his statement to the committee. I need only say that I subscribe to the recommendations he has made with respect to the bill now under consideration. Both the employers and the workers in the New York and New Jersey sectors of the millinery industry are strongly convinced of the necessity
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of setting up organized control and stabilization mechanisms for the regulation oi competition and the elevation of competitive standards in the trade.
Both employers and employees are particularly well organized in the metropolitan area which we represent. Nearly three-fourths of the millinery manufacturing in the country is done in that area. The groups for whom we speak are articulate and have had a considerable experience in dealing with the abuses of unregulated competition in a trade wherein such competition spells bankruptcy for employers and sweatshop employment or unemployment for the workers. In this industry, as in many others, “free competition” and “fair labor standards”, whether of wages or of hours, cannot coexist.
I might say here that the accountant of the Commission and I have made a report upon the economic condition of the industry, so far as the New York market is concerned, and that we have here copies of that report which will gladly be placed at the disposition of the committee, if it is desired.
Senator La Follette. We would be glad to have you leave that 1 with the clerk of the committee.
Mr. Brissenden. I shall be glad to do it. The millinery industry—capital and labor alike—believes, as to basic minimums and maximums for wages and hours, that it is desirable that they be imposed by Government, as this bill proposes to do. It believes that as to wage rates above the minimum and hours of work time below the maximum the prime reliance should be upon private negotiation, collective bargaining, and trade agreements, between the parties. We think, therefore, that the emphasis in this bill should be upon the setting of marginal, not intermediate, standards as to wages and hours, leaving to collective bargaining the task of improvement upon these basic marginal standards. While Government, I think, should not so legislate as to supplant or hamper collective bargaining, or weaken the private agencies which carry it on, the Government can do much to supplement and reinforce it. On this aspect of the problem foreign legislative experience is illuminating.
In Germany, before Hitler, it was provided by law that collective labor agreements, under certain conditions, might be extended by official order and made applicable to all workers, nonunion as well as union, in the area covered by the negotiated compact. The general idea has been adopted more recently by at least four of the Provinces of Canada. The first of these Canadian laws was that of Quebec, which in 1934 enacted the Collective Labor Agreements Extension Act. Under this law a trade agreement, which ordinarily is binding only upon the parties to it, may be made applicable by orders in council upon all employers and employees in the industry or region which it covers. Upon petition by any union or employers’ association, and after notice, publication, and lapse of a specified waiting period, the Minister of Labor “if he deems that the provisions of the collective, labor agreement which is the object of such petition have acquired a preponderant significance and importance for the establishing of conditions of labor in a trade or industry in the region for which the agreement was entered into may
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recommend * * * (its) approval * * *.” It is pertinent in the present connection to note that the Quebec law specifically provides that “the only provisions of the collective labor agreement which thus becomes obligatory upon the (nonsignatory) employees and employers concerned are those respecting rates of wages and hours of labor.”
Extensions under the Quebec act already have been made covering about one-fourth of the wage earners in the Province. The Quebec pattern has been closely followed in Ontario (Labor Standards Act, 1935), Alberta (Industrial Standards Act, 1935), and Nova Scotia (Industrial Standards Act, 1936) for the city of Halifax and the town of Dartmouth only. The “extensions” so far made appear to have been chiefly in the apparel and building trades. Among the apparel trade agreements which have been “extended” in this way is one for the millinery manufacturing industry of Quebec.
I have no competence as a legal draftsman and I will not attempt to put the suggestions in the form of an amendment, but I recommend that the committee consider the question whether it may not be desirable to incorporate (possibly in part II of the bill) a provision for “extending” trade agreements under certain conditions. It seems to have been the primary concern of the Canadian sponsors of agreement extension legislation to protect minimum wage standards.
Here I should like to interject an expression of my very keen sense of the importance of consideration by the committee of such legislation as this Canadian type of law in relation to section 5 (a) of the bill before us. If I understand the section correctly it would seem that under it it may be possible to follow one or both of two lines of strategy with reference to collective bargaining and collective trade agreements. One line of strategy would be, I take it, that of setting up an alternative to private bargaining in the form of a graduated scale of wages with differentiated minima for different crafts or occupations.
The other strategy is one which also is realizable under section 5 (a) of this bill, and that is one of supplementing (rather than supplanting) collective bargaining by means of the device of extension or covering in of the terms of privately negotiated collective agreements, in so far as they relate to minimum wages and maximum hours, thus making them applicable (in so far as the specified employments and occupations are concerned) to all of the employers and employees within the areas which the agreements cover. I should like to urge upon the committee the importance of giving consideration to the possibility of so revising section 5 (a), as to encourage the strategy of agreement extension instead of the strategy of Government-imposition of intermediate schedules of wages above basic minimums and hours below basic maximums. The reason I emphasize this is that I am apprehensive that it may be possible, as the result of the imposition of such intermediate scales of wages in situations where the Labor Standards Board was of the opinion that the facilities for collective bargaining were inadequate, that the result will be that the free and independent organization of labor by trade unions may be discouraged or even prevented, because of the existence of a governmentally implemented substitute for trade-union collective bargaining.
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I should like respectfully to urge upon the attention of the committee the unwisdom, as I and those for whom I speak see it, of attempting to cover so much legislative ground in this single bill and thus to assign to the agency which the bill creates a task which would seem to be unnecessarily staggering. I feel very strongly that the provisions about child labor and “oppressive labor practices” should be incorporated in entirely separate bills. In my judgment, it would be wise to make haste slowly in legislation upon wages and hours. If these baffling matters are given the thoughtful, deliberate study which it seems to me they merit, the retention in the same bill with the wages and hours provisions of such simpler and less controversial matters as child labor and oppressive labor practices will result in quite needless delay in the enactment of the latter provisions. The child-labor provisions in the labor-standards bill seem to be substantially similar to the terms of bills now before the Congress and concerned simply with the problem of child labor, one of which I imagine could be promptly enacted. I suggest, therefore, that these previsions be deleted from the labor-standards bill and incorporated in one of the child-labor bills, insofar as they are not already embodied in them, with provision for their administration by the Children’s Bureau.
It may be feasible to incorporate the “oppressive labor practices” provisions in the Wagner-Connery Labor Relations Act as amendments thereto. My first conviction was that there should be a still further vivisection of the bill to separate the relatively less complicated problem of hours of work from the vastly more involved and difficult one of wages, but further reflection upon the matter leads me to the conclusion that these two aspects of the employment relation are, as a practical matter, so interrelated functionally that it would be unwise to separate them. One contemplates with a good deal of dismay the thought of a wage-standards board and an hours- standards board simultaneously promulgating orders affecting these mutually interrelated terms of perhaps an identical series of work agreements, one board, possibly, ordering a lowering of the hours maximum while the other grants an exemption lowering the minimum hourly rate of wages. This result certainly would not effectuate the announced objectives of the bill. An order fixing, say, a 40-hour maximum may, perforce, have to contain some ruling as to the minimum wage rate if minimum weekly earnings are to be maintained. It seems plain that both orders should issue from the same administrative agency. If, however, it should be decided to embody hours and wages provisions in separate statutes, their enforcement should be vested in the same agency. In any event it is desirable, in my opinion, to throw out of this bill everything except the central problems of wages and hours standards. This pair of problems is enough—it may be more than enough—for any mortal board. We have had chastening experience of this business of biting off more than can be chewed. We did it under the N. R. A. and we have repeated it in the case of the Social Security Act. I hope that the same mistake will not be made in the present bill. Its administration and enforcement, the members of the committee know well, will be difficult enough, at the best.
The millinery manufacturing industry is predominantly one of small operating units. This is particularly true of the New York
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area, where the average establishment employs about 15 workers. Since the industry wants any wages and hours legislation that may be enacted to be made applicable to the whole of the market, it wishes respectfully to suggest that the provision in section 6 (a) of the present bill providing for the discretionary exemption of employers employing fewer than a stipulated number of employees, be completed by the insertion of an extremely low maximum number. In consonance with this sentiment of the industry (and in view also of the terms of the Social Security Act), I suggest that the number 4 be inserted in this clause. If the number should be put much higher, it might result in the exclusion of a considerable proportion of the workers of the industry from the application of the statute. Moreover, our industry is by no means unique in this respect, as the members of this committee doubtless are aware. There are many industries in this country in which substantial proportions of the employers employ no more than a handful of employees.
Regional differentials in wage-rate minimums, and probably also in hours maximums, we think should be discouraged. Such differentials may, indeed, recognize the greater skill of the worker in New York, but that superiority is often exaggerated, if it is not, as Mr. Keating suggests, a figment of the imagination. However that may be, such differentials are sure to do something else. They encourage manufacturers to migrate to the “cheap-labor” areas away from the city, putting a premium upon the “runaway shop.” Of course, it is argued that the rigid application of a minimum will put some firms out of business. But neither can it be denied that the principle of a basic minimum is that if the manufacturer is unable to pay it, he ought not to be in business. And it may be noted that the necessity for paying higher wages may galvanize the employer into more efficient operation. These considerations move us to suggest that the Congress give the administrators of the act the benefit of an explicit rule written into the law requiring them, when considering petitions for differentials, always to assume that there is a prima-facie case for uniformity. Similar considerations may have force in respect to other types of differentials—and to differentials in hours maximum as well as in wage minimums.
Two suggestions in which the industry which I represent has no special interest and which, therefore. I make as purely personal ones, are that the definition of “employee” on page 4 of the bill, section 2 (a) (7), be so modified that it will include agricultural laborers, and that some provision be made, if possible, for the stringent regulation of industrial home work, if not its outright prohibition.
As to the inclusion of agricultural laborers, I am prompted to make the suggestion I have made because I am convinced that, as a class, these laborers are more flagrantly exploited than most other groups of workers, and that their conditions of employment are in need of standardization, if such standardization is needed anywhere.
I have studied this bill with sufficient care to be acutely conscious of the complexity and difficulty of the problems to which its wages- and-hours provisions—the core of the statute—are addressed. I suspect that the same is true of most, if not all, of those interested, pro or con, in this important legislative proposal.
Although I believe that this legislation should be pushed forward as expeditiously as is consistent with due consideration of its wisdom
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as . a whole and in detail, and as rapidly as is consonant with the creation of a statute that will work effectively toward the goals set, I see no good reason for undue haste. We face no emergency as we did in 1933. That being so, it would be folly, in my opinion, to be precipitate in a matter so difficult and, for this country at least, so novel. I believe that the fixation of basic minimum standards of wages and hours is desirable and feasible. I believe that it should be done federally rather than State-wide. I may be wrong on both counts. The thing may be beyond the wit of man whether it is attempted by State or Federal officials. But one thing is sure:
The Nation’s recent hectic experience in the effort to administer a hastily conceived and formulated plan for the regulation of our gigantic industrial system should be enough to give no pause. That experience dins in our ears that this sort of thing simply can’t be done without deliberate, unhurried, systematic, and searching examination of concrete proposals such as those embodied in this bill. This bill, if enacted, would not repeal more than minor clauses in the law of supply and demand. Nor, generally, would it repeal geography, technology, or economics. The fixation of price floors for wages and ceilings for hours sets in motion forces affecting employment, commodity prices, etc., which may easily defeat the purposes animating it. Wage income, as well as other income, is limited by the amount of wealth that is produced. Unless per-hour productivity per man is increased, the lowering of the hours ceiling scarcely can continue indefinitely and still produce higher wages per week. And will the employer continue to buy more labor as its price goes up—unless its efficiency goes up also? He likely will not. And if he does not what happens to the purpose of this bill to increase employment ? These are but random, offhand samples of the difficulties we face. They are suggested not out of any hostility to the principle of this bill, or even to most of the specific proposals put into it to give effect to that principle, but to give point to my earnest suggestion that the proposals be subjected to the most searching kind of scrutiny and criticism. Indeed, I should like to see this bill, and any other definite legislative proposals along these lines that may be in the offing, turned over to a commission of inquiry, constituted after the fashion of the British Royal Commissions, with a mandate and, say, a year’s time to make a thorough study of the whole problem, inquire into the applicability of foreign legislative experience to the American situation, appraise this and other similar bills, recommend revisions in them, and if necessary propose substitute measures.
I ought to add, finally, that these suggestions about the imperative need for full exploration of the problem and painstaking scrutiny and careful revision of the plan which this bill offers, are made by me personally as a citizen who has given a good deal of thought to labor problems, rather than as a member of the Millinery Stabilization Commission, speaking for the industry. I submit them in a spirit of friendly cooperation. I firmly believe in the principles and objectives underlying the bill. But one recoils at the thought of trying to give effect to these principles through an unworkable statute.
I congratulate the members of this committee upon their very obvious purpose to hold full hearings and to give themselves the
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benefit of the best criticism and the best constructive suggestions that interested citizens can offer. Though there be no emergency, in the sense of crisis, with us now, the evils to be remedied are great and challenging enough, in all conscience, to make it the unquestioned duty of the Congress to push forward with this legislation as rapidly as is consistent with the achievement of an adequate workable plan for their elimination.
The Chairman. Are there any questions?
Representative Schneider. I would like to ask the witness a question or two. Do you know anything about the millinery industry in the Province of Quebec?
Mr. Brissenden. Next to nothing, sir. I know very little about it.
Representative Schneider. Do you know anything about the Labor Extension Act in the Province of Quebec other than what you have stated here?
Mr. Brissenden. I think I know somewhat more about it than I have included here. I have read the act.
Representative Schneider. Are the workers in the millinery industry in Quebec organized, do you know?
Mr. Brissenden. They are partially organized. It is not nearly so strongly organized as in the metropolitan area of New York, however. I might say in that connection that there recently has been set up a commission covering the Provinces of Ontario and Quebec, a Millinery Stabilization Commission somewhat paralleling the commission which Mr. Keating and I represent, and that that commission, like ours, has been set up as the result of a joint agreement by and between the union of millinery workers in Quebec and. Ontario on the one side and the employers on the other.
Representative Schneider. Are you familiar with the Catholic Syndicate of Labor in Canada?
Mr. Brissenden. I know that there are such unions, and they are strong factors in the labor movement of Canada.
Representative Schneider. They make these agreements with the employers?
Mr. Brissenden. They make some of the agreements, at least.
Representative Schneider. They make a good many of them.
Mr. Brissenden. Yes; that is probably true.
Representative Schneider. And some of these agreements cover the building trades.
Mr. Brissenden. I think the majority of them are building-trade agreements covering plasterers, sheet-metal workers, and so on.
Representative Schneider. So they are not like the regular trade unionists, they are Catholic Syndicate labor organizations?
Mr. Brissenden. I should say that they represent one variety of trade union, sir.
Representative Schneider. They are?
Mr. Brissenden. Yes; I should think so.
Representative Schneider. They repudiated this act. protested against it?
Mr. Brissenden. Yes; I understand so.
Representative Schneider. So the act, as a matter of fact, favors people other than the workers in many respects. That is the reason why the workers are opposed to it.
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Mr. Brissenden. I recently had occasion to talk with the chairman of the Millinery Stabilization Commission of Ontario and Quebec. He explained to me that, as you have said, there was a good deal of difference of opinion in the ranks of most labor unions regarding the Collective Labor Extension Act.
Representative Schneider. Not only in Quebec, but also in Ontario.
Mr. Bkissenden. I believe that is true.
Representative Wood. In your prepared statement, the latter part of page 7, you make this observation, and I quote [reading]:
Although I believe that this legislation should be pushed forward as expeditiously as is consistent with due consideration of its wisdom as a whole and in detail, and as is consonant with the creation of a statute that will work effectively toward the goals set, I sec no good reason for undue haste. We face no emergency as we did in 1933. What do you mean by “undue haste”? Do you mean it is not necessary particularly that this legislation be passed at this session, that it would be just as well to give it consideration and to pass it at the next session, or the next session after that?
Mr. Brissenden. No; I do not mean that, sir; I mean there is not the critical urgency which requires us to enact this legislation without due consideration. By “due consideration” I mean the careful consideration of it, examination of the assumptions underlying it, of the probable effects of it, and the evidence bearing upon those points sufficiently to enable us to construct a statute which will be workable.
Representative Wood. Do you think it is without due haste to pass it at this session, by this Congress ?
Mr. Brissenden. I cannot answer that yes or no because I do not know how long this session of Congress will last. That, I take it, depends to some extent upon the weather.
Representative Wood. Say that this session would last two or three or four months longer, do you think that we have sufficient information now, or do you think we should go on with our study of the matter, our research, until such time as we are quite sure that we have a law that would have the desired effect?
Mr. Brissenden. Well, my feeling about it, sir, is that we should resolve that doubt in favor of going on until we feel that we have reached a state of certainty and assurance about what we are doing. That will produce an act which can be administered.
Representative Wood. Now, how can you reach a state of certainty unless you have had experience with the law, the application of it and the administration of it? You do not mean to say that we can tell now just exactly what would be the effect of this law through its administration, do you?
Mr. Brissenden. I should certainly hesitate to predict what would be the effect of this law. Such prediction, I think, would be less difficult on the basis of fuller knowledge.
Representative Wood. And how would you suggest that we get that fuller knowledge ? Don’t you think that we have had sufficient knowledge in the last 5 years as to the necessity of the passage of this legislation?
Mr. Brissenden. As to the necessity for some legislation we have knowledge in abundance. Whether the particular provisions of this statute are the best, provisions which could be devised for coping with those admittedly grave evils is, in my mind, a question.
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Representative Wood. You cannot tell that until that is enacted and you have had experience with the law in its application, can you?
Mr. Brissenden. Perhaps not.
Representative Wood; You may study this act and you could not tell, to save your life, just what the resultant effect would be that would flow from the application of the law, could you?
Mr. Brissenden. This committee might resolve to terminate the hearings tonight. It proposes to hold them, as I understand it, for several days longer, and I take it it is moved to do so because of the belief that it will be able to get additional information, additional points of view, more light on the wisdom of the various provisions of the bill.
Representative Wood. You do not think that this committee is going to gather all that information, do you ? Don’t you think the Members of Congress will also have some suggestions after we report- the bill out over a space of several weeks or a month or two?
Mr. Brissenden. Yes; pro and con.
Representative Wood. You do not think there would be any danger of enacting this law now from the information we have and can acquire at this session, do you?
Mr. Brissenden. I am not sure as to what you mean by “danger.” Danger of what?
Representative Wood. Danger of an ill effect.
Mr. Brissenden. Yes; I think there is danger of ill effects. I do not know that more time was spent in the consideration of the Social Security Act than is being spent in consideration of this bill, and I apprehend no little danger in connection with the operations of the Social Security Act. It will have to be amended. This act, no matter how long we work over it, doubtless will have to be amended.
Representative Wood. How could you tell how the Social Security Act was going to perform except by and through experience in its operation?
Mr. Brissenden. That is true, we cannot tell fully. One cannot perfect a working instrument of control of this sort without trying something, and trying it as soon as one feels reasonably certain that one has something that is rationally related to the thing that it is desired to do.
Representative Wood. All we can do is to draw a conclusion by research, and then it is a matter of conjecture whether the law is successful or unsuccessful, whether it will work an injury or a benefit. It is generally supposed that it will be a great benefit.
Mr. Brissenden. I do not think there is any way that Solomon himself would know, even after 50 years, or, as you say, an eternity of study, absolutely and in every detail how a statute is going to work.
Representative Wood. In the light of that statement you might just as well pass it now as next month?
Mr. Brissenden. The difference between 1 or 2 months is the difference which I have resolved in favor of the 2 months.
Representative Wood. I mean at this session.
Mr. Brissenden. I do not mean to imply opposition to action at this session of Congress. I did not so stipulate it partially because of my uncertainty as to how long this session of Congress might
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be. If this session should come to an unexpectedly early end I should think it might be questionable whether this statute should be rushed through.
Representative Wood. A radio speech was made the other night by Senator Vandenberg and he intimated that we were rushing posthaste with this legislation, that we should wait.
Mr. Brissenden. I did not hear the Senator’s address. I should certainly be the last man to say that this law is being rushed through in anything like the way in which the National Recovery Act was rushed through.
Representative Wood. He said there was no undue haste. Of course, he means sometime in the distant future.
Mr. Brissenden. You will notice that I used the word “undue.”
The Chairman. Thank you very much. Is Mr. Lane here?
STATEMENT OF E. H. LANE, THE LANE CO., ALTAVISTA, VA.
The Chairman. You may proceed, Mr. Lane.
Mr. Lane. My name is E. H. Lane of the Lane Co. at Altavista, Va. We are furniture manufacturers, and manufacture furniture specialties.
I do not think any common-sensed, fair-minded employer is in disagreement with what the President is trying to accomplish by the application of maximum hours and minimum wages. Some of us who have had long practical business experience disagree with the speed at which these radical changes are attempted.
A law that is going to bring about such a tremendous change in industry and in our economic structure should be considered very carefully from every angle, and the practical business experience of all sorts of employers obtained. In other words, in my humble judgment, the final draft and enactment of a measure of this import should not be attempted in less than a 6-month period. I think you should hold your hearings here, then, even after that, ask the different industries to send you committees—not too large—to advise with you from time to time and enable you to make this bill more workable. It would possibly be still better if you had subcommittees go to different districts and get the testimony of the different sized manufacturers, because, as I see it, it is one thing to make a law and another thing for somebody to live under it.
The destiny of 130,000,000 people is tied up in this act, and the first point I want to make in connection with this is that it should be approached in a more deliberate manner. As I understand, there are about 12,000,000 people employed by industry that this bill will affect. You have got about another 120,000,000 people that are going to pay the bill, and that is the point, I think, that we ought to keep under consideration.
I am not fighting this bill. I can live under any set of rules or laws that anyone else can live under, and the suggestions I am making are not solely for business reasons. I am endeavoring to make them from the viewpoint of a citizen who loves his country and who would like to contribute his little bit, however humble it may be, to developing a law that will be workable and will not too seriously dislocate our entire economic structure. I have had 25
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years’ experience in running a small and what you might now call a medium-sized business, and a man ought to learn a few things in 25 years.
I don’t have to tell you that with the higher wages that this law will force upon business, in addition to the increasing social-security taxes and the large amount of lifeblood that is being taken away from them by the undistributed profits taxes, all of these are making the cost of doing business that much greater and are coming at such a rapid rate that it is impossible for industry to improve efficiency fast enough to offset such increases in costs, and, not being in the Government’s position of being able to print money or bonds, businesses have to go out and secure money from the sale of their products and have to pass on increases in costs over and beyond any increases that can be made in efficiency.
We have had a lot of discussion in recent months with regard to the threat of inflation, and it is a real one, because our Government is spending money at a more rapid rate than they are taking it in, and this means that they are printing bonds which sooner or later must be redeemed in money to pay these bills, and this in turn will mean that taxes are going to have to be raised to such a backbreaking or spirit-breaking point as to kill the initiative of the people, or there will be inflation.
Mr. Eccles, Governor of the Federal Reserve Board, with the machinery he has there, can help to retard inflation, but the advancement of wages faster than the improvement in efficiency will, in my humble judgment, offset anything he can do.
I am not speaking as a low-wage employer, because in my particular industry, we pay higher wages than anyone else in our section of the country, and I might say further that we pay as high and in some cases higher wages than those paid in the North in our same industry, but I do know that rapidly advancing wages means advancing prices, which means price inflation sooner or later. If we are to check inflation, wages should be spiked temporarily to stop prices from going up.
As I have said, everyone of us in industry, I feel sure, wants to see working conditions improved. We want to see employees have more money to spend and this can be done, gentlemen, if we approach it from the right angle, and deliberately enough, but it can’t be accomplished entirely by passing laws in Washington or in the capital of any State. It has to be done through the improvement of efficiency of the people. Any advancement in wages faster than the improvement in efficiency tends to upset the entire economic structure.
It was Mr. Owen D. Young, I think, who once said that when we wanted to solve a very complex problem, the best way he had found was to go back to the small town where he was reared and find some problem there of like nature, but of smaller dimensions, and to study the workings of that little problem; then, based on the assumption which I think is pretty generally accepted, that human reactions are about the same the world over, he would go back and apply the solution of the simpler problem to the more complex one.
Following Mr. Young’s theory, let us reduce the economic situation to the simplest form possible. Let us take, for example, one
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man, or family, on a piece of land. We shall have to assume, to begin with, that the weather will be normal, as that is the biggest gamble of the farmer. I was raised on a farm, and I think that the farmer is the biggest gambler on earth.
Taking a man on a piece of land, I think you will agree, his standard of living will be in direct proportion to the mechanization he employs, plus the intelligence he uses, multiplied by the effort he puts forth. If he works as many hours as is physically possible, with good land and reasonably normal weather, he should produce enough to live on under fair living conditions, but if he cuts down the number of hours he works, unless his mechanization can be increased in direct proportion, his living standard will be reduced.
The same principle, gentlemen, will apply to our 130,000,000 people. If we reduce the number of hours individuals can work more rapidly than we increase the number of units of output per individual, we are bound to decrease the standard of living.
In my humble judgment, the reduction of the workweek below a maximum of 40 hours should be done piecemeal, and very slowly, and at no more rapid rate than industry can improve efficiency, unless we want to reduce the standard of living of our people.
We must take into consideration, also, that there is only a limited amount of skilled help in this country and the unskilled can be trained only so fast. If the maximum week is reduced more rapidly than the skilled help can be developed and trained, we are going to throw people out of work rather than create jobs for them.
In approaching the details of such a vast proposition as this, as I see it, we must first attempt to get the whole picture, or background, firmly in our minds, and from there work out the details of the picture.
The same mistake, in my humble judgment, was made by this administration when it put in the N. R. A. wages and hours laws, as was made by Hoover in the fall of 1929 and the early- part of 1930, when the depression started upon us. Hoover suggested that all industry hold up wages. So what happened? The people had stopped buying in anything like the previous proportions, and by keeping wages up, the unit cost of the merchandise increased for the simple reason that industry could work only the number of hours they could get orders to run on, and since the high price of merchandise kept people from buying, there was no incentive to set them buying; consequently, the working people of the country worked fewer hours, and though their rates were the same, they had less to buy with.
When the N. R. A. wages and hours were put in under the President’s reemployment agreement, the same mistake was made. The minimum was put too high. As soon as that higher cost of merchandise reached the floor of the dealers, it stopped moving, and it took nearly 12 months for the purchasing power of the people to increase to such an extent as to absorb the higher-priced merchandise, and that is why we had a lull in business from the end of 1933 to somewhere around the middle of 1934. It took approximately a year for the people to get sufficient buying power to start buying again. Now, with this advance that you are going to require here, in most of the principal industries that I know of it is going to mean another 25 or 30 percent in wages.
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Now, if you increase the ones below the minimum up to the minimum you have got to increase the ones above it, if you want to hold them, because skilled labor is very scarce, it is hard to get, you have got to cater to those boys.
As an employer, as long as you make my competitors do the same thing, I don’t care what wages you force me to pay. It is all relative, anyway. A dollar a day, in my judgment, in all industry, will buy just as much, once it has had time to permeate the economic structure, as $10 a day for the same amount of work. It just means that if wages are raised faster than the efficiency, the purchasing power of the dollar is reduced.
I shall now attempt to go into details on this bill, as I have endeavored to develop its background in your mind and mine, and try to present it in my humble way to you gentlemen. Section 2, paragraph 27, clause B, states that—
any merchandise manufactured under substandard labor conditions within 90 days previous to the removal of such goods shall be prima-facie evidence that such goods was produced under substandard conditions.
Section 29 of this act states that this bill shall take effect in 120 days after enactment. In other words, as I interpret the law*, any merchandise manufactured after 30 days after this law is enacted will be tainted merchandise and if shipped after the effective date of this act, it will be in violation of the law. Am I right in this interpretation and is this the intention of the act? I am sure that the average person who has read the law does interpret it that way.
As I interpret this law, all wages and hours must be brought up to the minimum standards of the law within 30 days after it is enacted, or the merchandise manufactured under the prevailing conditions, if shipped after the effective date of the law will be in violation.
Am I right in the interpretation of this act? I am sure that the average person I talk to thinks that is not the intention of the act. I have talked to a dozen people that have read the act and they said they read it that way, but I do not think you can read anything else into it except that in 30 days after the enactment of this law you have got to establish your wage standards or the merchandise is considered to be produced under substandard conditions.
Representative Ramspeck. Haven’t you got to have the labor standards fixed before you can manufacture under the substandard conditions?
Mr. Lane. Would that be the interpretation?
Representative Ramspeck. That would be my interpretation of it. This law does not require anybody to comply with it until the Board applies it.
Mr. Lane. The Board has to declare that the law is in force?
Representative Ramspeck. That is my understanding of it.
Mr. Lane. Unless provisions are made flexible in this law, in most industries there is going to be a lot of merchandise dumped just before the effective date of this law that has been manufactured under substandard conditions, either 30 days after the law was enacted or before the enactment of the law, and this condition should be avoided as it is bound to upset price structures and cause large losses and slow up business.
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Now, what would you say is the proper interpretation of that I know you know a lot more about it than I do.
There should be very clear and definite provisions for apprentices as the percent of skilled labor to our total industrial population has been very much reduced in the past 15 years, and unless liberal provisions are made for the training of apprentices, it is going to force more mechanization than ever in industry, and increase unemployment, whereas it could be prevented by making liberal allowances for apprentices first 12 months of employment.
There should be very elastic provisions in this bill to cover mechanical repair crews—those who take care of break-downs, and so forth. Their average week should be averaged over, say, a month, rather than over 1 week; otherwise, this class of men who are now paid quite high hourly rates will have their rates reduced and a lot more men will have to be trained for this class of work. This is a long, slow process. Furthermore, due to break-downs, it is very impracticable to abide by a 40-hour week. It is better to hare an average of 40 hours a week over a given period of time, but provision should be made to see that these mechanical crews should not represent over a certain percentage of one’s pay roll.
Those like ourselves who are in a seasonal business will have to have some protection as to the time this bill will become effective or their businesses will be seriously disturbed. It would be much better if this bill could become effective as of January 1, as this would protect at least the largest majority of the seasonal businesses.
You can readily see if you put it into effect in the middle of the season what will happen to an industry. I think the dealers would probably stop buying for the rest of that period and it would throw people out of employment, and if it would be possible to make the bill effective January 1 it would be easier to work it out in most seasonal industries that I know of.
Now, when you come to the matter of the maximum of 40 hours, under the Furniture Code we had a provision that we should have an average of a 40-hour week over two 6-month periods, starting in October and April, with no more than 45 hours in any week and the maximum of 8 hours in any day, and this worked out so that if the seasonal requirements made it necessary, employees could be worked 35 hours per week for 3 months and 45 hours per week for the next 3 months, as there is just a limit to the capacity of our warehouses and our financial ability to carry stock. Under that the maximum that we could average was 38 hours, doing all we could to keep running. Now, if you are going to provide a maximum of 40 hours I do not believe the average seasonal business can average over 32 or 33 hours to save their lives, because you have got periods when you cannot store the merchandise, you cannot finance or anything of that kind, you have got to run on shorter hours until you can begin to make some shipments.
Representative Ramspeck. Why should the furniture business be a seasonal business?
Mr. Lane. You do 35 to 40 percent the first part of the year and 60 to 65 percent the last 6 months of the year.
Representative Ramspeck. Why is that true?
Mr. Lane. People do more moving in the fall than they do in the spring. Then I think they have got the money in from the crops.
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That is a large factor in some agricultural sections of the country.
Unless there is an elastic provision in the bill to enable one to average over a period of time I do not think they would ever average 40 hours a week and I should think the earnings of the people would be reduced to that extent. 1 also think there should be something in the bill to cover a differential in rates between the northern and southern parts of the country. I know there are a lot that do not agree with me on that. Under the furniture code we had 30 cents in the South and 34 cents in the North.
You must realize also, Senator, that trade and the density of population is in the northeast quarter of the United States where, to begin with, they have got more favorable freight rates per ton- mile than in the South. I think history has proven that the isothermal line has had greater effect upon the world as a whole than any other one thing. Going from the northern sections toward the Equator, one will find that the activity and productive ability of the population gradually decreases, and in most of the hot countries one will find a backward people. Recognizing this, there should be a very definite provision made for lower minimum rates as one progresses southward from the northern sections.
Furthermore, as one progresses southward in this country, and westward after leaving the middle West, as far as the Pacific slope, the density of population rapidly decreases. As a matter of fact, from 60 to 70 percent of the population of the country, if I am not mistaken, will be found in the northern quarter of the United States. That means, as one goes south away from the northeast quarter, that those industries located at more distant points have to nave some sort of wage advantage to pay transportation costs to the centers of trade, and that is another good reason why a definite differential should be recognized; otherwise, this law will cause a tremendous migration toward the centers of trade and population, which I am sure you do not want to cause as that would upset the whole economic structure of our country.
Those industries that require a certain amount of skilled labor would be very much stabilized, in my judgment, if some provision could be written into the bill to provide a minimum average wage, in addition to the floor, or minimum wage. I know this has been tried out in Ontario, in the furniture industry, where the minimum average is about 15 to 20 percent above the minimum wage and the manufacturers up there are very much pleased with it, as it prevents those particular units in industry who happen to be located in a plentiful labor market from bringing practically all wage scales to the minimum wage, which was practiced to a large extent under the N. R. A. wage and hours provisions, and, I might say, this was more prevalent m the North than in the South, as far as I could see from my travels.
I think you will all agree that you cannot do as much work in Washington on one of the hot, humid days, as on a cold day. I know I can’t, and as you go further south that condition prevails more and more. We are located in southern Virginia, and we have competitors further south, in Chattanooga, Tenn., and their competition hurts us rather than helps, but I think they should have a
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sufficient differential to cover the extra freight cost of getting to the centers of trade.
Representative Ramspeck. Then you do not mean a differential based on North and South, but a differential based on the location of a particular plant, a particular area of the country?
Mr. Lane. I agree with you.
Representative Wood. Are we going to follow the policy of interrogating the witness while he is reading a prepared statement?
The Chairman. I do not believe Mr. Ramspeck was here at that time. Let him read the statement and then ask the questions.
Mr. Lane. Since, when this law takes effect, it is practically going to put handcuffs on industry, there ought to be a flexible provision placed in the law to grant any employer an automatic stay of execution of, say 30, 60, or 90 days, until his particular situation is investigated.
The board that is to administer this law is going to have tremendous power—far greater power, I think, than any other board connected with our Government, unless it was the administrative set-up governing the N. R. A. and the A. A. A., and unless we want, to develop into a completely authoritarian state, very definite provisions should be written into the law governing all major factors.
You must, of course, realize that this law, as well as the N. R. A. was a boon to monopolists. As a matter of fact, most of the things this administration has done have been either to grant monopolies to labor organizations or to certain industries.
The higher the wages that are forced on industry and the more hours are reduced, the more favorable it will be to large businesses plentifully supplied with capital and highly mechanized. In other words, in my humble judgment, it is going to be very difficult in the future for anyone to get a start in a small business, like our company did 25 years ago, as the whole set-up of things under the present trend of laws is against such.
You must, of course, realize that this type of law is going to work some very serious dislocations in the effect the competition of one industry has on another. For instance, in the production of cigarettes, as I understand it, only about 2.9 percent of the selling price is for labor. Another item is butter; I am advised that only 4.9 percent of that cost is for labor. In furniture, on the other hand, 31.5 percent of the cost is for labor.
When one adds the social security taxes and the forced high wages, there is a definite tendency to greatly reduce the status of one industry as compared to another.
I would like to point out the effect that the increase in manufacturing costs—and when I say manufacturing costs, I am speaking of the country as a whole—is going to have on our foreign trade. It is going to make us just that- much less competitive and it is going to be that much more difficult to compete with industries in other countries.
In conclusion, just as a plain, old, everyday businessman, who has had to meet pay rolls for the past 25 years—and I don't know of anything that will come nearer to calming one down than having to meet a pay roll and not knowing where the money is coining from—I would like to suggest a little caution to you gentlemen in approaching this highly complex matter. You know it is one
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thing for a bunch of college graduates who have never had any practical experience in the operation of business to write laws, and another for us who manage businesses to live under them. We are not in an emergency any longer. As the entire efforts of the administration have been directed toward the elimination of emergencies, if we are in an emergency, the administration has been a failure. So why rush at the matter? Why not take it a little more deliberately? Call in the heads of businesses of various sizes and go at the matter thoroughly, even if it does take 6 months, because when you get through, you will have a much more workable law, which will control the whole economic system, than you will if you rush pell-mell into the enactment of this 48-page bill.
You must not forget that there are only around 16 million people employed in manufacturing, and of this number it is estimated that this law will cover only from 11 to 12 million of them, but still, it will seriously affect the other 115 to 120 million people in the country.
I had some information from my industry this morning. If you gentlemen do not mind, I would like to just read it. It will not take but a couple of minutes.
Of my own knowledge, there are a great many very small furniture-manufacturing firms that are poorly equipped and have very poor methods. They employ a lot of people in the aggregate. They would be unable to meet high labor standards, and if they did meet the high labor standards, their cost would be so high that they could not compete with the large, well-equipped plants. It may be inevitable that they will eventually be driven out of business, but certainly it is not in the best Interests of the country to put these people out of business quickly. It would create dislocation of Industry, unemployment. and all of the ills that would follow a thing of that kind.
A large, efficient manufacturer told me a few days ago that in his town Is a small firm employing possibly 75 workers. He recently visited the plant and found that they were very poorly equipped. The workers were all middle- aged people and very slow. Their wages were lower than those paid by the larger firm. The manager of the larger firm said that his own company would not under any conditions employ the workers that were in the small plant. He expressed the opinion that the small company was doing a service to the community by employing these people, although they were paid wages less than the standard. He said that if these people went out of business, it would simply throw all of these workers out of employment.
There is no question in our opinion, gentlemen, but that this would increase the cost of furniture somewhere between 10 and 20 percent to the buying public in this country, if it is done rapidly. If it is done over the period of 2 or 3 years, industry could improve their efficiency and a lot of this increase could be possibly avoided. To begin with we are just going to have to increase prices to that extent.
That is all.
Representative Schneider. Mr, Lane, how many people do you employ?
Mr. Lane. About 800.
Representative Schneider. How many people in your employ 25 years ago?
Mr. Lane. Twelve, when we first started.
Representative Schneider. You built up quite a big institution during that time, did you not?
Mr. Lane. Well, we do not call it so big.
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Representative Schneider. It is large. You have 800 employees. At least, it is a tremendous increase in the number of employees, is it not?
Mr. Lane. Yes, sir.
Representative Schneider. And considering the installation of modern machinery?
Mr. Lane. Yes, sir.
Representative Schneider. You must have put a lot of new equipment in the plant to put that many employees in.
Mr. Lane. Yes, sir; we have what is considered probably one of the most highly mechanized woodworking plants in the United States.
Representative Schneider. Just what is the specialty?
Mr. Lane. Cedar chests.
Representative Schneider. A cedar chest?
Mr. Lane. A hope chest, or whatever you want to call it.
Representative Schneider. That is not seasonal, is it?
Mr. Lane. Yes; they are seasonal, more seasonal than even furniture.
Representative Schneider. That is a standard make, is it not?
Mr. Lane. I do not know just what you would term a standard make.
Representative Schneider. Well, it is not varied seasonally?
Mr. Lane. Not seasonally, but it is very changeable as to styles. For instance, a few years back everything we were selling was a highly decorative type, but today it is all modern streamline rather than wood decoration.
Representative Schneider. I mean, you carry it in stock, you can run your factory, and you do not have to be working on orders all the time. You know that some of your houses will order in advance, don’t you?
Mr. Lane. Only for probably a month or two of production. That is all we dare take a chance on.
Representative Schneider. What are the average wages that you pay your employees?
Mr. Lane. Our average wage rate is 46 cents an hour.
Representative Schneider. What is the average of your industry?
Mr. Lane. We do not exchange that information in the industry, but I should say the average is right around 39 or 40 cents. Our lowest in the South is 36 cents.
Representative Schneider. Do you employ many women?
Mr. Lane. Very few.
Representative Schneider. How large a city is that?
Mr. Lane. About 5,000. It is a small town.
Representative Schneider. How does your raw material compare in cost to that of a similar plant in the city of New York?
Mr. Lane. Well, probably we have some advantage in raw material. We bring in logs as far south as Senator Black’s State, from northern Alabama into Altavista.
Representative Schneider. It would not cost as much as it would for a furniture company in New York to bring in that material?
Mr. Lane. I do not think so.
Representative Schneider. Then you do not have any differential freight rates?
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Mr. Lane. We do not claim any differentials for ourselves. We are paying wages slightly above what they are paying in Indiana and Wisconsin, our competitors located in those two States.
Representative Schneider. Do you have an apprenticeship system by which you train employees?
Mr. Lane. Yes; we followed the Furniture Code as long as that existed. We have found the average beginner, when we bring him in, that is for the first 3 months he is an expense rather than an asset; then the next 3 months he might be worth the room he is taking up, part of which we are paying him, and then after that he becomes more valuable to us. He should not, under any conditions, we think, get as much as a man who has done the work for over 12 months.
Representative Schneider. You do not train the young people under the national apprenticeship training system?
Mr. Lane. No ; we do not have that.
Representative Schneider. Why don’t you?
Mr. Lane. I do not know. We just haven’t cared to avail ourselves of it.
Representative Schneider. You do not have any difficulty in getting sufficient skilled help right now. do you?
Mr. Lane. Yes; we have a great deal of difficulty. We increased our force about 150 men the 1st of January in anticipation of this law, because we averaged last fall between 40 and 50 hours.
Representative Schneider. What law?
Mr. Lane. In anticipation of this law right now.
Representative Schneider. This law under consideration?
Mr. Lane. Yes, sir; because we realized when this administration was reelected in November that we were going to have legislation before the fall, and 65 percent of our annual business is done in the fall of the year.
Representative Schneider. You must have some brain truster down there.
Mr. Lane. No, sir. All we had to do was read the signs, that is all.
The Chairman. You read the Democratic platform, did you not?
Mr. Lane. Yes, sir.
Representative Schneider. What competition do you have in importations?
Mr. Lane. None, whatever.
Representative Schneider. Then we need not discuss the tariff?
Mr. Lane. No, sir.
Representative Schneider. You are not discussing the freight rates?
Mr. Lane. The freight rates? You see, we are pretty far north, in the most northern State of the South, and our freight rates do not bother us like they do those fellows further south, like in the southern part of Tennessee.
Representative Schneider. You think your help is not as efficient as the help in the North?
Mr. Lane. I think it is probably 5 to 10 percent less efficient.
Representative Schneider. You are sure about that?
Mr. Lane. We do not claim any differentials for ourselves. We are paying wages slightly above what they are paying in Indiana and Wisconsin, our competitors located in those two States.
Representative Schneider. Do you have an apprenticeship system by which you train employees?
Mr. Lane. Yes; we followed the Furniture Code as long as that existed. We have found the average beginner, when we bring him in, that is for the first 3 months he is an expense rather than an asset; then the next 3 months he might be worth the room he is taking up, part of which we are paying him, and then after that he becomes more valuable to us. He should not, under any conditions, we think, get as much as a man who has done the work for over 12 months.
Representative Schneider. You do not train the young people under the national apprenticeship training system?
Mr. Lane. No ; we do not have that.
Representative Schneider. Why don’t you?
Mr. Lane. I do not know. We just haven’t cared to avail ourselves of it.
Representative Schneider. You do not have any difficulty in getting sufficient skilled help right now. do you?
Mr. Lane. Yes; we have a great deal of difficulty. We increased our force about 150 men the 1st of January in anticipation of this law, because we averaged last fall between 40 and 50 hours.
Representative Schneider. What law?
Mr. Lane. In anticipation of this law right now.
Representative Schneider. This law under consideration?
Mr. Lane. Yes, sir; because we realized when this administration was reelected in November that we were going to have legislation before the fall, and 65 percent of our annual business is done in the fall of the year.
Representative Schneider. You must have some brain truster down there.
Mr. Lane. No, sir. All we had to do was read the signs, that is all.
The Chairman. You read the Democratic platform, did you not?
Mr. Lane. Yes, sir.
Representative Schneider. What competition do you have in importations?
Mr. Lane. None, whatever.
Representative Schneider. Then we need not discuss the tariff?
Mr. Lane. No, sir.
Representative Schneider. You are not discussing the freight rates?
Mr. Lane. The freight rates? You see, we are pretty far north, in the most northern State of the South, and our freight rates do not bother us like they do those fellows further south, like in the southern part of Tennessee.
Representative Schneider. You think your help is not as efficient as the help in the North?
Mr. Lane. I think it is probably 5 to 10 percent less efficient.
Representative Schneider. You are sure about that?
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Mr. Lane. I am sure, because we have brought them down from the North. They went at a faster gait for the first few months and then they slowed down on us.
Representative Schneider. Are these people organized into unions?
Mr. Lane. Not yet, thank you.
Representative Schneddbr. Not yet?
Mr. Lane. No.
Representative Schneider. You expect them to be?
Mr. Lane. We feel that the guns are in our ribs.
Representative Schneider. Are you in favor of having the men organize into unions and dealing collectively with them?
Mr. Lane. I think that would depend entirely on the union leadership. If you get a radical at the head of it, I think it is liable to crucify business. Then again, if you get commonsense people at the head of it, probably it is a good thing.
Representative Schneider. I am speaking of your employees that you employ. Of course the labor unions will have to take the people that you have got in your plant. If they should organize into a union, you know the law now provides that you should recognize them and deal with them collectively, do you not ?
Mr. Lane. I do not know right now what else you would do.
Representative Schneider. That is all.
The Chairman. Any other questions?
Representative Wood. Mr. Lane, how many employees did your firm have in 1932?
Mr. Lane. Sir?
Representative Wood. What was your average employment in 1932? How many people did you have employed?
Mr. Lane. I think it was right around 300, or something over 300 to 330.
Representative Wood. Did you work full time in 1932?
Mr. Lane. No, sir; we did not work full time. We spread the work out as much as we could. We never laid off anybody of our own accord from 1929 through 1933.
We had some that quit and went to other places, some who died, and that kind of thing, but we never laid off any of our own accord. We reduced the hours enough to keep them all living and the Government did not need to take care of any of them.
Representative Wood. You had 300 in 1932?
Mr. Lane. Yes, sir.
Representative Wood. Now you have 800?
Mr. Lane. Yes. I might say we have doubled our facilities since 1932. doubled our plant space, machinery, and so forth.
Representative Wood. Did you stagger your employment in 1932?
Mr. Lane. The best we could; yes, sir. We worked one group one week and another group another week as far as possible.
Representative Wood. What is your average week?
Mr. Lane. Fifty-five hours. That was the standard, but we never worked that. We worked nearer 32 to 33 hours.
Representative Wood. Now your average is 40 hours?
Mr. Lane. Right at this time; yes, sir.
Representative Wood. You reduced the hours 15 hours?
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Mr. Lane. We did that in August 1933, under the President’s Reemployment Agreement.
Representative Wood. What were the wages paid in 1932?
Mr. Lane. We paid an average of 30.2 cents in 1932, at the low point.
Representative Wood. 30.2?
Mr. Lane. Yes.
Representative Wood. Now you pay the average of 39?
Mr. Lane. No; 46.
Representative Wood. Well, that is about 16 cents increase per hour, on the average?
Mr. Lane. Yes, sir.
Representative Wood. Your average work-week is 15 hours less?
Mr. Lane. In 1932 we were only averaging about 32 or 33 hours a week. Our standard week was 55 hours, though.
Representative Wood. The standard week was 55 hours?
Mr. Lane. Yes.
Representative Wood. And you worked full time?
Mr. Lane. No ; we had plenty of hours to spare.
Representative Wood. Your standard week was 55 hours and you raised wages since then 16 cents an hour, nearly.
Mr. Lane. Yes, sir.
Representative Wood. And now you have 800 employees?
Mr. Lane. Yes, sir.
Representative Wood. In view of that I am interested in the statement you made that this administration made the same mistake that Hoover made. What did you mean by that?
Mr. Lane. I meant by running the minimum wage up in 1938 too rapidly. I think if they had taken three or four bites at it it would have been better.
Representative Wood. Mr. Hoover did not hold the wage up, did he? Mr. Lane. He held the wage up in 1929.
Representative Wood. Mr. Hoover did not hold the wage level up in 1929, did he?
Mr. Lane. He tried it.
Representative Wood. The difference is that Mr. Hoover asked the employers to maintain the wages; is not that right?
Mr. Lane. And some who had good intentions did.
Representative Wood. And President Roosevelt did something about it; he did not ask the employers to maintain the wages, but when he came here in 1933 the employers were here asking Congress to pass legislation that would relieve them from cutthroat competition, and the administration did that. Do you consider the passage of the N. R. A. the same mistake as Hoover made?
Mr. Lane. No; I did not mean that at all. I think the passage of the N. R. A. at that time as a temporary proposition was a very excellent thing as a stabilizing influence.
Representative Wood. Mr. Hoover advocated keeping the wages up, and the resulting effect was that wages went down and unemployment increased. This administration has not only advocated to maintain the standard, but since 1933 it has advocated the raising of the standard, and in the face of that you increased your
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employment from 300 to 800. How do you account for it? If that is a great mistake, how do you account for it?
Mr. Lane. I did not say the raising of the wages is a mistake. Do not get me wrong on that. I am in favor of high wages if industry can pay them.
Representative Wood. That was the statement that you made.
Mr. Lane. I thought they raised them too rapidly, in one big jump, when possibly it should have been done more slowly and not disrupt or dislocate business. It hurt business for a considerable time, and it was 12 months until they could get going again.
Representative Wood. You recovered nicely. You have 500 more employees than you had in 1932.
Mr. Lane. I admit that there has been a great improvement in business in general.
Representative Wood. Then you think the N. R. A. is a mistake?
Mr. Lane. No, sir. I believe you got me wrong. I believe the N. R. A., as a temporary proposition, was a wonderful stabilizer. I was thoroughly in favor of it. As a matter of fact I served on the Furniture Code Authority and did all I could to help see that it was put into effect in a proper way in our industry.
Representative Wood. What would you do about spreading employment in this country to employ the 7,000,000 or 8,000,000 that are now still unemployed if not by this type of legislation? Would you lengthen the hours and lower the wages?
Mr. Lane. No, sir. I would suggest that the changes be made slower instead of just one fell swoop.
Representative Wood. Five years is rather slowly, isn’t it? We have been gradually increasing wages 5 years now.
Mr. Lane. Our. wages are about 25 to 30 percent higher than in 1929, right today in our plant.
Representative Wood. Do you think there is any rapid change here, when you are now practically complying with the provisions of this law as far as the maximum hours and minimum wages are concerned? You would not consider it a revolution, would you, if this bill was passed and you were required to pay 40 cents an hour?
Mr. Lane. If you do not go above 40 cents I do not think it will seriously dislocate things.
Representative Wood. That is all the bill deals with, a minimum of 40 cents an hour.
Mr. Lane. That is not written in the bill.
Representative Wood. Yes; it is written in the bill.
Mr. Lane. I thought that was left blank. I knew it was the intention of picking 40 cents, but I do not think the bill that I read the other day provides 40 cents. I may be mistaken, because there is a lot that I do not know about this bill yet, that I have got to learn about it.
Representative Wood. Do you think that this bill, if passed, would increase the cost of your production by increasing the cost of wages 25 to 30 percent?
Mr. Lane. I said in the furniture industry as a whole.
Representative Wood. You do not mean your individual plant?
Mr. Lane. No, sir. I stated a while ago our wages now average as high or higher than they are in similar industries in Wisconsin or Indiana.
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Representative Wood. Why would you object to your competitors having their wages raised? You could more readily compete with them, could you not?
Mr. Lane. I would not compete with them at all.
Representative Wood. Then why do you object to raising their wages 25 or 30 percent?
Mr. Lane. I am not objecting to raising them at all. I think the thing ought to be approached slowly, cautiously, deliberately, over a period of time. If you provided for some flexibility, averaged it over a period of time. I would be thoroughly in favor of it and go along with it willingly, because I think it is a good thing.
Representative Wood. In other words, you like to just move slowly and give your competitors an opportunity to compete with you in low wages for the next few years?
Mr. Lane. They are not hurting us with low wages, because as a rule where they nave got low wages they have got low quality, up to a certain extent.
Representative Wood. Well, high wages naturaly bring about high prices, don’t they?
Mr. Lane. I think when you boost them in an industry like the furniture industry, where you have got a 33 percent sales price of labor, if you do not raise the minimum any more rapidly than the efficiency could be improved, you would not raise the cost of the furniture.
Representative Wood. Considering all the rest of the overhead, your insurance, taxes, interest on stocks, and so on, and all the other overhead of the factory, you would not consider a 20 percent increase in wages would naturally reflect a similar increase in the price of the product, would you?
Mr. Lane. A 20-percent increase in wages would make us raise our prices about 7 to 8 percent, I should say offhand.
Representative Wood. You just said that in some industries the labor cost was less than 2 percent.
Mr. Lane. In cigarettes, particularly. I think it is around 2 or 3 percent of the sales price.
Representative Wood. How would you figure that in the average cost of cigarettes?
Mr. Lane. It would not be big at all, just a few mills. An industry that had a 33 percent sales price of labor it would affect materially more, of course.
Representative Wood. You can produce more per man-hour now than you could 25 years ago?
Mr. Lane. Yes. It used to take us 27 to 30 man-hours to make a cedar chest. Now, when we are clicking along, in the fall of the year, after we get going along, we can produce a cedar chest with 7 or 8 man-hours.
The Chairman. A 500-percent increase?
Mr. Lane. I do not know what percent it is.
Representative Wood. Your cost of production in producing the article now has been decreased at least 100 percent, in 25 years?
Mr. Lane. From the man-hour standpoint.
Representative Wood. In talking about wages you have got to consider the man-hours, of course.
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Mr. Lane. Twenty-five years ago we paid cabinetmakers $1.75 for 10 hours, and today we are paying them $6 for 8 hours.
Representative Wood. Forty cents an hour is not $6.
Mr. Lane. That is the average.
Representative Wood. I was informed of some furniture machine in Fort Smith, Ark. I went down there to see it. I was informed that some of the men that were working at that time were producing 20 and 30 times more than they did 20 years ago, and some were producing 50 times more than they did 20 years ago on some machines, and almost all the machines in the factory were producing from five to eight times more than they did 20 years ago. That is the man-hour production in the plant.
Mr. Lane. I will tell you, Congressman, that the improvement of wood-working machinery has not been as rapid in the furniture industry as it has been in the metal-working trades. For instance, a cabinet planer today does not operate certainly over twice the speed that it did 25 years ago, and a moulder probably double or triple the speed of 25 years ago, on account of the increase in the current frequency today, speeding the heads up. You see, our main improvement has come from power-driven conveyors, assembly, finishing, and shipping, and the transportation of material. That is where our big improvements come.
Representative Wood. In the light of the rapid increase in productivity per man per hour, the workers have certainly not shared in that increased productivity, because their wages have been increased from $1.75 a day, as -you said, 25 years ago, to 35 and 40 cents an hour in your plant. Their wages have not been doubled by any means.
Mr. Lane. Wages have not been doubled?
Representative Wood. No.
Mr. Lane. Our wage average 25 years ago was probably about 14 to 15 cents; I said we paid cabinetmakers, the highest skilled trade that we had at that time, $1.75 for 10 hours, or 17.5 cents an hour. Today he gets around 60 cents an hour.
Representative Wood. Your production per man-hour has increased 500 to 700 percent in 25 years. I think that is the case in all mechanized industry. I think that is probably the minimum.
Mr. Lane. Of course, the public has benefited by that. Today we give them about 3 or 4 or 5 times as much as we used to give them.
Representative Wood. We cannot tell by the price of the furniture.
Mr. Lane. I will tell you, right even today, with wages from 25 to 40 percent higher in the furniture industry than in 1929, furniture is 20 to 25 percent cheaper than it was in 1929.
Representative Wood. It has been testified here by witnesses representing large industries that, since they lowered the hours and increased the wage standards, they could produce more than formerly.
Mr. Lane. I agree with you, on a lot of hand operations.
Representative Wood. That does not harmonize with your statement that when the wages are raised prices are raised. Demand raises prices more than anything else.
Mr. Lane. You got me wrong. I said if you raise wages faster than you improve efficiency, you raise the cost to the public. Do not get me wrong, Congressman. I am not against the objectives
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of this bill, I am thoroughly in favor of it, because as practically the leader in our industry, the largest producer in it, it is going to help us. We are in favor of it. The little fellow is the fellow who is going to catch the devil, who is not mechanized, who has got probably inefficient labor, and that kind of thing. 1 would not go back to 55 hours for anything in the world, because I do not think the men can do good work in 55 hours, not at the speed we make them travel now.
Representative Wood. I am glad to hear you make that statement.
Mr. Lane. I am fully in favor of it.
Representative Wood. You say this bill would affect, if enacted into law, some 12,000,000, that 120,000,000 people pay the bill. One hundred twenty million people paid the bill during the Hoover depression, did they not?
Mr. Lane. Yes; that was pretty bad, I will grant you that.
Representative Wood. In order to pay the bill you have got to give that 120,000,000 people something to purchase with.
Mr. Lane. Unquestionably, after the efficiency has a chance to catch up with the increases, the people I think will get just about the same for their money.
Representative Wood. This 11,000,000 of course represents 33,000,000 human lives, 33,000,000 people, 11,000,000 wage earners, and this does not affect all industry, either urban or rural, but I will venture the fact that it will indirectly affect millions of others.
Mr. Lane. Yes.
Representative Wood. There is no objection to that, is there?
Mr. Lane. No; none in the world.
The Chairman. Is there any other question? I want to ask you one or two questions. What was your volume of business in 1932?
Mr. Lane. Oh, I should say it was about between 25 and 80 percent of what it is today.
The Chairman. What is it today ? What is the volume of business today?
Mr. Lane. Of course, we fellows in business do not like to give our trade secrets to the public. It would be something like $3,000,000 this year.
The Chairman. What was it last year?
Mr. Lane. About $2,400,000.
The Chairman. About $2,400,000 in 1936. What was it in 1935?
Mr. Lane. I do not know. I do not have all the figures here. I think in 1933 it ran around about $1,200,000.
The Chairman. $1,200,000 in 1933?
Mr. Lane. Yes. The Chairman. Do you know what it was in 1934?
Mr. Lane. No. We have been increasing by proportion each year.
The Chairman. It has gone up each year, has it not?
Mr. Lane. Of course our increase in prices has had its effect.
The Chairman. It increased in volume too?
Mr. Lane. The unit is probably 50, 60, or 70 percent higher than in 1932.
The Chairman. It increased the volume of production each year since 1932?
Mr. Lane. Yes.
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The Chairman. So your business has been growing each year since 1932?
Mr. Lane. Yes, sir.
The Chairman. It grew the year of the N. R. A. and the year after the N. R. A.?
Mr. Lane. Yes.
The Chairman. And it has been growing each year since?
Mr. Lane. I might say there that we pay a good deal for national advertising for a business of our size, and that has been one thing that contributed to make it so.
The Chairman. You have always advertised?
Mr. Lane. For the last 15 years.
The Chairman. So your business has grown up each year since 1932. When did you build the extra addition to the plant?
Mr. Lane. We built the addition year before last. We built last year, we built this year, I am sorry to say.
The Chairman. You are building that this year?
Mr. Lane. Yes, sir; it is finished.
The Chairman. Are you using it to full capacity?
Mr. Lane. We have not moved into it yet.
The Chairman. I think I recall you testified that the surplus-tax law would throw all the little people out of business, or most of them.
Mr. Lane. Eventually it will.
The Chairman. You think it will?
Mr. Lane. We think it will.
The Chairman. Have you looked into statistics as to the number of people who were thrown out of business this year in comparison to last year and the year before?
Mr. Lane. Of course, we would have to take into consideration that we are on an improvement cycle. The point is it is going to hurt on the down slide.
The Chairman. At that time you thought the surplus tax would hurt the business?
Mr. Lane. I still do. I have not changed my mind a bit on the surplus tax.
The Chairman. You think this might destroy the business?
Mr. Lane. I think it is going to be very harmful. You know. Senator, in the last depression, in the year 1929, there were 3.200 furniture manufacturers, and at the end of the depression there were about 1,500.
The Chairman. You think it will increase even more than that?
Mr. Lane. That is assuming this profits tax is liable to stay in, and all the other things favoring the large and well-financed businesses. I should say in the next depression if there are 500 left it would be a lot.
The Chairman. You built your additional factory since the surplus-tax law went into effect?
Mr. Lane. The trouble was we had to build it to balance our production.
The Chairman. You had to build it to produce more to sell more?
Mr. Lane. We built one end last year, the finishing end, and this year we built the machinery end to it.
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The Chairman. Your business has gone up this year how much over last year?
Mr. Lane. I do not know.
The Chairman. A pretty good increase?
Mr. Lane. Certainly.
The Chairman. A man gave some evidence here yesterday as to the increase in income in various cities. He happened to give one which I recall very vividly, because I live there, and that is Birmingham. He said they gathered statistics that showed Birmingham, Ala., showed an increase in a man’s income from $1,200 to $1,800, but he bought 125 percent more furniture than he did the year before. It is true, is it not, that you sell a good deal more furniture when people have a better income?
Mr. Lane. Absolutely.
The Chairman. So that in spite of the increase in wages and shortening of hours your business has gained each year?
Mr. Lane. Our business grew each year from 1922 to 1929, and we kept more profits.
The Chairman. You had more profits?
Mr. Lane. We kept more profits.
The Chairman. Your men worked longer hours? Your men worked much longer hours?
Mr. Lane. Yes.
The Chairman. And you paid your men smaller wages?
Mr. Lane. Yes, sir.
The Chairman. What are the lowest wages you pay now?
Mr. Lane. I think the minimum right at the present time is 32.5 cents.
The Chairman. What percentage of the pay that you pay to your wage earners is less than a minimum, say, of 40 cents an hour?
Mr. Lane. I think our cost man told me the other day if we come up to 40 cents it would increase our wages between 25 to 30 percent.
The Chairman. You mean enough people draw under 40 cents an hour to account for that increase?
Mr. Lane. Enough to make the percentage: yes, sir.
The Chairman. How many do you employ under 40 cents an hour?
Mr. Lane. I do not know offhand. Our percentage would run 25 to 30 percent, I should say.
The Chairman. That is about 200 men that you employ that earn under 40 cents an hour?
Mr. Lane. I should say 200 or 300.
The Chairman. That would be about 25 percent of the people?
Mr. Lane. Yes, sir.
The Chairman. What percentage is it of your wage payment in amount, not in number of people?
Mr. Lane. I do not know. I haven’t got those figures in my head.
The Chairman. It would likely be much smaller in percentage than 20 percent, because they are the smallest wage earners that you have.
Mr. Lane. I might say at this point, in anticipation of this bill, which we felt a year ago was going to happen, that we put on 150 new men on January 1 to train before the fall season.
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The Chairman. So yon gave 150 men employment merely because you felt we were going to have higher wages and shorter hours?
Mr. Lane. We knew you were going to have 40 hours. We were inching up on it.
The Chairman. You gathered that from the fact that it was generally known over the country that this administration stood for a law which would provide minimum wages and maximum hours?
Mr. Lane. Absolutely.
The Chairman. It was in the Democratic platform?
Mr. Lane. Absolutely.
The Chairman. You began to think about it some time ago, so much so that you began to prepare for it months ago; is that right?
Mr. Lane. That is right; after November 3.
The Chairman. People all over the country had ample notice that there was going to be a law of this kind enacted, did they not?
Mr. Lane. Mr. Senator, it just brings me back to a situation that happened on the train.
The Chairman. The question I want you to answer is this: You knew without any question that it was going to come?
Mr. Lane. We felt certain of it but, even back as far as March, we did not know for certain; thought we might have made a mistake.
The Chairman. You knew the administration had promised it?
Mr. Lane. We knew it was going to come at some time.
The Chairman. You knew, if the administration would carry out its pledges, it would do that?
Mr. Lane. Yes.
The Chairman. You knew it was discussed on every stump in America?
Mr. Lane. Yes.
The Chairman. In every newspaper?
Mr. Lane. Yes.
The Chairman. You knew that, for 5 years at least, the people in this Nation had been discussing the best type of law to pass to provide a minimum wage and maximum hours in the industry?
Mr. Lane. Yes.
The Chairman. The people discussed it considerably—businessmen, legislators, and the public—they have all been discussing it, have they not?
Mr. Lane. Yes.
The Chairman. And we have had a pretty full and complete discussion on that subject, have we not?
Mr. Lane. No question about it.
The Chairman. As I understand it, you yourself favor a maximum-hours and minimum-wage law?
Mr. Lane. I am afraid we will have to have it.
The Chairman. You are afraid we will have to have it?
Mr. Lane. Yes.
The Chairman. The only thing is you want it done in a way that will least dislocate business?
Mr. Lane. Yes.
The Chairman. I think everybody agrees with you. The bill provides it shall be done in that way, by leaving it to a board to take in the industries one by one after a thorough study. Do you think
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that is a good suggestion, or would you rather write it into the law directly
Mr. Lane. When I look at it one way, I think it ought to be written into the law; when I look at it from the standpoint of the size of the country, the diversification of our industries, the diversification of their needs—some industry can probably produce all the merchandise they need in 30 hours, but there may be another industry that would require 45 hours. I really think to make a workable law, to keep them from absolutely handcuffing business, it will have to be flexible.
The Chairman. Then, we agree on the point that we need a law on maximum hours and minimum wages; that it should be sufficiently flexible to meet varying conditions throughout the country; is that right?
Mr. Lane. Yes.
The Chairman. And the only way we can do that is to pass a law that leaves it to some kind of agency to bring that about?
Mr. Lane. Yes.
The Chairman. May I ask you whether or not you believe that the method we have suggested here with reference to the five men appointed from different parts of the country is the best method of accomplishing that purpose, or have you any suggestions as to any change in that?
Mr. Lane. I think, Senator, that probably three would be quicker than five.
The Chairman. That is true. May I ask you this question in connection with that : There are two different viewpoints. No doubt three would be quicker and one would be quicker than three.
Mr. Lane. One would make more mistakes but probably would be quicker.
The Chairman. I think that is correct. Would we have as good a representation from the entire country? For instance, many people believe that so far as possible we should have a regional appointsment made from the Southwest, made from the far West, the Middle West, New England, and that section of the country. From that standpoint, would you think it better to have three or five, or even seven?
Mr. Lane. I am afraid if it was being considered from a geographical viewpoint of the country as a whole that it would be better to have five or seven, but from the standpoint of arriving at quicker decisions it should be three.
The Chairman. That is undoubtedly true.
Mr. Lane. If you will let me make a suggestion, by all means, I think it ought to be mandatory in the bill that the different industries should appoint the committee to develop the necessary data to inform that Board, because they cannot be experts in all lines of business.
The Chairman. We do have a provision for committees from industry and labor to meet with them and serve in an advisory capacity.
Mr. Lane. That is not mandatory.
The Chairman. Oh, yes; it is mandatory. The board would not be compelled to accept their conclusions.
Mr. Lane. No.
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The Chairman. But if they did not agree the board could appoint another committee, and in that way we have endeavored, following the New York minimum-wage law, to obtain the benefit of the experience of men in business and men connected with labor.
Mr. Lane. I do not think there is any question but what that would be helpful.
The Chairman. And we have also provided in the bill a system whereby—it may not be finally adopted that way—it does provide, however, that the law shall not go into effect with reference to a particular industry until a study has been made, and a postponement of the time of the operation of the act is provided for that study to be made.
Mr. Lane. Take my own industry, the furniture industry, for instance, if this law is passed, say as soon as it would be enacted, by August 1, would that law become operative on the furniture industry in 4 months after that date?
The Chairman. It would become operative in the furniture industry if the Board at that time put the law into effect with reference to the furniture industry, but it would not become operative in any industry until the Board had made its investigation and then placed it into effect on that particular industry. So that the furniture industry might not be affected for another month or 2 months. But it being the declared policy of the bill to bring it into effect as quickly as possible, having due consideration to carrying out the policy of the bill, in order to prevent throwing people out of work, and to prevent dislocation of the business.
Mr. Lane. Of course you realize that Board is going to have an enormous job.
The Chairman. That is correct. Is there any other substitute that you can suggest?
Mr. Lane. I think if the Board can go after the matter in a deliberate manner it would be better. I think one of the things that defeated the N. R. A. was the fact that it jumped into it so rapidly. I think if the Board would go out into industry and take the largest ones first, take some like the automobile industry, which is pretty well unionized today, that the condition you want to establish is already established in the industry, I think that would help.
The Chairman. I was mistaken in one statement that I made a moment ago. The bill does not make it absolutely mandatory to appoint a board. It says “they may.” There might be a condition where they will not need a board. For instance, as you say, in the automobile industry, certain industries of that kind, because it is not contemplated that this bill shall affect wages over $1,200 a year.
It seems to me we are very much in accord and that you are in accord with the ideas of this bill, and the only question you have in mind and what you want to suggest is what a man did several days ago, that the board that administers the bill do it, as he explains it, like a doctor and not like a policeman.
Mr. Lane. I think that is very correct.
The Chairman. So far as I gather from your evidence, you are I very much in accord with the ideas of this particular bill?
Mr. Lane. I have been close enough to our workmen in the last 25 years, I know most of them by their names, unfortunately some
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of them I do not, but I want to see them get the highest possible standard of living that they can get, but I realize there is a lot of difference between wages and standard of living. We have got to realize that, too. The higher a standard of living we can bring to our people the better, but we also must realize that we can not average up brains.
I was struck by a conversation that I had. last October over in London with Ramsay MacDonald’s son. He is a Socialist, of course. I told Mr. MacDonald, “You are the first high-class Socialist I have met for a long time. What do you fellows want to accomplish?” He said, “We want to equalize opportunity.” I said, “You mean you want to equalize wealth?” He said, “No; we want to equalize opportunity for everybody.” I said, “Well, you will probably fail. You cannot equalize brains.” He said, “No; we cannot equalize mentality; but we want to equalize opportunity at birth, mentality considered.” I said, “I agree with you. I am a conservative and you are a Socialist, but I agree with you.”
The Chairman. I do not think there is so much disagreement between you and this bill.
Mr. Lane. The only thing, Senator, that I would like to state, I think there should be provided in the bill that the Board could establish a minimum average in industries, where they had a good deal of skilled labor, to keep those who are in a favorable labor market from pulling the whole scale down. This would apply to the white and colored workers the same?
The Chairman. It applies to all workers under $1,200.
Mr. Lane. All that get under $1,200 and who work more than 40 hours.
The Chairman. You are talking about our provision?
Mr. Lane. Yes. How far up m a man’s office force would this apply?
The Chairman. The bill specifically provides certain exemptions.
Representative Connery. Executives.
Mr. Lane. It is a question as to where the executive starts.
Representative Connery. They did not have any trouble with that in the N. R. A.
Mr. Lane. I think anybody getting $135 a month would come under the maximum-hours provisions under the furniture code.
The Chairman. I think this one is very liberal, is probably more liberal than it will be when it is finally passed, if it is passed.
Mr. Lane. I would like to suggest that we not go above the 40-cent minimum, because it would seriously dislocate my industry. I think the increase in the future could be made slowly and very effectively.
Representative Connery. Mr. Lane, you spoke about the Advisory Board. We found that one of the evils in the N. R. A. was the codes. I mean by that, big industries writing the codes for the employees. Labor could sit in at the meetings, they could talk, but could not vote at all, and they really took the codes finally as written by the employers. For instance, the cigarette industry, I think Clay Williams wrote the code for the cigarette industry. I have nothing against Mr. Williams.
This goes back to your white and colored worker: “ ‘Employee’ includes any individual employed and any individual whose work has ceased as a consequence of, or in connection with,
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any current labor dispute”, and so forth, “but shall not include any person employed in an executive, administrative, supervisory, or professional capacity or as an agricultural laborer”, and so forth. As to “executive” or “executive capacity”, well, you probably get your definition of that from the Civil Service Commission on social security, as to what an authoritative expert is, what an executive is, and all of that. I do not think you would have much difficulty there.
To get back to the Advisory Board, as the Senator says, this Board could appoint, if they saw fit, an Advisory Board. Now, after that it says: “Then they shall appoint”, I think, it is two employers, two employees, one of the public, or something like that. It sets out whom they shall appoint.
From your practical experience in business don’t you think it would be fairer for the textile industry—I will just take that as an example—suppose they had Mr. Hobbs, of the Arlington Mills, Mr. Comer—there you have the woolen and cotton textile mills—and Mr. Gorman, of the textile workers, and Sidney Hillman, and then had some representative from Harvard or Wisconsin, or somebody representing the public, the consumer, some lady, as we had here today, don’t you think they could get a fair idea of what was needed on wages and hours in the textile industry to report to that board, rather than the system we have under the codes?
Mr. Lane. I always thought one of the great weaknesses under the code set-up was the fact that you let competitors sit in judgment on their competition.
Representative Connery. Mr. Gorman and Mr. Hillman would not care whether it was Mr. Hobbs or Mr. Comer they were dealing with. When they were dealing for the workers they would get just as much as they could get for the workers. And then you would have the public representative there. Don’t you think as a practical business matter from your experience that you would come out with some agreement that would be pretty fair all around?
Mr. Lane. I tell you when you lock up two manufacturers and two labor men in the same room there would be a lot of fireworks.
Representative Connery. I did not find it that way. I was secretary to the mayor of Lynn, and when we had shoe troubles I always took the position that when you can get men across the table and they are on the level—the manufacturers on the level and the employees on the level—they will reach an agreement. The trouble, as you know, is that you have a fair businessman, another fair businessman, and another fair businessman, and then you have the chisler, and the chisler is always the man who can break up the conference. The other three men can get along with organized labor.
Mr. Lane. I hope the day will come, Congressman, when the heads of labor, and the heads of industry, can sit down together as man to man and settle these things for the benefit of all concerned in a friendly and amicable way.
Representative Connery. Senator Black and I think that this bill is headed that way.
Mr. Lane. There are a lot of things that work backward from the way they are intended to work.
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Representative Connery. We will take the mistakes of the N. R. A. and perhaps rectify those mistakes, remedy those mistakes in this sort of legislation, keep the good points.
Mr. Lane. May I understand that this will not become effective on an industry until the Board so orders?
The Chairman. That is the way the bill is written.
Mr. Lane. It does not make this the effective date of the bill if the Board has not issued an order for that industry by that time, it does not become effective, does it?
The Chairman. That is the way the bill stands today.
Thank you very much.
The committee will recess until 10 o’clock tomorrow morning.
(Whereupon, at the hour of 5:35 p. m., the committee recessed until 10 a. m. of the following day, Wednesday, June 9,1937.)
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WEDNESDAY, JUNE 9, 1937
United States Senate,
Joint Committee of the Senate Committee on
Education and Labor, and House Committee on Labor,
Washington, D. C.
The joint committee met, pursuant to adjournment, at 10 a. m., in room 357, Senate Office Building, Senator Hugo L. Black (chairman) presiding.
Present: Senators Hugo L. Black, James E. Murray, Rush D. Holt, Allen J. Ellender, Robert M. La Follette, Jr., and James J. Davis.
Representatives William P. Connery, Robert Ramspeck, Matthew A. Dunn. Reuben T. Wood, Jennings Randolph, Richard J. Welch, Fred A. Hartley, William P. Lambertson, Albert Thomas, Joseph A. Dixon, William F. Allen, and Santiago Iglesias.
The Chairman. Before we proceed, I would like to find out, if I can, what witnesses are here for today. Therefore, I will call the list in order that we may ascertain.
The Right Reverend John A. Ryan.
Monsignor Ryan. Here.
The Chairman. C. O. Sherrill, the American Retail Federation.
Mr. Sherrill. Here.
The Chairman. The National Upholstery and Drapery Textile Association.
Mr. Wilson. Here.
The Chairman. Roy A. Cheney, Underwear Institute.
Mr. Cheney. Here.
The Chairman. Ralph Emerson, National Maritime Union.
Mr. Emerson. Here.
The Chairman. Benjamin C. Marsh.
Mr. Marsh. Here.
The Chairman. Mr. Arthur Besse, Wool Manufacturers Association.
A Voice. He will be here.
The Chairman. John P. Davis, National Negro Congress.
(No response.)
The Chairman. Earl Constantine.
Mr. Constantine. Present.
The Chairman. Erwin Feldman, National Association of House Dress Manufacturers.
(No response.)
The Chairman. The National Association of House Dress Manufacturers, is any representative here?
(No response.)
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The Chairman. Herbert Gutterson. of the Institute of Carpet Manufacturers of America has wired that he could not be here.
We have for today 10 witnesses. I am sure if we proceed as we did yesterday morning, each one of them will have a chance to make their statement and give us the benefit of their views.
I would like to wait for Mr. Connery, but I am not sure that he is not delayed on some work that he is doing, so I think that we had better proceed.
Monsignor Ryan.
The Chairman. We will be very glad to have you make a statement on the bill.
Monsignor Ryan. I favor this bill because it presents the only effective method of raising the wages of the underpaid and of bringing about full employment of our workers and full operation of our industries. My reasons for believing that these ends may be attained through this bill are derived from certain economic facts and assumptions.
The pertinent facts are: Our resources of machinery, man power, and intelligence are sufficient to provide all our people with the means of decent living; there are at present some 9,000,000 American workers unemployed; according to the volumes of the Brookings Institution on income and economic progress, our productive plant was, on the average, 20 percent unused in 1929; had it been fully utilized that year, $15,000,000,000 could have been added to the national income; this sum would have enabled the 16,000,000 families then receiving less than $2,000 a year to enjoy incomes of that size; since 1929, the productive power of our industries and workers has been still further increased by from 10 to 25 percent; finally, according to Harold Loeb and associates in their national survey of potential plant capacity, the national product could have been increased by some 50 percent in 1929 if all the then available resources of technology had been utilized. In other words, the national income, according to Loeb and associates, in 1929 could have been 135 billions instead of something more than 80 billions.
Why was this immense productive capacity unused in 1929? Why is it still unused? Why do we not employ our material resources and our manpower to provide all our people with the means of decent living? The answer, of course, is that we have not been able to make the right kind of distribution. Actual and profitable production depends upon effective demand for goods, and effective demand for goods depends upon the distribution of purchasing power. Bad distribution was the principal cause of the great depression which began in 1929. Too much of the national income was converted into new instruments of production; too little was expended for the products of existing capital. The masses of the people could not buy more goods because they had not the money; the minority that could have bought more failed to do so because they already had enough. In other words, those who had the desire to consume more had not the power, while those who had the power lacked the desire. The latter put their surplus into new machinery, new factories, new apartment houses, new office buildings, and a hundred
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other forms of new capital which were unable to operate at full capacity.
In addition I would like to point out that, according to the volumes of the Brookings Institution on Income and Economic Progress, some 9 billion of the 15 billion which was saved in 1929 did not go into new instruments of production at all. There was no place for these billions in new instruments of production, so they went into speculation of various kinds and were practically all wasted.
At length this excessive and unprofitable investment came to an end. Immediately followed the disemployment of hundreds of thousands in the capital-goods industries and their consequent inability to buy the products of other industries; then unemployment in the latter industries, a further reduction in the demand for goods, and a progressively wider area of unemployment.
This inadequate distribution of purchasing power, this excessive saving by the well-to-do, and insufficient consumption by the poorer classes has been going on for a long time. For the last half century capitalism in the United States has been committee slow suicide. It has been proceeding on the assumption that, no matter how large was the provision of instruments of production, all their product could be sold. It assumed that goods could be sold without buyers—that there was no necessity of providing adequate purchasing power to those who would be glad to use it. In this assumption businessmen were supported until quite recently by the majority of economists. From the days of J. B. Say, David Ricardo, and John Stuart Hill until February 1932, when Prof John Laurence Laughlin, late of the University of Chicago, made his naive pronouncement, only a few of the economists paid any attention to the problem of providing the masses, with purchasing power. The declaration by Professor Laughlin just referred to was this:
In short, we come to the fundamental conclusion that production of salable goods Is the only way of developing purchasing power.
The trick word in that sentence, of course, is “salable”, but Professor Laughlin did not think it worth while to tell us how to make goods salable when no one has money to buy them.
It should be an elementary proposition that effective demand for goods can be maintained only by putting more purchasing power into the hands of those who are willing and eager to buy. This means more purchasing power for the farmers and the wage earners. Both of these groups would spend more for goods if they had had the money.
This bill would put more purchasing power into the hands of the wage earners through increased minimum-wage rates and reduced hours of labor. The former method increases the purchasing power of labor directly; the latter indirectly by increasing the number of persons employed. To many economists and others this device seems to be self-defeating. Increasing wages and decreasing hours cause, so the argument runs, higher prices; higher prices cause a decrease in the demand for labor and in the volume of employment.
If this argument were correct, it would be fatal not only to the theory embodied in this bill but to every attempt to raise wages by whatsoever method. As a matter of fact, the increased wages and increased cost of production brought about by a maximum-hours and
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minimum-wage law can be met partly out of profits and interests and partly through the elimination of the high-cost productive concerns. The proposal to reduce the share going to capital may be a hard saying, but it represents an achievement that is absolutely necessary if excessive saving, excessive investment, and wasteful speculative activities are to be prevented. More of the Nation’s income must go into consumption and less of it into saving and investment. Moreover, it must be borne in mind that whatever increase in prices was necessary to take care of the increased wages would be borne in part by other groups in the community than the laboring classes; and the laborers themselves would have more money to spend on account of their increased remuneration.
At any rate, the maximum-hour and minimum-wage method is the only one that holds out any hope of substantially increasing the number of the unemployed or substantially increasing the lowest income. Even the incurable optimists among businessmen seem to have given up the expectation that the unchecked operation of economic forces all will automatically abolish unemployment and bring about a general prosperity. The favorite formula of the economic soothsayers used to be that industry corrects its own maladjustments, that slumps and depressions are only incidental and exceptional phenomena in the general reign of prosperity. Of course, that is not true, nor was it ever true. Between 1790 and 1925 there was in the United States 1 year of depression to every 1½ years of prosperity. Between 1925 and 1935 there were fewer months of prosperity than of depression. Many observers of the economic scene are coming to the conclusion that we shall never again see general prosperity and general employment, that we shall always have five or six million persons out of work.
Surely this is a counsel of despair. Surely it suggests the bankruptcy of American industrial and political intelligence. The American people will not and should not be asked to accept this as a permanent condition. The supreme merit of the bill now under consideration is that it makes a systematic attempt at beginning the process of correcting the great evils of unemployment and underconsumption. It may fail, indeed, but it at least represents a promising attempt. No other equally promising or equally realistic measure has been proposed by anybody. A general reduction in prices would indeed be helpful, but no practical or effective method of attaining it has yet been suggested. Moreover, the wage-and-hour method is superior to the reduction-of-price method, because the latter would distribute the benefits to everybody and leave uncorrected the excessively low incomes of the underpaid classes. This measure goes directly at the main evil, the underpaid labor, and distributes the bulk of the benefit to those who need it most.
I should like to make a few observations on two or three provisions of the bill. Section 2 (14) presents what is probably as practicable a definition of a “fair wage” as could be devised, particularly as supplemented by section 5 (a). The definition of a fair wage in terms of a living wage would be simpler but it would not be applicable to the minimum rate of remuneration that has been most frequently suggested in connection with this bill, namely, 40
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cents an hour. That is obviously less than a living wage for the head of a family.
Section 8 (a) is excellent because it aims to prevent substandard labor conditions not only in the manufacture of goods going into interstate commerce, but in the production of goods that compete with products entering interstate commerce. Section 14 provides for advisory committees to aid in determining hours of employment and rates of wages. I regard this provision as very helpful, since it gives some authority to the persons most concerned in any local situation.
Section 22 (a) is likewise very commendable, since it protects the labor standards set up by the more progressive States. Federal regulation of wages and hours has been widely criticized on the ground that it supersedes the authority of the States, that it reduces the States to the position of a fifth wheel on a wagon so far as industrial matters are concerned. Of course, this is a gross exaggeration.
The best refutation of it is found in the power of any State that so desires to do better than the Federal Government in its industrial regulations. Finally, I agree with the Secretary of Labor in the opinion that the employers of a small number of workers should not be excepted from the provisions of the bill. After all, it is among small employers that sweated labor conditions are conspicuously prevalent.
In closing my statement, may I take the liberty of saying that no legislative proposal that I have ever supported has given me quite as much satisfaction as the Black-Connery bill? I wrote the first book in which legal minimum wages were advocated in the United States. The book was published 31 years ago last month. I made the first important speech in favor of minimum-wage legislation in the States. That was at the annual meeting of the National Consumers’ League in 1910. I wrote the minimum-wage law which was enacted by my own State, Minnesota, in 1913, and had the pleasure of seeing it approved by the supreme court of that State. I saw with bitter disappointment the nullication of the minimum-wage law of the District of Columbia by the Supreme Court of the United States in 1923. That statute was outlawed because a bare majority of the Court read into the “due process” clause an unsound economic theory and a false ethical theory. The economic theory upon which a majority of the Court acted was that of laissez faire; the ethical theory was that of utilitarianism. Again, in 1936, I saw the New York minimum-wage law declared unconstitutional by five of the Supreme Court Justices, four of whom were identical with four of those who had invalidated the District of Columbia statute. Within the last few weeks I have seen the decision in the District of Columbia case explicitly overruled and the Wagner Labor Relations Act upheld. After 31 years, therefore, I have the pleasure of supporting a minimum-wage bill which applies not only to women and children, but to men as well. And I assume that the bill will be enacted into law and sustained by the Supreme Court.
Representative Connery. Monsignor Ryan, Senator Black, and I were just discussing you, and we were calling to the mind the fact that if this legislation becomes law, this Black-Connery bill will be the fruition of a lot of hard work on your part through many, many
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years. We recall the time you came before the committee on the original Black-Connery bill, way back, and long before that on other labor legislation.
Monsignor Ryan. Yes. I could not resist the temptation to put it all into the record.
The Chairman. Thank you very much.
Mr. C. O. Sherrill.
Mr. Sherrill. My name is Clarence O. Sherrill, president of the American Retail Federation.
At the outset, I wish to ask you gentlemen that, if possible, your hearings be extended until we might have an opportunity to obtain and summarize for you the views of our member associations toward this bill. I am hopeful that we can get reports or recommendations in reply to the requests we are sending to them within a very few days.
In making that suggestion, I wish particularly to say that it is not with the intention of defeating this bill or interfering with its procedure to a rapid conclusion.
As you will notice from our membership list, which I will read to you, we have associations in all parts of the United States, and it is very difficult to secure the views of those associations unless we have a reasonable time to do so.
Our membership at the present time comprises the State associations of retail merchants representing the various classes of retailing in the following States: Colorado, Illinois, Indiana, Iowa, Maine, Maryland, Ohio, Massachusetts, Missouri, Nevada, New Hampshire, New Jersey, New York, Pennsylvania, Tennessee, Texas, Vermont, and Virginia, as well as six important national retail trade associations.
As you can see from the geographical location of our member associations, they are scattered all over the United States. It takes considerable time to reach them. It takes time for them to make their decision, and it takes time for them to transmit their decisions to us.
And I may say here for the benefit of the committee that under our procedure we do not express ourselves definitely for the bill and its provisions until we have canvassed our members and secured practical unanimity, so that I feel the views of this representative group of retailers, representing as it does the third largest industry in the United States, would be helpful to your committee.
It is my opinion from the discussion that I have had with our trustees and directors since this bill was introduced that the retailers all over the United States will in general favor the objectives of this bill in desiring to secure an increase of the standard of living, to eliminate substandard labor conditions, to eliminate child labor, and other unfavorable working conditions, but, as I have indicated a moment ago, we have not had time nor opportunity to receive from our membership their views in reference to the particular provisions of this bill.
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We wish you to know, however, that we do believe thoroughly in decent wages. We believe in reasonable hours of labor and just working conditions.
I wish to call your particular attention to the great difference that exists in the problem confronting retail distribution as compared with that which confronts the productive industries. This difference is based upon the fact that with the improvement of machines it is possible to tremendously increase the output of each individual. This is not the case in retail distribution. We have just so many hands with which to pass goods over the counter, and there is no device which has ever yet been found that will expedite this materially.
Moreover, there is another point that I wish to call your attention to, and that is that the public has a very large influence; in fact, they are the controlling influence in the hours that retail stores are kept open. We serve the public, we come in close contact with them, and we carry out so far as possible their desires in these matters.
As expressing the general philosophy of our organization in reference to the matter of decreased hours in industry and in retailing, I wish to quote a statement made some time ago by the chairman of the board of the American Retail Federation, Mr. Louis E. Kirstein, of the William Filene Sons Co., of Boston. He was then referring to the 30-hour-week bill which was actively before the Congress at that time.
Another case in point is the bill now in Congress calling for a 30-hour week. Now, while we do not pass an opinion on the effect of a 30-hour week in industry, we do know that the introduction of a 30-hour week in retail stores would increase prices to consumers enormously, for it is important to visualize the difference between the processes of production and distribution. Many commodities, for instance, are turned out in factories by the tens of thousands through methods of mass production, but with very few exceptions, these same commodities must be sold in stores one by one to Individual customers through individual salesmen. We know, for example, that a certain shoe factory turns out 175,000 pairs of shoes a day through methods of mass production, but these same shoes are sold one pair at a time to Individual customers through Individual salesmen. And so with a great many commodities, technological progress, inventive genius, the application of science will no doubt lead to even greater developments in the direction of greater and greater productivity. But mass production methods simply will not work in distribution. We have tried again and again to install mechanical devices for selling, but we find that our customers will not use them. They want to feel the goods; they want to discuss their merits with the salesman. It can be readily seen, therefore, that if the 30-hour week were established for retaiL establishments there would have to be an enormous increase in the costs of retailing, which, in the end, would Increase considerably the price to consumers. Moreover, an employee In a retail establishment is not under the same strain of having to fit in with the routine enforced by a machine as is true in the typical factory or mill. There is, therefore, not the same element of fatigue. Hence the necessity for reducing hours of work to the same standard as may be desirable in an industry does not obtain.
As I said a moment ago, we have not had time to canvass our members on this bill, but I do wish to point out that retailing has in the past gone on record in support of the Government unemployment legislation, both State and national, and it has supported State minimum-wage laws in States throughout the country, for the reason that our membership believes firmly in the necessity of raising the standard of living by a gradual improvement of the condition of the wage earner, and I think in this respect, without at all committing
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our organization as to the details of this bill, I feel sure that we are entirely in accord with the objectives of the proposed legislation. In fact, I believe that every right-thinking American can fully agree with the objectives sought, although there may be some differences as to the method to be used in accomplishing these ends.
For instance, there are a great many people in the United States that believe that rather than have the United States Government undertake by a single piece of legislation to accomplish a minimum wage and maximum hour as a national matter, that it might be preferable to accomplish an improvement over a period of time, that is, a gradual evolution toward bettering standards through some such legislation as that favorably passed upon by the Supreme Court in the Prison Goods case, which in effect would allow the United States to sponsor and support the efforts of the States in improving their labor conditions. I do not wish to say here that we favor that, but I simply call attention to it as one very important subject on which there may be great difference of opinion.
For instance, the difficulty that this labor board might have in fixing a wage in Louisiana that would have a proper relation to the wage in Massachusetts. There are many problems, it seems to me, that would exist in that matter, and I say that with some knowledge of the situation, because I was chairman of the Ohio N. R. A. Board from the beginning of the N. R. A. until it ended, and I am firmly convinced that we should give very careful consideration to the maintenance of local home rule and State home rule in our efforts to improve conditions.
And without indicating what our view is in reference to the broad method proposed, I simply throw out this suggestion as an important matter to be considered.
There are a number of details in this bill that later on we would like an opportunity to submit data on, but at the present time I only wish to comment on two paragraphs. There has been some question raised at the hearings; in fact, the Assistant Attorney General who explained this matter, Mr. Jackson, was not quite certain as to whether this bill applied to retailing or not; but I call your attention to section 5 (a) of the bill and section 8 (a) of the bill, under which, from our reading, it appears to us that this bill may give control, not only over the working conditions, hours and wages, and other matters of retail stores in interstate commerce, but also in intrastate commerce, for the reason that the intrastate stores would be definitely in competition with interstate, and therefore they will have to be adjusted by the board, as I see it; and, frankly, I do not see how that can be avoided if this bill is to be a success, because obviously it can’t simply throw a ring around the States and leave the entire area within the States unaffected by , it, because the competitive situation, as anyone who has been in the retail business knows, would be impossible.
I want to thank you. Senator Black, and Mr. Connery for giving ' me an opportunity to be heard here today, and to assure you, as I said before, that we are not hostile to this bill. We are inclined to be favorable to the bill, but we would like an opportunity to canvass our members before expressing the views of the American Retail Federation.
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The Chairman. We will be very happy to have their views when you get them. I am sure it will take you only a few days. You can send them in, even if the hearings are concluded.
Representative Thomas. I have just a question or two. You stated that if your workweek in the retail trade was substantially cut down and a minimum wage is also adopted, that it will increase the costs of your business substantially. Is that your contention ?
Mr. Sherrill. Somewhat. What I particularly had in mind in that statement is this, that if you reduce them largely, the hours under which a store can keep open—they are not excessive now, certainly in certain types.
Representative Thomas. I am talking about the costs now. Do you mean that it will increase the costs?
Mr. Sherrill. Yes, sir.
Representative Thomas. Let me ask you this question. Is it not a generally accepted fact that the cost of any retail business, as far as labor is concerned, is the smallest element in the cost of the business? Is that not generally true ? It is cheaper than rent----
Mr. Sherrill (interposing). No.
Representative Thomas. Cheaper than advertising?
Mr. Sherrill. No.
Representative Thomas. What is the average cost of labor in retail business, in percentage?
Mr. Sherrill. The average cost of salaries and wages in a retail store, including compensation of active proprietors, according to the Bureau of the Census and Dun and Bradstreet, is approximately 14 percent.
Representative Thomas. Of its entire cost?
Mr. Sherrill. Of the cost of sales. And rent and the other items, the totals of the other items are not as much as that, except for the cost of merchandise.
Representative Thomas. Fixing your cost basis, it never runs more than 25 percent, does it? That is a high figure, is it not?
Mr. Sherrill. The way we figure in the retail business is on the cost of a sale.
Representative Thomas. A retailer in the merchandising business will give a salesman 6 percent on what he sells, isn’t that right?
Mr. Sherrill. No ; it is more than that.
Representative Thomas. If the present rate of pay in the average retail business were to be increased 25 percent on the widest stretch of the imagination, it would not increase the cost of the product to the public more than 8 or 10 percent, would it?
Mr. Sherrill. Well----
Representative Thomas (interposing). Some time when you get the opportunity, will you write us a letter and give us the benefit of your views on that
Mr. Sherrill. Yes; but may I say one thing? The increased wages would not proportionately increase the cost of the goods. If that is what you have in mind. It would be a very considerable burden on the stores, and the decrease in hours would have the same effect, but within limits. For instance, many merchants are only working their employees about 40 hours a week at the present time.
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Representative Thomas. Then, I understand yon to say by that statement that it would not increase the cost to the public, but it would cut down the merchant’s profits?
Mr. Sherrill. No ; it would increase the cost to the consumer but not in direct proportion to the increase in wages. The merchant can only get a very, very small percentage of profit, due to the competitive situation and this change in wages and hours does not change that competitive situation, except it might help it.
Representative Thomas. Why?
Mr. Sherrill. Figuring that it would cut out the chiselers who give very poor pay.
Representative Thomas. That is all, sir.
The Chairman. Thank you very much.
Mr. Willson, of the National Upholstery and Drapery Textile Association.
Mr. Willson. Mr. Chairman and members of the committee, my name is Harvey Willson, and I am general manager of the National Upholstery and Drapery Textile Association, with headquarters in New York.
To establish the identity of both the industry and the association which I represent, I should like to quote from the letter of former National Recovery Administrator Johnson, with which letter he transmitted to the President of the United States the code of fair competition for the upholstery and drapery textile industry. On page 261 of that printed code General Johnson said:
The production of upholstery and drapery fabrics is a business which, on equipment of great versatility, uses all types of fibers in producing fabrics to develop and meet style changes. Since its founding it has been a separate and distinct branch of the textile industry, generally unaffiliated with the production of other textiles. This separation was the natural result of the variety of raw materials used and the special skill and art required in the manufacture of these fabrics. Sales also are made through specialized channels. Upholstery fabrics generally are sold direct to manufacturers of furniture, automobiles, railroad cars, etc. Drapery fabrics are sold direct by the mill to large retail outlets, while smaller retail outlets are reached through wholesalers. The industry realizes that it is only a small branch of the whole textile industry, but, because of the variety of fibers used, its specialized type of products, and its separate distribution problems, it does not fit into any of the major classifications of textiles.
Further in that connection this same letter of former Administrator Johnson says that—
The National Upholstery and Drapery Textile Association is truly representative of the upholstery and drapery Industry and the bylaws of this association provide no inequitable restrictions to membership.
It is for that association that I am appearing. The industry is pretty generally concentrated in New England and the Middle Atlantic States, with some mass production of the cheaper type of upholstery and drapery fabrics in Southern States, notably North and South Carolina. The membership of the association represents approximately 90 percent of what is known as the pile-fabric production in the industry. Pile fabrics are the plush type of fabric as
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distinguished from what we know as flat goods, which are tapestries, damasks, and the like.
The association represents approximately 90 percent of the pile fabric industry and 74 percent of the so-called flat fabrics made on 4 by 4 box board looms with a jacquard design requiring at least 600 hooks and 2 shuttles or more. From a layman’s point of view that technical reference means simply that in flat fabrics we represent the fabrics of higher quality, more intricately designed and woven.
Immediately after the nullification of the N. I. R. A. our association called a meeting of the industry at which it was voted unanimously to continue on a voluntary basis all of the code provisions— except that limiting the number of shifts. The labor provisions called for a 40-hour week with a $12 minimum in the South and $13 in the North. Our industry statistics show an average earning in both pile and flat fabric branches of the industry of 57 cents per hour. Child labor is not now and never has been a problem in the industry.
We are not opposed to Government supervision of hours and wages but we think it should be done only on a simple, clean-cut basis of a fixed minimum wage for the unskilled worker and a maximum workweek. We believe it to be very unwise to set up a board with power to vary the minimum wage and maximum hours and to inject itself into other phases of the employer-employees relationship. Regardless of any effort which may be made to limit the powers of the board in the drafting of this bill, the fact of the matter is that boards, commissions, bureaus, and the like almost invariably tend to exceed the authority and scope of activity originally contemplated for them. This is quite understandable, not only because such arms of the Government seem naturally to have a tendency to reach out for more authority and influence but also because complex situations, never imagined when the Board was established, appear to require legally unauthorized expansion of its authority for the sake of practical administration of the law.
We believe this bill, as a law, would be wholly unworkable and would result in confusion in industry far exceeding that connected with the attempt to administer the N. I. R. A. which was bad enough. Due to the fact that the law contemplates a study of each industry by the Board before any of the purposes of the law are effectuated in any particular industry there is bound to be a relatively long period of uncertainty: confusion, undesirable speculation in commodities, and competitive maneuvering among related industries for advantage over each other. Moreover, the Board which would be set up by this bill will find problems of which it never dreamed in the shape of highly complicated and sensitive relationships between industries. Such situations are bound to delay action by the Board in connection with many industries, unless an arbitrary and possibly unfair conclusion is reached for the sake of prompt action alone. We anticipate also that the difficulty of administering such a law as this will be increased because the contemplated procedure makes it more likely than even under N. R. A. that political influence and political considerations will be brought to bear in determining questions which should be decided only from an economic or
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social point of view. For example, the power given the Board to establish differentials as between urban and rural communities and as between general geographical divisions of the country, is almost certain to result in employers in those urban, rural, and general geographical divisions of the country resorting to every means, including political influence, to gain advantage over someone else or to defend themselves against what they may consider the effort of a competing interest to gain for itself an advantage. All of this will greatly complicate the administration of the law, delay it, and bring about confusion and instability which will deter our complete economic recovery.
In addition to such practical criticism of the law we believe that it represents a long step toward complete Government control of industry and labor such as exists in several European countries. We think this is neither necessary nor desirable in the United States. In this connection, I direct your attention to the comment of Gen. Hugh S. Johnson, former Administrator of N. R. A., in the World- Telegram, of New York, of June 7, from which I quote the more pertinent paragraphs:
The proposed wages-and-hours legislation, if enacted in its present form, and the social security laws deprive the States of independent power to regulate social matters within their own borders, just as the proposed farm legislation will deprive them of independent power to regulate agricultural matters.
If and when all these various proposals come to a head, the combined result will be a transfer of a very large part of the former governmental power of the States, the Congress, the judiciary, and all independent quasi-judicial commissions—not to a Federal Government but to a Federal governor.
Much of this was necessary by reason of stultification of liberal legislation by too many “checks and balances.’’ This column would not be much afraid of such a system with Roosevelt President. But it does not believe this was his design and—with him gone—it shudders to think of such a system in the hands of the Machiavellis whose design it was—or their choice of his successor.
So much for the general position of our association on the undesirability and impracticability of the proposed law. If, nevertheless, a law ot the nature proposed by this bill is to be passed, we offer the following further comment:
We have been told that the primary purpose of inserting a minimum wage per hour and a maximum workweek in the bill itself is to strengthen it from the standpoint of its constitutionality by more specifically defining or limiting the power of the Board. In our opinion, such an idea represents nothing but pure sophistry, for the reason that the Board is given the power to vary the minimum wage and maximum workweek up or down. This, in effect, means that the Board has unlimited power. Hence, you are at exactly the same point so far as constitutionality is concerned as if no specific minimum wage or maximum workweek had been written into the law. Furthermore, if the proposed supervision by Government over minimum wages and maximum hours is on such thin ice that it requires so devious and delicate an approach, then its proponents, in our opinion, would do better to defer legislation until they are on more firm ground. In other words, if the fixing of a minimum wage and a maximum workweek is not clearly within the province of the Federal Government without hypothetical limitations upon the administrative board; without banking upon changes in the personnel of the Supreme Court and without anticipating decisions of that Court, then the project should not be undertaken.
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Again, if a law of this sort is to be passed, we wish to endorse heartily the position taken by Secretary Perkins and others who have testified earlier, that no employer, no matter how few his employees, be exempted from the provisions of the law. In our industry there are just enough small manufacturers with only a few employees (sometimes including only the members of the family of the owner of the business) to constitute difficult competition because even though small they are engaged in interstate commerce and their price quotations are broadcast over the country.
We endorse also the view expressed by Miss Perkins that such a law as this, if it is to be passed, should not establish differentials in the minimum wage and maximum workweek by geographical divisions of the country but on the basis of distribution only. It never should be possible for a manufacturer located in the South or anywhere else to compete with a New England manufacturer in the Chicago or Grand Rapids market for upholstery fabrics on the basis of his having an advantageous differential in either the minimum wage or the maximum workweek. Competitors in any market should be on the same level so far as their minimum wage and maximum hours are concerned.
In connection with section 14 authorizing the Board to establish advisory committees we believe the setting up of such committees should be not only permissive but mandatory. Although it is almost inconceivable that the Board would not establish an advisory committee for every industry with which it deals, we think it desirable to require the Board to have such an advisory committee in order that any possible tendency to deal perfunctorily or arbitrarily with the smaller industries may be prevented.
Concerning the matter of competition from imported goods which may become increasingly troublesome as manufacturing costs of American producers are increased by such a law as proposed, we concede that there is no place in such a bill as this for introducing the necessary safeguards. They should be taken care of through the governmental agencies already existing in connection with tariff matters. However, we believe also that our industry’s problem of foreign competition, particularly from the Orient, should not be casually dismissed by saying that there are Government agencies already in existence to take care of it. It has been clearly established that the policy of the State Department and of the administration is to encourage foreign competition through the medium of reciprocal trade treaties. The securing of relief through established tariff agencies consequently is slow and uncertain. We think the administration should not proceed upon the principle of not letting its right hand know what its left hand is doing, but that if the administration is convinced that the fixing of minimum wages and maximum hours is necessary to our economic health, then it is the responsibility of the administration to visualize the situation in the broadest possible light and to adjust its foreign trade theory and policy so as to be more in harmony with its domestic objectives.
Section 5 (a) and (b) seems to us inequitable and illogical in that the Board is authorized to fix labor standards in those industries where inadequate or ineffectual collective bargaining is presumed to have resulted in unsatisfactory wage and hour standards unfair to employees. The Board should be similarly authorized to inquire
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into those cases where collective bargaining may have resulted in unfairness to employers through the establishment of unjustifiably high standards due to coercion or the overwhelming strength of a union, as might easily occur in the case of small industries and small manufacturers.
Representative Thomas. Do you know of such an instance?
Mr. Willson. I happen to have one immediately in mind. It is in the process of negotiation now, but it represents a situation of just the sort that I have referred to, where the company is more or less isolated. The move which is being made to unionize it and 1 bring about collective bargaining is not part of a general move among the competitive units in the industry, and unquestionably through the mere strength, the overwhelming strength of the union movement, that company is going to have to capitulate.
Representative Thomas. Has the employer been beat down yet by labor, or is it a supposition on your part that he will be?
Mr. Willson. It is unquestionable that he is in the process of being beat down.
Representative Thomas. Would you mind stating his name for the benefit of the record, and his address?
Mr. Willson. I do not think it would be quite fair to him. I would rather not, if you don’t mind.
Representative Thomas. That is all right. Go ahead.
Mr. Willson. Because, as a matter of fact, the fact that negotiations are under way is not generally known in the industry, and it is to his disadvantage if it were known. Competitively, I mean.
Finally, we disagree with the recommendation of Mr. William Green, of the American Federation of Labor, that the bill be amended so as to provide that the Government will withdraw from supervision of minimum wages and maximum hours after collective bargaining has been attained in any industry. Such a proposal seems to be predicated upon the assumption that, one of the principal purposes, if not the primary purpose, of this wage and hour bill is to advance the cause of collective bargaining. Labor has all the instrumentalities justifiable to promote the principle of collective bargaining in the Wagner-Connery Act. As suggested in the foregoing it is quite conceivable that collective bargaining may result in injustice to employers and if Government supervision is salutary from the standpoint of protecting employees from inadequate and ineffectual collective bargaining, there is no sound reason or denying the same sort of protection to employers, particularly those in small industries or representing small enterprises.
The Chairman. Thank you very much.
Mr. Willson. I wish to thank you for the opportunity of making this statement.
Representative Wood. You have appeared before the Subcommittee on Labor of the House on the Ellenbogen bill?
Mr. Willson. Yes, sir.
Representative Wood. Did you appear in opposition to the Wagner Act?
Mr. Willson. No ; I did not.
Representative Wood. Or the N. R. A.?
Mr. Willson. Not the N. E. A.
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Representative Wood. Your objection to the Board being established is because of the instability. You are certainly not comparing this Board to the N. R. A., are you?
Mr. Willson. Yes; in respect that its administration involves a great deal of the same sort of machinery and operation; that is, physical operation.
Representative Wood. What caused the confusion and instability and tribulations of the N. R. A.?
Mr. Willson. The great and rather unexpected complexities that developed, relationships, very sensitive relationships, between industries that prevented early and decisive action in connection with one or the other or both of the industries or several industries that might be all tied together; in fact, the generally complex situation that I have referred to.
Representative Wood. There were nearly 700 codes of fair competition. The employers got those codes in practically every instance except 61. The employees had a voice but not a vote on 30 of them. And in 28 or 30 others they had a voice and a vote. In those cases where the employees were on the code authority and just had a voice, there was less confusion and less discrimination and more stability in those 61 codes than any of the others. The employers established all of these codes—that is, over 600 of them. Don’t you think the employers were the ones who were responsible for the instability, the discrimination, and confusion?
Mr. Willson. No; I do not.
Representative Wood. If they were not, who was?
Mr. Willson. The natural difficulties of the situation. An attempt was made to do far too much. The employers were in many instances responsible for having attempted to do too big a job at one fell swoop with the writing of their codes. They tried to take in too much territory. I will concede that.
Representative Wood. And then some tried to do too small a job.
Willson. Yes; quite possibly. I will have to take your statement about the better situation in these codes on which labor was either represented or had a vote, or both? because I don’t know that that is true. I am quite prepared to take it for granted that you have looked into the thing and that you do know that it is true.
Representative Wood. You do not admit that the employers had almost full charge of the drafting of the codes and the administration of the codes?
Mr. Willson. Not at all.
Representative Wood. You say the employers had no hand in the administering of the codes?
Mr. Willson. I did not quite catch the question.
Representative Wood. Do you mean to tell me that the employers had no hand in the administration of the code?
Mr. Willson. No; that was not your question as I understood it. It implied that the employers had charge of the administration of the codes, which certainly is not true.
Representative Wood. They had the complete charge of drafting the codes?
Mr. Willson. Well----
Representative Wood (interposing). And they had almost complete charge of the administration of it.
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Mr. Willson. I cannot accept the first part of your statement because it so happens in our own case that due to the difficulty of distinguishing our particular division of the textile industry from the major divisions that were set up on the basis of the fabric used, cotton, silk, silk, rayon, wool, and so on, our code was written or rewritten by the attorneys and the deputy administrator of that particular section of the N. R. A. that we were placed under. I know that that occurred----
Representative Wood (interposing). At the request of the employers?
Mr. Williams. No ; not at the request of the employers.
Representative Wood. He did not have the authority otherwise.
Mr. Willson. But upon the initiative of the administration officials of the N. R. A. who undertook to dispose of our code or see the code through in that way—upon their own initiative.
Representative Wood. There is not any parallel between the administration of this law by the Board as set up in the law and the administration of the N. R. A. under the code authority. You would not say there was any similarity?
Mr. Willson. Not if you confined the administration of the N. R. A. codes to the code authority, but in my opinion it was not limited to the code authority. The administration was fully as much handled by the administration officials of the N. R. A. as it was by the code authority. In many, many cases the administration officials had occasion to overrule the code authority and to guide it. I am not talking only of our own code authority but many others that I am acquainted with.
Representative Wood. If they had not done that, or rather if they had not had that authority, there would not have been any reason for having a code where the employers drafted their own code.
Mr. Willson. Except to give it the force of law.
Representative Wood. You cannot see any parallel between the two?
Mr. Willson. I do. I see a great parallel, and that is the reason I anticipate a great deal of difficulty.
Representative Wood. Here is a governmental agency authorized by Congress to administer the law within certain definite limits.
Mr. Willson. For that very reason I think it is quite conceivable that the difficulty will be increased, because the codes had the advantage at least of the initial moves in their administration being made and undertaken by the people who were intimately of the industry. Whether you agree that that is an advantage or not, in my opinion it was. At least, I think there was a greater probability, for that reason, that they got started in the right direction, even though they might have had to be steered a little bit, or straightened out by the administration officials of the N. R. A., later.
Representative Wood. In your remark about beating down the employer. what did you mean by that?
Mr. Willson. I did not use that expression, as a matter of fact. This gentleman over here did [indicating Representative Thomas]. But what I said, and what we believe, is that it is quite conceivable— I think this is the wording I used in effect—that it is quite conceivable that collective bargaining may result in unfairness to an
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employer, particularly in a small industry, or a small enterprise in any industry—collective bargaining may result in unfairness to the employer, just as it is presumed in the drafting of this bill that it may be inadequate and ineffectual with respect to employees; in other words, that thing is likely to run in both directions in some instances; and the board is given the authority and the power to protect and straighten out those things from the employees' standpoint, and the same protection should be available to the employer.
Representative Wood. What do you mean by “unfairness to the employer” in collective bargaining?
Mr. Willson. Specifically by setting standards that are unreasonably high. This sort of thing is occurring, and I hope that no one will ask me to cite the specific instances----
Representative Wood (interposing). Have you a specific case?
Mr. Willson. I was about to say that I hoped that no one will ask me to cite the company, as I will have to make the same answer again; but this sort of thing is occurring, and I anticipate it will occur with more or less frequency. An organizing effort is directed at a company that pays, we will say, an average wage of $26 a week, and an organized drive is made at boosting that to $32 a week, we will say. Nearby, in the same industry and competitive with this plant that has the $26 minimum at present, is another plant that has a $32 minimum----
Representative Wood (interposing). Then you think it is better to have a minimum wage so that they would all be protected?
Mr. Willson. For unskilled labor? Will you let me finish the examples? I do not think that you have anticipated the conclusion of the thing. Instead of being satisfied with a $32 average in that higher-grade plant the organizing effort then is directed at boosting that from $32 to $38—the same $6 increase that they aimed in connection with the $26 average-wage plant. That, in my opinion, constitutes unfairness, so far as that $32 average-wage employer is concerned, and it takes no cognizance at all of the desirability of bringing about a fair degree of equality. That sort of thing continues, and perhaps even extends, the inequality that already was existing between those two plants.
Representative Wood. You seem to be opposed to the minimum wage provided for in this law, and you seem to be opposed to collective bargaining.
Mr. Willson. Not at all.
Representative Wood. What method would you suggest would be best to raise wages, or the standard of wages, if not by and through collective bargaining or a minimum-wage law?
Mr. Willson. Let me state our position again on both of those subjects. We are not opposed to the minimum wage. I have tried to say that in this statement. We are opposed to its being hooked up or administered by a board that has the power to alter it up and down and to look into other phases of the employer and employee relationship. We are not opposed to collective bargaining, but we do feel that inasmuch as the board in this bill attempts or is preparing apparently to protect the employee from the results of inadequate and ineffectual bargaining, then we ask simply that the same protection be available to the employer who may nave suffered some injustice
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as the result of his being not able to take care of himself adequately on collective bargaining.
Representative Dunn. I would like to ask the witness just one brief question. Mr. Willson, don’t you believe that this bill, if enacted into law, will eliminate the sweatshops and child-labor conditions and better the conditions of the working people generally?
Mr. Willson. Yes; when, as, and if it is successfully administered, but I have grave doubts as to its being successfully administered within any reasonable length of time, and I think that within the period during which the administration of the law may run into all sorts of difficulties that I have referred to, employment and our general economic recovery may suffer a set-back that will leave us not j very much better off for a long time.
Representative Dunn. Just on that point. You spoke about its being administered. Nevertheless, you admit it will do what I said it would. If it is properly administered, then it will stamp out child labor and also the sweatshops, and mate the conditions better for the workers.
Mr. Willson. Undoubtedly. There is no argument about that.
Representative Dunn. It is up to us Members of Congress to see that it is properly administered.
Mr. Willson. Yes; but based on actual, practical experience with what I considered to be a very similar undertaking so far as its administration is concerned—not so far as the principles involved or perhaps the vesting of power either partly in the hands of the industries as contrasted with its resting completely in the hands of the Government as in this case, or in the case of these bills, I feel, based upon that practical experience with the N. R. A, that there are going to be a great many administrative difficulties that are going to raise hob with the program.
Representative Dunn. Even taking the N. R. A., it did a tremendous amount of good, because I know a large number of people employed in the District here working 7 days a week, 12 and 14 hours a day, and when the N. R. A. came into existence, they got at least 1 day a week off and were only compelled to work 48 hours a week, and just as soon as that humanitarian piece of legislation was repealed, or declared invalid rather, these exploiters get on the job and increased the hours and decreased the wages. So the N. R. A. did a tremendous amount of good, and every businessman if he is unbiased will admit that. That is all.
Representative Ramspeck. The brokers and the investment bankers made the same prediction about the Securities and Exchange Act, didn’t they?
Mr. Willson. I think they did, based upon my recollection of what appeared in the newspapers at that time.
Representative Ramspeck. You are familiar with that. And you will admit that that situation is much better than it was before the act was passed.
Mr. Willson. Not having any direct or indirect personal knowledge of the thing, I cannot say that. I do not even know what their impression is at the present time. I am sorry, but it would be entirely guesswork on my part.
The Chairman. We appreciate your testifying. I do not want to ask you any questions, but I want to be sure about the
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recommendation of your organization. As I understand it, you say since the bill provides that wages under $1,200—that the Board shall have a right if collective bargaining fails to give enough wages under $1,200, to fix a minimum wage, that your organization thinks the bill should go further in order that if collective bargaining gives too much under $1,200, that the Government should have the right to reduce this wage and say whether they should get $900 a year or $600 a year, or whatever it is. That was my understanding of your recommendation.
Mr. Willson. Yes; having in mind that we are talking about a minimum wage all the time.
The Chairman. Is that the recommendation of your organization?
Mr. Willson. Yes, sir.
The Chairman. You understand it only reaches salaries under $1,200 or wages under $1,200. Therefore, they might by collective bargaining get $600 a year, and you think if that $600 is too much, that the Government should have the right to step in and reduce that wage.
Mr. Willson. You have chosen a very low figure.
The Chairman. All right; use the figure $1,000.
Mr. Willson. All right.
The Chairman. You think if they get $1,000 by collective bargaining, that the Government should have the right to step in and protect the employer from that $1,000 a year wage?
Mr. Willson. If----
The Chairman (interposing). I just wanted to know if that is the recommendation, and I want to get it clear in the record.
Mr. Willson. It is quite conceivable that in certain circumstances the $1,000 minimum would not be justified economically, and in those cases where collective bargaining has resulted, whether it be a thousand or whatever figure----
The Chairman (interposing). Well, the limit is $1,200. What I want to get clear is—this is not a discussion or an argument, but I just want to know if the recommendation of your organization is that this bill should be amended so as to provide that if the wage earner gets under $1,200, and the Government thinks it is too much, that it should protect these employers from this excessive wage.
Mr. Willson. That is right. Not an excessive wage necessarily, but unjustified by the economic factors in the situation.
The Chairman. And that is one of your chief objections to this bill, that the Government would not have the right to protect the employer from such a wage. Thank you very much, Mr. Willson.
Representative Thomas. Mr. Chairman, before we proceed I would like to make a suggestion. It seems to me that it is becoming a question of the alleged differential in freight rates between the East and the South where it is alleged that the East has the preference over the South. That question has become very important, to my mind. I suggest that some commissioner from the Interstate Commerce Commission be invited over and let him enlighten us in regard to that point with regard to this bill.
The Chairman. Suppose we take that up a little later? I am going to take up the question of these matters later. We have our schedule now set for the week, and we would not have a chance to get him
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today. I have no objection personally to that being done, and it may be advisable to do it
Representative Thomas. Anytime; but I think it is very advisable i to do it.
The Chairman. Mr. Roy A. Cheney. We have you listed as the representative of the Underwear Institute of New York City.
Mr. Cheney. That is correct
The Chairman. Is the Underwear Institute a local institution?
Mr. Cheney. It is national, with members in about 37 States, representing about 70 percent of the production of the country.
The Chairman. Manufacturers of underwear?
Mr. Cheney. Underwear and allied products.
The Chairman. You may proceed.
Mr. Cheney. We have made a careful study of the bill-—of both bills—and have analyzed it section by section. It would take too long to read that complete analysis of this here, so I would like permission to offer that to the committee and have it put in the record.
In addition to our observations with regard to the bills themselves, we have made some economic briefs and cost briefs. We would like to offer those also.
At the present time I will just bring up some suggestions that may be controversial, and so it may give the opportunity of asking any questions, which I will be glad to answer.
In the first place, we will welcome effective legislation doing away with child labor and fixing a ceiling for hours of work and a floor for wages. We believe, however, that such ends may be attained much more simply than through these bills.
One of our major thoughts on this whole problem has to do with the power given to this Commission. We feel that too much power is given, and we feel if the Congress or the committee will look over our analysis they may come to our conclusions.
Secondly, I would like to raise this question: In the clauses appointing this Commission, it seems to us that whoever may be President of the United States is given complete control over the Commission. In other words, perhaps we are wrong again, but it looks as if the President, whoever he may be, has the power to remove a commissioner for any cause whatsoever, and therefore we recommend that the Board be appointed for life----
Representative Wood (interposing). For life?
Mr. Cheney. For life. At a salary of $20,000 a year, eligible for retirement at 75 years of age at a pension of $15,000 per year.
We feel also that the bills empowering this Commission to set up subcommissions and boards, that those subcommissions and boards should have the same safeguards thrown around them that we have attempted to throw around the main Commission here. All of this if the Congress believes that a commission or board should be appointed. We do not think it is necessary.
Now, further, we feel perhaps unjustifiably, that Congress is more and more delegating its legislative authority to more and more boards
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and commissions. Perhaps that is none of our business as underwear manufacturers, but perhaps as citizens we think that Congress should scrutinize all bills and should think carefully before delegating more and more power to commissioners and boards, particularly if they are controlled by the Executive and taken out of the control of the Congress.
Now, we feel this also, that the power to increase wages and to reduce the hours of work is, in practical effect, the power to reduce tariffs. Therefore, we feel that if a board is set up, that it should be mandatory upon the board, and given the power also, to enact compensatory tariff legislation by rules or orders. If that is constitutional or legal; perhaps it is not.
The other controversial points in our brief which we will offer as our recommendations, and I believe these are going to be really controversial, we would much rather have a fixed minimum wage for our industry set by Congress and legislation rather than the setting of it by a board and giving that board discretion to vary minimum wages according to geographical or other reasons. So we set set up here a $12 minimum wage.
We do not maintain that that is a living wage, it is not even an average wage, but in our effort to get away from giving a board discretion, we are setting a minimum wage so low that it will take care of the backward parts of the country and enable those backward parts of the country to be developed, and in fact are setting that wage so low to achieve the same result that the bills attempt to achieve in giving this board power to grant differentials.
Representative Thomas. Why are you so interested in the backward part of the country? You do not live in that part of the country, do you?
Mr. Cheney. I have lived there; yes, sir.
Representative Thomas. You do not live there now?
Mr. Cheney. I do not.
Representative Thomas. Does your association have any business in that part of the country?
Mr. Cheney. Yes, sir.
Representative Thomas. In manufacturing operations?
Mr. Cheney. Yes, sir.
Representative Thomas. Whereabouts?
Mr. Cheney. When I speak of the backward sections, I mean backward industrially—Georgia, South Carolina, Mississippi, and some parts of Tennessee.
Representative Thomas. I infer from your remarks then, that you think $12 as the minimum is about right for Georgia and those States that you have just mentioned, and the other parts of the country should have a higher minimum; is that correct?
Mr. Cheney. No, sir.. I think the minimum should be set low enough to prevent immediate and drastic dislocations where the wages are at that figure now or less, and then perhaps later on, after the thing has been adjusted, the Congress can raise that minimum wage, but I do believe this----
Representative Thomas (interposing). In other words, you want to take care of the present differential and gradually raise the lower up to the higher?
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Mr. Cheney. Exactly. I feel this, that where you fix a minimum wage too high, you are really setting a tariff on the expansion of industry and the development of the backward industrial centers.
Representative Thomas. Go ahead.
Mr. Cheney. I think that is the extent of my statement.
The Chairman. You say you have a brief, Mr. Cheney?
Mr. Cheney. Yes, sir; as I mentioned.
The Chairman. Will you offer it to the committee for the record?
Mr. Cheney. I will; yes, sir.
(The briefs will be found at the conclusion of Mr. Cheney’s statement.)
Representative Ramspeck. The purpose of manufacturing is to sell the product, isn’t it?
Mr. Cheney. Yes.
Representative Ramspbck. And everything that intervenes between the acquiring of the raw product ana the delivery of the finished product to the wholesaler or the jobber has to be taken into consideration, does it not?
Mr. Cheney. It does; yes, sir.
Representative Ramspeck. That includes the freight rates?
Mr. Cheney. Yes, sir.
Representative Ramspeck. If a manufacturer in Georgia or Tennessee is laboring under a 89-percent differential in freight rate against the rate as compared with a manufacturer in Rhode Island, we will say, in reaching the market, it is just as much a handicap as a differential in wages, is it not?
Mr. Cheney. I would say so, generally; yes, sir. I have not figured that out.
Representative Ramspeck. I want to ask you one other question. I presume that the sale of underwear, like a great many other articles, is contracted for in advance of manufacture, is it not?
Mr. Cheney. It is; yes, sir.
Representative Ramspeck. Then it would be desirable from the standpoint of that type of manufacturer to have some stability to any minimum wage that might be fixed, would it not?
Mr. Cheney. Very much so: yes.
Representative Ramspeck. If a minimum wage is fixed today and maybe changed next month or 60 days later, it would be very difficult to contract for delivery of fall underwear, for instance, would it not?
Mr. Cheney. That is true, and that is the situation now. The threat-excuse the word “threat”—with the possibility of wage and hour legislation and the uncertainty as to what course it is going to take, I think that is one of the reason why our business has fallen off. Only one of the reasons, but I think a substantial one, why our business has fallen off in the last 6 weeks or 2 months. People are afraid to order because they don’t know at what price the merchandise is going to be delivered.
Representative Ramspeck. Have you discussed in your brief section 10 of the bill?
Mr. Cheney. Yes, sir. I mean to mention to that. It is my impression, perhaps incorrect, that section 10 does away with a power of the Board to maintain differentials due to geographical location or other reasons.
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Representative Ramspeck. Just one other question. As I understand it, your suggestion about the tenure of the Board is based on the fact that we have some commissions, such as the Federal Trade Commission, where the members are not removable by the Executive, is that right ?
Mr. Cheney. Exactly; yes sir.
Representative Ramspeck. You think that this Board ought to have the same protection?
Mr. Cheney. I believe so; I certainly do.
Representative Connery. Just one question, Mr. Cheney. Do you think that something should be put in the bill—as I understand it, you took the position that this Board should have the power to set the tariffs.
Mr. Cheney. If the Board is set up; yes, sir.
Representative Connery. I do not know as I would favor that, although I favor protection against foreign imports. We have a Tariff Commission, and I would like to see something in the bill that would give power to the board to recommend to the President along with the Tariff Commission, the protection of American industry if they were to be penalized by going to shorter hours and higher wages, and the foreign wages were low and the hours were too long. Do you think that something should be put in the bill to accomplish that?
Mr. Cheney. No matter how it is accomplished, so long as it is effective.
The Chairman. Did you state in the beginning whether you own a mill?
Mr. Cheney. No, sir; I am a paid trade association executive.
The Chairman. You are the secretary?
Mr. Cheney. I am the secretary or managing director. That happens to be the title.
The Chairman. You are not in the manufacturing business?
Mr. Cheney. I am not; no, sir.
The Chairman. All right. Thank you very much.
The underwear and allied products manufacturing Industry represents approximately 85 percent of the production of underwear, etc., and includes some 600 mills manufacturing: (1) All kinds of knitted underwear—cotton, wool, rayon, and silk; (2) 20 percent of woven cotton athletic underwear; (3) knit underwear and glove fabrics, beef tubing, and other fabrics made on underwear-knitting machines; and (4) knitted fabric gloves other than wool. The only types of underwear not Included are woven rayon or silk undergarments and woven cotton undergarments other than athletic underwear.
We believe the great majority of our industry will welcome effective legislation having to do with the elimination of child labor, the fixing of a ceiling for hours of work, and a floor for wages only. Extension of the bill beyond these three points would make it utterly impractical and unworkable, as proved by our N. R. A. experience. We believe this can be done very simply and easily by the Congress without the delegation of power to any boards or commissions. We do believe that this present bill goes to unnecessary lengths to accomplish these results.
These are our objections:
1. The bill places in the hands of a board, under the control of whoever may be President of the United States, full power over Industry, commerce, and labor. Inasmuch as this board is under the complete direction of the President, we think it unwise and contrary to a democratic form of government to give any one man such great power.
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2. However, should the Congress be Impressed by the necessity of setting up any board, we recommend that the setting up of economic governments of this type follow the traditional political Government set up by the Constitution of the United States; that is, there should be a distinct division of the executive, legislative, and judicial powers in these economic governments, properly balanced one with the other, and that the judicial part of these economic governments should have thrown around them the same safeguards which are thrown around the judiciary of the United States. Therefore, while we think that the setting up of any board is unwise, we recommend, should Congress set up such a board, that the clauses in the legislation doing so specifically state that the members of the board shall be appointed by the President by and with the advice and consent of the Senate; shall not engage in any other activity; shall be appointed for life at a salary of $20,000 per year; shall be eligible for retirement at the age of 75 years, with a pension of $15,000 per year; and that the members of the board be removed from office only upon impeachment proceedings similar to those used in the impeachment of a Federal judge. Furthermore, and in this regard instead of empowering this board to set up what amounts to lower courts through appointment of agencies, etc., that the Congress itself set up subboards for each Industry employing more than 50,000 people, such subboards to consist of three members, each to be appointed by- the President of the United States, by and with the advice and consent of the Senate: the members of the subboards not to engage in any other activity: to be appointed for life at a salary of $15,000 per year; be eligible for retirement at the age of 75, with a pension of $10,000 per year; and be removed from office only upon impeachment proceedings similar to those used in the impeachment of a Federal judge.
Inasmuch as this proposed legislation is in reality a constitution governing the economics and welfare of commerce, industry, and labor, the same should be most carefully drawn and should throw around the executive, legislative, and judicial departments of this new government the same safeguards that are thrown around these similar bodies by the Constitution of the United States setting up the political Government of the United States. We believe that this constitution for industry and commerce should even be more carefully drawn, because history shows that whoever controls the economic government of a nation also controls the political government. Otherwise, whoever is President, of the United States when this bill is passed, will be in a position to perpetuate himself in power.
3. With the increasing number of our fellow citizens who are awakening- to the import of this bill and other similar legislation, we deprecate these continued and ever larger and larger grants of power by the Congress to executive-controlled boards, commissions, and bureaus. The Congress has already delegated a larger measure of its powers over transportation to the Interstate Commerce Commission: over the telephone, telegraph, and radio to the Federal Communications Commission; over unfair competitive practices, etc., to the Federal Trade Commission, and probably will be asked to- grant more in a new bill which we understand is now about completed: over securities, etc., to the Securities and Exchange Commission; over shipping, to the Maritime Commission; over tariffs, to the Tariff Commission, and more- lately to the Secretary of State, to whom Congress has practically delegated all of its tariff-making power and to whom in this regard the Senate of the United States has delegated its treaty-making powers. Through the recent neutrality law, Congress has delegated to the President of the United States a large measure of its power to declare war, and through the power to fix the value of gold, the Congress has delegated to the Executive the greater part of its power to coin money. Sooner or later someone might arise to point out that Congress has abrogated its power.
4. We suggest also that inasmuch as the power to increase wages and’ to reduce the hours of work is also in practical effect the power to reduce tariffs, it be made mandatory upon any board set up to Increase the tariffs proportionately with any increase In cost in production and distribution. The mere granting of power to increase tariffs to such Board is not sufficient: at least, such was our experience under the N. R. A. With a board of the character set up in this bill, made as subservient as it is to the President of the United States, it is reasonable to suppose that such a board will carry out whatever may be the then policy of any President of the United States rather than to deal out equal justice under the law.
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We believe that it is not necessary for the Congress of the United States in its endeavor to further the economic and social welfare of the whole people to set up an autocratic type of government for industry, commerce, and. labor. We believe, and know that such desirable ends can be accomplished with simplicity and still maintain our democratic form of government. We recommend the passage by Congress of legislation:
1. That prohibits the employment of any minor under the age of 16 years in industry.
2. That the law state that no part of the process of the manufacture of any of the products of industry shall be permitted to take place in the home premises or living quarters of any person.
3. That no employee shall be permitted to work in excess of 40 hours in any one week except upon payment of time and one-half for overtime.
4. That members of supervisory staffs, including all who direct the activities of others, such as executives, superintendents, foremen, and assistant foremen, also office help, be exempt from the provisions relating to the maximum hours of labor herein specified.
5. That the minimum wages that shall be paid by employers to any of their employees, excepting members of supervisory staffs, office employees, learners, and privileged employees, shall be at the rate of $12 for a 40-hour week, and at the rate of time and one-half where employees work more than 40 hours in any one week.
6. Learners and privileged employees shall be paid at the standard piecework rate, if any, applicable to the particular operation or duty they are performing, but in no event less than at the rate of 66% percent of the established minimum wage per 40-hour week while so classified. No employee shall be classified as a learner for a period longer than 12 weeks. The number of privileged employees shall not at any time exceed 10 percent of the total employees in each plant. The term “learner” as used herein is defined to mean an employee who has not been employed in the same operation or duty within a year previous to his existing employment, and therefore requires training. The term “privileged employee” as used herein is defined to mean one who, by reason of age or of physical or mental inability, is unable to do the minimum amount of work usually done by employees in his classification of work. A certificate of a duly licensed physician to the effect that an employee belongs in the privileged class shall be prima facie evidence of such status.
7. No deduction for faulty work shall be permitted which reduces any employee's pay to an amount less than the minimum rates specified.
8. The provisions for minimum rates of pay herein establish guaranteed minimum rates of pay regardless of whether an employee is compensated on a time rate, piece rate, or other basis.
9. Each employer shall post and keep posted In each plant the provisions of this law relating to hours of labor, minimum wages, and conditions of employ meat in a manner to be prescribed by the Secretary of Labor.
10. Each person engaged in the industry shall furnish to the director of the Bureau of Labor Statistics of the United States Department of Labor, upon his written request and specification and in accordance therewith, duly certified reports as follows: Wages and hours of labor (reports shall be based on payroll period). Each person engaged in the industry shall furnish to the Bureau of the Census, upon the written request of the Director thereof, and in accordance with the specifications therewith, machinery data and production data.
11. All members of the industry shall keep records as required and specified by the Director of the Bureau of Labor Statistics and the Director of the Census showing facts, circumstances, and conditions of their business necessary for the preparation of the foregoing reports and the ascertainment of compliance with this law, and the same shall be kept open and available for inspection at all reasonable times by said directors or their duly accredited representatives, provided that—
(a) No one so delegated shall be employed by, or otherwise affiliated in interest with, any persons connected with this Industry
(b) All information so obtained shall be treated in strict confidence except as required for the administration and enforcement of this law.
12. That no goods, wares, or merchandise made in contravention to the terms of this statute shall be transported, sold, or offered for sale in interstate commerce.
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13. That a right of action be given to any employee injured by a violation of this statute against the violator or violators thereof in any court, State or Federal, which now has jurisdiction over civil actions of a similar nature.
And to the end that equal and speedy justice may be done to all parties herein concerned, there shall be appointed by the President of the United States, by and with the advice and consent of the Senate of the United States, an additional judge to each district court of the United States and that there shall be similarly appointed an additional Federal district attorney in each such Federal district-court jurisdiction whose sole duty it shall be to prepare, try, and expedite criminal actions brought hereunder and who shall represent In civil actions employees in suits brought to recover payments not made or withheld in violation of this statute.
The penalty imposed by this statute for violations hereof shall be $500 for each offense against each employee.
Our specific objections to the bill as now constituted we are now filing with this joint committee of the Congress and ask that they be spread upon the record.
Objections to the So-Called Fair Labor Standards Bill, By Roy A. Cheney, Managing Director, Underwear Institute
Repeating our objections to this whole bill as it is now constituted, we are definitely against the delegation of power by the Congress to a board of this nature and believe that such wide delegation of power and the inclusion of powers extraneous to the expressed intent of this bill are unnecessary.
Turning to the sections and subsections of this bill:
Part I, section 1, subsection (a), page 1, line 9: The words “occupations in interstate commerce" seem to mean that all persons and employees engaged in any industry or branch of commerce whose products cross State lines or whose activities affect commerce in any way would come under the terms of this bill. This would include publishers of newspapers, books, magazines, etc., telephone, telegraph, and radio companies, etc. Does Congress intend to give such an extent to the powers granted to the Board set up in this bill?
Subsection (4), lines 11, 12. and 13 on page 2: Beginning “and diverting Interstate commerce, etc.”, this clause actually means diverting production, manufacture, etc., and does not mean diverting interstate commerce. We do not believe it would stand up under test by any court no matter how constituted.
Subsection (b): It is stated that the correction of the above conditions requires that Congress exercise its legislative power to regulate commerce. The query arises in our minds as to whether in this bill Congress is exercising its legislative power, or whether, as a matter of fact, it is not delegating the exercise of legislative power without setting up proper standards.
Section 2, definitions, subsection (a), sub-subsection (1) : We suggest that in line 6 after the word “association”, the word “organization” be Inserted.
Sub-subsection 2, line 10 on page 3: The insertion of the word “communication” in this subsection leads us to believe that the labor standards bill will have power over the employees of telephone and telegraph companies, etc., and will give authority to the Board to subpoena telegrams, etc., on file in telegraph and cable offices. Does the Congress wish to give this power to this Board?
Subsection (5), line 18, on page 3: The use of the words “or branch thereof.”
Query: Would this include a branch mill, for example, whose products did not enter directly into interstate commerce? Furthermore, we believe that this subsection (5) should be followed by the words “in interstate commerce, in the production of goods for interstate commerce, or otherwise directly affecting interstate commerce.” Otherwise, this definition might be taken to include purely intrastate occupations.
Subsection (6), lines 20 and 21, on page 3: We believe the words “or indirectly” should be eliminated, as the inclusion of such words wipes out any standard for the guidance of the Labor Board.
Subsection (7), line 6, on page 4: The words “of any unlawful discharge”— what is the standard here which shall govern the Labor Board in determining whether or not a discharge is lawful or unlawful? Lack of standards will vitiate this section.
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Subsection (9) : This subsection includes within the term “labor dispute” any controversy which may arise as to the right of any labor union to represent its membership. It seems to us that this matter is covered by the Labor Relations Act and should not be found here, because out of recent experience a group may claim to represent the employees of a mill, while not actually so representing them; nevertheless if an enforced closing of the mill took place under such circumstances, it could be determined as a “labor dispute” under the terms of this act. Besides, on lines 23, 24, and 25, it states "regardless of whether the disputants stand in the proximate relation of employer and employee.” This means that in this bill the Congress of the United States is approving of the “flying squadron” methods sometimes used by irresponsible labor leaders, that is, that the employees of a mill or a group of mills may be perfectly satisfied with conditions as they exist but outside forces, having no connection with the mill or its employees, may start labor trouble and thus the trouble becomes a labor dispute, which, in view of certain following sections of this bill, gives the Board authority to impose conditions upon the mill or group of mills where neither the employers nor the employees desired intervention, and thus, in effect, gives power to labor union leaders to change conditions in any community where they may choose so to do. This is by indirection, but nevertheless in practical effect, a delegation of legislative power by the Congress to persons without the Government of the United States.
Sub-subsection (10), line 5, page 5: Eliminate the words “standard of cents per hour”, and insert “at the rate of $12 per week for a week of 40 hours.” In string a minimum wage Congress must take into consideration the fact that the large part of the employees of this industry are unmarried girls and not heads of families. In substantiation please see the testimony of Mr. Francis Gorman, president of the United Textile Workers, given at the hearings on the so-called Ellenbogen bill before the subcommittee of the Labor Committee of the House of Representatives. (See p. 143, pt. 3, of the Official Transcript of the Hearings before the subcommittee of the Committee on Labor, House of Representatives, 75th Cong. 1st sess., on H. R. 238, dated May 12, 1937.)
Sub-subsection (11): In line 14, page 5, after the words “standard of” and before the word “hours”, there should be Inserted the word “forty.”
Sub-subsection (12), sub-subsection (A): This subsection (A) in effect forces the shut-down of a mill or factory during a labor dispute, and In other words permits labor union leaders, who today under our law have no responsibility, to close down a mill or factory as they see fit and for any reason, just or unjust; and prevents the payment of higher wages for any reason whatsoever to anyone employed in a mill or factory during such dispute even though they may be performing addition tasks or duties. This probably will be declared unconstitutional in any court no matter how constituted. In line 25 on page 5 and line 1 on page 6, who is to determine whether or not the employer knew a person to be unqualified for the job, or whether the employer knew that the person had no intention of accepting regular employment? No standards are set up here.
Sub-subsection (B) : This denies to an employer the right to determine the economic views or activities of any of his employees; in other words, this gives to an employer no right to find out whether or not any of his employees are engaged in communistic activities. Does the Congress really mean to accomplish this end?
Sub-subsection (13), sub-subsection (B): This gives to the Chief of the Children’s Bureau in the Department of Labor power by regulation or order, with or without notice of hearing, to declare certain occupations hazardous. This of course is an improper delegation of power without proper standards, and contrary to accepted American principles.
We are impressed at this point, as we are with the entire bill, that the Congress in this proposed act is delegating the power to legislate on hours and wages, working conditions, etc., to a commission of five and is divesting itself of control over these matters.
Sub-subsection (14) : Should subsection (e) of section 4 be read in connection with this subsection? Presumably the wages fixed by the Labor Board under subsection (c) of section 4 will be “a fair wage.” Therefore, should not the standard set forth in this subsection (14) be combined with the standard set forth in subsection (c) of section 4 to guide the Board; or in other words, can the Board for one purpose apply a certain set of standards and for the
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same purpose but in a different place apply a different set of standards without the constitutionality of the bill being called in question.
Sub-subsection (15): Likewise, should not the standards set forth in this subsection be read with, and be made a part of, the standards set forth in subsection (d) of section 4, for the reasons outlined above?
Sub-subsection (18). This subsection read in connection with sub-subsection (12) practically makes it impossible for a plant or factory to operate when any labor leader determines to create a labor dispute, justified or unjustified. This in effect is a grant of power by the Congress of the United States to any labor leader to close any mill or factory, or any group of mills or factories, or any industry which he so chooses to do without limitation or restriction. Furthermore, a substandard labor condition is defined to mean in (A) and (B) whatever the Labor Board determines it to be, and in case of (C) whatever the Labor Board determines it to be plus whatever the Chief of the Children's Bureau in the Department of Labor shall determine it to be. Here we have an attempted definition by the Congress of something which must be defined later under delegations of power |o commissions and bureaus and therefore results in no definitions, but merely a delegation of the power to define and then to legislate upon such definitions. The lack of standards here vitiate this effort.
Sub-subsection (19): Here the Labor Standards Board is given power to determine what are fair labor standards based upon all the delegations of power mentioned in connection with sub-subsection (18) hereof, which means of course that those goods which the Board has not determined to be made under fair labor standards cannot safely be considered such. It will create a "no-man’s land” in industry and commerce which will be extremely hurtful to the free flow of commerce and a burden upon interstate commerce.
Sub-subsection (21) : Does this definition include stocks and bonds, etc.?
Sub-subsection (22) : Does this mean to classify as unfair goods into which have entered as raw or semiraw materials, merchandise manufactured under any so-called substandard labor conditions, Irrespective of whether or not such raw or semiraw materials have been in interstate commerce?
Sub-subsection (23) : The same question lies here.
Sub-subsection (24): This subsection differs from a similar subsection in the bill (H. R. 7200) introduced into the House of Representatives on May 24. 1937, by Mr. Connery, of Massachusetts, in that it includes in two places the phrase “in any State.” Does this mean to exempt goods produced in the Territories or possessions of the United States or in the District of Columbia? Further, the word "transporting” again appears. Does this mean that the employees of the railroads, express companies, etc., are brought within the jurisdiction of this Board? Furthermore, the use of the phrase “in any State” seems to clash with subsection (4) of section 1 (a) and also seems to clash with subsection (b) of section 1.
Sub-subsection (25), lines 2 3and 24 on page 8: The words “or other disposition” would seem to be such a broad inclusion as to defeat the idea of definition and therefore should be eliminated for obvious reasons.
Sub-subsection (26) : Again in the definition of “to a substantial extent” it seems to mean nothing after the reading of it. In other words, “to a substantial extent” can mean practically anything, and the attempt to define such a phrase in such language results in defining nothing.
At this point we wish to recommend to the Congress that Congress itself should say by what rules or standards Industry and commerce should he carried on and not leave this Important piece of legislation to the discretion of a board which does not have to answer to Congress for its actions.
Subsection (b) : For the information of the Congress there are two general classifications of employees, viz, (1) direct labor, where the employee actually works upon the production of the articles, and (2) indirect labor, where the employee has nothing to do with the production of the goods themselves. Does this subsection purport to cover both classifications, and if so, does the Congress believe that this subsection will be upheld?
Section 3, labor standards, subsections (a), (b), and (c): The language creating the Labor Standards Board, particularly in view of the wide powers given to the Board in this bill, is most loosely drawn and dangerously conceived. If there must be a board, we suggest that the bill provide in addition that the salary of each member of the Board be $20,000 a year and that each member of the Board shall be appointed for life with compulsory retirement at the age of 75 on a pension of $15,000 a year. Furthermore, we recommend that a member
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of the Board be removed only upon impeachment proceedings, the same as those used in the impeachment of United States judges.
With the large legislative powers delegated to this Board and with the large judicial powers similarly delegated, this Board will have power and authority over approximately 15,000,000 employees and approximately $50,000,000,000 of invested capital, a greater power than is now given to any board or commission existing under the authority of the United States. You will note that we have not used the terms “quasilegislative” or “quasljudicial” because this Board with its agents and functionaries will be most definitely a legislative and a judicial as well as an administrative body. As the bill now stands, the President of the United States may remove a member of the Board for any reason whatsoever and through this power exercised according to the terms of the bill, he controls the Board in its legislative, judicial, and executive functions. This, of course, is giving whoever may be the President of the United States autocratic and unlimited power over industry and commerce, brought about through the delegation of powers by the Congress. As it stands today, Congress has already delegated its tariff powers to the Tariff Commission and the Secretary of State, including the Senate’s treaty power therein; it has delegated its spending powers for relief to the President of the United States; it has delegated its power over unfair trade practices to the Federal Trade Commission (and may delegate more in the new bill which seems to be in the offing) ; it has delegated its control over communications to the Federal Communications Commission; it has delegated its power to coin money through the power to fix the value of gold given to the Executive; it has delegated its control over stocks and bonds, etc., to the Securities and Exchange Commission; it has delegated its power over shipping to the Maritime Commission.
Through recent neutrality laws, it has enabled the President to invoke or provoke war; it has delegated its power over telephone, telegraph, and radio to the Federal Communications Commission; it has delegated its power over labor relations to the Labor Relations Board and it completes its delegation of power in labor matters through this bill to this labor standards board. Through legislation of the character contained in this bill, and particularly within the last 3 or 4 years. Congress has given away to commissions, committees, and bureaus a large share of its legislative power and control over the people of the United States, thus bringing about in effect a rule by commissions, and making It necessary for the individual citizen of the United States to petition boards, commissions, and functionaries rather than his Menber of Congress for relief or change in legislation. If this trend continues the time will come when someone will announce what is almost an accomplished fact and that is. that Congress is no longer necessary as a part of our function of government.
Subsection (d): We suggest that the examiners employed by the Board be placed under the civil service so their examinations and reports may be unbiased and unprejudiced, fair and impartial in the security of their employment.
Line 4, on page 11: The words “and utilize such voluntary and uncompensated services” should be eliminated because there is no limit placed upon the manner, method, or way in which such services can be used by the Board and in certain circumstances an employer’s association might be utilized in activities unfair to labor and vice versa.
Subsection (e): For the same reason the words “or by such other agents or agencies as the Board may designate” should be eliminated. Inquiries, investigations. judicial or quasi-judicial activities should be limited most carefully to the Board itself or its duly authorized representatives. No delegation of power should be permitted and in fact should be absolutely refused in this bill to any one or group other than the Board itself to exercise judicial or legislative functions, quasi or otherwise.
Subsection (f) : Further, this subsection gives the Board the same powers as the courts now have and without the safeguards thrown around the courts as to the use of subpoenas, etc. It further gives authority without limit to the Board to compel the attendance of a witness and the production of books and records at any place in the United States which the Board or its agents in their discretion or caprice may set. This is absolutely contrary to the accepted American principles of justice and opens the door to unlimited abuses.
Part II. section 4, subsection (a) : Here the Board should extend the applications of the provisions of this bill to employments only after due notice and public hearing and further, the Board in extending the application of this
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bill to employments should be governed by the standards set up in subsection (14) of definitions, part I, section 2 (a).
Subsection (b) : The same suggestions for the same reasons as were adduced to subsection (a) above are brought forward here with the exception .that the standards set forth in subsection (15) of definitions, part I, section 2 (a), should be made mandatory upon the Board.
Subsection (c) : Here also the board should be governed by the standards set up in subsection (14) of section 2 (a) of part I, and should not by regulation or order vary the standards without due notice and public hearing.
Subsection (d) : Here also the board should be governed by the standards set up in subsection (15) of section 2 (a) of part I, and should not by regulation or order vary the standards without due notice and public hearing.
Section 5, subsection (a) : In effect and actually this section gives the board power to set wages where unionization is not effective or complete, if the board for any reason believes that this is so. It practically gives the board the power to fix as fair minimum wages the highest wages imposed upon a manufacturer in the industry in question by any labor union through coercion or otherwise, and in effect delegates to labor-union leaders the power to legislate as to what shall be wages in any given industry. This section does not provide for any geographical or other differentials, and it sets up different standards from those set up in other parts of the bill. In this instance no rule or regulation should be adopted or emitted by the board without due notice to all concerned and after public hearing. As it stands the board, upon its own initiative and upon such investigations as it may choose to make, can legislate.
Furthermore, we would call attention, to the use of the word “occupation” which appears in this section 5. If this means to give the board power to set wages by classifications of employees according to their occupations, it will raise unsurmountable difficulties, because in numerous industries the same word generally defining an occupation in one industry means an entirely different thing when the same word Is used to define an occupation in a different industry. In the men’s clothing industry and in the women’s garment manufacturers’ industries the word “cutter” means a person of high skill, including a large knowledge of the art of designing. In the underwear industry, by contrast, the word “cutter” means a person who runs an automatic cutting machine and calls for no skill In design, etc.
Subsection (b): This subsection deals with hours of work as the preceding subsection (a) deals with wages, and the same objections lie here. Further, in lines 13, 14, and 15 on page 15 of this section and In lines 22, 23. 24, and 25 of subsection (a) on page 13, do the words “In any occupation in which such employees are engaged in interstate commerce or are engaged in the production of goods which are sold or shipped to a substantial extent in interstate commerce’’ mean that a substantial part of the goods in the individual mill or factory must be shipped in interstate commerce, or do they mean that a substantial part of the goods of the industry as a whole are shipped in interstate commerce? This Is unclear.
In line 20 on page 16 of this subsection and in line 24 on page 14 and line 1 on page 15 of subsection (a), does the word “voluntarily" mean wages maintained by an employer who has not been subjected to collective bargaining? Section 6, subsection (a) : There should be no elimination of a small employer from the effects of this proposed legislation. A very large number of "cutters-up” or small mills employing very few people exist in our industry today. If these people are eliminated from the effects of this bill, it will mean the transfer of the business from the larger mills to these small concerns, and because the larger mills are located in small communities, it will mean the transfer of the business from the smaller communities of the country to the metropolitan centers.
Subsection (b): This subsection seems to give power to the Board to determine what shall be a proper workweek and what wages including overtime shall be paid therefor. The language is so involved and the real meaning so hidden that we recommend that this subsection be redrafted and the aims of it be frankly and openly stated. From what we can gather, however, this subsection gives to the Board control over the number of shifts worked by industry or commerce.
Part III. section 7, subsections (a), (b), and (c): This part III. section 7, subsections (a), (b), and (c) gives the Labor Board set-up in this bill complete control over wholesalers and retailers. These clauses in this bill also give
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complete control of the manufacturers or suppliers of raw materials who are not engaged in interstate commerce.
Section 8, subsections (a), (b), and (c): This section attempts to give the Board power to legislate for concerns engaged purely in intrastate commerce. It will undoubtedly be declared unconstitutional because it is stretching the decisions of the courts to such an extent as to create evasion or avoidance of the Constitution and is thus highly immoral. It invades the rights of the States.
Section 9, subsection (a): This subsection is in effect an attempt by the Congress to delegate to the Board powers to legislate for the several States.
Subsection (b) : The same objection lies here, and further it gives the Board an unwarranted, unconstitutional grant of power to place embargoes on shipments from one State to another although the latter State may not have any law governing labor standards, etc. These subsections (a) and (b) also give the Board the unrestricted power to wipe out geographical or other differentials.
Part IV, section 10: In this section the Board should not make any determination until after due notice to all parties concerned and upon public hearings where all parties have a right and opportunity to be heard. Furthermore, this section makes it mandatory upon the Board to wipe out wage and hour differentials given or granted because of geographical locations, etc., and in fact makes the provisions relative to differentials given to geographical locations, etc., of no value.
Subsection (1): This subsection, read in connection with subsection (9) of section 2 defining “labor dispute”, permits outside labor unions to create a labor dispute within the terms of this bill where the employer and employees both are satisfied with conditions. This, in effect, is a grant and delegation of power to labor-union leaders through an act of Congress. Furthermore, the use of the word “tends” leaves too much to the discretion of this Board and is not governed by proper standards.
Subsection (2) of this section gives the Board power to disregard wage or hour differentials caused or granted because of geographical locations and in fact makes the provisions relative to geographical location, etc., of no value.
Subsection (3) : This subsection deals with Intent and the standards for determining the same should be set forth, as they are not at present. Secondly, this subsection empowers the Board to prevent the starting of new plants or factories in industrially backward communities. Through the power of the Board to fix wages and hours under the conditions set forth in this and other subsections, there probably will be no expansion of industry and no balancing of agriculture and industry in communities now primarily agricultural. These powers of the Board In effect will be a tariff upon the setting up or migration of industries for the benefit of employers, employees, labor unions, and localities where Industries are now located and will fix industry in its present location and prevent the development of the United States.
This section 10 also tends to increase the civil war existing between the American Federation of Labor and the C. I. O. through the use of the word “occupation” and other methods. This will, as a matter of fact, increase the burden upon interstate commerce. Furthermore, by the use of the word “shall” in line 14 on page 23 of this section, the Board must issue the orders wiping out geographical differentials, etc., if it finds substandard labor conditions existing as is set forth in subsections (a) and (b) of this section. Therefore the permissive power to set up geographical differentials given in other sections of the bill is wiped out by these two subsections.
Section 11, subsections (a), (b), and (c) : These subsections bring within the power of the Board all transportation companies, all wholesalers, retailers. and other distributors and all producers of raw materials.
Part V, section 12, subsection (4): This grant of power to define “occupation etc.” taken in connection with other sections and subsections of this proposed bill gives blanket power to this Board to do practically whatever it chooses with regard to industry, commerce, and labor.
Subsection (5) : This subsection is so vague that it should be carefully redrawn. The vagueness of it and the lack of standards will defeat it. Furthermore, in its vague implications, It gives too much power over labor, industry; and commerce when read in connection with other sections and subsections of this bill.
Subsection (6) among other things empowers the Board to prevent the discharge or reduction in wages of employees receiving more than the established minimum wage. This is an unwarranted delegation of power, is probably unconstitutional, and no proper standards or safeguards are set up.
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This subsection interferes most directly and certainly with the right of the workingman to extract the greatest return for his skill, and it also interferes with the right of management to reward the workingman according to his abilities. In all of these wage limitations, the minimum wage tends to become the maximum wage and the measure of pay granted to a classification of employment, irrespective of individual skill, ability, or initiative tends to become the maximum. In addition, the fixing of these classifications and the wage scales therefor always gives rise to a form of racketeering which I was becoming very prevalent during the last 6 months of N. R. A. A substantial number of employees whose abilities permitted them to make the minimum wage soon grew aware of the fact that they could take it easy and that the employer would be forced under the law to pay them, not what they actually earned, but a minimum wage which was a higher figure than they chose to earn. The effect of this on the morals of the abler workers was soon apparent. Those able workers soon, and undoubtedly correctly, came to the conclusion that it was unfair to them to exercise their skill, ability, and willingness to work when others who did not do so received compensation for their laziness.
Having reached that conclusion, the abler workers in a great many mills followed exactly the same policy on the theory that why should they work haul when they could loaf and the employer was compelled under the law to pay them an income for their loafing periods? Morale suffered and production suffered, and if the N. R. A. had not been declared unconstitutional by the courts, the minimum wage would have become the maximum wage and the cost of production through reduced volume would have soared to such a point that the consumer would have refused to buy our merchandise, bringing about another cycle of unemployment. Provisions of this nature are never justified excepting perhaps as temporary measures in an emergency, because initiative, competition, improvement in the art, and recognition of individual abilities can never flourish In a strait jacket.
All of the objections mentioned above pertain to this subsection, because while skill in different occupations may be fixed relatively, the skill of individuals can never be fixed or recognized except through intimate knowledge of the individual which neither this Board nor any other board can ever have. This provision, as well as others, gives the Board powers and responsibilities and functions which they never can carry out equitably and justly.
Besides this, this particular subsection gives the Board the right in determining minimum wages to take into consideration any factors which the Board may consider relative. This gives absolute and unlimited power to the Board and does not subject it to any standards.
Furthermore, it curtails the right of the employer to discharge employees for quite legitimate reasons. A form of racketeering will grow up, if this subsection is kept in this bill which will defeat the purposes of the entire bill.
Subsection (7) is too broad a grant of power to the Board without proper safeguards and standards.
Subsection (8) does not state who may modify, extend, rescind, etc. Probably the Board is meant, but it should be stated further that such modification, extension, or rescinding of an order shall be made only after due notice and public hearing.
Section 13: A labor-standard order should be made, modified, extended, or rescinded only after due notice to all parties concerned, an opportunity to be heard and after a public hearing on the proposed order. Such hearings should be held within a reasonable distance of the places of business or residence of the parties concerned, and the Congress should carefully prescribe the safeguards usual in such matters. Further, this section should provide that any employer or group of manufacturers shall have the same right as any labor organization to complain to the Board, and the definition of the bona-fide interest should not be left to the Board but should be defined by Congress. Otherwise, the same one-sided, controversy-provoking situation will arise hereunder as has arisen under the Wagner Labor Relations Act. The Federal Government should set an example of impartiality and fairness, and particularly the Congress should keep its skirts very clean of any taint, express or implied, of partisanship. Notice of such hearings should be given by mail to the parties interested, as well as in the Federal Register, and the notices should contain a definite, clear, and detailed statement of the purposes of the hearing and the matters to be considered in the hearing, and it should be stated by the Congress in this bill that the matters so stated in the notice should be the only matters considered at the hearing.
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It should be provided here or otherwise that only the Board itself, after due consideration, can determine and issue orders, rules, or regulations of any sort or nature. In fact, if Justice is to be done and the legislation is to work, all the safeguards now thrown around parties to court actions should be thrown around persons subject to this bill.
Section 15, subsections (a) and (b), require anyone in industry to furnish such data to the Board as the Board thinks will facilitate its investigations. The discretion of the Board is unlimited. This is too broad a grant of power to the Board, which permits the Board, through caprice or otherwise, to determine for itself what data it wishes and provides none of the usual American safeguards to the right of the individual to have his private papers, etc., kept In confidence. The Board also has unlimited power to investigate anything having to do with industry. This unlimited power of investigation may readily become the power to persecute. These subsections give the Board or its agents power to compel industry to throw open the most intimate details of its business to the Board of its agents, and, further, and without limitation, they give the Board and its agents access to all books and records at any time. Parallel powers are only found today in Russia, Italy, and Germany.
Provision should be made that no publicity shall be given by the Board or any of its agents to any of the information it secures under subsection (a).
Furthermore, in a great many instances the Board will be duplicating the work of the United States Bureau of the Census and the Bureau of Labor Statistics of the United States Department of Labor. It seems unnecessary and an added expense upon the taxpayers of the United States. This subsection gives the Board the same powers as the courts now have and without the safeguards thrown around the courts as to the use of subpoenas, etc. It further gives authority without limit to the Board to compel the attendance of a witness and the production of books and records at any place in the United States which the Board or its agents in their discretion or caprice may set. This is absolutely contrary to the accepted American principles of justice and opens the door to unlimited abuses.
Section 16: Particularly the words “whenever it shall appear to the Board” and the words “about to engage” leave it to the Board to act whenever it so chooses. This power permits the Board to utilize these powers for the purpose of persecution. There are no proper standards set up, and a more careful definition of the Board’s power herein should be given.
Section 17, subsection (a) : This subsection gives the Board or its agents power to compel a mill to throw open the most intimate details of its business to the Board or its agents and to submit whatever reports the Board may desire without limit, and to keep accounts or systems of accounts in any manner which the Board may devise. And. further, and without limitation, it gives the Board and its agents access to all books and records at any time. Parallel powers are only found today in Russia, Italy, and Germany.
All of the objections hitherto mentioned in connection with section 15 most certainly apply to this subsection, which, without limit, gives the Board power to make investigations wherever it deems necessary, whether or not any person has violated any part of the act, or of the rules or regulations; and further gives the Board power to investigate, if it in its wisdom believes that any person is about to violate anything having to do with this act. This opens the door to annoyance and persecution, and it is against this very sort of thing and to secure the prevention of it that the Anglo-Saxon peoples have fought over the centuries. This section of the bill and a great many other sections of the bill throw over most, if not all, of the gains made in the fight for personal liberty, freedom, and equal justice since the signing of Magna Carta in 1215 A. D. Most certainly a provision should be inserted in this subsection, and in every subsection of the bill which calls for publicity, to the effect that no publicity shall be given with regard to any person until after a proper hearing, due notice, and the finding of the guilt of such person, after his right of appeal has expired or such appeal has been found against him.
Subsection (b) : This subsection gives the Board the power to adopt and issue insignia, labels, etc., and further gives the Board power to compel the use of such insignia, labels, etc., by persons engaged in industry and compels them to attach such insignia to their products. This will increase the cost of the products to the consumer; will increase the size and therefore the cost of bureaucracy made necessary by this bill through the employment of investigators, checkers, etc.; and will deliver into the hands of the Board and its agents the power of commercial life or death over the manufacturer. All of the above
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has been brought out by the experience of those industries who chose to use such insignia or “blue eagles" under their codes.
This subsection by implication gives the Board and its agents power to take away the right to use the insignia. Undoubtedly, If this bill becomes an act. there will be a welter of propaganda and ballyhoo such as accompanied the birth of the “blue eagle", and it will be impossible for a manufacturer to sell or distribute his merchandise without having placed the insignia thereon. This Board can take away that right without hearing and upon its own volition and thus kill commercially and industrially any manufacturer it so chooses. Such powers for industrial and commercial murder have never heretofore been granted even to the courts of this land ; and considering the lack of safeguards thrown around the appointment of this Board and its agents, the granting of this power is an extremely dangerous thing, and is entirely contrary to the American spirit. Furthermore, in actions and hearings before the courts, experience of the centuries has built up many safeguards in the introduction and evaluation of evidence and in the form of jury trials which are not present as safeguards in the case of this Board or its agents. If this provision, as well as some other provisions of this bill, are allowed to stand and become enacted into law, this Congress is changing the form of our Government so far as industry is concerned from a democracy to an oriental despotism. As in all the grants of unusual power to this Board which are found in this bill, the Congress should most certainly take note that this Board is a judicial, legislative body which can delegate its power and authority to any agents it chooses. Those who have the best interests of the United States and its people at heart will be shocked at the setting up of such a board with such extraordinary powers without throwing around the Board and its agents and the people and industry subject to their will the usual safeguards for personal liberty and equal justice which have been common to our law.
Section 18: Section 18 is a delegation of the powers contained in section 17 (a) to the Secretary of Labor and to the Chief of the Children’s Bureau in the Department of Labor. It is an improper delegation of power and without the setting up of proper standards.
Section 19: It should be stated in connection with this section that the Board shall have power to make, issue, amend, or rescind regulations and orders only upon due notice and public hearing. Further, the granting of power to such Board as it may deem necessary or appropriate to carry out the provisions of l this bill is too wide a grant of power, leaves too much to the unlimited discretion of the Board, and 1b without proper standards. Furthermore, the Congress should determine the form and manner in which complaints may be filed and proceedings instituted for the establishment of fair labor standards; the Congress should prescribe the procedure to be followed at hearings and proceedings, because this broad grant of power to the Board enables it to throw aside and to ignore the best methods of orderly procedure and justice which have been built up throughout the centuries for the trial and decision of controversies and gives the Board the opportunity to do away with certain safeguards which have always been thrown around the American people. This section gives power to the Board to define what are executive, administrative, supervisory, or professional capacities without proper standards being set up It gives the power to define what is an agricultural labor without proper standards; it gives the Board power to impose upon employers without limit the form, content, and type of records to be kept by employers, and the form, content, type, and volume of reports to be filed by employers—in this regard the power of the Board is without limit, and the delegation of such power by the Congress is most certainly improper and unwarranted.
In line 25. on page 35 of this section, the word “publicity" in its context gives the board power to publicize in any way it chooses what it believes to he the acts or omissions of employers, with or without hearing and decision. This section gives the board power to give publicity to violations of the act or any of the rules, regulations, or orders made pursuant thereto. This power should be granted to the board tn exercise only after a proper hearing and the fixing of liability and guilt and should be given to the board only after an appeal has been had to the circuit court of appeals with decision thereon against defendant or after the time for such appeal has expired without the person complained against having taken advantage of it. The people have confidence in the pronouncements of the Government so the power of the board to publicize its allegations rather than its final decision can do irreparable injury to the reputation and markets of a manufacturer which, in turn, will be reflected upon the employees of that manufacturer through their loss of employment.
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Included in this section are some of the broadest grants of power ever made to any commission or bureau in any government in history.
Beginning in line 9, on page 36 of this section, a sentence reads: “No provision of this Act imposing any liability or disability shall apply to any act done or omitted in good faith in conformity with any regulation or order of the Board, notwithstanding that such regulation or order may, after such act or omission, be amended or rescinded or be determined by Judicial or other authority to be invalid for any reason.” Just exactly what does this mean?
This section is undoubtedly what would be called a “shotgun” section; and because of the wide grants of power to legislate, it would seem unnecessary to grunt to the board the power given in a former subsection to apply to the Congress for more legislation.
This entire section should be eliminated or most carefully rewritten to bring out in true and honest perspective the grants of power given, as well as to set out standards, if such are possible to set up, for the guidance of this all- powerful board.
Section 21, subsection (b), is another example of a straining after power by those who wrote this bill and exemplifies very clearly that in an effort to draw an “airtight” bill the drafters have forgotten the rules of simple, fundamental justice evolved through the centuries by a freedom loving people. At this point we are impressed with the change in the methods of bill drafting which has taken place in the last 2 or 3 years. Heretofore, practically all legislation proposed by legislative bodies has been drawn most carefully to preserve the fundamental rights of persons living under our Constitution. Lately, most legislation ignores all of this and seems to be designed, mainly through Indirection and by hidden and devious means, to set up an autocracy in the United States. No other conclusion can be reached. This subsection places a burden upon a manufacturer to make certain so-called reparations to his employees even though his merchandise, without his knowledge and after it has passed beyond his control, may find its way Into Interstate commerce. In their effort to plug every loophole, the drafters have evidently forgotten the rules of ordinary justice and fair play. There is present here also a lack of standards, as there is throughout the entire bill.
Subsection (c): This subsection would seem to mean that the employer may be compelled to pay the costs of the action whether or not he won or lost in a court test. This subsection should be redrawn to make it dear what the actual intent and wish of the Congress is.
Subsection (d): This subsection, taken In connection with subsection (b), equally outrages an ordinary sense of propriety and decency in the framing and enforcement of law.
Section 22, subsection (a): This subsection should be carefully redrawn so that the intent of the Congress may be made clear as the subsection as now drawn seems to contradict itself. In trying to obey this law, one may Ana himself subject to penalties for disobeying other laws.
Subsection (b). This subsection in effect gives power and authority to the States to place an embargo on the shipments of merchandise from other States. This cbn nges materially our present concept of government, and Congress should most carefully consider all the broad implications contained in this subsection. Thia subsection, taken into consideration with other sections and subsections of this proposed bill, will actually operate as a tariff and embargo in favor of some and against other sections of the country, States, and communities where the cost of living is lower and where the competition for jobs has not raised the rates of pay. It will unquestionably deter and possibly prevent the development of nonindustrial communities and will fix industry and the employment of capital in the industrially developed sections of the country and will tend to concentrate industry in or in close proximity to the largest cities where the largest markets lie. This subsection, together with other sections and subsections of this proposed bill, will tend very strongly to large concentrations of capital in industry because under the rules, regulations, etc., of this bill, only heavily financed and large, capitalized corporations will be enabled to start new mills or factories. In our particular industry, it takes from a year and a half to 3 years for a new mill to achieve competitive equality in efficiency of production and quality of merchandise.
Section 23. subsection (a) : This subsection declares it to be the purpose of the bill, and states that it shall be so construed and applied, as to encourage and protect the self-organization of employees for the purpose of collective bargaining and mutual aid. In this statement the Board is directed to utilize
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all its wide and unlimited powers in a wide and unlimited way to force and coerce wherever possible the unionization of industry whether or not the employees or the employers desire or need such a situation. Such a direction, coupled with the grant of such powers to this Board, practically puts all industrial power, and a great deal of political power in the hands of labor union leaders who. in the present state of our legislation, are responsible to no one.
Furthermore, unless there is some intent not clearly or openly expressed in this subsection, the National Labor Relations Act would seem to take care of any real need.
Section 25, subsection (a) : This subsection, like other subsections in this and similar bills, places an undue and onerous burden upon the circuit court of appeals and upon those who wish for an impartial, judicial review of the rules, regulations, and orders of the Board by denying to such people the more convenient access to the district courts of the United States. Therefore, we recommend at the outset that appeal to the district courts of the United States be allowed. And further, because of the large multitude of questions which will arise (as was the situation under the National Industrial Recovery Act), in order to properly enforce this act. it will be necessary that the number of the district courts and of the circuit courts of appeal of the United States be increased and probably doubled and that the number of judges assigned thereto be doubled in legislation passed currently with this bill.
We recommend that any agencies, subboards, or commissions set up by this Board, and to which this Board delegates any of its powers, particularly those powers to hear and determine and to legislate, be composed of natural persons not actively engaged in any other business; that such persons be appointed by the President by and with the advice and consent of the Senate; that such persons be appointed for life at a salary of $15,000 per year; that they be removable from office only upon the same impeachment proceedings used for the removal of United States district judges, and that they be retired at the age of 75 with a pension of $10,000 per year.
Further we recommend that the Board shall delegate none of its judicial or legislative power to any agency, commission, subboard, or person not appointed, qualified, etc., as above. In this connection we recommend for this bill, as for all other similar legislation, that where delegations of legislative, judicial, or executive power are made, such bills follow the pattern of the political government of the United States, viz, a distinct division of the legislative, executive, and judicial, and that there be thrown about such recipients of power all the safeguards which experience has taught us are necessary for the well-being of a free people.
Returning to this particular subsection, there should be a direction in the bill that the courts shall give preference to cases under this bill for great and irreparable economic loss may take place through delays. Likewise, there should be a direction to the Board to hear promptly and ahead of all other matters objections to any of its rules. Otherwise, in the hands of unscrupulous or partisan men, this subsection may be the means of persecution and of great loss to those involved, including the probable laying off of employees.
The last few lines of this subsection are a denial and a circumscribing of rights hitherto enjoyed by the citizens of a democracy, such as we have been. The Congress should scrutinize this whole subsection most carefully, should examine its implications as well as its patent clauses, and should further consider throwing around the litigants before this Board and the litigants before the delegates of this Board's power the ordinary and time-tried safeguards which our people now enjoy in the trial of civil and criminal actions. This should include the definition and the setting up of standards governing the content, time of service and return of papers developing the issues, the right of cross-examination, and all other rights, the denial of which were among the reasons why Charles the First of England lost his head.
In connection with these sections 25 and 26, power should be given to the district courts of the United States as well as to the circuit courts of appeal and to other judges of the Federal judiciary to enjoin this Board and its agents and delegates of power where irreparable injury, etc., would lie if the action of the Board were carried out. This injunctive power should be specifically stated in the bill.
Section 26: The courts should have power to assess costs against this Board because the assessments of costs against a losing party is one of the finest and best time-tried ways of stopping unwarranted actions which may develop unless some limitation is put thereon, into persecutions.
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Section 27, subsection (a), (b), and (c): These three subsections are apparently an attempt to put such teeth into this act that it may be rigidly enforced. If this is the purpose of this section, does it not defeat its own ends?
Everyone who has had experience with the criminal courts certainly realizes the possibility of infinite delay in the trial of criminal actions. Sometimes this delay is intentionally caused by the defendant. If so, would not this allow a person who is flagrantly violating this act to keep on with such violations and thus cause undue hardship on and unfair discrimination against honest employers who have always tried to obey the law of the land?
On the other hand, if such delay is occasioned by the congestion of the court dockets or by the inability of governmental officials to try the case at certain times, due to other engagements (caused by having to prosecute other violations of this act) or other reasons, cause a law-abiding employer unjustly accused to stand before the people of his community, State, and Nation as a criminal when, if the opportunity were given to clear himself, he could readily do so. It can therefore be easily seen that such an accusation under this section might wreck a business which a man or group of men had worked for years to establish for the good of themselves and of the people of the Nation, when, if a trial were held, such person or group of persons would be fully vindicated. In this connection we would also like to say that, considering the penalties stated in this section and the possibilities of injustice arising from this section, the entire section should be completely rewritten so as to more clearly state the method of prosecution, who or what agency shall make the charge, before what courts the charge shall be made, and the offenses themselves should be set forth with more particularity.
Following the lines set forth in other paragraphs of this brief, we think that this is but another section which clearly demonstrates the awful possibilities of persecution that might arise from the improper delegations of power contained in this act. In effect under subsection (a) the Board may say what constitutes “willfully performs or aids or abets in the performance of any act declared to be unlawful by any provision of this Act”; under subsection (b) what records an employer is required to keep and what constitutes “willfully fails to keep records required by this Act or any regulation or order thereunder or to furnish such records to the Board or any authorized representative of the Board upon request”, and further under this subsection an employer might be tried for willfully destroying records which he did not know that he was required to keep and during time limits about which he knew nothing because of the fact that such requirement or such limits might be set forth in an obscure or unnoticed rule of this all-powerful Board.
The same general objections set forth above apply also to subsections (c) and (d) of this section and further under subsection (c), due to the way in which it is written and the general character and incompleteness and obscurity of its wording, a person might make a statement or entry in all innocence, thinking the same to be true and then under some ruling of the Board, have it proven against him that such statement or entry was false with the possibility that biased witnesses might prove by a chain of circumstances that he knew or should have known such ruling to be false.
Applying the above objections to subsection (d) we wish to say further that the words “or because such employer believes that such employee has done or may do any of said acts”, should be stricken out because of the fact that these words constitute a dragnet which might gather into its folds employers who had no intention of violating the principles which this act purports to cover, and might, under certain circumstances, put an employer completely in the hands of certain unscrupulous employees (or employees with a hidden grudge) so that instead of the stockholders of a company controlling a business, such business might be controlled by prejudice or hatred.
Subsection (e) : This subsection entirely departs from the principles of other bills which have been passed delegating powers to commissions or boards because of the fact that in all other bills, any person subpoenaed by such commission or board has a right to appeal to the circuit court of the district of such person as to the fairness of such subpoena and the relevancy of its testimony to the hearings before the Board. This subsection practically gives the Board the right of life and death over any person who they wish to subpoena without his having had an opportunity to appeal to an impartial tribunal as is guaranteed to him under our Constitution. It seems to us that a person were tried criminally under this subsection, the question
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would be, not as to the fairness of, or need for, the subpoena against him, but simply whether he refused to obey such subpoena without just cause.
Although subsection (f) attempts to take some of the sting out of the other subsections of this section, it entirely fails so to do because of the fact that a person might be fined for an offense one day and imprisoned for what the Board might arbitrarily call a second offense the next day, thus putting forth another reason why this whole section should be restated.
In this connection, we recommend that this act in the event that it becomes the law of the land be enforced by the time-tried method of cease and desist orders as set forth in the act creating the Federal Trade Commission.
Section 28: We believe that this section is so patently unfair that it condemns itself. However, in effect it provides that the large industry with money and means to carry case after case to the Supreme Court will be able to have its rights under this act fully adjudicated, while the small employer (probably struggling for his very existence) will have to take the act and like it, regardless of what hardship it works upon him, or regardless of how or in what manner it violates his constitutional rights because of the fact that he is unable to carry his case through the various subboards, boards, and courts of this country to the Supreme Court of the United States.
We recommend to this joint committee of the Congress that it forget partisanship or prejudice of any kind and that it report unfavorably upon this entire bill to the Congress of the United States.
The Underwear Institute, representing the underwear and allied products manufacturing industry, wish to record the following information showing the effect of the Fair Labor Standards Act of 1937 on costs in the underwear industry. Also it will be shown how increases in costs will be reflected in increase in consumer prices.
At the present time the underwear industry is operating on a $12 minimum in the South and a $13 minimum in the North for a 40-hour week, or an avenge minimum for the entire industry of $12.60 per 40-hour week.
The United States census of manufacturers for knit underwear for 1935 shows that out of each dollar of mill value 55.7 cents represents material, 24.4 cents represents wages, and 19.9 cents represents all overhead costs.
The Cotton Textile Institute advised that labor represents 25 percent of the value of textile products. Included in these products are such items used by underwear manufacturers as yarn, fabrics, thread, hangers, and trimmings. Applying the increase in labor cost under the various wage-and-hour regulations to the item of labor and to that portion of material represented by labor, the following table will show the minimum Increases which will result, using the census of manufactures figures.
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In the above tabulation, although the item of “Other overhead expenses” is shown as remaining constant, this figure will be affected by minimum-wage regulations for It includes salaries of office workers, such as stenographers, bookkeepers, and accounts-receivable clerks.
The provisions of the Fair Labor Standards Act of 1937 provide, in part III, section 7 (a), “It shall be unlawful for any person, directly or indirectly, * * * to sell for shipment in interstate commerce or with knowledge that shipment thereof in interstate commerce is intended, any unfair goods” which will affect the operating cost of wholesalers, retailers, and distributors. The Wholesale Dry Goods Institute advises that the present mark-up of the wholesaler is 20 percent on his selling price to the retailer. Under a 30-hour week and an $18 minimum wage, this mark-up would be increased to 25 percent of the wholesale selling price to take care of increase in cost of operation. According to a report published on June 8, 1936, by the Controllers’ Congress of the National Retail Dry Goods Association, the mark-up on knit underwear is 40 percent on the retail selling price. Applying this Information to average cost of representative garments of the underwear Industry, the attached tables 2, 3, 4, 5, 6 show the percentage of increase tn price to the consumer under various wage- and-hour regulations. We wish to emphasize the point that these increases in cost are minimum increases for the reason that many indirect expenses in the way of clerical and office salaries in manufacturing offices and offices of selling agents will be affected upward and will be pyramided through to an additional increase to the consumer.
The situation in regard to importations of underwear into this country will become more serious than at present by any increase in cost or price of domestic-made merchandise. The attached tables 7 and 8 show comparative prices to the consumer on domestic- and foreign-made men’s balbriggan undershirts and balbriggan drawers.
Any increase in costs of domestic-made merchandise must be reflected in increased prices to the consumer. Under present conditions, as is shown in tables 7 and 8, the consumer price of domestic merchandise is 35 percent greater than the price of imported merchandise of like quality. These tables show the percentage of increase in prices of domestic merchandise over imported under various wage-and-hour regulations.
Roy A. Cheney,
Managing Director, Underwear Institute.
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The points discussed in this economic brief may be summarized as follows:
1. The Black-Connery bill would substantially increase labor costs in the underwear and allied products industry; also in certain primary textile industries supplying our raw materials.
2. Labor costs in the underwear industry have always been higher In relation to value received for products than in most other industries, so that any increase in labor costs is particularly burdensome.
3. The product of our industry is such that increased manufacturing costs cannot be offset by increase in physical volume so as to lower overhead costs and thereby maintain present unit prices.
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4. Increased manufacturing costs must, therefore, be passed on to the consumer, or be absorbed by the manufacturer.
5. The experience with the manufacturing cost increases occasioned by N. R. A. and the A. A. A. has shown that consumer and buyer resistance have prevented our mills passing along in full to the consumer such additional manufacturing costs.
6. Further, the underwear Industry has seriously impaired its operating margin in absorbing a substantial part of the increased manufacturing costs instituted under N. R. A. labor provisions and since maintained.
7. The already high business mortality rate of our industry would probably be boosted by added manufacturing costs which ran ahead of purchasing power.
8. Increased domestic manufacturing costs, unless attended by compensatory protection from imported merchandise and by export subsidy, would deliver both our domestic and export trade to foreign competitors.
9. The underwear industry, having already made a very material contribution to employment and pay rolls during and since N. R. A., favors consolidation of those gains by continuing their basis; namely, an absolute minimum wage of $12 for a 40-hour week.
Development of the points summarized above follows:
Introduction.—The underwear and allied products industry includes some 600 mills manufacturing (1) all kinds of knitted underwear—cotton, wool, rayon, and silk; (2) woven cotton athletic underwear; (3) knit underwear and glove fabrics, beef tubing, and other fabrics made on underwear knitting machines: and (4) knitted fabric gloves other than wool. The only types of underwear not included are woven rayon or silk undergarments and woven cotton undergarments other than athletic underwear.
This industry is highly concentrated in the Middle Atlantic States, particularly New York and eastern Pennsylvania. The Middle Atlantic States accouut for 60 percent of the total number of mills in the industry and over one-half the total output. The remainder of the output is distributed approximately as follows: New England, 11 percent: North Central and Western States. 19 percent; and Southern States, 18 percent.
For simplicity, the underwear and allied products manufacturing industry will be referred to hereafter as “the underwear industry” or “the industry”, unless specific branches are mentioned.
Labor cost increases resulting from the Black-Connery bill.—The Black-Connery bill does not specify minimum wage and maximum hours but general report has imputed a $18 minimum weekly wage for a 40-workweek. Discussions have ranged from this wage and hour recommendation to the extremely drastic provisions of the original Ellenbogen bill, H. R. 238, which called for an $18 minimum weekly wage for a 35-hour week minus meal periods, or the equivalent of a 3O-hour workweek. The underwear industry established, during N. R. A., the minimum weekly wages of $12 South and $13 North for a 40- hour workweek. This has since been maintained, largely through the influence of a voluntary code advanced by the Underwear Institute subsequent to the invalidation of N. R. A. That means our minimum hourly rates are 30 cents South and 32½ cents North, or an average of 31¼ cents. As the $16 weekly minimum wage with a 40-hour workweek would mean a 40-cent hourly rate, it. is obvious that the labor rates In our mills would be advanced by such provisions to the extent of 33 percent in the South and 23 percent In the North, an average of 28 percent. To cover other possible wage and hour combinations that have been mentioned in connection with these hearings, we show the following approximate comparisons:
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As three-fourths of the total underwear output consists of cotton materials, and as the wage and hour conditions in the cotton textile Industry are approximately the same as in our Industry, we would normally anticipate that our raw materials—cotton yarn, thread, and fabric—would be affected with a labor cost advance corresponding to that experienced by our mills as shown by the above table. On that score details will no doubt be forthcoming from the cotton textile industry. Our cost data are presented in detail by Earle E. West, director of cost research for the Underwear Institute.
Underwear labor costs proportionately high.—Our industry pays out in wages an unusually high proportion of the value received for Its products, and therefore would be especially sensitive to any Increase in labor costs. The underwear industry pays out of every dollar received for its merchandise approximately 24½ cents, compared with corresponding ratios of wage payments amounting to 21 cents in the textile industry as a whole, and 17 cents for all types of manufacturing Industry. In the fabric-glove branch of our industry wage payments represent 40 cents of every dollar of income. Official supporting data for these points are furnished by the Biennial Census of Manufactures, as follows:
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Relatively inelastic demand for underwear tends to fix overhead costs.—The manufacturer normally has the following alternatives in accounting for increased manufacturing costs: (1) To increase output so as to restore the cost per unit of manufacture: (2) to maintain present output and absorb the increased cost, if possible; or (3) to maintain present output and pass the added cost along to the consumer in higher prices. The facts at hand indicate that the underwear industry would find the first two alternatives impossible under present conditions and the last alternative extremely difficult, if not impossible.
Underwear is a staple product for which the demand is relatively inelastic. The circumstances attending the output of a commodity for which the demand is inelastic, and the effect of changing personal habits which tend to minimize the amount by weight and units of underwear worn, are clearly reflected in production records of the industry. These data, compiled by the United States Bureau of the Census, show very clearly that production of the number of dozens of garments, as well as the equivalent units in full-piece garments (1), declined during the advancing prosperity from 1927 to 1929, (2) further declined from the prosperity year of 1929 to the depression year of 1931, (3) though dozens were the same, the equivalent units produced were not as great in the relatively good year 1935 as they were in 1927, and (4) while the number of dozens shot up in 1936, relatively little increase was recorded over 1927 in regard to equivalent units produced, and what is more important, every available trade record indicates this extra volume of goods went mainly to replenishing distributors’ stocks rather than supplying any unusual consumer demand. The whole record indicates a relatively static position in underwear output, and no likelihood that underwear manufacturers can safely plan to expand their output beyond the rate of population increase or at such a rate as to place the unit cost under the provisions of the Black-Connery bill at anything like the unit cost under current manufacturing costs.
United States Census Bureau data supporting the foregoing points are contained in the table following this paragraph. Again, with reference to the upturn in 1936 output, which activity has been carried over into the first few months of 1937, it must be pointed out that the increase has been due largely to buying by distributors to restock their shelves, or possibly on a speculative basis. Even so, the percent of increase (2.3) in the output of equivalent units of underwear from 1927 to 1936 by no means matched the gain in population during the same period of approximately 6 percent.
Conclusion.—Because of the relative inelasticity in underwear demand, it is impossible for the manufacturer to increase his volume to the extent of lowering unit costs sufficiently to absorb any increase that would result from higher labor costs. Therefore, the manufacturer must either pass along to the consumer higher costs such as would be caused by the Black-Connery bill or he must absorb such increases in his operating margin.
The consumer and buyer resist increased prices.—The experience of our industry subsequent to the introduction of N. R. A. and the A. A. A. processing taxes fairly illustrates the difficulty faced by our manufacturers in passing
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along to the consumer legitimate manufacturing cost increases. Advances caused by those two factors created substantial Increases in mill selling costs, but it. should be noted, as N. R. A. and A. A. A. economists learned through sad experience, that those increases were pyramided because of the traditionally constant mark-up employed by the jobber and retailer. Because of these mark-ups, the amount of cost increase at the mill was almost doubled by the time the commodity reached the consumer.
Another important set of circumstances affects any attempt by our industry to advance prices; namely, the tendency of the public to make the old suit of underwear last far longer than its normal span when times are hard, prices are high, or when it is a case of deciding between the purchase of an undergarment, which when in use is unseen by one’s neighbors, and the purchase of the necessities of life or a suit of clothes or a tie, which are subject to public scrutiny, or even the purchase of an automobile or gasoline. There is also, as has been suggested before, a tendency toward the use of less underwear, both as measured in weight and in number of pieces.
In the face of such obstacles, the underwear industry was unsuccessful in passing along the increased costs from N. R. A. and A. A A.. We give evidence of that fact first in the following record of wholesale price trends based on data supplied by the United States Bureau of Labor Statistics. In these it will be observed first, the index of wholesale prices on underwear declined during the depression years further than the Indexes for all textiles and all commodities from the levels of 1927, 1929, and 1931. It will also be noted that from the low point of February 1933 to the present (March 1937) the underwear price index has inclined approximately 19 percent, in contrast with advances of 44 percent in the general commodity price index and approximately 51 percent in the index for all textiles. Certainly the costs in the textile field generally, both from the labor and raw materials standpoint, were subject to about the same factors as were underwear manufacturing costs.
A very practical and immediate example of the difficulty of the industry in passing along legitimate cost increases is our experience in the current trade in lightweight underwear. A price advance approximating 10 percent was made by our mills on lightweight merchandise for the current season, with the result that buying almost ceased. Repeat business on lightweight underwear this year is extremely disappointing because the distributors will not or cannot pay the increased price which has been required by higher raw material costs and underwear manufacturing wage increases. (Current raw material costs alone show gains over last year as follows: Cotton yarn, 10s knitting, 30 percent; wool yarn, quarterblood knitting 2/20s, 17 percent; rayon yarn, 150 denier 24-40 filament, 11 percent; and raw silk, Japan white, 13/15 denier, 78 percent seriplane 18 percent
Industry operating margin seriously impaired.—Having been faced with the inability to lower overhead costs and thus absorb increased manufacturing costs, and further being unable to pass along manufacturing cost increases in full to the consumer, our manufacturers have been compelled to absorb such Increases to a large extent in their operating margins. The net result is that mill-operating margins in recent years have been so perilously thin that many mills have been submerged in red ink.
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[PAGE 542]Note in table II the data just released by the Bureau of the Census for the knit underwear industry in 1935. These show that raw material costs advanced sharply as one would expect, from 1933 to 1935, that labor costs also advanced relatively, and that the manufacturer's operating margin had been reduced to by far the lowest point since and including 1929. We call particular attention to these facts in view of statements made by labor-union leaders that profits have been increasing in the textile industry at the expense of wages. As far as this industry is concerned, their contention is dismissed by the facts as shown by the United States Bureau of the Census.
Our industry has been on something of a skyride in 1936 and the first quarter of 1937. Its normally unvarying production schedule has been kited to exceptional heights owing to a demand that has apparently been prompted mainly by the restocking of jobber and retailer shelves which had lain bare during the years of the depression, and because these distributors have been ordering speculatively in anticipation of the likely price increases that would be caused by general wage and hour legislation. The point is that with this tremendous business most mills have clambered out of the red, yet in 1936. according to a compilation of financial statements of underwear manufacturers made by Dun and Bradstreet, over 30 percent of the mills were still showing losses.
We feel it altogether probable that when the Industry settles again to its normal pace, its already high mortality rate would be boosted materially by any substantial advance in labor costs. A Dun and Bradstreet analysis of insolvency trends among 201 industries during N. R. A. showed a rate for our industry of 1.33 percent. In other textile lines the insolvency rates were as follows: Cotton textiles, 0.39; hosiery, 0.70; silk textiles, 0.67; and knitted outerwear, 2.25. This evidence of the relatively high insolvency rate in our industry coincides with the picture of depressed prices which has previously been presented.
Much of the predicament of our industry from wage boosting, particularly if the attempt is made to establish uniform wages throughout the country, would arise from the fact that it is in the main a small-town industry. The loud complaint of small industries and small-town businesses against N. R. A. costs is still too recent to be forgotten. Our industry in the main is composed not only of small and medium-sized companies, but their factories are also chiefly in small mill towns.
One indication of the size of our establishments is the number of workers per mill. One-third of our mills employ less than 50 workers, 22 percent have from 51 to 100 wage earners, 27 percent show from 101 to 250 employees, and less than 18 percent employ more than 250 workers.
Further indication that ours is definitely a small mill town industry is disclosed by the fact that 22.1 percent of our mills are located in communities of less than 5,000 population. Another 8.7 percent are in towns of 5.000 to 10,000 population; 13.7 percent in localities of 10,000 to 25,000 population, and 8.5 percent in communities of 25,000 to 50,000 population. That means a total of 53 percent of our mills in localities of less than 50,000 inhabitants. In the smallest of those locations the labor supply is frequently decidedly limited and even in the larger communities it would probably be difficult to obtain additional skilled labor if there was any diversity of industry.
Protection from foreign competition essential.—Proper consideration of the effect of the proposed Black-Connery bill requires both national and international perspective. From both viewpoints, it presents grave questions.
The bill would undoubtedly tend to diminish further our competitive position in foreign markets, and. unless it specifically provides for protection against import competition at home, it would virtually greet import competition in the American market with open arms. If It were possible for us to forget the need for controlling import competition while we are regulating our domestic economy, and it is not, even then we would have serious doubts as to the efficacy of more stringent wage and hour control as a stimulant to employment and purchasing power. The first stumbling block, as we meditate this change, is our recollection of the break down of the enforcement of N. R. A. A repetition of that experience would mean simply that more stringent, wage and hour laws would he placing a more severe penalty on law-abiding mills and granting higher premiums to violators.
Our next impression is that much of the well-intentioned social legislation of the present administration such as the Social Security Act and the proposed Black-Connery hill actually place a penalty on employment by raising labor
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[page 543]costs. This act would have the effect of stimulating the increased use of machinery with the effect of displacing manpower. Too much burden is being placed on the very phase of our economic life which we are striving to improve—something like trying to lift one’s self by his bootstraps. Particularly is this so if in regulating our national economy we leave ourselves wide open to the competition of imported merchandise which is manufactured under far less stringent labor conditions.
One very good example of the disparity between wages in the textile industry in this country and abroad, is that furnished by a recent Canadian report on wages paid in the Canadian knit-goods industry. This report has been compared with corresponding occupational wage averages in our industry as a whole and with details for southern wage rates. It will be noted in the following table that the average wage rates, occupation by occupation are considerably higher in our industry as a whole and also in the Southern States than Just across our northern border in Canada.
Further from the International standpoint, we can measure the present progress of the United States textile industry in the light of the recent International Textile Labor Conference held here in Washington. At that conference there were represented some 20 nations, with government, employer, and employee delegate from each. The primary objectives of the conference were to secure endorsement of an international 40-hour week for the textile industry and some kind of a minimum wage. Hope for a uniform minimum wage flew out the window quickly, but some hope was retained for the 40-hour week. This, too, failed, as progressive nations such as England, living on approximately our own economic standards, recorded their inability to accept the 40-hour standard because of their need for protection in home and foreign markets from the competition of economically backward nations. The Chinese delegate complained that Japan is abusing its extraterritorial privileges to evade its responsibility to Chinese industrial laws and to work its textile employees in China an 11-hour day. 6 days per week, at 18 cents a day per worker.
The United States textile Industry is in no different position from that of England. It needs to appreciate realities. It needs to realize that it is already out in front of all but one or two nations in reducing its textile industry workweek to 40 hours. To race further ahead at this time would be to sacrifice the remainder of our foreign trade in textiles and textile products and to expose our domestic market to foreign domination, which could not be stayed even by quotas arrived at by “gentlemen’s agreements”—unless, as seems quite doubtful, American businessmen are able to secure from foreign businessmen a greater respect for contractual obligations than our own
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government has obtained from the foreign governments of those same businessmen.
Underwear industry recommends consolidation of N. R. A. gains.—Our industry contributed notably to reemployment and to increased purchasing power through increased pay rolls during N. R. A. and has since maintained that record. Employment in 1936 averaged 64,500 workers, compared with the average of 63,800 workers in 1929.
United States Bureau of Labor Statistics records for 1936 showed an improvement in the underwear industry of over 12 percent in employment and over 22 percent in pay rolls, as compared with 1934, from which it is obvious that the industry has not only maintained but has actually improved upon the record established during 1934 under N. R. A.
Current employment in our industry and in the textile industry as a whole compares very favorably even with that of the predepression years. Our industry in 1936 engaged 101 percent as many workers, as it did in 1929. whereas in the general manufacturing industries the 1936 employment was only 91 percent of that for 1929. Indicating that the textile industry as a whole has done its part in reviving employment, is the fact that its employment in 1936 was at 95 percent of the level for 1929. These comparisons are based on records of the Bureau of Labor Statistics and the Bureau of the Census.
In view of the foregoing facts, our industry views with considerable satisfaction the record of its employment and pay-roll advances made in compliance with the wishes of the administration. Our industry feels that it has made a contribution to the attack on unemployment and depleted purchasing power, which, if matched proportionately by all other branches of business, would quickly lift the country out of its social and economic difficulties. Our industry feels further, however, that this contribution has been made at great sacrifice and that any additional concession would seriously threaten the existence of our mills.
Conclusion.—In final summary, the underwear and allied products industry recommends the consolidation of gains made under N. R. A. If textile wages and hours can be enforced and are to be enforced, we recommend that for the present they be confined to the $12 minimum weekly wage for the 40-hour workweek.
Roy A. Cheney.
Managing Director, Underwear Institute.
The Chairman. Mr. Ralph Emerson.
The Chairman. Mr. Emerson, we have you listed as the legislative representative of the National Maritime Union.
Mr. Emerson. Yes, sir.
The Chairman. All right, you may proceed.
Mr. Emerson. Mr. Chairman and gentlemen, my name is Ralph Emerson. I am the legislative representative of the National Maritime Union of America, comprising a membership of over 50,000 merchant seamen of the Atlantic and Gulf coasts.
I am also appearing here on behalf of the American Radio Telegraphists Association.
In appearing on behalf of the seamen it is not our intent to go into a detailed analysis of this proposed legislation. The seamen are heartily in accord with the general provisions of this bill, but we feel that some tightening up is needed of some of the clauses, so that their intent will be made more specific. Interpretation of the bill in its present form would give the proposed Labor Standards Board general wide powers in regard to all labor.
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At this point I would like to introduce in the record a resolution passed by our union.
Whereas the general purposes of the Black-Connery bill, embodying President Roosevelt’s wage and hour program are good ones: Be it resolved, by the Deck and Engine and, Stewards Divisions of the National Maritime Union in the port of New York, That we support S. 2475 and H. R. 7200, the Black-Connery bill, with the following changes and amendments.
They are short amendments, and I will list them.
On page 4 of S. 2475, in subsection (8), that this subsection be amended to exclude the words “employee representation committee or plan.” We feel that the inclusion of those words would legalize company unions.
Representative Connery. May I interrupt you there? In my bill I struck that out—in the Connery bill.
Mr. Emerson. I am reading from S. 2475.
Representative Connery. The Senate bill ?
Mr. Emerson. Yes.
Representative Connery. I intended to confer with the Senator on that before it slipped my mind. I do not know what the Senator’s attitude is, but I think it will probably go out of his bill, too.
Mr. Emerson. Yes. Now, on page 6, line 5, that the exceptions under the definition of “strikebreaker” be omitted; and we would like those exceptions omitted, since we feel, then, as regards the maritime industry, that ship scabs would not be included in the term. That is the way they have it listed there. In other words, in case of a strike that the shipping interests could not use scabs in place of union labor.
Now, on page 14, that is clause (3)—and it is both on pages 14 and 16—in clause (3), that the word “primarily” be inserted after “consider.”
Representative Connery. Where is that? What, page?
Mr. Emerson. That is page 14.
The Chairman. Lines 19 and 20.
Mr. Emerson. Lines 19 and 20. We would like the word “primarily” inserted there, so that union contracts shall provide the minimum wage and hour standards.
On page 19, lines 14 to 17, inclusive, that this section be omitted in the case of the seamen, or that provision be made to give us protection, since the steamship owners could then deduct from our wages for our meals and sleeping quarters.
Of course, as you know, in the maritime industry, in the case of the seamen specifically, that at sea we have no choice but to accept from the company meals and sleeping quarters along with our wages. It would be impossible to have a different set-up in that case, but we feel the interpretation of this bill in its present form might discriminate against us.
The Chairman. I would just like to ask a question in that connection. I would like to make this clear: Do the seamen now get their board and lodging as a part of the pay or do they fix their wage scale exclusive of the board and lodging?
Mr. Emerson. Well, there has never been any specific rule for that except it has always been included, because our standard of wages has been so far below other standards, naturally we have had to have our board and lodging, and no deductions have ever been made for it.
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Now, on page 29, line 6, that the words “as far as practicable” be struck out, so that the advisory committee will have union men only representing labor.
That is the extent of the amendments offered by this resolution passed at the meeting in New York.
I have a few further recommendations to make from the general membership, which are included in my statement.
While there is no doubt in our minds that the intent of the bill is to raise labor standards to a fair level, and while it is also the intent of this bill to raise those standards among workers in mills, factories, and other branches of industry which could be classed as productive, we feel that in a general interpretation of the whole bill that the way has been left open for the proposed Labor Standards Board to have jurisdiction over those classes of workers who are engaged in transportation. While this may not have an unfavorable effect upon the workers engaged in transportation by water, we feel that it may conflict with the laws now in effect regarding the jurisdiction of the Government machinery now set up to handle these problems.
On page 3, of S. 2475, section 2, subsection (2), lines 9 to 12, “ ‘interstate commerce’ means trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof or within the District of Columbia.” Now, our interpretation of the words “and any place outside thereof” would imply that this means foreign commerce, and this would, of course, include all carriers by water and the employees of such carriers. Also all commerce earned interstate by water would affect the coastwise shipping lines and their employees. If it is not the intent of this proposed legislation to place this interpretation upon this bill, then it would not so vitally affect the seamen. I think it would be in order for a legal interpretation to be given this paragraph so that our position could be defined definitely. If it is the intent of this bill that the proposed Labor Standards Board shall have jurisdiction over all labor and all industry, then we would find it necessary to offer the following amendment:
This amendment would be in the nature of an addition. I refer to page 40, section 22, and this would be a new paragraph (c). It would read as follows:
That no provision of this act or of any regulation or order thereunder shall supersede or in any manner revoke or impair the present jurisdiction of the Maritime Commission over merchant seamen as defined in Public Act No. 835, Seventy-fourth Congress, title III, section 301: “Provided, however, That this shall not prevent the Labor Standards Board from establishing a minimum fair wage and a maximum workweek standard for merchant seamen which will be higher than that standard established by the Maritime Commission.
Representative Connery. May I interrupt you there?
Mr. Emerson. Yes, sir. Representative Connery. Did you read section 22 on page 39. which reads:
No provision of this act or of any regulation or order thereunder shall supersede, or justify noncompliance with, any Federal or State law or municipal ordinance regulating or prohibiting the employment of minors or establishing a minimum wage higher than a minimum wage established under this act or a maximum workweek lower than a maximum workweek established under this act, or otherwise regulating the conditions of employment in any
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occupation and not in conflict with a provision of this act or a regulation or order thereunder.
Mr. Emerson. That is right.
Representative Connery. In other words, your Maritime Commission would be taken care of there.
Mr. Emerson. Well, I have taken this matter of the interpretation of this bill up with several people and they seem to think that the proposed Labor Standards Board well might have jurisdiction in this case.
Representative Connery. Under these bills they cannot interfere with any law which sets a shorter workweek or higher minimum wage.
Representative Thomas. Does the Maritime Act attempt in any way to regulate hours and wages?
Mr. Emerson. It is a small section of the act that refers to the Maritime Commission’s jurisdiction over merchant seamen. This is from the Merchant Marine Act of 1936:
The Commission is authorized and directed to Investigate the employment and wage conditions in ocean-going shipping and, after making such investigation and after appropriate hearings to incorporate in the contracts authorized under titles VI and VII of this act minimum-manning scales and minimum-wage scales and reasonable working conditions for all officers and crews employed on all types of vessels receiving an operating-differential subsidy.
Representative Thomas. Thank you.
The Chairman. I did not quite get the recommendation with reference to that. Would your organization prefer to continue under the Maritime Commission rather than to be included in this law ? Have your seamen any position on that?
Mr. Emerson. The position is—some people might say we want our cake and we want to eat it at the same time because while we want to go along under the jurisdiction of the Maritime Commission we feel, however, if the Labor Standards Board established a higher standard, then we would like to get any benefits which might accrue from this, although we feel that the Maritime Commission is going to do a good job as regards the merchant marine.
Representative Connery. In other words, you want double protection.
Mr. Emerson. This is simply a protective clause; yes, sir.
As this newly formed Maritime Commission has jurisdiction, at present, over seamen in regard to wages, working conditions, and manning scales on subsidized merchant ships, and as we have every faith in the ability and competency of the Commission to handle our affairs, we feel that for the present time that that jurisdiction should not be hampered or impaired by any legislation that would be conflicting. However, we do not care to isolate ourselves from any benefits which could be accrued by this bill. As it is only in the recent past that the seamen, through organized efforts, have managed to have their standards of wages and living conditions raised, we feel that on page 12, part 2, section 4, paragraph (c) that caution should be observed by this committee in giving the proposed board the power to lower labor standards so that in no case should those standards be lowered to an extent that would deprive us of the gains we have already made. In fact, the seamen feel that any revision of wage scales for the maritime workers for some time to
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come should be upward as we have long been amongst that class of workers who were underpaid and overworked.
Now, I would like to say something in regard to the maximum workweek. Under the best of union conditions in the maritime industry as affecting the seamen it is impossible at the present time for us to work less than 56 hours a week. At sea we cannot stop work and just say, “Well, this is a holiday”, because we have to keep on working at the rate of an 8-hour day, 7 days a week, and that certainly makes 56 hours, but with the minimum of even 40 hours I think satisfactory arrangement could be made whereby the other extra 16 hours could be considered as overtime, and with the wages of the maritime workers at the low standards, as they have always been, I do not think we would be getting any too much money in regard to wages, because we have always been underpaid.
As I say, it has only been recently, in the last year or two, that we have started to raise our standards. We still feel, as regards the seamen, that they are working under substandard labor conditions, because our wages certainly do not compare with the average mechanic or shore worker, up to now.
In the matter of establishing a definite standard of a minimum wage and a maximum workweek, many advantages could accrue through this for the workers in certain industries, but then again this might not always apply to the workers in industry who have long-established and well-organized trade unions. It has always been the policy of the employer in industry where minimum wages have been established to keep the employees’ wages down on a level as near the minimum as possible.
Now, on page 19, lines 14 to 17, inclusive, it states:
Deductions for board, lodging, and other facilities furnished by the employer if the nature of the work is such that the employer is obliged to furnish and the employee to accept such facilities.Great care should be observed to minimize the activities of employers in sponsoring the use of “company houses” and “company stores” where this situation is really unnecessary. This situation was brought out clearly before the La Follette Committee hearings in the case of the mine operators in Harlan County, Ky.
In that respect, it was shown clearly there that many of the workers were paid off in scrip and if they wanted cash for the scrip 20 percent was deducted.
Also, many times, at the end of the week, by the time that the man had bought his supplies for the week at the company store, at the high rates prevailing there, that he had nothing left, that he used all his earnings to keep his family in existence, in groceries, and so forth. But, of course, that does not affect us, only as regards the provision as I stated before.
As I say, we are in a position where we have to accept board and lodging, and an interpretation of this clause here gives the employer in the maritime industry the right to deduct for board and lodging.
Representative Connery. Pardon me. You notice that is not mandatory on the Board, the Board “may” do it, depending on the conditions.
Mr. Emerson. What we would like is an interpretation of the bill which would provide a protective, clause for the seamen. If it is
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going to be the interpretation of the bill that transportation workers in general come under the jurisdiction of this Board then we would like to know it. I have never been able to find out yet as to whether the Board is going to have jurisdiction over us.
The Chairman. Do you not think it would be unwise to have two boards with jurisdiction over the same group?
Mr. Emerson. Yes, sir.
The Chairman. Which would you prefer?
Mr. Emerson. We would prefer the Maritime Commission.
The Chairman. You would prefer the Maritime Commission?
Mr. Emerson. Yes, sir.
Representative Ramsfeck. Mr. Emerson, getting back to this board and lodging, if you were charged for the board and lodging on the ships, of course you would want higher wages than you have now?
Mr. Emerson. That is absolutely necessary. If we had to pay for board and lodging we would have practically nothing left.
Representative Connery. Right there your idea is that board and lodging is one thing, do you not?
Mr. Emerson. Yes, sir.
Representative Connery. You bargain for that for a starter, that you get decent food, and then after that your wage scale is entirely separate?
Mr. Emerson. Entirely separate. You see, it would be impossible to do otherwise. We have to accept it.
In regard to the use of child labor, the seamen have always felt that this evil should be corrected and we believe that the inclusion of this problem in this bill is proper and fitting and should be made an integral part of this proposed legislation if it is enacted into law. In general, we feel that with a tightening up of various parts of this proposed bill and its enactment into law, that not only would labor have much to gain, but that in time industry as a whole in this country would be favorably affected.
That is all I have to say, gentlemen.
The Chairman. Thank you very much. I might say, so far as I am individually concerned, I believe it would be improper to have a conflict of jurisdiction between two boards. I would not want to have divided jurisdiction. I would want one that had complete authority. I do not believe the bill, as written, covers the seamen, although there may be a question about it.
Mr. Emerson. Well, that interpretation of “interstate commerce” would certainly take in the carriers in interstate commerce and their employees.
The Chairman. Thank you. Mr. Benjamin C. Marsh.
Mr. Marsh. Mr. Chairman and members of the committee, my name is Benjamin C. Marsh and I am representing the People’s Lobby. I want to read first a brief statement and then make some comment on the bill, with your permission, and, of course, I would be glad to answer questions.
America has reached the limit of trying to manipulate economic laws, instead of establishing economic justice, and of regarding
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dictated decisions that laws are constitutional, as the important objective of legislation, instead of the economic and therefore ethical soundness of laws.
Government should determine the number of hours worked per week, as well as working conditions.
You will remember, Chairman Black, that we appeared, in favor of your bill. I think Mr. Connery had it in the House, the 30-hour bill
Shorter hours undoubtedly will tend to foster the installation of labor-saving machinery by wealthy corporations, driving weak concerns out of business, but it is equitable.
I was told by a gentleman who had just been talking with a high official in the C. I. O. That official said:
We won a wonderful victory in a certain city. They recognized the union, but I know that within a year they are going to have enough machinery installed to discharge, perfectly legally, at least one-third of our men.
I never saw a bill in which three times on two pages the warning was given that the tendency of the bill would be to curtail opportunities for employment. That is on pages 12 and 13. On page 12, section 4 (a), and on page 13, sections (c) and (d), and it occurs several times m each of the pages following.
Setting a minimum wage, while plausible in theory, postulates coordinate action by Government to reduce living costs, just the reverse of present policies—to be effective for any length of time. Incidentally, that is a complete reversal of all major New Deal policies.
Mr. Leon Henderson in a radio address, under the auspices of the People’s Lobby, on April 24 this year said:
Labor should recognize in the threat of price rises that the painfully won gain of collective bargaining will be cruelly destroyed by increased prices. At long last a sympathetic administration and strong labor leadership are fortifying the equality of bargaining power but wage gains are being nullified by the rising cost of living.
I quote from the advance which the Columbia Broadcasting System sent out on this speech of Mr. Henderson:
Can wages beat inflation? Can wages beat prices? Certainly not. The total wage income has never been able to take off the market the goods and services produced by labor even when prices were not on the increase. If wages cannot keep up with stable prices, there is no earthly possibility of winning a race with inflated prices.
Government policies are primarily responsible for the present cost of living, which, including rents, is rapidly rising.
Living costs, including consumption taxes, are largely subject to Government action.
Before reading the next statement I want to make it clear that we favor trying this out. Speaking for myself, I will tell you why I am very keen for this bill. Naturally, having been for 20 years living in Washington, I know you are going to pass such a bill. Next year you are going to pass something like the O’Mahoney bill for Federal incorporation of corporations, but amended to protect on overcapitalization, and also to give consumers a break, as well as labor and the stockholders. I think if you pass those two bills you cannot possibly escape making public ownership the
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dominant issue in 1940, at least, because they will not work. They never have. You cannot lift yourself by your bootstraps even if you had 99 members on the Supreme Court to declare such action constitutional.
The Black-Connery bill of itself promises little permanent help to those who most need help. What little help they can get they are entitled to.
Representative Connery. Mr. Marsh, I am speaking just for myself now. Originally the Black-Connery bill said that you could not ship goods in interstate commerce in the production of which the employee worked more than 5 days a week, 6 hours a day, or a full 30-hour week. Under that bill we estimated it would put 6,000,000 people back to work. At that time we estimated there were 12,000,000 to 14,000,000 people out of work.
Personally, I have always believed that this legislation is merely a step forward, and that the labor-saving devices of which you speak, and of which Mr. Lewis spoke the other day, should be taxed. Mr. Lewis said they had a loading machine that could load 1,100 tons a day, thereby displacing 100 men, 100 employees. With this proposition before us I feel the next step will be something like a tax on the power of machinery, and the tax on that power to be used for unemployment insurance, so when these men are thrown out of their jobs they are going to pay for it.
Mr. Marsh. Mr. Connery, I think that is a reversion to the Dark Ages. We should not tax machinery. We are going to have public ownership of machinery and make it serve the people instead of the stockholders, and the sooner the Democratic Party knows that the more chance it has to avoid early extermination.
Mr. Corrington Gill, assistant administrator, W. P. A., in a recent radio address, said:
A result of inflation would be to increase the burden of relief at the very time that inflation is weakening the strength of the existing relief program. I seriously question whether any work program could stand up under the impact of 300,000 to 400,000 new unemployed a month such as we witnessed in 1931 and 1932. The dole would be inescapable.
Yesterday I appeared before the Senate Subcommittee on Appropriations on the relief bill and pointed out that four or five million families have got to be cared for by the Government, and $1,500,000,000 is suggested to do it with. You would have to go to the old Weyler concentration camps in Cuba to gather anything as cruel as that. Now, what chance has labor to get anything under this bill?
It is appropriate to recall that in 1934, of the 528,000—I use round figures—corporations which filed returns, only 145,000 had a net income. 324,000 had no net income, and 59,000 were inactive.
The net income of corporations reporting net income was $4,275,000,000. in round figures, and the deficit of corporations, with no net income, was $4,181,000,000, in round figures. The net income of corporations reporting net income was only $94,000,000, in round figures, more than the deficit of no-income corporations, and the total income and excess-profits tax liability was $596,000,000.
Monday I called up the Internal Revenue to see if I could find out the figures for 1936. They are not available, but they were much greater, probably five or six times as much, but largely due to war
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preparations, to the fact that installment purchases were about $9,000,000,000 compared to about $6,000,000,000 in 1929, according to the New York Trust Co. index for April quoted by Mr. Leon Henderson in the radio speech to which I referred, and to the fact that Federal expenditures were about $8,300,000,000 of which nearly one-half was borrowed.
This triangle of sand is not a secure basis upon which to erect a labor policy.
The Black-Connery bill is justified as part of the futile efforts to lift ourselves by our bootstraps, in which we have been indulging ourselves all this present century, since good free land passed out of the hands of Government into private speculation and exploitation.
At least two-thirds of the American people cannot be benefited by it and the advantages to those it is sincerely intended to help are temporary and doubtful.
You can imagine what is going to happen to rents, which will probably rise about 15 to 20 percent, and are now high. You have done a great service in suggesting $16 a week, 40 hours, at 40 cents, as the minimum-wage requirement, but I call to your attention that that requirement lasts for 52 weeks of the year, and that Government has got to see that that income is available, and there is only one employer that we believe can do it, and that is the Government. We will get to that just before the election of 1940.
The Black-Connery bill, unless it is to be merely a shot in the arm—I believe in taking the shot, because you have to do all the fool things before you do the sensible things—must be implemented, and let me give you the specific things: Transferring 6 or 7 billion dollars of consumption taxes to incomes from whatever sources derived (including those of Congressmen), personal and corporate, to land values, and to estates.
2. Public ownership and operation for public benefit of all natural monopolies, natural resources, and basic industries, acquired on an honest basis, with no payment for watered stock. That will leave about 10 or 20 percent of the alleged value to be paid in some cases. The pending Frazier-Lemke Government Marketing Corporation bill should be enacted at once.
I haven’t time to read them, but would like to study the figures given by witnesses to the Senate Committee on Agriculture on this marketing bill, showing profiteering in nearly all farm produce processed, which people have to have. That bill has not been re- girted by the agricultural committee in either branch of Congress. o not ask me to tell you why.
Let me suggest that if you were to pass the resolution introduced by Senator Frazier, which Mellon killed when he was Secretary of the Treasury, and Morgenthau is helping to kill now, required that every Member of Congress file a statement of the corporate, stocks and bonds that you and your families own, every Member of the Congress and all Federal employees getting a salary over $3,000. and the corporations yon were or are connected with, and the land that you own, except for occupancy, we would get a whole lot of this legislation through so fast it would exceed the speed limit.
Only government can end unemployment and deprivation by ending the system which blocks employment and robs labor of its money wages, by higher living costs.
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I would like permission to read just a very brief summary of speeches by Mordecai Ezekiel and Leon Henderson.
The Chairman. Suppose you just put it in the record.
Mr. Marsh. Oh, yes; I would not read it now because it would be too devastating.
The Chairman. You were the one we requested to testify. That is the reason I suggested that everybody else's speech be just inserted in the record.
(The matter referred to is as follows:)
(From the Columbia Broadcasting System, Washington, D. C., for release 2 p. in. eastern standard time, Apr. 24]
People's Lobby Luncheon Forum on “What Price Inflation’’ Broadcast by Columbia Broadcasting System
(Following is a copy of excerpts from addresses made during a People's Lobby luncheon and broadcast over the Columbia Broadcasting System, Saturday, Apr. 24, at 1:30 p. m., eastern standard time. Leon Henderson, consulting economist of W. P. A.; Corrlngton Gill, Assistant Administrator, W. P. A.; and Dr. Mordecai Ezekiel, economist of the United States Department of Agriculture, were the speakers. The broadcast originated through the facilities of WJSV, Columbia's station for the Nation’s Capital.)
Can Wages Beat Inflation?
(By Leon Henderson)
Can wages beat prices? Certainly not- The total wage income has never been able to take off the market the goods and services produced by labor even when prices were not on the increase. If wages cannot keep up with stable prices there is no earthly possibility of winning a race with inflated prices.
During the twenties wholesale prices were fairly stable. Labor costs were reduced about 14 percent. In order for wages to stay in balance with production, prices should have come down. The deficit was made up in part by huge borrowings of consumer credit which were a claim against future wages. The present condition is even more serious. Workers’ income in February of this year was 81.5 of 1929, while wholesale prices were 90.9 and the cost of living was 87.0 of 1929. Workers’ income will fall further behind because retail prices will be much higher in the fall. Even if retail prices next fall are only 10 percent higher, retail purchases will cost $4,000,000,000 more.
The present deficit in purchasing power is already evident. Kenneth Collins, vice president of Gimbel Bros., said yesterday, “An alarming impasse has developed in retail trade during the last 4 or 5 weeks.’’ Installment credit is already 50 percent higher than 1929 and in order to carry a similar volume of business as in 1929 a back-breaking total of $12,000,000,000 of installment credit would be necessary this year.
The public is highly unrealistic about rising prices. Many of the alarming increases since last September are the result of inflated prices produced by monopolies. These have nothing to do with unbalanced budgets or any governmental monetary policies. They are just plain monopolistic price rises.
Labor should recognize in the threat of price rises that the painfully won gain of collective bargaining will be cruelly destroyed by Increased prices. At long last a sympathetic administration and strong labor leadership are fortifying the equality of bargaining power, but wage gains are being nullified by the rising cost of living.
Since 1929 there has been a gain of 20 percent in labor productivity. Wages cannot hope to keep in step with rising prices. Only through rising wages and lowered prices can there be a hope for balance.
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What Inflation Does to Relief
(By Corrlngton Gill)
Most of the money spent by W. P. A. goes directly into the pockets of project workers and is in turn spent by them on food, rent, clothing, and other necessities of life. In fact, 85 percent of Federal dollars spent by this Administration goes to project workers; only 15 percent is needed for materials and equipment to carry on the projects. This has been our policy throughout the program, and it is in line with the recent statement of the President that Federal expenditures should now be directed as much as possible into the purchase of consumers’ goods as contrasted with heavy materials.
Now, bearing these things in mind, what would be the probable effect of inflation on the administration’s Work Relief program? The most serious effect would be on project workers themselves, 96 percent of whom come from relief rolls. As you know, they are paid a security wage which is none too high under present conditions. Any rise, unless slight, in the cost of living would necessitate an increase in these wages. An immediate result of an increase in the security wage would be a lowering of the amount which could be spent for materials and equipment because the Work program appropriation is for a fixed amount. This would mean changing from our present program, under which we build roads, rural schools, parks, and sewers, for example, to leaf raking at its worst. We might not even be able to buy rakes.
So far, I have spoken of the immediate dangers which inflation would bring to the administration’s relief program. The real threat, however, is the certain effect on the whole economic system.
In the wave of higher prices some industries would be sure to take advantage of the general situation by raising their prices still more. The monopolistic industries and those which are so organized that their prices are easily controlled would, if past experience is any guide at all, raise their prices to such an extent that purchasing power would be cut and production thereby lowered. This in turn would mean more unemployment and, consequently, a greater volume of destitution. Thus the demands on the relief program would be greater, rather than less. In short, then a further result of inflation would be to increase the burden of relief at the very time that inflation is weakening the strength of the existing relief program. I seriously question whether any work program could stand up under the impact of 300,000 to 400,000 new unemployed a month such as we witnessed in 1931 and 1932. The dole would be inescapable.
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How to Prevent Inflation
By Mordecai Ezekiel
We are in no danger of the astronomical kind of inflation which carried the values of the American continentals, the French assignats, the old German marks, or Russian roubles, to zero. Rather, the only type of Inflation that might threaten us is such a rapid rise in speculative values, as in 1928-29, or in commodity values, as in 1918-19, as might eventually plunge us again into a major depression like those of 1920 or 1929.
We may choose between several different alternatives to avert such a possibility.
The first method, and probably the most desirable one, is one that businessmen themselves can adopt. It is for them to put into action the program recommended to them by the Brookings Institution in its book, “Income and economic progress." That method is very simple: Use the reduced costs of production arising from technological improvements and full-capacity operation primarily to lower the selling price of the product, and to raise wages of labor; and only in small measure to raise profits. In that way the buying power of workers can be kept rising, more workers will be employed, and production and consumption will rise together. Also, that will avoid the vicious circle of rising wages, rising prices, and more rises in wages, leading to still further rises in prices, which many industries seem to be starting today.
In the essence, this program boils down to this: Increase pay rolls faster than you increase profits; and pay higher wages out of lowered costs, rather than
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passing them on as higher prices. Unfortunately, our leading corporations seem to be going in the opposite direction. From 1935 to 1936, industrial pay rolls increased only a little over 10 percent, while the profits of reporting corporations increased more than 50 percent. If businessmen continue to increase profits out of all proportion to pay rolls, disaster is sure to follow.
If industry does not adopt a more reasonable policy, but continues to jack up prices at the rates noted recently, Government could step in with the second alternative, a drastic change in Federal fiscal policy. Two tax policies are possible. One is to leave tax rates where they are or reduce them, and to balance the Budget by severely cutting Federal spending; the other is to increase taxes, especially income taxes, and continue spending. Federal taxation and standing serves to take off some of the high Incomes at the top, out of which oversaving and overinvestment arise, and to distribute them largely to those with low Incomes who spend them largely on consumption goods.
A rapid reduction in Federal taxes and spending would probably not cheek inflation; on the contrary, it would feed the flames of overinvestment that build up Inflationary speculation. The other program, of heavier taxation and continued heavy spending, would help check inflation arising from overinvestment and speculation, and maintain consumer buying power for consumption goods.
If effective action is not taken in either of these fields, the final possibility is to use Federal Reserve policies to check inflation. This might Involve creating a scarcity of funds, advancing interest rates, or both. Such a policy would tend to cause a prompt check in rising prices, and also a drop in industrial activity. As Mr. Eccles has recently pointed out, however, it would be foolish to check rising industrial activity while millions of men are unemployed and in need. It would be burning down the industrial barn to get rid of the inflation rats.
What we need are policies which will maintain a stable price level and still permit steady and continued recovery until practically full employment is reached. It will not pay to increase employment rapidly if that is only the incident of an upswing boom of rising prices that is sure to break and recede again.
Perhaps the soundest program will be an intermediate between depending either wholly on industry or wholly on Government action; one that involves continued heavy Federal taxation and spending, to redistribute income, and one that also secures a fairer balance on the part of industry between prices, pay rolls, and profits.
Mr. Marsh. I am sorry that Dr. Ryan said that no sensible proposal had been made. There is the marketing bill of Senator Frazier and Mr. Lemke, and Congressman Coffee of Washington, has introduced a bill for public ownership of the four competing sources of energy—coal, oil, water power, and gas—and to permit the Government to manufacture all electrical appliances, which, of course, will cause heart failures in Westinghouse and General Electric.
We shall introduce, and are now having prepared, bills to socialize steel, motors, and for public ownership of forests, except woodlands on farms.
Mr. Chairman, before the Senate Committee on Education and Labor I suggested amendments to the Wagner housing bill so the Government could get land at a fair price instead of paying the Astor or Morgenthau price, and put up tenements and construct factories for building materials if commercial interests block housing by high prices. The Federal Government is just going to have to spend around $4,000,000,000 a year for relief or employment, and it should be empowered to construct housing where needed when local authorities fail to act.
We shall have a bill put in to socialize textiles and to permit the Government to operate farm lands it buys, even if dumped on it by deserving Democrats who are land poor down South. I will finish
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with an amended quotation from the Scriptures: “This ought ye to have done but not to have left undone”, the socializing of basic industries and natural resources and monopolies.
I thank you.
The Chairman. Mr. Besse.
Mr. Besse. Mr. Chairman and gentlemen of the committee, my name is Arthur Besse, representing the National Association of Wool Manufacturers.
I am afraid I can hardly be as entertaining as Mr. Marsh. I feel a little more serious at the moment, considering this bill.
Mr. Jackson last week said: “The attempt is to consolidate in a single bill all hopeful approaches to constitutionality.” I think it was a very good phrase, but he neglected to state that an attempt also had been made to consolidate all possible approaches to the delegation of unlimited powers to this extraordinary labor standards board, extraordinary in respect to its proposed degree of authority, which it is proposed to delegate to it, and extraordinary as to its responsibility which it is expected to discharge. It is to this board and to its unlimited authority that our industry emphatically objects.
We have a sincere reluctance to oppose a bill of this nature, realizing that to those who do not understand the real nature of the bill we appeal' to be opposed to the principle of minimum wages and maximum hours, and reluctant to support the abolition of child labor. That is not true. There is no child labor in the wool textile industry. We have approved and supported the establishment of minimum wages and maximum hours both in the code and subsequent thereto, but we can see nothing but disaster resulting from the attempt to endow a board with power to set any and all standards of labor remuneration based on criteria of which the board itself is sole judge. It is idle to say that the board will never use or misuse this power. You might just as well rely upon a father’s statement that a boy who pleads for an air rifle for Christmas will not use it to shoot at anything. If the board does not intend to use these powers why does the President, who is to appoint the board, ask for them?
The bill is so cleverly and adroitly drawn that these powers are not easily discernible at a first reading. But the fact is that the board not only can fix minimum wages that in its opinion are not “oppressive” but in one way or another it can determine the wages and fix the hours to apply to any class of employees in any part of the United States. The board can make wage and hour classifications which apply at its pleasure to a single establishment, to a group of establishments, to a geographical sector, to a craft or industrial union group, or to an industry, or to any other classification that, they see fit.
You gentlemen have heard and will hear much of the degree of power which it is proposed to vest in this board. I do not want to take your time merely to restate such objections, but I do want to add our voice to the others raised in protest against this delegation
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and surrender of power on the part of Congress and against the establishment of a super N. R. A. board to control and supervise the minutest details of wages in this country.
There are, however, one or two specific points that I would like to call your attention to. I cannot say definitely that they have not been argued before this group. The first is the direct implication to be drawn from the provisions providing for variations and exemptions. Section 4 (c) provides that the board may “vary such, standard upward or downward as to all employees or as to any class of employees.” Section 6 is devoted exclusively to the matter of exemptions.
Now, the entire argument for Federal as against State regulation is based upon the desirability of securing uniformity of standards. This bill is written with the obvious intention of providing non- uniform standards. Such a procedure makes a Federal statute entirely unnecessary and ineffectual. The drafters of the bill have admitted, in the language which they have used, that uniformity is impracticable. Federal regulation on the scale contemplated cannot achieve uniformity; it is without merit, and appears to be based on the desire to exercise control rather than on the desire to improve conditions of employment. The answer seems to me obvious—Federal regulation should be based on general considerations, should be simple m principle, and should establish general minimum standards of hours and wages that no one anywhere would be permitted to ignore. When you go beyond that point, uniformity is impossible and the problem becomes one for local or individual rather than mass treatment.
The second point I would like to make concerns this in effect: The setting of fair wages based upon a “reasonable value of services rendered” and other similar considerations—all of which is set forth in section 5 and elsewhere—is far different in its effect than the establishment of a single statutory minimum wage.
We believe that the establishment of a minimum wage is a perfectly sound objective, and we believe that there is some figure that will represent the minimum worth of any employable worker. Such a minimum wage, as was proved under the N. R. A., does not tend to become the maximum, as there are easily demonstrable differences in the economic value of a skilled and an unskilled worker. But when you set a fair wage for specific classes of employment, you are setting a wage that is at once a minimum and a maximum.
But you are doing far more than that, because you are cutting out any employee who cannot earn that fixed amount. There are hundreds of thousands of employees who are perfectly satisfactory as factory operatives, but who, for one reason or another, cannot turn out sufficient work to entitle them to what might be considered a minimum fair wage for that particular occupation. These men are going to become unemployable, if you set a wage higher than they are worth based on the amount of product that they can turn out, and would have no alternative but to apply for relief. There are comparatively few workers whose week’s work is not worth the amount which might be established as a national minimum wage, but there are thousands of workers in specific occupations who are not and cannot ever be, worth the minimum fair standard as provided in section 5. This fact alone is sufficient to cause abandonment of
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the idea of fixing wage rates by legislative fiat or by decree of an appointive board.
The third point I would like to make is this: That the fixing of either minimum wages or fair wages peacemeal is bound to break down, for the reason that their determination is certain to affect and to necessitate some revisions in most of the rates already made. I think that was brought out in the N. R. A. and the necessity for supplementing the N. R. A. with the President’s agreement.
The bill provides that the board shall extend nonoppressive minimum rates to all employments within the scope of the act from time to time as quickly as possible, and shall make determination of minimum fair wages whenever they have reason to believe that such wages are not fixed or maintained otherwise. Every such application of the minimum rates or such determination and imposition of so-called fair wages as respects any occupation, class of employment, or locality would involve a serious dislocation of the relationship of the enterprises affected and others not affected thereby.
Every labor standard order issued would immediately necessitate reexamination and possible revision of other labor-standard orders then in force. Wage rates in any industry must be reasonably responsive to general economic conditions and in particular to wages in competitive industries. Because of this fact the proposed labor standards board would either be estopped from making labor standard orders relating to fair wages or changes in the nonoppressive minimum wages, or, if they persisted none the less in making such changes, they would do so with the certainty that such changes would upset the balance as between different localities and different industries, and disturb and interfere with instead of promote and aid the flow of goods in interstate commerce. If you attempt to fix wages on the scale suggested you have got to proceed piecemeal, but if you proceed piecemeal you are bound to get into a hopeless mass of interrelated and conflicting elements.
I think that was very clearly illustrated, as I said before, in the President’s agreement. The industries who came forward on the code—we happened to be the third code signed by the President under the N. R. A.—objected to the fact that many other industries were not yet codified and did not have minimum wages. I do not think that this bill can possibly be administered on the basis of proceeding from one industry to another.
Representative Connery. Mr. Besse, right there, because I may lose track of that, let us take a practical illustration; let us take the woolen textile industry. Under the advisory board provision in this bill suppose that Mr. Hobbs and yourself were selected by the Board, Mr. Gorman, of the United Textile Workers, and Mr. Hillman, and another wool manufacturer, and another labor man, and three disinterested people from the public, three disinterested persons from the public, do you not think that you could sit down with three people, the nine of you, and get a basic wage and hour situation in the woolen textile industry that would be practical?
Mr. Besse. It is very simple, but the amount of that would depend very much on the general wage level and general price level. It is not a question of what you could do now; it is a question of what the levels are going to be and what others will pay. We employ
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160,000 people. What we can pay them and the extent to which we can increase the price of our product, which we must do if we pay them more money, depends on general situations very largely out of our control.
Representative Connery. Suppose the Board then started off with you nine representatives and said, “Go out and report within 60 days”, and at the same time sent shoe men and the same relative proportion of labor men and public out, sent the automobile men out, sent the steel men out, and all the rest of them at once, and said, “Report back in 60 days”; what about that?
Mr. Besse. We are all going to say, “What is the other fellow doing?” If you ask me how we are going to administer the bill, I will say this: That whatever the minimum wage is, whatever is practical to establish as a minimum wage, could well be established to take effect 4 months from the day the act was signed; that during the interim any industry which could not pay that minimum would have an opportunity to present its case, but the burden of proof ought to be on the industry.
Representative Connery. Well, you have that in the bill, practically. You see, if the bill goes into effect the law goes into effect the day it is signed by the President; then no regulation set by the Board goes into effect for 120 days afterward.
Mr. Besse. I have no objection to that. I find myself a little confused as to the differentiation to be made between the words “regulation” and “order” in section 4. If a regulation is something different than an order, and if the regulation would be made without a hearing, the Board could provide by regulation that everyone be subject to the minimum wage except the industries who made claims to the effect that they could not pay it.
Representative Connery. It provides for public hearings here, does it not?
Mr. Besse. I think, Congressman, if you have public hearings you are doing exactly what I object to. You are putting one industry in the position of having to establish a minimum wage without knowing what the industry in general is going to do.
Representative Connery. Would you prefer to have the committees report the bill to Congress saying there will be a 40-cent minimum wage and 35-hour week, for instance, flat, without any exemptions at all?
Mr. Berse. We prefer to have Congress study the matter of determining what is a reasonable minimum wage to establish, and then establish the wage and make it extremely difficult for industry to get out of paying that wage.
Representative Connery. I believe you said a 40-cent minimum and 35-hour week. That might be all right for the textiles but the shoe industry has not worked over 30 hours a week for the last 10 years. How would you set your hours?
Mr. Besse. I think if the shoe industry is working a smaller number of hours than what you gentlemen think is a proper workweek, you do not need to bother with it. If they are under the maximum that you set as the proper maximum, why disturb it?
Representative Connery. How about their wages?
Mr. Besse. I do not think the object of this bill should lie to cause as much trouble as possible in all the industries, regardless of the
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conditions in those industries, I supposed the object of the bill was to correct the conditions that were not up to the standard that Congress was to set.
Representative Connery. Yes; but the shoe industry works 30 hours and you say the hours should be 35.
Mr. Besse. I am not in favor of a 35-hour week but I would say you have the privilege of working up to the hours established by the Congress.
The Chairman. What is your feeling in the matter?
Mr. Besse. My feeling is if you go below the 40-hour week you unduly disturb conditions in many industries.
The Chairman. Then your organization recommends the passage of a straight 40-hour week?
Mr. Besse. We have maintained the 40-hour week since N. R. A.
The Chairman. Are you in favor of the 40-hour law being written into the bill?
Mr. Besse. Yes; provided you have a reasonable amount of flexibility, as you have in this bill, for overtime. There are occasions in the industry, particularly in the finishing operations, when on Friday night, for example, you need a little more time to finish odd things then in process; but I think the basis of the 40-hour week is perfectly practical.
Representative Connery. What is your position relative to foreign imports?
Mr. Besse. That would take more time, Congressman, than this committee has. We are struggling with the Tariff Commission now. My theory is that the question of importations should be handled by the Tariff Commission, but unfortunately the Tariff Commission does not appear to be particularly sympathetic to our point of view at the moment.
Representative Connery. Do you think something should be put in this bill to protect you against foreign imports?
Mr. Besse. I think something should be in the legislation to protect us against foreign imports. As to whether it is in this bill or some other bill I have no preconceived idea.
Representative Dunn. Does the industry you represent have any plants in any other countries shipping goods into this country?
Mr. Besse. The wool textile industry of this country is entirely within this country. We export nothing. All of the product made in this country by American interests is made here and is used here.
Representative Dunn. I have one other question. You believe that there are some institutions in the United States that are known as sweatshops, do you not?
Mr. Besse. There probably are. I think the matter has been very much exaggerated.
Representative Dunn. Don’t you believe that this bill will do something to eradicate those conditions?
Mr. Besse. Understand me, I should be delighted to have those conditions eradicated, but I do not say that that is an argument for giving power to a board in excess of that needed to eradicate the conditions complained of.
Representative Dunn. That was not my question. Don’t you believe that this bill in its present form would wipe out the sweatshops, put a stop to child labor, and make working conditions better?
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Mr. Besse. I do not think that that is any argument for this particular bill. You can do that with a much simpler bill.
Representative Dunn. My question is: Don’t you believe, if the bill would be enacted into law in its present form, that it would do the things that I enumerated?
Mr. Besse. It would do those things, and others.
Representative Dunn. Anyway, it would eradicate sweatshops, put an end to child labor, and also make working conditions betters.
Mr. Besse. I think it would. There is this to be borne in mind: The bill contemplates exemption for establishments employing a certain number of people. I have heard the figure 15 suggested. You must realize it is those shops in which the worst conditions are apt to exist.
Representative Dunn. But it would do those things that I have suggested, would it not?
Mr. Besse. I think it would.
Representative Dunn. That is the point I wanted to make clear. I have one other question. Then I understand you to say that you would be in favor of having Congress insert in this bill the number of hours that people should work and also a minimum wage?
Mr. Besse. Yes. I do not think Congress should insert that until they have had an opportunity to study it and determine what is the proper rate.
Representative Dunn. In your opinion, what would be a good minimum wage?
Mr. Besse. I cannot tell you. I represent just one industry.
Representative Dunn. What minimum wage does your industry pay?
Mr. Besse. Our minimum wage was $14 in the North and $13 in the South. We have a very small amount of industry in the South.
Representative Dunn. What is your maximum?
Mr. Besse. Our maximum wage?
Representative Dunn. Yes.
Mr. Besse. There is not any such thing.
Representative Dunn. For your skilled employees?
Mr. Besse. There is not a maximum wage for our skilled employees.
Representative Dunn. You do not have a maximum rate for your skilled employees?
Mr. Besse. We have not such thing as a maximum rate; no. I can tell you what we pay certain skilled employees, but there is no maximum wage in any industry that I know of.
Representative Dunn. One other question. Isn’t there a possibility, if we were to insert in this bill what is called a minimum wage, that that minimum wage might become the maximum wage?
Mr. Besse. No.
Representative Dunn. It would not do that?
Mr. Besse. It did not do that under the N. R. A. I see no reason why it would, provided you are talking about the minimum wage and not the fair-value wage based on the value of the services rendered in a specific operation. That is an entirely different thing.
Representative Dunn. That is all.
Representative Gildea. Isn’t there a possibility of the so-called minimum wage becoming the maximum wage?
Mr. Besse. I tried to make that clear before.
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Representative Gildea. What I mean is this: It is said that they can work up to 40 hours a week, and that is the workweek set, but the underprivileged, the unskilled worker, instead of having set up a minimum wage he has a maximum wage set up, and the minimum wage will also become the maximum wage for the skilled.
Mr. Besse. Not if you confine the efforts of the bill to the setting of the minimum wage; no; I do not believe it would.
Representative Gildea. It could be the maximum wage that they could earn?
Mr. Besse. Absolutely not. There is a great difference between section 4 and section 5 in that regard. In my estimation, a minimum wage set as a floor, in accordance with the provisions of section 4, cannot become the maximum wage for anybody. A fair wage set under section 5, based on all the considerations there set forth, in my opinion, would become a minimum as well as a maximum wage for those occupations. In one case you are dealing with the minimum wage that you pay any employable person; in the other case you are trying to set the value on specific services, and there is a very great difference in what happens when you do those two things. There was absolutely no evidence in our industry, nor in any industry that I know of, that the minimum set under the N. R. A. tended to become the maximum.
Representative Jenks. Mr. Besse, you say that some of your mills are in the South?
Mr. Besse. Comparatively few. About 8 percent of the total machinery of the industry is in the South.
Representative Jenks. Do you feel the southern mills have to have a lower minimum wage than the northern mills, in order to compete?
Mr. Besse. No. I think that this bill is getting very far away from the object of the bill, if you talk in terms of enabling one industry, or one section of the industry to compete against the other. In my estimation you should set the minimum wage based on the facts as they exist. If you set that minimum wage for a certain section of the country I do not believe that there is any possibility of some other section of the country going down immediately because they do not meet it today, but I do not see anything to be gained by setting different minima for different parts of the country.
In other words, I think you have got to consider every industry in every part of the country before you are qualified to suggest what minimum wage you ought to insert in this bill. When you consider every single factor existing, both geographically and industrially, then you know what kind of minimum wage you can put in this bill.
Representative Jenks. One of the witnesses that appeared before the committee, that had textile mills in the South, said that he felt that a lower wage in the South was not necessary in order for the worker, to get the same benefit on account of different living conditions, and on account of different conditions in other ways, that his clothing was somewhat cheaper, that that would equalize itself.
Mr. Besse. I am not an expert on cost of living in the South, but I believe you have got to consider the conditions in the South, the conditions in the Midwest and anywhere else before you are qualified to determine what the minimum wage ought to be.
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Representative Welch. Why do you pay a lower minimum in the South than in the North?
Mr. Besse. It was in our code originally, but the reason for it is because of the difference in conditions in the South and the different price that a man can ask for his services. I cannot tell you whether or not there is any validity in the statement that a southern worker is not as efficient as a northern worker. I know I work less rapidly when it is hot than I do when it is cold, but the statement has been made a great many times that the southern worker is not as efficient as the northern worker. I do not know, but I think if you consider the most inefficient worker in the most inefficient plant and go back to the limiting factor in any industry, or any geographical district, you have the answer as to where your minimum wage ought to be.
Representative Jenks. General Lee said that they were not efficient many times.
Representative Thomas. Mr. Besse, I believe you stated a while ago that the minimum wage paid by your organization is $13 in tile South and $14 in the North, is that correct ?
Mr. Besse. That was under the code.
Representative Thomas. What is it now?
Mr. Besse. Wages have been increased since then, so that our theoretical minimum is higher than that.
Representative Thomas. I am not interested in your theoretical minimum; I am interested in your cash minimum. What is it now?
Mr. Besse. Of course, that depends on what you mean by “minimum wage.”. I can give you an average wage, but if I give you a minimum wage, to be strictly correct. I have got to tell you the lowest price that anybody is working for in any mill, and I do not know where they are. I suspect there may be somebody who is working for $12, but I do not know where he is.
Representative Thomas. Is it not true that in your industry, since the demise of the N. R. A., that you have increased the workweek, the number of hours, and you have also slightly increased your pay?
Mr. Besse. We have increased our pay substantially, and we nave not, except in a few instances, increased our workweek.
Representative Thomas. When you say you have “increased it substantially” what do you mean?
Mr. Besse. We increased the average pay from 48 cents to 53½ cents. That is the average of all people employed in the industry.
Representative Thomas. Fifty-three cents?
Mr. Besse. Fifty-three and one-half cents. That is the average, according to the last figures of the Bureau of Labor Statistics. In fact the preliminary figures just issued for April 1937 give an average of 57½ cents.
Representative Thomas. What is the average earning capacity per year of your employees whom you say you pay 53 cents? How many weeks or how many months do they actually work a year on that pay?
Mr. Besse. That is very difficult to determine, because it depends upon the practice of a single factory, as to whether they spread the work when they run into a period that is less active.
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Representative Thomas. You mean to tell the committee; Mr. I Besse, that you do not know what the average earning capacity of : your employees is per year?
Mr. Besse. I can give you a theoretical figure, but there is no one on that figure. I can take the figure. I can take the figures of total employment, total number of hours over the year and give you an approximate figure. In the last preliminary report of the Bureau of Labor Statistics that is for April 1937, the average workweek was slightly under 38 hours a week, and the average wage was 57½ cents. Now, I cannot tell you as respects any year, as to how long those people are going to work.
Representative Thomas. How many hours per week did they work during this period?
Mr. Besse. Slightly under 38 hours per week.
Representative Thomas. And how many weeks of the year?
Mr. Besse. Fifty-two weeks.
Representative Thomas. At 53 cents per hour?
Mr. Besse. Fifty-seven and one-half cents per hour. That is the latest figure. Of course, that figure varies a little bit from month to month.
Representative Thomas. One further question. Since you do not have the specific information upon which to base the hurried calculation that you gave there, if a minimum wage of 40 cents an hour is set and even if 40 hours per week is made the maximum, this bill would not affect your organization, would it?
Mr. Besse. I beg your pardon. The bill would. The particular section of the minimum wage would not affect us. We not only do not object to it but we approve of it. We are not objecting to the minimum wage, we have an objection to section 5 of this bill and the power given to a commission to set all wages in all industries.
Representative Thomas. It is pretty easy to criticize. That is the way we lawyers usually make our living, being able to criticize well. Do you favor setting up the minimum wages in black and white in this bill? You said something a while ago that struck me rather forcibly. Just how would you cure the evils set out in section 5 and section 6?
The Chairman. Mr. Thomas, I think he said he favors the maximum hours and the minimum wage, with the exception that he wants flexibility. I suppose he is an attorney and I am sure the committee would greatly appreciate it if he writes the bill and sends it to us. I would be glad to have it I would like to see it.
Mr. Besse. Fortunately for the committee I am not a lawyer, but assume that there are lawyers on the committee.
The Chairman. You have a lawyer for your organization, do you not?
Mr. Besse. We have.
The Chairman. And he has consulted with you on this?
Mr. Besse. No, he has not.
The Chairman. Your evidence is just your evidence, without consulting the lawyer?
Mr. Besse. Without consulting a lawyer, yes.
The Chairman. Are you secretary of the organization?
Mr. Besse. I happen to be president.
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The Chairman. Do you own any plant yourself?
Mr. Besse. None.
The Chairman. Are you interested in any plant yourself?
Mr. Besse. None.
The Chairman. So you are the president of this organization?
Mr. Besse. That is right.
Representative Dunn. Are you a big stockholder?
Mr. Besse. No, sir. I do not think it would be appropriate for me to have any interest in any of our mills. I am supposed to be impartial as between the interests and the industry. I would like to say in connection with writing that bill, if I were a lawyer I would be glad to write it.
The Chairman. We would be glad to have the lawyer of the organization send one out here.
Mr. Besse. I assumed that there were lawyers in the Congress, but I also understand that none of the congressional lawyers are taking a hand at writing this bill.
The Chairman. Well, we would like to see your lawyer do it.
Mr. Besse. The brains of some lawyers in Congress are going to atrophy if they are not going to start writing bills.
The Chairman. Let us not beat around the bush. You have a lawyer for your organization?
Mr. Besse. Exactly.
The Chairman. He is employed by your organization. You say that your organization has certain definite ideas about the kind of a bill that should be drawn. Irrespective of how many lawyers there are in your organization, they were greatly interested in it; they sent a representative down. Be kind enough to send a bill down here so this committee can have advantage of their ideas.
Mr. Besse. Unfortunately our lawyer is what is known as a constitutional lawyer. [Laughter.]
The Chairman. I admit, Mr. Besse, that some so-called constitutional lawyers find it difficult to draw up a bill. I am sure your organization could draw up one, because you say you are for one, you think one should be drawn, and you have a lawyer. Is he an able lawyer?
Mr. Besse. He is a very able lawyer. Now, I will tell you something more, which is the reason I did not consult him; I did not want the committee to be prejudiced. It is Mr. Arthur A. Ballantine, formerly Under Secretary of the Treasury.
The Chairman. We would not be prejudiced against, him.
Mr. Besse. You probably would not. Mr. Ballantine does not believe that this type of legislation is constitutional. I do not know whether it is or not. I would be glad to see a minimum-wage and a maximum-hour bill.
The Chairman. You made certain suggestions that I was interested in, that you would like to see a bill drawn fixing the maximum hours and minimum wages, with sufficient flexibility. If that is your idea, and I assume it is, because you said it is, we would like to nave the advantage of that. It is difficult, as you realize, to draw one with sufficient flexibility, the flexibility that everyone mentions.
Mr. Besse. We shall draw it.
The Chairman. We will appreciate it very much, even though it be drawn by your constitutional lawyer.
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Representative Connery. Mr. Besse, you spoke about your lawyer being a constitutional lawyer. You remember there were some 84 constitutional lawyers who said the Wagner-Connery Act was unconstitutional, but the Supreme Court of the United States, by a 4-to-5 decision, overruled the 84 constitutional lawyers, do you not?
Mr. Besse. As someone said, “Where are they now?” Personally, I hope the bill will be dropped and some other bill substituted.
Representative Dunn. Why do you say that, when you admitted a few minutes ago that if this bill was put into law it would eradicate the sweatshop, put an end to child labor and the other things?
Mr. Besse. I am simply unable to make you understand my point of view. I am 100 percent against this bill. There are certain things in this bill of which I approve, and I would be glad to see the bill effectuate those things without doing the damage that I see that this bill is going to do.
Representative Dunn. Listen, you said that this bill would wipe out the sweatshops, put an end to child labor, make conditions better for labor. If you admit that it would do those things, why should it be dropped?
Mr. Besse. Because I think the price at which it does that is too big a price to pay.
Representative Dunn. Too big for whom to pay?
Mr. Besse. For the country.
Representative Dunn. Not the laboring men; not the people who are compelled to work in sweatshops.
Mr. Besse. I will say again that I have no objection to that; I am absolutely in favor of it, but I object to other things that this bill does by implication and by specific application of authority.
Representative Dunn. I suggest, then, in view of what Senator Black says, that you get your lawyer and your firm to write us a better bill, if it is willing to go along with the principles set out in this bill.
Mr. Besse. I have gotten myself a job, I am sorry to say. I wanted to say that if this bill, or if this particular language is used, I would like to make another specific suggestion, and that is that you amplify section 2, which is the dictionary of the bill, a somewhat voluminous dictionary, and include in that dictionary a definition of the term “self-organization.” I mention that because there seems to be considerable confusion as to what “self-organization” means. There are those who consider it “self-organization” when employees of the Artcraft. Hosiery Co. are knocked down if they refuse to sign a C. I. O. card and are given a second opportunity to sign before being knocked down again. And there are those who consider it “self-organization” for the textile workers when Mr. Lewis and Mr. Hillman come to Lawrence, Mass., and publicly state that they have $500,000 of the clothing workers’ money—and can get more—to organize the textile workers. If it is in truth “self-organization”, why do the textile workers need money and organizers from the Amalgamated Clothing Workers, or why is it necessary to send athletes to their homes to show them the value of C. 1. O. membership? And if it is “self-organization”—a spontaneous movement on the part of the workers themselves—why the emphasis on the closed shop, which keeps out of work anyone who is unwilling to agree to the orders of the union agent, or upon the
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check-off, which forces the workers to pay, whether they like it or not, for the upkeep of those who control their fate? It is organization, beyond question, but in many industries and localities it is not “self-organization.”
I leave with you the suggestion that in all legislation having to do with labor matters you differentiate between various forms and methods of “organization”; I make also the plea that you do not attempt the impossible, that you write and enact a simple workable bill to fix a general standard of wages and of hours, and to prevent the employment of child labor. Such a bill—which this bill most emphatically is not—would not be opposed; on the contrary, you could expect the great majority of industry not only to support its passage but to cooperate with the Government in assuring its strict enforcement.
Representative Dunn. Is it not a fact that the capitalists of the United States are pretty well organized?
Mr. Besse. I am afraid not.
Representative Dunn. Yes, they are.
The Chairman. You are president of one organization, are you not?
Mr. Besse. I am.
The Chairman. What organization is that?
Mr. Besse. The National Association of Wool Manufacturers.
The Chairman. Was that self-organized?
Mr. Besse. Yes, since 1864. We have had our struggles a good many times when I would think that there was no organization whatever.
The Chairman. There is now?
Mr. Besse. We have an organization, but we do not agree within the organization at times, but we seem to be in very close agreement on this bill.
The Chairman. You mean the president disagrees with the organization?
Mr. Besse. Oh, many times.
The Chairman. But you are in accord on this?
Mr. Besse. We have a man—he is the first witness scheduled tomorrow—who used to be a member of our organization, but he is not now. He may disagree with me very completely. I do not object to the alleged objectives of the union leaders, but I do object to some of the methods which they have employed, and I object to calling “self-organization” something which seems to me to be organization from other sources. That was the only point I wanted to leave with you in connection with a possible expansion of the dictionary, which otherwise seems to be quite complete.
Representative Wood. It is your contention that union organizations are organized by force?
Mr. Besse. Not all of them, Congressman. I object to those that are organized by force. I am not, by any means, saying that they are so organized.
Representative Wood. What ones are organized by force and what ones are not? Give us some specific case. The knock-downs that you are talking about., what were they?
Mr. Besse. I mentioned particularly the Artcraft.
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Representative Wood. Do you know of a single case where a man asked a man to sign, where he was handed a card and if he did not take the card he was knocked down?
Mr. Besse. I mentioned that in connection with the Artcraft Hosiery Co. in Philadelphia.
Representative Wood. Do you know of any specific cases like that? It is easy to make a statement, but it is much harder to verify it.
Mr. Besse. I can have that verified, Congressman, I would be very glad to.
Representative Dunn. Would you also verify how many strikebreakers’ organizations they brought in, and gunmen, to shoot down people who were justifiably on strike? Can you do that?
Mr. Besse. I could not prove that.
Representative Dunn. Do you know it is a fact?
Mr. Besse. It has been alleged. I do not know of my own knowledge whether it is true or not. It has not been true in our industry.
Representative Dunn. Never in your industry?
Mr. Besse. Not as far as I know; no, sir.
Representative Dunn. When people went out on strike the employers never brought in people to take their places in the mills and factories?
Mr. Besse. Not so far as I know. I have been connected with the industry since 1933. We had a strike in 1934. There were no strikebreakers, as defined in this bill, that I know of. They were employed at that time.
Representative Wood. Do you mean to tell this committee that no member of your organization has ever brought in any strong-arm men, or gunmen, or thugs, to prevent men from organizing?
Mr. Besse. I do not know of any, Congressman.
Representative Wood. You know men have been knocked down for not joining the union, do you not?
Mr. Besse. I do.
Representative Wood. Is that your personal knowledge?
Mr. Besse. No, sir.
Representative Wood. I suggest the gentleman read the La Follette committee hearings and he will have some definite information. He probably does not read that type of literature. If he did he would be better informed on the labor movement than he is now, and the methods of the employers that they have been using all these years. I would like to have you read the La Follette hearings.
Mr. Besse. I have read many of them, Congressman.
The Chairman. Wait until lie writes our bill.
Mr. Besse. Not the kind of knowledge that you are asking me about, that I have of my own personal knowledge. It is not the kind of knowledge that should be mentioned here because it is not firsthand knowledge. I have read several of the hearings, I am familiar with what has been said. I am speaking only of my own industry, with which I have not been connected except for the last 4 years.
Representative Schneider. Mr. Besse, you have stated that you are in favor of the minimum wage, and you are the head of your association, which includes practically all the plants in your industry. Do you think that those who are engaged in your industry could come to
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an agreement on a minimum wage, as to what it should be? Did you get an expression from those in your association?
Mr. Besse. Yes; I expressed myself in a hearing before you last month on that very point, but the minimum wage which we would be willing to reach by agreement would be affected by what other industries were doing.
Representative Schneider. So you could do that and you could let the committee have that information and the heads of all these other associations of industry could give an approximate idea of what they would agree to as a minimum wage, and putting them all together it would give the committee considerable information, would it not, that would be worthwhile?
Mr. Besse. Yes; I think it would, but I do not consider our industry is the limiting factor, because there are other industries who pay lower wages than we do, and what we are willing to pay depends in some measure on what other industries are willing to pay, or able to pay.
Representative Schneider. You would not be willing to pay as much as some of the other industries either, would you?
Mr. Besse. That is right.
Representative Schneider. We have got to consider a low level some place.
Mr. Besse. That is quite right.
Representative Schneider. That is the purpose of the work of this committee, just to do that. Now, if you would expect this committee to do that just how would they do it without your cooperation or some expression of opinion from your association?
Mr. Besse. I think it depends upon whether this committee is looking at it from the standpoint of an investigation to determine what is practical, or whether the committee is asking us to put in a specific minimum as respects our industry. I will be perfectly frank with you. If you say, “What do you think your industry might do? What do you know about other industries, if any?” I would say, “We are making a survey to determine what the conditions are.” If, however, you come to me and say, “What rate will you set for your industry? What will your industry, after consultation, accept as the rate which will apply to your industry starting October 1st?” I say to you, “Well, what are the others going to do?” naturally.
Representative Schneider. Now, if you will tell us just what you will do, and all the rest will tell us what they will do, we would have some valuable information.
Mr. Besse. I cannot tell you what we will do until we know what the general wage level is going to be in other industries.
Representative Schneider. Then, of course, with that kind of procedure, we will never arrive at any conclusion, because there would always be some who never would agree, no matter what information we had as to what other would do. Then we will have to be arbitrary about it and say to the fellow who pays as much as a $10 minimum, we would have to say arbitrarily that we will make it $14, $15, or $16.
Mr. Besse. If you ask me what wage we can afford, how do you know whether or not I am trading with you?
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Representative Schneider. Well, we would rely to a certain extent upon your industry.
Mr Besse. You might rely on an industry that is paving high wages, but you cannot rely on an industry that is paying low wages and wants to continue them. This is the very industry you want to reach.
Representative Schneider. Of course, if we cannot get any information from your industry----
Mr. Besse (interposing). I tried to make that distinctly clear. We are delighted to give any information about our industry and to advise this committee just as much as possible, so the committee would get the information on which to act. That is a different thing than asking the industry to agree in advance to a specific minimum wage.
Representative Schneider. It is a fact, however, that you generally use the figures of the Labor Department as the figures of your industry. Now, if you people are satisfied that we use the figures of the Labor Department in making up this bill, what is the use of an investigation? It is true that when you were before our committee, and now, that you used the figures of the Labor Department in presenting your case. Why should we go further, if you are satisfied that we use those figures?
Mr. Besse. I am perfectly satisfied to have you use those figures, if you know what they are. Those are figures on average wages. The Labor Department does not publish figures on minimum wages.
Representative Schneider. Because you object to it?
Mr. Besse. I do not object to it. He cooperated with the Labor Department, Bureau of the Census, for years, in the collection of statistics, and we have as complete statistics as any industry in the country.
Representative Schneider. Would you be in favor of the Labor Department publishing the figures that they got from your industry and presenting them to this committee?
Mr. Besse. I have no objection at all. I do not think the Labor Department would publish those figures in such a way as to show the identity of the individual producer.
Representative Schneider. They can; they have done it, but they have agreed not to give them.
Mr. Besse. They have an agreement with us not so to do.
Representative Schneider. I understand that. They are not accessible to the public, nor even to this committee, without breaching the confidence of the employers from whom they got them. You are satisfied always to get the figures from the Labor Department before this committee. If we can get no other figures we would be glad to use those figures.
Mr. Besse. I would be glad to give you the figures if they meant anything. Obviously you have got to have a number of people below a certain amount in order to determine the proper amount for the minimum wage. We may have, at the moment, a minimum wage of $12. for example, it may exist in 1 percent of the cases; or there may be just one man at that wage or there may be 50,000. I submitted figures at the Ellenbogen hearing last week which indicated, to the best of our knowledge, I believe, that 18 percent of our present
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employees were below the figure of $15. I can give you figures of that type; I would be delighted to give them to you.
Representative Connery. Had you concluded?
Mr. Besse. I gave you the conclusion. It was simply that I wanted a simpler bill, confining itself to the setting of a minimum wage and maximum hours.
Representative Connery. In other words, you are in favor of the principles of this bill, as far as minimum wages are concerned and maximum hours, but you do not like the manner in which the bill is drawn?
Mr. Besse. I particularly do not like the powers delegated to the Board in section 5, and the other powers which are obviously necessary to permit the Board to act under section 5, which are spread through the bill to the end.
Representative Connery. Knowing that you are sincere, I wanted to make it clear for the record that you are not coming here saying that you are against the minimum wages and against maximum hours.
Mr. Besse. I thank you, Mr. Chairman.
The Chairman. Mr. John P. Davis.
Mr. Davis. Mr. Chairman, I represent the National Negro Congress—a federation of some 600 organizations in 38 States. While fully endorsing the principle of minimum wages and shorter hours on which this bill is based, we wish seriously to object to certain sections of it which serve to defeat the expressed purposes of the bill.
Roughly, half a million Negro workers are employed in industries whose products flow in interstate commerce. They are the lowest-paid workers in America. They are the least-organized workers in America. These are the workers most responsible for the diversion of interstate commerce from areas where fair labor standards exist to areas of oppressive labor standards. If the stated objectives of this bill are to be achieved, then it is precisely this group of workers who must be assured the benefits of its operation. The bill as at present formulated is far from giving such assurance.
The experiences of the National Recovery Administration furnish the basis for this conclusion. I have had a deal of experience with the N. R. A. I have carefully studied its several hundred codes. 1 appeared at more than a hundred of its code hearings. I studied in the held, the effects of scores of these codes on Negro workers; and I wish now briefly to give to this committee the benefit of that experience.
In the period of N. R. A. code hearings Negro workers were helpless to defend themselves against demands made, especially by representatives of southern industry, for longer hours and lower wages for those occupations, industries, and geographical divisions of industries in which the predominant labor supply was Negro. Unorganized and without perceptible collective-bargaining power, the Negro worker was soon singled out by pressure groups of employers as the legitimate victim for all manner of various differentials. In some 670 N. R. A. codes four major types of differentials were created. The first was the occupational differential established in
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the cotton textile code. Outside crews and cleaners were first, denied the benefits of a minimum-wage or maximum-hours provision and later, after much pressure, granted a wage of $3 a week less than the $12 a week minimum wage for the South. This differential bore no relationship to previously existing wage scales for the industry between this group of workers and other textile workers. The only reason for it was that most of the workers in this occupation were Negro and were unorganized. The occupational differential was used as a device to discriminate against scores of thousands of Negro workers in some 60 industries.
The next type of differential adopted in N. R. A. codes was that of the geographical differential. The fallacious reasoning was that it cost less to live in the South. But an examination of N. R. A. codes reveals the blunt fact that this differential was used primarily to deny benefits of minimum wages to Negro workers. First of all the dividing line between the North and South varied from code to code depending on the geographical location of the industry and the number of Negro workers employed in any particular area. In the fertilizer industry 94 percent of the labor supply is Negro. The State of Delaware was defined in this code to be in the South, where it was said it cost less to live and where, therefore, lower wages could be paid. But in 669 other codes Delaware was said to be m the North and subject to higher wage minima.
In the laundry code pseudo economists of the N. R. A. divided the country into sections, using as a dividing line between two of these sections the ninety-sixth longitudinal meridian, so that in the little town of Buffalo, Tex., the wage provided for a worker on one side of the street was 20 cents an hour and on the other side of the street was 14 cents an hour—all in the holy name of cost of living. The geographical differentials established in practically every code bore ho relationship to economic conditions in industry, other than the relative predominance of unorganized Negro workers in the industry.
Still another popular device in many of these codes was a clause providing that workers receiving more than 30 cents an hour in the precode period should receive minimum wages of 40 cents an hour, while those doing the identical work in the identical section of the country who received less than 30 cents an hour should have their wage raised to 30 cents. It worked out this way: A white and a Negro worker would be doing the same job in the same plant. In precode days the Negro worker would be getting 25 cents an hour, the white worker 30 cents an hour. The white worker would have his pay raised to 40 cents an hour and the Negro worker would receive only 30 cents an hour. And this type of “economic grandfather clause” was allowed to find its way into scores of N. R. A. codes. And N. R. A. briefs still sought to support such differentials with the same old gag about differences in cost of living.
Finally the device of filtering into code provisions all manner of exemptions as to hours, overtime, apprenticeships, old or handicapped workers, furnished a fourth major means to discriminate against weak, unorganized Negro workers. By this final method— that of exemptions—-N. R. A. was able, at least on a small scale, to adopt differentials involving not a single white worker.
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I have mentioned these major discriminatory devices used by the N. R. A. because I wished to point out that the bill now under consideration makes possible even worse differential treatment of Negro workers. In fact, it is even, likely that employers will be permitted to recoup increases which they pay white workers by decreasing the already inadequate wage of their Negro employees. Let us now consider how this is so.
Part II, section 5, subsection (a), beginning on page 13, permits the Labor Standards Board created by the bill to fix minimum wages by occupations and not by industries. This is highly conducive to the establishment of occupational differentials. The Board is further directed to base its wage minima upon such factors as cost of living and the value of the service or class of service rendered. Here the floodgates are open for confusing standards of living with costs of living, for introducing such figments of employer imagination as those common in N. R. A. days which said, first, that it cost Negroes less to live, and, second, that Negro workers were less efficient. There is not a single thing in this part of the bill that will prevent the same type of ruthless exploitation of Negro workers which was their lot under the N. R. A.
Mr. Chairman, the so-called research of N. R. A. economists is notorious for its fallaciousness. I have seen studies where wages were sought to be established on the basis of the mesne temperatures in various sections of the country produced by the N. R. A. research staff. There is no guarantee in this bill that such ridiculous research will not again be used to starve Negro workers. In fact, it is doubtful if research will be used at all by the Board in yielding to the superior group pressure of employers of Negro labor.
What I have said about the minimum-wage provisions of the bill applies, of course, and with equal force to the methods established for arriving at a weekly and hourly maxima. Here, again, it is possible to single out the weakest groups of workers for the worst treatment.
Section 6 of the bill permits the Board widest latitude in effecting exemptions. It is clear that such exemption devices as those for handicapped workers, apprentices, will be used to discriminate against Negro workers as was done under N. R. A. But this bill goes even further—-it permits deductions from wages for food, lodging, and other facilities furnished by employers, thus permitting the employer to recoup any wage increase by simply raising the prices for these furnishings. Moreover, the section further empowers the Board to provide for suitable treatment of other cases or classes of cases which because of the nature and character of the employment justify special treatment. Now, this section may easily be interpreted to allow discrimination against Negro workers on fake grounds of lower efficiency and can be used in many ways to cover a multitude of sins.
This bill is supposed to be intended to help those workers whose lack of collective bargaining power renders them capable of exploitation by employers. As it stands it does no such thing. It places no fixed level below which the labor standards of workers may not go. It provides for all manner of exemptions through which hundreds of
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thousands of workers may be excluded from any meaningful improvement of their condition. Already limited to only those workers involved in the production of goods which flows in interstate commerce, the bill is subject to further and wholly unnecessary limitations in the treatment of workers who do produce such goods.
The economic crisis has not lifted for the Negro people. Because they are largely unskilled workers, reemployment for them has been slight. Negro domestic and agricultural laborers—representing the bulk of Negro labor—have had no benefits from the Social Security Act or other protective legislation. But prices have risen steadily. and this bill will make them rise some more—thus further lowering the meager purchasing power of the majority of Negro families. Relief appropriations have been drastically cut, promising even greater difficulties for the millions of unemployed, half-starved Negro workers. Negro people have shared hardly at all any benefits from faun tenancy or housing projects. And now comes this bill, promising further to debase the standards of living of half a million Negro workers.
In these facts there rests a warning. Poverty is a highly contagious disease. Once you permit employer-pressure groups to secure exemptions and differentials affecting half a million Negro workers, you will find that the very exploitative conditions you hope to cure by this bill will not be cured. Instead, the growing impoverishment of Negro workers will be the ugly cancer preventing the improvement of the lot of a much larger number of white workers.
It seems unnecessary to continue, discussing this bill. For it will be clear to anyone who knows the history of N. R. A. and who studies this bill that we are headed for the same type of confusion unless there is courage enough to really establish a minimum wage which is not subject to being whittled away by every high-pressure industrial lobby that comes to Washington. Section 5 of this bill should be drastically changed to provide for a fixed minimum wage of not less than 40 cents an hour and a fixed workweek of not more than 35 hours. The bill, rather than permitting differentials, should expressly declare as a part of its policy its opposition to any type of differential treatment so far as minimum wages are concerned. For it must be remembered that we are talking here not of an entire wage structure but only of the lowest level of that structure. Section 6 of the bill should be drastically changed.
We would suggest the requirement that each individual worker for whom an exemption is sought on the ground that he is an apprentice or a handicapped worker should be registered, so that employers would be prevented from playing a fraud on the law by substituting workers in this category from time to time. As the bill now stands, an employer can hire an apprentice, work him a stated period, fire him, and then hire him again as an apprentice. Protection against such a practice ought to be written in the bill. Also the number of such workers ought to be limited in the bill to less than 5 percent and the length of apprenticeships ought to be limited to not more than 12 weeks.
We further urge that no such latitude be given the Board as is provided on page 19, lines 20 through 23, which reads:
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(5) suitable treatment of other cases or classes of cases, which because of the .nature and character of the employment, justify special treatment.
This catch-all section ought to be completely left out of the bill.
That completes the statement.
Representative Dunn. May I ask a question, Mr. Chairman?
The Chairman. Yes.
Representative Dunn. I want to say to the gentleman that I know the Negroes do not have a square deal. For example, take the steel plant in Pittsburgh, and the mines out through that section there, how could this Board discriminate against them? Suppose the Board set a minimum wage for unskilled labor, there are 400 Negroes working in that mill and probably, say, 2,000 white people unskilled, and the minimum wage would be $20 a week, how would the Negro be discriminated against by the Board ?
Mr. Davis. You referred. Congressman Dunn, to the steel industry, and to the Jones-Laughlin plant. Now, that the workers have collective bargaining, with Negro members in the union, collective bargaining will take care of the wage scales, without the aid of legislation. The organized workers will see to that.
But in the N. R. A. code, in the steel industry, you had precisely this situation: Some 81 percent of the workers in the steel industry in Jefferson County, Ala., are Negro, and the percentages are rapidly decreasing as you go further north. If you study the steel code which was adopted and which was in force during the N. R. A., you will see that a wage differential was directed against Jefferson County, Ala. They had some 12 or 16 of such geographical divisions graded precisely on the basis of the number of Negro workers in the several areas.
Representative Dunn. I understood you to say that, in fact, you did not make any allowances for any part of the United States. You said the N. R. A. was more of a disadvantage to the Negroes than a benefit, and yet I know personally Negroes that it helped considerably. You have in cities right here in Washington and New York and Philadelphia where they work for $7 a week, 12 and 14 hours. I maintain if that is true they are benefitted. However, I will not prolong the argument. You only take one section of the country in saying that the Negroes were not given a square deal. That was not true all over the United States.
Mr. Davis. I want to answer the question as briefly as possible, because you want to go to lunch. A brief answer to your analysis is simply this, that if you will study the effect of the N. R. A., and all of the types of differentials which it created, together with the increase in prices which it naturally caused, upon the Negro workers throughout the country, you will inescapably come to the conclusion that it was a detriment to Negro workers precisely because of the type of exemptions which you are permitting in this bill at the present time.
Senator Holt. Is it not true that differentials have always proved injurious to Negro labor, such as set up in this bill?
Mr. Davis. Yes.
Senator Hour. That is all.
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The Chairman. The committee will recess until 2 o’clock.
(Whereupon, at the hour of 1:15 p. m., the committee recessed, until 2 p. m. of the same day.)
(The hearing was resumed at 2:05 p. m. pursuant to taking of recess.)
The Chairman. Mr. Constantine, will you come forward please!
The Chairman. You are the National Association of Hosiery Manufacturers’ representative?
Mr. Constantine. That is right.
The Chairman. We will be glad to hear any statement you have to make on the bill.
Mr. Constantine. Mr. Chairman and gentlemen, if it meets with the pleasure of the committee, I should like to have the privilege of presenting my views in an extended statement, somewhat impromptu from notes, after which I shall be more than happy to submit myself to any questions on any aspects of it. I think it will give me a continuity of approach which perhaps might be helpful.
First, in speaking for the hosiery industry, I have the privilege of speaking for an industry whose record in the last 5 years, beyond dispute from any angle, either from the Government or from labor circles, has been a very broad attitude on the so-called New Deal legislation that affects the industrial problems of the day. I may say, and I am sorry that one of the members of the committee is not present, that ours was one of those industries which in drafting its code, invited its “partner” to sit with it. Jointly labor and management drafted the code to which they both subscribed. I may say that after the code had reached its final hearing, that it was on the motion of management, and to the surprise of labor, that our industry insisted that labor should not only have a place on its code authority, but should have a place with vote, and should take its proportionate share of responsibility in administering that code and in making it function. And I may add that it was administered in that fashion for 2 years without one single criticism emanating from the labor organs in the industry or from any labor leader in our industry.
Our industry has been attempting for the last 5 years to do something that I hope all industries will do rapidly in the years to come, and that is trying to do an industry-wide planning job. And one indication of our efforts along that line is that, as far back as last November, we announced an industry-wide conference to be held in New York in the middle of February, or a reasonable time after the opening of the present session of Congress, for the purpose of deliberating and setting out broad lines of policies, arrived at after ample discussion, relating to labor legislation, with the understanding that whatever decisions or policies might be adopted by that conference, executive in character and very largely and representatively
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attended, would be the guide posts which I and other agents of the industry would have to follow in appearing before this or any other committee on legislation of this character.
And I am happy to say that at that conference, with unanimity, management in the hosiery industry went on record as favoring reasonable and practical Federal legislation for minimum wages and maximum hours, administered by the Federal Government as it would administer any other law which it had made the law of the land.
So my appearance here today is in behalf of a major textile industry which is sympathetic with the objectives behind this act. And if it offers any criticisms, they are meant to be distinctly helpful and constructive criticisms and not meant to be the reverse. I am not going to touch upon the legal aspects that might be involved in this ill. I am perfectly willing to assume that it can stand the test of legality.
I would like to point out that it does not attempt to set up a code of standards, but that it does, as we must all admit, delegate very substantial powers over hours and over wages (with its flexible provisions) into the hands of an administrative body. I am going to say one more thing, that while the resolution of the industry in February was to the effect that it favored Federal legislation, reasonable and practical in character, governing minimum wages and maximum hours, administered by the Federal Government (and that might imply merely the setting of a blanket minimum of wages for all of industry and a blanket maximum of hours for all of industry), that I do not believe that that is the real attitude of the industry nor that that is the implication to be taken out of that action or our industry. I believe that our industry realizes that to set merely one minimum and one maximum for all industry would be equivalent somewhat to deciding that a size 9 shoe is the shoe that should fit all persons in society. And naturally, if you do that, you would have many people whose feet would be floundering around in a big shoe and many more whose feet would not enter the shoe.
Representative Griswold. Will you repeat what you said there? I did not quite catch it.
Mr. Constantine. I said, that the action that was taken by the industry in February is not interpreted by me, and I say that advisedly, as meaning that our decision is merely that we favor legislation that sets a blanket minimum on wages and a blanket maximum on hours and abolishes child labor. I am sure, that there is implied in the action of our industry a recognition of the fact that such legislation merely setting a floor on wages and a ceiling on hours, would be equivalent to deciding that a size 9 shoe should fit all persons in society, whereas, as a matter of fact, a size 9 shoe might fit a few, might be too large for some and be too small for the others. If that type of job is not a sound job, attempting to put one minimum and one maximum respectively, on wages and on hours for all industry, then it is inescapable that you must move in the direction of having some kind of a governmental administrative agency which shall take each industry, one at a time, study its needs and requirements, and
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set for that industry those minima and those maxima which apply to the industry and which will produce the objectives of the law, without at the same time injuring the industry unduly.
I would like to stress one thought which has been brought out by one or two witnesses today, and I understand in previous days, namely, that we believe with others that we are not today in the same position that we were in 1933. And when you are discussing hours-and-wage legislation, you are not dealing with an acute emergency condition, which all of us must admit existed in 1933. I have said before, and I repeat now, that in our own industry, we discovered in 1933, when we were searching for facts for our code, that we found instances where “unsocial” hours and wages could hardly describe the conditions, conditions surprisingly bad. Those conditions no longer exist in our industry. 1 believe that that is true of most industries. I know that our code, which limited weekly shifts, not only to 40 hours, but confined them to the 5 days of Monday to Friday inclusive, creating thereby a 2-day week end, that that setup which was in effect under the code for 2 years, has remained unbroken in the industry ever since. I do not know of one single plant in our industry today which is conducting any productive operations on Saturday. All of our operations are confined to the days of Monday to Friday, inclusive.
If no emergency exists, and I believe that to be the fact, in the interest of once and for all times enacting legislation that will deal with hours and wages in a manner that will prevent unsocial hours and wages, it seems to me that all of the facts argue toward proceeding as cautiously and carefully as possible, so that when we do legislate this time, we will know that we have permanent legislation under which industry, when once adjusted, can carry on without the danger of having to reopen the general issue within a year or two, reexamine the structure, and proceed from there after another period of uncertainty.
I am not here alone, I have five or six leading manufacturers of our industry sitting in this room behind me. They know what I am saying, they have had a part in fashioning the facts which I am presenting, they subscribe to what I say. We are anxious to see this legislation done so well at this time that an industry which has suffered one uncertainty after another, beginning with 1929, first the uncertainties of depression and then the uncertainties of legislation or threatened legislation, may settle down to the rules of the game and proceed to do a job for management, for labor, and for the public whom we serve with a necessity. And I leave it, of course, to the judgment of the committee, as to whether an act of this importance, sweeping in character, which will leave its stamp upon industry, can be dealt with properly at this late hour in this session without the serious risk of doing something which will require major tampering or tinkering before another year or two goes by. It is my deliberate opinion, based not only on having been the chairman of the committee that drafted our code, but also the person who was the executive administrator of the code for 2 years, that the latitudes which are given the proposed administrative body,
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and which carry with them inescapable responsibilities which must be discharged by the board if it is to do all that it is intended to do, carry a load of administrative duties which will so overload the board that it might crack and fall under its weight. We may find ourselves driven back here in the period of a year or two to go over this same issue again in the light of unfortunate experience.
I, therefore, urge, in the interest of safe and sure steps for social betterment, that the measure be simplified as much as possible. I am in entire sympathy with what has been said this morning by Mr. Besse, although I have not discussed his views on section 5, that in section 5 is to be found that element of extra load which is likely to break its back. For section 5, in essence, is wage-fixing. Section 5 is something more than setting floors on wages or ceilings on hours. Section 5 opens the door wide for discretionary powers of setting fair wages. I am entirely in sympathy with what Mr. Besse said, that while minimum wages do not, and I believe cannot, become average wages—and 2 years under codes should demonstrate that with finality requiring no guessing about it—that if you set fair wages they do run a serious risk of becoming the average wages.
I find myself in agreement with Mr. Lewis as regards section 5. I believe it is the weak point in a good effort. I am afraid it is the point at which you will overload your board, and it will not be able to function, and I say that advisedly.
I can tell you of our experiences in managing our code. I remember one stretch where the members of our code authority and myself averaged from 9 in the morning until 2 and 8 o’clock the next morning for over 2 weeks on one problem alone that came up during the administration of our code. We went to bed a block away in a motel and were glad to grab from 5 to 6 hours of rest and go back, tired men, to tackle the same problem. Now, multiply that. We were dealing only with one industry, one textile industry. To be sure, not a small one, but compared to the total of industry, a drop in the bucket, employing as we do about 150,000 today. About 800 plants in 32 States.
If that was the task that fell on an administrative body dealing with one industry alone, multiply that as you would have to to the nth degree when you come to cover as wide a scope as this measure necessarily must cover.
And so I say that we are not in an emergency which presses for overnight action. This is supported by the fact that industry generally has maintained the maximum of 40 hours and generally has not lowered wages. I think that we have a few instances scattered in our industry where wages have been lowered, but they are more striking by the fact that they are exceptions rather than otherwise. When the gentleman to whom I just referred—Mr. Lewis—states that at last he sees a glimmer of sunlight to millions of submerged workers who now live in economic darkness and despair, I find it a little bit difficult to visualize that condition as a condition that is wide enough or large enough in size to justify that general description.
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Now, I am going to deal, if I may, gentlemen, on two or three provisions of this bill. I think we can agree that if no emergency exists now, and if our minds are all open, that an improved measure a few weeks from now, a few months from now, if necessary, is far more to be desired than a faulty measure adopted too quickly. I believe this proposal is faulty from one standpoint. It imposes an almost impossible burden on your board. I am afraid it will crack under the load. If it should find it impossible to discharge its responsibilities, you will have one resultant which is always unfortunate—too small a degree of enforcement; too large a degree of delay in applying the act here and there, all of which 1 think would be confusing, and hurtful to your objective.
Now, in section 2 of the act where the definitions occur, there is a blank space to define an “oppressive wage.” I have heard various wages suggested for that definition in terms of cents, as I recall. I believe with some of the witnesses that, it would be the height of wisdom to set these limits on wages and on hours at points which would disturb the present set-up in industry the least possible, and which will allow industry to get into gear with the act with the least possible disturbance. Bear in mind that I subscribe to the idea of an administrative board, and to the powers given to the board under section 4 to allow it to cite an industry for hearing, to find out the facts of that industry, and to fit the hours and wages that belong to that industry in the light of fact.
We had under our code—and it is in effect generally today with only few exceptions—a minimum of $12 in the South and $13 in the North. I should like to tell the committee, or remind it in case it knows it, that our code was one of the very few codes which provided more than simply one minimum for the industry. We provided in our code for a classification of our workers above that point into several classifications of skill, and we gave each classification of skill a minimum of its own, on the theory that if you are building a ship which you want to float and which runs the risk of occasionally foundering on a rock, that you do not want the water, if it enters at any point, to sink the ship. So you divide the hold into a series of compartments, and if the leak occurs in one it does not spread through the rest of the hold and sink the ship. In other words, it was an effort to protect against an improper moving down of the higher rates to compensate for any of the increased labor costs resulting from the setting of a minimum wage. We protected each classification of skill with a minimum of its own. While we had a minimum of $12 in the South and $13 in the North, I believe that our industry would be willing on a 40-hour basis to accept right at the outset a 35-cent hourly minimum wage in the definition of “oppressive wage”, which would mean an increase from the $12 to $14 for a week of 40 hours.
I agree with some things which have been said here to the effect that in setting the minimum, if you are not careful and if you try to do the idealistic thing and move it too far up, that you will bring about a condition where many persons who have been in industry for many years and have acquired some skill of one kind or another will lose their employment, because economically they cannot produce
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enough to justify the minimum which you set. I am inclined to believe that a 35-cent minimum on a 40-hour basis fully compensates, and I think the Government figures will support this for any increases in the cost of living which have taken place m the last 2 or 3 years.
Now, on the definition of “oppressive workweek”, our industry is operating on a 40-hour basis. Like most industries or many industries, it was operating on an average of 55 hours in the summer of 1933. It took a reduction from 55 hours down to 40 hours per shift. However, there is one condition which was true in our industry and which I know was true in many other industries. We were an industry which to a great extent was operating one shift only. When that one shift was cut down from 55 hours to 40 hours it was replaced by two shifts of 40, making a total production week of 80 hours against 55.
Now, it gave added employment, naturally. The minute that we moved from one shift to two shifts, wherever that happened, it spread employment. It, however, brought with it serious problems of overcapacity and overproduction, resulting in the maintaining of a very weak price structure, which leaves the industry sadly unprofitable today. And, in that fact, labor has just as much concern as management does, and I think that labor in our industry realizes that fact.
Our major industry-wide problem today is our overcapacity to produce. Now, if the industry has moved very generally from one shift operations to two, as the result of the N. R. A., a cutting down of the hours of each of those two shifts cannot produce any more increased employment to speak of. I grant you that you can carry shift lengths down to such a low number of hours that they will drive the industry into three shifts. You can do that, but the minute that you do, you only accentuate the problem of overproduction. You further emphasize the rising cost of the product, and you do not get anywhere for very long. In other words, at a certain point in reducing hours you go smack up against the rule of diminishing returns, and I believe that you are at that point today. I will grant that perhaps our industry within the last year averaged according to Government statistics 38.9 hours per week—call it 39 hours—call it 1 hour less than 40—they might be able to operate with 38 hours or perhaps as low as 36 hours, but I insist that even if you go down to 36 hours, operating on two shifts now quite generally as against one shift previously, you would not accomplish the objective of increasing employment.
And while on that point, may I give figures which I present as evidence that the N. R. A. objective of spreading employment was accomplished in a most satisfactory degree in the industry which I am representing here. These are the facts. In 1929—that is in the heydey of the twenties—our industry was employing 127,000 workers. In 1933, as the result primarily I would say, of longer and longer hours being put into effect on the single shift, which was quite general in the industry, employment had shrunken to 118,000. Under the code it increased from 118,000 to 137,000. Since the code, which is a matter of 2 years, it has further increased to 146,000.
If you ask me the answer for the increase in the last 2 years, I think that the statistics on production or consumption of hosiery
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gives you the only answer. There has been a very material increase in the consumption of the units of hosiery during the last 2 years, indeed, a surprising increase even to those of us who are close to the picture.
Just as a sample of that, the largest item in hosiery is ladies’ silk hosiery. It is not only the largest because, let us say, there are more women in the country but because they consume more hosiery than men do. More and more their requirements have been for more and more deliciate product, sheerer goods, and, of course, the lighter and the sheerer the product is the less life it has, and the turnover ratio has increased. Beginning back in 1927 or 1928, and running through 1934, annual shipments showed almost a constant of 31,000,000 dozen pairs of ladies’ full-fashioned silk hosiery. In 1935 they took a jump to about 34,000,000, which in terms of percentage is quite substantial. And in 1936, to our great surprise, they jumped again from 34,000,000 dozens of pairs to about 37,500,000 dozen pairs. And not in the same ratio, but in varying ratios, there has been a material increase in shipments of the other types of hosiery in the last 2 years, which accounts for the increase from 137,000 workers under the code to 146,000 workers today.
Now, it is my deliberate judgment that we have reached about the end of this climb of consumption in units. If there is any more of it, if any more is to come, it will not be substantial and it will not materially affect the picture. I believe that we have gone, for several years to come at least, to about the possible peak of employment for our industry. And I may say that in that increase from 1933 to 1937 to 36,000 additional employees in 3 years we have absorbed all of the available skilled help for our industry—in fact, we have had to do an awful lot of training of help in order to carry on. I think we have reached about the top of the hill. That is my own opinion.
I believe it would be very unwise for Congress to define at this time as an “oppressive workweek” a workweek of less than 40 hours. I am perfectly willing for our industry, in hearings before the administrative board, to have the Board raise the question as to whether or not our industry can operate on lesser hours, and I am perfectly willing to go and argue the case intelligently and factually with the Board and let the facts govern the decision. If they find that the industry can serve the public needs, without unduly burdening the public on the price end, with something less than 40 hours, we will take it like good soldiers. But on the theory that you can destroy opposition and from a positive standpoint, you can build favorable reception for your proposal by not making your definitions of “oppressive wage” and “oppressive workweek” too onerous in section 2, I urge the committee to give consideration to a 40-hour week, not less, and to 35 cents, which is an increase in the minimum wage for most industries on a 40-hour basis from $12 to $14. I believe that you will get favorable reaction, and I think that by the latitudes and flexibilities that are provided under section 4 you can go on from there; and put the issue to each industry without very much disturbance to industry generally.
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I have a note here which, frankly, I think I shall pass by. To be frank with the committee, I noted down the fact that the President' in appointing the personnel shall consider industrial and geographical factors in selecting the personnel of the Board. I assume that the word “geographical” has a slight political tinge to it, and it logically occurred to me that perhaps you might consider a safeguard, as was true with the Federal Trade Commission Act and other acts, providing that all of them shall not be Baptists or all of them shall not be Democrats, but it should have some bipartisan or multipartisan complexion. But I am willing to waive that. We will take our chances with a board, no matter how constituted, and I think the result would be that any board vested with heavy responsibilities, no matter what individual personalities or approaches might be, would within a reasonable time acquire a judicial approach to this problem, and, as its responsibilities get more and more fastened upon it, would take pride in doing a sound job.
In passing, I may say I think there is much wisdom in that provision in this act which does not allow any provisions or orders relating to hours and wages to go into effect short of the passage of 120 days. That seems to me very wise. It gives your administrative body an opportunity to become organized, to select intelligent and able personnel, to work out the innumerable rules of procedure and action, and what not, so that it shall be a functioning body before it starts to do business. I think that many of the troubles that we had under N. R. A. were due to the fact that thousands of men and women were hastily brought together here, with huge responsibilities, and with no common denominator. We had to deal with that kind of a situation.
I may say that within the 2 years of administration of the hosiery code we had exactly 12 changes in the N. R. A. administrators with whom we had to deal. We had 13 administrators in 2 years’ time. That is, I think, the way part of my hair turned gray. [Laughter.]
I could tell you more about the N. R. A., but I would tell it confidentially. The man who served the longest as our administrator served for 8 months. He had finished his junior year in college, and his professor had told him that he thought that he would get a better course in economics in 1 year in the N. R. A. than he would in a senior course in the university, and he brought him here to Washington and put him in charge oi our code. He was deputy administrator of our code. He was a fine fellow; I liked him.
The only thing wrong about him was that, he was green. I mean that he had had no opportunity to acquire a sense of proportion, a sense of everything else that comes from experience alone. A fine chap, but it was a crime to throw such a responsibility on a man of that young age, and equally a crime to impose that type of administration on an industry of our proportions, or any other industry, for that matter.
Now, one effect that would result from setting your “oppressive wage” definition too high or your “oppressive workweek” definition too low, of course, would be an effect on prices. I received this morning a memorandum by a very good friend of mine, one of the finest, employers in this-industry, written in longhand, and I thought I would like to read it, because it is so homely and presents such simple economics. He says that there is a balance, or an equilibrium,
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between the cost of production and the volume of consumption. That makes sense to me. He says that there is a happy medium of cost and price at which goods move most freely in trade. Employment depends upon each of those. The more units you sell, the more employment hours you work. The lower the cost, the lower the price. The more you sell, the greater the employment. He says that high costs reduce sales, and employment goes on part time, say 2 or 3 or 4 days a week instead of the possible 5 days a week.
Representative Thomas. Let me interrupt you right there, if I may. Why does high cost reduce sales, and generally that is true, but why does it do it?
Mr. Constantine. Well, because you are dealing here with----
Representative Thomas (interposing). The answer is quite simple, isn’t it? Because people do not have the purchasing power.
Mr. Constantine. The effect of higher wages for a limited portion of the population without any commensurate or similar increased earnings for the balance of the population which must buy your product.
We find, too, that already with the shortened hours in effect in industry, a very large number of workers are not wasting their free time from the middle of the afternoon on, or their Saturdays, but in a surprising number of ways and to a surprising degree are supplementing their earnings from the industry where they work, by entering into different types of businesses as side lines. We know of instances of workers, knitters, and others in our industry operating and opening up gasoline stations—operating their places in the afternoon and evening and having someone work for them in the morning, doing extra work in the peak hours of restaurants and occupations of that kind. To the extent that that thing develops, and there is evidence enough of it now, to that extent it must create a certain amount of displacements.
I only mention that as a curious resultant which I know I did not anticipate, and of which I find reports coming from various sections of our industry.
In section 4, labor standard orders are discussed, and again later in section 12 (8). I would just like to read section 12 (8):
That a labor standard order may modify, extend, or rescind at any time, in the light of the circumstances then prevailing, a labor standard order previously made.
I believe that that is unfortunate. I believe it will create the very type of uncertainties and confusion which I take it the proponents would like to avoid. I believe that there should be some provision in the act which shall provide that labor orders issued after that first 120-day time lapse has gone by, shall not go into effect short of 60 days. Give an industry a reasonable length of time within which to adjust itself to the effect of the new order.
I want you to realize that we do not have, generally speaking, today the character of prebuying that we used to have 25 or 30 years ago. I remember, and you remember, that 25 or 30 years ago—take shoes, for instance—the representative of a shoe factory would go out to some western city twice a year, display his samples, and sell the need of the retail store for 6 'months to come. Today the manufacturer is warehousing for the retailer. Spot deliveries are a common thing. Orders are small in amount but many in
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number. And in some products like ours, where the style factor comes in, and I am speaking now of the ladies’ full-fashioned hosiery which is the biggest item that we make, that product 20 years ago could better be described as a piece of clothing or coverage for the leg and foot. But it is no longer that. We have become part of the stylish apparel of the women. Twenty years ago a very large amount or that hosiery was manufactured out or predyed yarns, giving us what we call ingrained hosiery. Today I do not suppose that there is 1 percent of the production which is made of predyed yarns. That 1 percent is high. There are only three or four plants that indulge in it, and the amount that they produce is insignificant.
All of these goods are made in the gray. Most of it, I am happy to say, to the order of the buyer, with some of it as a protection on the part of the manufacturer to meet the unforeseen demand. But even so, the buyer orders his volume, but he reserves the important factor of what we call the details, which means the specifications on colors. He will hold off on his color details until he sees what the trend of the color demand is in the market, and then usually very late he comes in with his details on colors, and the manufacturer is compelled to work like nobody’s business to get the delivery in on time.
Now, with that type of thing, I want to point out this, that we have to foresee our costs for a considerable period of time ahead. I would say that 90 days is really an essential prevision of cost in order to be able to soundly price your product and be able to deliver it without going into the bankruptcy court.
So I urge from that, standpoint, as well as from the standpoint of readjustment, that Board orders should not be effective for at least 60 days after issued, giving the industry a reasonable time to adjust itself to the order.
Furthermore, as a corallary to that, an order on wages or hours having been issued, and having gone into effect 60 days after issuance, should have a guaranteed minimum life. An order should have a life, let us say, of a year. Nothing is going to happen socially revolutionary in character, in 1 year? time to require a more frequent dealing with a thing so fundamental in the cost of production.
Representative Thomas. Suppose the Board set a wage that was too high for you. Do you contend under those circumstances that the Board should force you to continue to pay that too-high wage for a year before you change the order?
Mr. Constantine. Yes. I would rather take that risk rather than the risk of a constant knife hanging over you, a knife of uncertainty, one that you do not know when or how soon it will be reopened and what character it will take. In the interest of giving industry some feeling of settled conditions, when you issue an order it should have a minimum life of say a year. If you will do that, you will assure a careful deliberation and the smartest job that the Board knows how to do, because once having taken ate action, it itself is bound by it for a reasonable period of time.
And so I would very strongly urge that the orders by the Board shall have a stated minimum life, and I suggest for your consideration a life of 1 year.
I have already touched upon section 5. I only want to emphasize our position on that. I consider it the most unfortunate provision
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from the standpoint of those who are most friendly to the objectives of the act. I believe that there is where you overload your Board. I again repeat that the “fair wage”, as Mr. Besse said this morning, runs the risk of becoming the average or the maximum. This is a quite different thing from what would happen to the minimum wages which would be set under section 4.
The Chairman. Mr. Constantine, we said that we would not interrupt you while you were talking. We have other witnesses and cannot take too much time.
Mr. Constantine. I will be through very briefly.
Mr. Chairman. I want to make this particular inquiry of you as to that section, because it is of vital importance, and I make it to you as one who is manifestly a friend to the efforts that are being made. Are you a lawyer?
Mr. Constantine. No; I am, unfortunately, not a lawyer.
The Chairman. Well, it may not be so unfortunate. [Laughter.]
Mr. Constantine. I am a layman.
The Chairman. When the minimum-wage law was stricken down by the Supreme Court originally, the chief argument made by the Court was that there was no effort to fix the fair value of the services. The argument was made with great force by the judges who struck down the minimum-wage law Shat because it simply fixed an arbitrary wage—they called it arbitrary because it was fixed in the bill— that this was a violation of the Constitution.
Now, when the minimum-wage law was sustained, it was sustained with provisions which are practically identical with those which appear in section 5, and it was sustained by the Court chiefly on the argument that it did not set an arbitrary minimum wage by law. but that on the contrary it provided that it must be for the fair and reasonable value of the services, after a hearing by the Board, and the law which was sustained contained the identical provision as in this bill, that the Board would consider the same facts that would be given in a court where a suit was filed on a contract without any agreement as to wages. What is known in law as a quantum meruit.
Now, under that quantum meruit, you can consider the value of the wages in that community. You can consider the value of the wages as fixed by bargaining or in other ways, but under no circumstances will a court give a verdict for more than what is the fair value of the services considering the type of services at the time and at the place where the services were performed.
And, being friendly to the bill, I want to call your attention to the fact that in discussing that feature, that if we should write a minimum wage into the law by act of Congress, we would go directly into the teeth not only of the original minimum-wage case, but in the teeth of the very excellent opinion written by Chief Justice Hughes, in which he gave as one of the chief grounds for sustaining the minimum-wage law of New York that the New York bill had departed from the old method of fixing an arbitrary standard and had said that the Board should fix upon the basis of the value of the services at the time and place.
That, of course, causes us to be confronted, as you can readily see, by a question of law in connection with attempting to write into the bill an arbitrary minimum wage. If, for instance, the Court should follow its old opinion, or even if it should go along with the argument that it used to sustain the New York Minimum Wage case,
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and we did write a minimum wage into the law, the chances are overwhelmingly, according to the opinions of the lawyers who have testified here and those of us who nave studied the cases, that the great probability is that we would have no minimum wage at all. I wanted to call your attention to that in connection with your discussion of the bill and show you the difficulty of writing a bill.
Mr. Constantine. May I ask a question for my own enlightenment?
The Chairman. Yes.
Mr. Constantine. Under section 4, you provide for minimum wages and maximum hours, and latitudes are extended to the administrative board to vary from the definitions under section 2, isn’t that right?
The Chairman. Under section 4, I would not say so. I do not believe that it would meet the Supreme Court opinion. I am saying this to you for this reason: I recognize from your evidence that you are genuinely in sympathy with this law. Of course, we do know that there are many who are against the law and who would like to 9ee it passed in such form as would not stand up in the courts. We know that, and we know that some of them will likely make efforts to see that it is written in such form that it would not stand the test of the courts, but under those decisions and under the statement given by Mr. Jackson, was given a careful study, and those of us who nave read those cases, we nave written into this bill practically the identical standards that are in the minimum wage law of New York which the Court did sustain, but on the ground that it did take care of differences in conditions and was not therefore arbitrary on the part of the legislators, and did not therefore take away from him a man’s property simply by legislative fiat.
I am not saying that that is the view that I had of a proper interpretation of the Constitution. I do not entertain it, but I am saying that that is the situation with reference to the legal phases and with reference to setting the standards in the bill which we have.
Representative Griswold. Will the Senator yield there for a minute?
The Chairman. Certainly.
Representative Griswold. In relation to these cases, as I recall the N. R. A. case, Justice Cardozo in his opinion said that that was delegation run riot.
The Chairman. That is correct.
Representative Griswold. And I personally reading the provisions of this and the delegation in the N. R. A. in section 5, it seems to me from my personal viewpoint, that this is even more riotous than the other, if possible.
The Chairman. Of course, I do not want to get into any discussion. It may be more riotous, but the Supreme Court did not so hold. The Supreme Court of the United States has held----
Representative Griswold. The Supreme Court has not had this up before it yet.
The Chairman. The Supreme Court has held that in this particular language, a minimum-wage law was valid. So far as the other feature is concerned of the delegation of power, it happens
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that I made that discussion on the Senate floor when the N. R. A. was up.
Representative Griswold. I made it also in the House.
The Chairman. And I voted against it as one of the reasons. But this is written in the form which has been sustained by the Supreme Court. The point that I was getting at was this: I am sure that you would want the committee in attempting to draft legislation, to draft it or try to draft legislation which was in conformity with the Court’s opinion?
Mr. Constantine. Yes; and may a witness, not trying to become a quizzer, because that is not the proper role for a witness, ask this question? Is it the opinion of the chairman that this act, if operated upon in the manner of removing section 5 would be unconstitutional and such removal therefore would destroy the whole effort?
The Chairman. I have no hesitation in saying that if we do not provide standards such as this, that the Supreme Court has indicated—not only has it indicated, but has said that we would not meet the test of the courts. I personally have always preferred having the least possible delegation of legislative power. No legislative power, but only that which can be fixed within limits. The Court has said that certain things can be done. I am not talking about this particular bill, but I am calling your attention to the fact that unless we do have some standards, such as they have fixed as right and within the power of Congress so that conditions can be taken into consideration at the locality and the time and the place that the Court has said, that the law would not stand.
Mr. Constantine. Am I correct, in differentiating between section 4 and section 5, that powers to fix minimum wages are delegated under section 4, which is one thing, while powers to fix wages are delegated under section 5, which is quite a different thing?
The Chairman. I do not so consider it. Of course, you understand, Mr. Constantine, that the committee will go over this matter very carefully and we are anxious to have the opinions of all.
Mr. Constantine. Certainly. Upon reading it, and I have read it times unknown and have had difficulty in reaching a conclusion. I have finally reached the conclusion that there is a very fundamental difference between the duties and the powers delegated under section 4 and the duties and the powers delegated under section 5, and that under section 5 you really go into the zone of wage making, which is certainly something quite different from placing a floor on wages. I can understand very well why labor, for instance, or some of the leaders in the ranks of labor, hate to see the bill go that far, because they think that it is a province which they ought to be able to explore by the use of their powers of collective bargaining. When you vest in a body of five powers over the wages of a thousand industries, with all of the complexities that go with the wage structure of any one industry, and give it the power to fix what are called fair wages, which in a sense are fixed wages, you run the risk of having misfits in wages, and you run the risk also, from the social angle, that such wages not only might become average but maximums, which I believe they will become.
I therefore am hoping, as a friendly witness, that the committee, without our going further into the legal aspect, will give further
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very serious thought to it. I am sure that you have given it plenty of thought. If the bill can stand the test of the courts without section 5, then by all means let us have it that way. Let us go along with section 4, and let us make a big step forward. “Sufficient unto the day let the progress be.”
If we find after we have gone along with section 4 that it fails to accomplish the objectives, and that it is desirable to go into the provisions of section 5, then let us do it in good time with a background of experience, with more time to deliberate over it. I think that you would find a mass of opposition, whether expressed or not, vanish like thin air if section 5 could be taken out of the bill, as- assuming that that will not put the bill beyond the pale of the law.
Representative Thomas. Will the Senator yield!
The Chairman. Yes.
Representative Thomas. Mr. Constantine, I think that your analysis of sections 4 and 5 is eminently correct, but you will recall section 5 merely delegates to the Board authority to set wages within certain limits, and beyond those limits the Board cannot go. It seems to me that section 5 is more or less a corrolary of section 4 in the sense that since the Supreme Court has held that any minimum wage must be fixed upon fair values, then section 5 merely goes one step further and says that in our investigation we may find many jobs in many businesses which are paying less than the minimum wage and not a fair wage, and therefore we set that fair wage until we reach a figure not to exceed $1,200, and then when we have reached that figure, we will turn it back over to the labor unions to arrive at their own figure of wages through collective bargaining. That is the step, it is that second step that you object to.
Mr. Constantine. Yes, sir.
Representative Thomas. You do not mind seeing the Board set the minimum figure?
Mr. Constantine. Not at all. I think it would strengthen the act, and I think you could always come back to bat on a provision like section 5 if you find that you do not accomplish substantially your objectives by the administration of section 4. The dropping of section 5 would sweep away so much of the demand on the time and on the efforts of your Board, that, in my opinion, it would be able within a reasonable time to do such a fine job under section 4 that it could move from there forward into better things. But if you load it with section 5, I think you give it an almost superhuman and impossible volume of tasks. I say that advisedly, deliberately, and based primarily on the experiences that I had in administering a code for one industry alone. It is a back-breaking job, and I am afraid that section 5 is where the camel’s back would break.
Now, as to section 6. No one wants to appear as the enemy of the incubator, the enemy of the nursery, the enemy of the small manufacturer or employer, but, in behalf of our industry, I would like to urge a protest and an argument against the exemption of any employers from the act by virtue of the size of the employment which they give. I would like to give some reasons for urging that. And this is not said as a friend of the big manufacturer as against the small manufacturer. We have both. We have some small manufacturers; we have more small manufacturers than we have big
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[PAGE 590]
ones. We are not a highly integrated industry. Eighty new plants have been started up in our industry in the last 2 years—since the N. R. A.—80 new plants. We are an industry of lots of small plants, but going back again to the experience of administering the Hosiery Code, I found among other things that size, by its very nature, draws the spotlight, and the managers of big plants, not because they are more social minded or better people than the smaller ones, but just by virtue of their size, have got to be more careful and cautious, and avoid doing something that will be detected.
Furthermore, little plants are very frequently plants that incubate in very small communities. They are tucked away in the outlying districts. I know of various plants in our industry that are in the foothills here and there, in small villages and towns. If you don’t impose on them as well as on the big plants the same social requirements in hours and wages, you are going to give encouragement to more bad conditions on hours and wages than we have today.
I think you make a mistake in having that provision in the act. I hope you reduce it to such a small number that its effect will be practically nil.
We have no housework in our industry. We had a few signs of it creeping into the industry in 1931, 1932, and 1933, just prior to the code. A small circular knitting machine stuck in a kitchen, with the housewife operating this machine between her household duties and turning out a product to supplement her means of income. Even in full-fashioned machinery today, we have machines which have come on the market within the last 3 years—new machines, which knit a full-fashioned stocking complete on one small machine not more than about 4 feet square.
If these restrictions in hours and wages are not universally applied, as they were under the recent codes, you invite a type of home industry, and child labor, because child labor finds a very easy place in the kitchen. You would invite a type of unsocial condition which I think would be unfortunate.
Now, under section 6 (c) of the act, latitudes are given to the administrative board under which it is recognized that a greenhorn has limited economic earning capacity, and that a learner or an apprentice is only gradually going to acquire a growing degree of skill and economic value. You give latitudes to the Board to recognize that fact and to allow lower minima to apply to learners during a given period of time. I think that is fine. In the same section, you give it latitude to take care of those who are physically injured or partially incapacitated. I think that is socially desirable. I think you leave out, however, a very important class of workers, very important, and that is the type of worker which, under the codes, was described as a substandard worker.
I want to make a very clear distinction between a person who is incapacitated, partially incapacitated, or mentally incapacitated, or incapacitated by age—that is one class—and on the other hand, what you would describe as a substandard worker. The substandard worker of whom I am speaking is a person who has a degree of skill which is not substandard.
Representative Connery. Is that not taken care of on page 19 under “The employment of persons whose earning capacity is impaired by age or physical or mental deficiency or injury’’?
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[PAGE 591]
Mr. Constantine. Not as interpreted under the codes. We have no other precedent to go back to, and I am afraid you are not taking care of the substandard worker.
The type of worker that I am describing is the one whose degree of skill is up to the standard, but whose speed, whose bodily reactions fall short of the average speed reaction. Now, in our industry, for instance, these workers are all working on piece rates, and piece rates translate themselves into real earnings. These efficient workers of whom you have a certain number—it varies in plants and varies from time to time—these workers are excellent workers, but their processes are slower than the average.
Now, under almost all the codes—I would almost have said in all industries, but there may be some exceptions—that type of worker was taken care of.
Representative Connery. What do you call them?
Mr. Constantine. Substandard. And you can probably get out of the N. R. A. some definition which would be definite in character and which will prevent abuse of the term, under which those workers could be governed by something less than the minimum which applies to the normal or the standard worker.
Now, in regard to the minimum that applied to the substandard workers, I think in many of the codes the percentage used was 80 percent of the normal minimum. I am not so much concerned with whether it is 80 or 85 percent or what it is. I think if you do not recognize the problem of the substandard worker that you operate against continued employment for a highly desirable and fine type of worker who through no fault of his own is lust a little bit slow.
I am almost through, Mr. Chairman, and I will be sitting down in just a minute if you wall permit me.
I would like to record the attitude of our industry on section 12 (5), where the Board is given latitudes to weigh, among other factors, differentials. I would like to record the fact that our industry, in a code which was prepared by labor and management together, recognized a fair or reasonable differential between the so-called southern zone and the northern zone. We set a differential at not exceeding 10 percent.
None of us are interested in seeing the South, or the workers of the South, enjoy less of life than those in the North. We do believe that the costs of living are lower in the South, at least in the zones where we manufacture, than they are in the North. We do believe that the South, where the industry is younger than in the North, is still operating for the time being under certain handicaps. We do not think that the handicaps are large, but we think that they are sufficient to require a reasonable compensation. We do not believe that the skill of our southern worker is so far below the skill of the northern worker. In fact, we frequently find southern plants where the skill will measure up to the best in the North.
We do find, however, that management seems to be compelled to use a much larger volume of supervision in our southern mills than in the northern mills. The number of supervisors or foremen to the total number of employees in the southern plants is markedly higher than in the northern plants, and we do know that they have certain disadvantages of distance from the market, both in the buying of their raw material and in shipping the finished material to the outlets.
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[PAGE 592]
We are not, therefore, as an industry, opposed to a reasonable differential in favor of a zone which can prove its right to the differential. We notice that there is a permissive latitude given to the Board to recognize conditions of that kind, and inasmuch as some people here have testified as being entirely opposed to giving consideration to such differentials, I wanted to record the fact that there is no serious objection to it in our industry. I mean that the northern manufacturers are willing to accord a reasonable differential to the southern manufacturers because of the factors I have just mentioned.
Representative Thomas. Will you mention those factors again, please? If I may interrupt.
Mr. Constantine. Being a younger section of the industry, they are engaged to a greater extent in training skilled help than in the North. Even according to the union rules in our industry, a person must be not less than 4 years in training as a helper before you can entrust him with a full-fashioned machine as a knitter. That is the union’s own requirement. Some manufacturers think that it takes closer to 5 years of training before they are willing to trust one of our machines to them.
I don’t know how many of you have seen a full-fashioned machine in operation. It is probably the most delicate machine in the textile industry. It will run the full width of this room, and it contains about 130,000 parts. It is a highly delicate machine. It must be set with exact precision. It is knitting 24 stockings simultaneously. An error or trouble on one section stops 23 other sections. Any difficulty in the machine jeopardizes 24 stockings in the process of construction. The result is that you have to have very highly skilled labor.
Now, in the South where they are developing their industry with some rapidity, they are engaged in the process of taking green hands and training them to be knitters. And, whether the training takes 3 years or 5 years, it is a considerable period of time, and in part explains the higher volume of supervision in the southern plants than in the northern plants. That, of course, adds to the overhead cost.
Representative Thomas. Let me ask you one question there. Do you sell the product of an inexperienced laborer any cheaper than you do the work of a skilled laborer?
Mr. Constantine. No ; you do not.
Representative Thomas. What has that got to do with the 10-percent differential then?
Mr. Constantine. Your product has to come out perfect. It is estimated, and I think it can be proven, that the cost to management of training a knitter is not less than $500. That is no different than investing $500 more of capital into equipment. This is human equipment or skill. It is a costly process to develop skill of the nature required in our industry.
Representative Ramspeck. If one of those people makes an error and makes a bad stocking, that has to be sold tor less, does it not ? Mr. Constantine. That. must be sold as a second or a third. And that is not a profitable sale, because you have to give that second or third all of the finishing processes which you would give to the best-quality stocking.
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[PAGE 593]
Representative Ramspeck. Therefore, the manufacturer with less skilled workers has more seconds and thirds out of his total production?
Mr. Constantine. That is right. The ratio of seconds is higher in plants of that kind.
Some reference has been made, Mr. Chairman, to imports from abroad. We have had that problem to deal with for the last 3 years in a very great and growing degree. We, too, like cotton, signed a gentleman’s agreement with Japan about 3 months ago which is good for 3 years and runs to the end of 1939, after which we do not know whether we will have more of it or not.
I do not believe that the distinguished gentleman from the Attorney General’s office gave the right answer as to whether that problem can be handled by the flexible clause of the tariff act. I would rather not publicly tell our experiences before the Tariff Commission on a proposal to apply the flexible provisions of the act. It was all very pleasant and nice. They were very nice to us and we were very nice and respectful to them, and there was some discussion that was not exactly official, that was quite as important as some of the open official expressions that we had. The net result was that we went into the direction of signing a Japanese quota agreement. Something of what I am implying is the answer for a number of other Japanese gentlemen’s agreements which have been executed in recent months.
Such being the case, the flexible clause of the tariff act does not seem to be the answer to the problem. Certainly when cheap cotton hosiery jumps from 330,000 dozen pair in 1934 to 650,000 dozen in 1935, and to 1,145,000 dozen in 1936, there is a perfect illustration of the rapidity with which an American industry might be challenged with competition which it cannot meet, and which it cannot meet for one reason only, and that is that the cost factor in the foreign country is so far below the cost factor here that they can manufacture the product, ship it here, put it into the market at a price considerably lower than the cost of manufacturing the product here, leaving out profit, leaving out distribution costs, and everything else.
I put before the Ellenbogen hearings some facts which I think are of interest, and it might be of interest to mention them here, to show in terms of dollars and percentages how what appears to be a minor change in a minimum wage, translates itself into very serious increase in cost to the consumer.
For instance, a 33-cent men's sock manufactured with a $12 minimum and a 40-hour week, showed the present production cost at $1.91 a dozen, which, after going through the channels of the jobber and the retailer, and giving the retailer his approximately 40-percent mark-up, sells at 33 cents a pair over the counter, or on a dozen basis, at $4 a dozen to the consumer. If you keep your 40 hours stationary but you raise your minimum from $12 to $15, here is what happens right away. Your production cost goes from $1.91 up to $2.27, which does not seem to be so very much if you look at it hastily. The retail price on a dozen basis jumps from $4 to $4.85; in terms of percentage you have increased the cost of that product to the consumer 21 percent.
If you take that same $15 minimum and apply it to a 35-hour instead of a 40-hour week, then the price jumps from $4.85 to $5.54 a dozen, and it is an increase to the consumer of 38½ percent, which is a very substantial price increase in what is a necessity.
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[PAGE 594]
Gentlemen, this is my concluding remark. Under the N. R. A. there was set up a Consumer’s Goods Industries Committee, at the suggestion of the President and at the direction of the Administration of the N. R. A. I had the privilege of serving on that committee. It has continued its activities ever since. We have tried to be constructive. We have done a number of things to keep all our consumer’s goods industries from abandoning the code standards, and I think with quite general success.
In studying this measure the other day, feeling that the proposed means might be in error, although sympathetic with the general provisions, here is an expression which we gave out:
It would seem that a step as revolutionary as this bill need not be taken precipitately but should be taken, if at all, only after the most careful deliberation. Such a study could best be made by a special commission created by congressional authority which would be required to report at the next session of Congress. Such a commission would examine into the following:
1. The need and appropriateness for such legislation under ordinary conditions in various industries of the country.
2. The need and appropriateness for such legislation in times of national emergency.
3. The experience of States and foreign countries in dealing with matters of similar character.
4. How such Federal regulation could be put into effect without undue disturbance to the recovery movement.
5. The necessity and means of protecting domestic manufacturers and employment from the effects of action under the bill in putting American wage costs further out of line with those of foreign countries.
6. How any such legislation might best be adapted to reflect differences in conditions in different areas and industries.
7. The possible effect of Government action in increasing industrial wage costs upon agriculture and other pursuits not covered by the proposed legislation.
The technique of a preliminary careful study by a commission which was used preparatory to the Security Act is one which may well be followed in this even more far-reaching legislation.
The Chairman. May I ask you if that is written out?
Mr. Constantine. Yes. May I submit it into the record?
The Chairman. Yes. Because we have another witness.
(The statement of the Consumer’s Goods Industries Committee submitted by the witness will be found at the close of his testimony.)
Mr. Constantine. I want to thank you, Mr. Chairman and gentlemen, for having been unusually patient with me. I have certainly attempted only one thing, and that, is to be constructive.
The Chairman. I am sure that all of us appreciate that.
Representative Jenks. Mr. Chairman, may I ask just one question of the witness?
The Chairman. Certainly.
Representative Jenks. If such a commission as you have just suggested now was appointed by the Congress, how large a commission would you suggest?
Mr. Constantine. My experience is that the smaller we make them the better job they do.
Representative Jenks. Would you care to state any number?
Mr. Constantine. I have not given any thought to that, but I say that a commission of not more than nine—I don’t know who would fight for the odd person, the House or the Senate. People like ourselves would be glad to come down here and put in weeks of time if necessary working with a commission of that kind and trying to
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[PAGE 595]
devise something that is the most workable thing possible. I offer that type of cooperation in case you should take such a course.
Representative Griswold. Generally I am in accord with what you have said, more than any other witness, but there is one thing that we must think about besides just the labor and the industry. There is all of us. You appreciate that, and you bring that in with your increase in prices?
Mr. Constantine. That is right.
Representative Griswold. There is another thing that enters into it, and that is these low-paid employees—take in my own city of Indianapolis. Thirty-three percent, as was testified to, of all of the white families are drawing less than $1,200 a year; 24 percent of them less than $900 a year; and those people have a line or demarcation between them and the ones that are on relief rolls which is almost invisible, and it is a burden on the taxpayers that we have to take care of. Do you think that in your particular industry—we are trying to establish a minimum here—that if Congress went ahead and established a minimum of $1,200 a year, that that would be too much?
Mr. Constantine. Well, I think your minimum should be in the form in which it is proposed under section 2. I think it should be in the form of a minimum per hour.
Representative Griswold. Say a minimum of 40 cents per hour. Do you think that under all of these conditions as they affect all of us, that that would be too much?
Mr. Constantine. I think it will be too much to put into your section 2 in your definition; yes.
Representative Griswold. For instance, you have this man here, or this woman, that runs this very complex machine with 130,000 parts; do you think that $1,200 a year would be too much for him?
Mr. Constantine. I am grateful to you for that question, because I should have made it clear that in the hosiery business the minima would apply, at least 75 percent, I would say, to girls, in a surprising number of cases, we have what you would call hosiery workers’ families, where one first, and then two, and sometimes three, members of the family go into the hosiery industry and work in the industry. You see, out of our total employment, not more than 20 or 25 percent are men. They are principally the knitters.
Their earnings go considerably higher than any minimum that you would set under any act. The other 75 percent are girls working the finishing operations.
Representative Griswold. Just a minute there. Your man that operates this highly complex machine----
Mr. Constantine (interposing). He is making from $35 to at least $65 a week today, and some of them over $100 a week.
Representative Griswold. He would not be affected by anything we might do here anyway?
Mr. Constantine. That is right.
Representative Griswold. But it is the lower-paid person that we are dealing with here.
Mr. Constantine. The lower one here, but most of them are girls, and their earnings are merely contributory earnings, and frequently there are two or more girls in the same family working in the plant.
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[PAGE 596]
Representative Griswold. You probably disagree with me on this, but so far as I am concerned, I am very much in favor of wherever you employ a girl on a job that a man can do and she does it as efficiency as a man, that she should get just as much as he does.
Mr. Constantine. I quite agree with you. I do not believe in paying a woman less for a given performance than I would pay a man for that same performance, because if I am a businessman, all I am interested in is what I get for my money, and if a woman can give me just as much as the man, I have no objection to paying her just as much, but I will tell you this----
Representative Griswold (interposing). In the social set-up, then, that woman that does that work should at least receive the minimum that a man would receive, and if we establish a minimum of 40 cents an hour for a man, she should get it.
Mr. Constantine. I will tell you where our theory gets into a fight with the facts, and that is that most of these delicate operations which are referred to by us as finishing operations call for not only high speed but for deftness of fingers, and they are types of operations for which the average man is entirely unfitted. Only a girl can carry out those operations, and if I could take you into a hosiery mill and show you the finishing operations, of which there are about a dozen, you will find that it is not a man’s task; it is a woman’s type of task.
Representative Griswold. I have never been in a hosiery mill, but I think you ought to pay that woman for her peculiar adaptability for a job that a man cannot do.
Mr. Constantine. We pay her all that the freight will stand.
Representative Griswold. Thank you.
The Chairman. Thank you very much.
The next witness is Mr. Erwin Feldman.
(No response.)
The Chairman. Of the National Association of House Dress Manufacturers. Is there anyone here representing the National Association of House Dress Manufacturers?
(No response.)
The Chairman. That completes the list of witnesses who were scheduled. The committee will recess now until 10 o’clock tomorrow morning.
(Whereupon, at 3:50 p. m., the committee recessed until 10 a. m. tomorrow, Thursday, June 10, 1937.)
The Chairman. You operate mills in several different States, do you not?
Mr. Levy. Yes, sir.
The Chairman. In what States do you operate your mills now?
Mr. Levy. I am connected with the Stillwater Worsted Mills operating mills in the States of Rhode Island, Connecticut, and Virginia.
Tne Chairman. How many people are employed there?
Mr. Levy. Eighteen hundred.
The Chairman. Are all of your mills worsted mills?
Mr. Levy. They are worsted mills, Senator Black.
The Chairman. And your home is where?
Mr. Levy. Harrisville, R. I.
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[PAGE 597]
The Chairman. Suppose you just proceed with your statement.
Mr. Levy. Mr. Chairman and gentlemen, may I be allowed to preface my testimony by the statement that I have long championed the cause of short hours and high wages in American industry, not entirely from considerations of a humanitarian nature, but also from a conviction that the technological developments of the past 30 years in all forms of endeavor leave us practically no choice; and it is my present belief that if we are to maintain the kind of civilization on which we are clearly embarked, we must have a general level of wages that is measurably higher than those that now obtain.
As early as March 1931, in the very midst of the depression, the company, of which I am a part, inaugurated a minimum wage scale of $24 per week for men over 24 years of age and of $18 a week for women over 20 years of age, with proportionate wages for younger people. In January 1933 I testified in support of the original Black bill and the original Connery bill. I have been hammering away on the subject of higher wages and shorter hours ever since.
I believe that during the past 15 years our company has paid the highest wages, furnished the fullest employment, and provided the best working and living conditions in its industry. I make that rather sweeping statement quite deliberated. Permit me to say also, as having some bearing on the point, that I believe that our company has made more money during the past 15 years on any comparable basis than any other concern m its industry. I also make this rather sweeping statement quite deliberately. Having set all this forth with due modesty, I hope the committee will feel that I am in some measure qualified to offer an unbiased criticism of the bill.
Civilizations are stages in social progress, and, to a considerable extent, any industrial civilization must be an expression of a wage scale, and the question that we must answer for ourselves is “What sort of civilization must we have here in the United States in the year 1937 in order that we may go on ?”
Mr. Chairman, about the time when you and I were lads the civilization of this country, as expressed in the lives of our industrial workers, was largely made up of what occurred in the places where they worked and in the places where they slept, and the wages and the production of goods and services were tuned to that condition.
But the civilization of 1937 is a far different thing—now we demand for our population a more abundant life.
It seems self-evident that a civilization that demands and intends to supply what we now call a fairly abundant life must be based on a scale of .wages that is higher than any scale that prevailed when life was less abundant. How is it possible to think or large-scale production of good house furnishings, of automobiles, of modern plumbing, of central heating, of silk stockings and lipsticks, if you please, to say nothing of education, amusement, and travel, on the wage scale of 1880? And unless there is large-scale production and consumption of all these items, and many others of the kind that are not necessary for existence or subsistence, this civilization, aS we have built it up, this more abundant life, cannot go on.
Thus far we have failed to create a scale of wages sufficient to sustain the kind of civilization on which we all insist. This point seems so simple that it should hardly be necessary to dwell on it, and yet it is almost the crux of the whole matter. It is merely a statement
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that if an individual wishes to live on a certain scale he must have an income that will support that scale. Likewise if millions of individuals wish to live on a certain scale, and we insist that they shall, then these millions of individuals must have incomes sufficient to support that scale.
The common objection to high, wages is the belief on the part of those who pay them that they cannot afford to pay more than they do, and that the things that are made cannot be sold if wages are advanced.
I think the people who think these things are really quite sincere about it, but I think they are mistaken.
In the first place, high wages do not necessarily mean high costs. This is not well understood. Secondly, there is nothing sacrosanct about a wage scale, or wholesale or retail prices; and those who say that high wages prevent their doing business must have short memories; and everyone knows that people who choke over a 10-percent wage increase swallow a 30-percent rise in the cost of raw materials without a murmur; and in many industries a 30-percent rise in the cost of raw materials is equal to a 50-percent wage increase or more.
We have heard of various kinds of wages. We have heard of starvation wages and we have heard of subsistent wages, which, to my mind, are not very much better. We have heard of living wages, which are still not good enough. The only wages that amount to anything are what I call profitable wages.
Mr. Chairman, by “profitable wages”, I mean wages that are greater than the cost of securing them.
It is not generally understood that—
A wage earner conducts a business. His skill and his health are his capital, his wages are his income, and the maintenance and education of his family are his expenses.
It is a business that is subject not only to the hazards of the market for that which has to be sold but it has added complications:
Periods of illness.
Advancing age.
The initiative for finding a market is not in the hands of the proprietor.
Whether or not there is a market at all, or the extent of that market, is dependent to a large extent on the skill, integrity, foresight, and financial strength of the wage earner’s employer.
Employment and wages in any industry depend for their continuance on employment and wages in other industries.
In common with all undertakings, there must be periods of gain commensurate with the hazards. Heretofore these have seldom been present.
The combination is extrahazardous as a source of uninterrupted income and family progress and should be so regarded.
If the wage earner’s business is profitable, that is, if his capital is maintained intact, and his income is greater than his expenses, he is a constantly recurring customer for all the things which he and other wage earners help to produce. When we say that we have millions of unemployed in the United States it is but another way of saying that the operations of millions of individual businesses have come to a standstill, and unless their operations can be resumed within a reasonable time, the only outcome for them is the receivership of public support.
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[PAGE 599]
The Stillwater Worsted Mills, with which I, am associated, is engaged in the manufacture of worsted textiles, with mills in Rhode Island, Connecticut, and Virginia, and I propose to set before you some comparative figures of our company’s actual experience in the years 1927 and 1937.
The years 1927 and 1937 are chosen because by the former year industrial America was already far along the road of technological progress, so that the figures cannot be said to reflect what happened between one industrial era and another; also that period was chosen because the years from 1927 to 1937 include both the period that antedated N. R. A. and the period of operation at reduced man* hours and increased hourly rates, that accompanied the advent of N. R. A.
The worsted textile industry may be said to be divided into four major functional parts: (1) Wool combing; (2) yarn making; (3) cloth making; (4) dyeing and finishing. While our company carries on these four major functions as a part of its complete processes, these four functions are oftentimes conducted as individual businesses, and I shall set before you the record of each as though it were a separate and independent enterprise.
I have before me a chart showing what happened with respect to costs and production in each of these separate businesses in the years 1927 and 1937, a 10-year interval ? and for a more expeditious undertaking of the matter, I should like at this point to furnish the members of the committee with a copy of this chart.
The Chairman. We would like to have it, and would like to have it also placed in the record at this point.
Mr. Levy. The figures take into account all persons who were occupied in conneciton with each complete functional operation.
This chart lists in progressive form:
1. Unit conversin costs.
2. The average hourly wage rate.
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3.The length of the working week.
4.The average full-time weekly earnings.
5.The production per man-hour.
6.Weekly production figure.
For the unit conversion cost, and for the production per man-hour, the figure of 100 has been used for the year 1927 in every case, and the increases or reductions for the year 1937 have been calculated accordingly.
The Chairman. Is this for your own business?
Mr. Levy. This is from the records of our own business.
The Chairman. At all of the three mills?
Mr. Levy. The figures were taken from typical operations representing these four functions.
For the average hourly wage rate and the full-time weekly earnings the actual money figures are used. Likewise the length of the working week is what actually occurred.
The chart brings out the following points:
1.There was a reduction in the length of the working week in all four functions as follows:
Wool combing-----------------------------------14 hours
Yarn making---------------------------------------9 hours
Cloth making------------------------------------12 hours
Dyeing and finishing-----------------------14 hours
2. There was an increase in the average wage rate in all four functions as folloows:
Wool combing, 13 cents per hour, or 20 percent.
Yarn making, 7 cents per hour, or 16 percent.
Cloth making, 12.7 cents per hour, or 23 percent.
Dyeing and finishing, 8.3 cents per hour, or 15 percent.
In spite of this reduction in working hours and increase in hourly rates, the unit conversion cost in all four functions was reduced as follows:
3. Wool combing------------------------------------1 Percent
Yarn making-------------------------------------23 Percent
Cloth making------------------------------------17 Percent
Dyeing and finishing-----------------------22 Percent
And this accounted for by increases in man-hour production in all four functions as follows:
4. Wool combing---------------------------------26 Percent
Yarn making-------------------------------------55 Percent
Cloth making-----------------------------------53 Percent
Dyeing and finishign----------------------41 Percent
Representative Thomas. May I interrupt you right there? What caused that increase in amount or production in that 10-year period?
Mr. Levy. The advance in technological knowledge and equipment, which was common to all industry in that period, and really began in our country about 1910.
Representative Thomas. Did that technological improvement increase or decrease the personnel of your working force?
Mr. Levy. It decidedly decreased the personnel of every working force in every kind of industry. And due to the reduction of working hours—we have been talking about man-hour production—but due to the reduction in working hours, the record shows that the
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worker’s total weekly output as differentiated from his hourly production, changed as follows during the 10-year period.
Wool combing, a decrease of--------------------------------------------------------------------------- 6.4 Percent
Yarn making, an increase of----------------------------------------------------------------------------26 Percent
Cloth making, an increase of------------------------------------------------------------------------- 18 Percent
Dying and finishing, an increase of-------------------------------------------------------------- 18 Percent
I now call your attention to what appears to be the important point disclosed by this tabulation. During this 10-year period when important reductions were made in conversion costs, due to greatly increased man-hour production and while a substantial increase occurred in the hourly wage rate, the total weekly earnings, that is, the amount of actual money received by the worker, the money on which he must support himself and his family, decreased for the four operations as follows:
Wool combing-----------------------------------------------------------------------------------10 Percent
Yarn making----------------------------------------------------------------------------------------5 Percent
Weaving-----------------------------------------------------------------------------------------------8 Percent
Dyeing and finishing------------------------------------------------------------------------14 Percent
Please recall that we are considering the operations of probably the highest wage scale company in its industry.
The unfortunate, disturbing, and uneconomic outcome of this whole episode is that the worker, with the assistance of management, has been enabled to greatly increase his output, thereby reducing the cost of production, and having done so he is actually receiving less money today than he received for the smaller amount of production 10 years ago.
We must stop thinking in terms of hourly wage rates. They have no meaning. We must think only in terms of annual income. No man can order his life or arrange the progress of his family on a rate. It must be an annual income to which he may look forward with a reasonable degree of assurance.
Representative Ramspeck. I am glad to hear you say that, Mr. Levy. That is my hobby. I think wage rates are a delusion and a snare.
Mr. Levy. They are just about as misleading as anything that the mind of man has ever conjured up.
Mr. Chairman, I have before me a chart dealing with this same subject from an impartial and unbiased source, the National Industrial Conference Board, and what this chart of the Conference Board sets forth substantiates, with remarkable closeness for a large number of concerns and industries with which it deals and for which it publishes these composite figures, the specific case history of the operations of my own company, which I have given you. Both tabulations carry the same message.
You cannot create more goods and provide less money for their consumption. This might be possible if the money value of the greater quantity of goods declined sufficiently, so that the less amount of money would still purchase them, but I have another chart of the National Industrial Conference Board indicating that wholesale prices in the United States stood at approximately 89 on the 1st of January of this year as compared with 100
You cannot create more goods and provide less money for their consumption. This might be possible if the money value of the greater quantity of goods declined sufficiently, so that the less amount of money would still purchase them, but I have another chart of the National Industrial Conference Board indicating that wholesale prices in the United States stood at approximately 89 on the 1st of January of this year as compared with 100 on the 1st of January 1928, and in the absence of a more recent tabulation I think we can all agree that there has been an increase in wholesale prices in the United States since January 1,1937, that will carry this figure from 89 to at least 100.
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Increase in quantity production, unless accompanied by a corresponding decrease in consumer prices, means that every production increase must be accompanied by increase in both individual and total purchasing power. Individual purchasing power is a matter of individual annual earnings. Total purchasing power is a matter of the number of people employed and their individual annual earnings. The subject is not disposed of unless both factors are properly accounted for.
Mr. Chairman, there is an element of mystery in all our attempts to deal with the national malady of unemployment. There has never been any sincere effort at diagnosis. I am reminded of the very sick child who was taken with all speed to the nearest physician. The learned man looked at the boy. He did not check temperature, pulse, or blood pressure. Instead he said to the father, “Spend a little money on him; give him a plate of ice cream and take him for a ride.”
Mr. Chairman, I am afraid that is a good deal like what we have been doing with our number one national problem.
Why is it that we have never made a sincere diagnosis of our illness? Why is it that we have not found out sufficiently and accurately how many unemployed we have. Where they are located ? How formerly occupied? Their individual ages and present potentialities?
Why don’t we know all this? What private corporation would attempt to solve this or any major problem without first establishing the facts? We are spending billions, and I don’t mind the expenditure of the billions so much as I do the failure to get these men and women back on their own American independence through constant employment.
How can any remedy be suggested without a knowledge of the facts? Furthermore, until such a diagnosis is made, any legislation i on the subject and any expenditures of money will fail to secure I the support of public confidence.
Gentlemen, fortunately there is a bill before the Senate of the United StAs, or may shortly be, that does approach this matter from what I think is a much sounder angle, and that is the bill to be offered by Senator Maloney, entitled “S. 1667, To provide for a census of unemployment and for other purposes.” The bill may not be perfect. It does, however, attempt, firstly, to diagnose the illness: it. does attempt to provide for a constant employment of people, and it does attempt to see that that employment will be maintained at profitable wages.
May I now, without being too critical, offer some of my points of view with reference to the bill under consideration?
The Chairman. We will be delighted to have them.
Mr. Levy. My first criticism, Senator Black, is somewhat harsh. I have tried to tone it down, but I just, do not have the language.
While this bill differs in many essentials from N. R. A. they have at least one point in common. Like N. R. A. this bill completely misses the point.
The avowed purpose of this bill is “to provide for the establishment of fair labor standards in employment in and affecting interstate commerce, and for other purposes.” What is and what is not a fair labor standard may be an interesting subject for debate, but
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The wage earners of our land cannot sustain themselves and their families on definitions, prohibitions, and penalties. The only thing that will answer their need, and they are clearly entitled to it, is reasonable certainty that profitable employment will be available to them without serious interruption. There is not a single thing in this bill, Mr. Chairman, that strikes at the heart of this matter. Our country’s basic problem is employment, with its related problem of unemployment, and I do not find anywhere in this bill any attempt to reach down into the causes of our unemployment, to diagnose what they are, and to suggest a remedy. To proceed now, after all these years of suffering and staggering national expense caused by our unemployment, without attempting to cope with it is something that I do not understand. Our country cannot regain an even keel until some solution for our unemployment is found. The bill says nothing about it.
Representative Thomas. Before you leave that subject of unemployment. You have evidently given this subject a good deal of thought. Do you know of any specific thing, do you have any specific suggestions that you want to offer regarding that criticism you have made of the failure of the bill to set out anything definite or strengthen any way of increasing employment? Do you have any definite ideas on that? I think it would be most helpful to the committee if you would give them to us.
Mr. Levy. I have, sir, quite definite ideas on that subject, and I find them somewhat expressed in Senator Maloney's bill, and I much prefer to appear before this committee sponsoring somebody else’s idea than putting forth my own. I might have an ax to grind; Senator Maloney has none. May I leave it there with you in that way, Senator?
Representative Thomas. If you like.
Mr. Levy. The bill before this committee places in the hands of a board of five men broader powers than have ever been given to any appointed body in the history of this country. Its powers are wider than those that attach to any court of law, for it is authorized to proceed in its own discretion, when no complaint has been made. It stipulates further that any two members of the Board may constitute a quorum. In either case, whether they are five or only the necessary quorum of two, these men will have to be supermen indeed, for the bill expects them to render important decisions with respect to the minutest details connected with every industry in the land. To expect five men or two men to discharge this task with respect to even one industry would be to impose an almost superhuman burden upon them. To function successfully they must have, spent many years in preparing themselves to discharge such a task for one particular industry. To ask five men or two men to qualify to do this for all the industries in the United States is asking too much. Men who can properly discharge such an assignment do not exist.
The bill proposes to exempt groups of employees of less than a certain number from the operations of the law. It is difficult to understand on what sort of philosophy such an exemption is proposed. If John Jones is being underpaid or overworked, does the fact that he happens to be a member of a group of 10 persons, instead of a group of 10,000, compensate for the underpay or the overwork?
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The Board is empowered to create an unlimited army of deputies, each of whom appears to be clothed with as wide powers as though he were a member of the Board itself. Indeed, it is necessary that this should be so if the Board is to function at all, and in the end it will not be the Board itself which will render the decisions under the law, but the Board’s appointed deputies. These deputies will exercise powers so wide that they are practically without limitation, and in the provisions on variations oi standards the Board is authorized to change the law at will.
The bill provides that any member of the Board, and any officer designated by the Board as well, is empowered to administer oaths, subpena witnesses, compel their attendance, take evidence, and require the production of books, papers, correspondence, or other records, of any employer deemed relative or material to the inquiry. Is there any question that any officer designated by the Board, therefore, has the authority to require all the records of any kind which he personally chooses to inspect and make public? And if this is not enough, any authorized representative of the Board, even in the absence of any claim or controversy, is to have the right to enter premises, inspect books of record, and make such transcriptions therefrom as he pleases.
Under the section on regulations and orders the Board has authority at its own pleasure to make, issue, remand, and rescind regulations and orders according to its judgment of the moment. Here, again, we find individuals with authority to make law and modify it as they see fit.
The plan of the law is a thinly disguised relationship to the codes that existed under the N. R. A., with however, a very great difference, that under the N. R. A. industry made its own codes, and now the burden of doing precisely that for all the industries of the United States is placed on the shoulders of five men.
These are but a few of the criticisms that can be leveled at the bill. I believe, that as the bill now stands, its chief accomplishment will be to aggravate the already rising tide of controversy, strife, and hatred in our land. It will fan to solve the question we need to have answered: How do we get our people back to profitable work?
Mr. Chairman, no country ever went forward when people regarded one another with hatred in strife. If we cannot achieve our destiny as a united people, we cannot achieve it at all.
I resent the statement on the part of any man that because I am an employer I am not so constituted that I can be a sincere friend of the man who works for me and with me. I resent it, sir, and I know our country cannot go on that way.
And so, in closing, I ask you, before any action is taken on this bill now before your committee, to look into what Senator Maloney has proposed. It may not be perfect but it starts right. It starts with a diagnosis of the illness, and it clearly has for its objectives two things—that the people of this country shall have constant, continuous employment, and that the employment shall be carried on at profitable wages.
Representative Ramspeck. My Levy, you have given us a very interesting chart of what happens to your unit conversion costs, hourly average wage rates, and so forth. What happened to your prices during that same period?
Mr. Levy. Finished prices?
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Representative Ramspeck. Sales prices.
Mr. Levy. I am sorry, Mr. Ramspeck, that I cannot give you the precise comparison of the prices of finished products at that time from my own record.
Representative Ramspeck. What I want to know is whether they went up or went down.
Mr. Levy. I hesitate to answer so important a question without being sure of the facts; but here I am turning to perhaps a better authority, which embraces the history of many concerns in many industries. And wholesale prices in the United States at the present moment, according to the National Industrial Conference Board, appear to be just about what they were on the 1st of January 1928. In the meantime wages in our country have gone down; that is to say, the country’s weekly wages.
Representative Ramspeck. Your total wages, of course, have gone down too.
Representative Mr. Levy. Precisely.
Representative Ramspeck. Then, the result of that is that that saving went into increased earnings?
Mr. Levy. May I have the question again?
Representative Ramspeck. I say, the result was that the saving on wages went into increased earnings, if the prices remained the same.
Mr. Levy. Increased profits, you mean?
Representative Ramspeck. Yes; increased profits.
Mr. Levy. That might be so, unless the differential between the course of conversion costs and prices was eaten up by part-time factory operation and the consequent increase in overhead offset or more than offset the difference; or by increase in basic commodity prices, which were not considered in any of my figures. Only figures reflecting costs of conversion were used. One or more of those three things happened.
Representative Ramspeck. It is generally understood, I think, by people who study these questions that increased profit does not always make more prosperity; isn’t that true?
Mr. Levy. That is true.
Representative Ramspeck. In other words, if a stockholder in your company or in any other company—I am not trying to be personal with you—makes more money than he needs to spend, he can do one of two things with it; he can either invest it in a going concern, in which case he contributes nothing to our civilization, or he can invest it in new plant and equipment which does create additional work. And is it not true that during the period you have mentioned, 1927 to 1937, particularly in 1927, 1928, and 1929, those increased profits were used for speculative purposes and contributed absolutely nothing to our civilization?
Mr. Levy. Mr. Ramspeck, I so testified if my memory serves, at the hearing on Senator Black’s original bill, that the depression had come about not because wages were too high, but because those who controlled large amounts of money and who had been speculating and who had lost their money, took the position which was publicly expressed by Mr. Albert Wiggin, then chairman of the board of the Chase National Bank of New York City, that securities had been liquidated, commodity prices had been liquidated, and therefore it was now time that wages must be liquidated. And that, sir, to my mind, increased the severity of our depression as nothing else did.
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Representative Ramspeck. Just one other question. I welcome your criticism of the bill, but it seems to me, and of course I am not the author of the bill or the proponent of it, but it has seemed to me that one of the functions of this bill was to be like a traffic policeman at a street intersection. Nobody speeds by a traffic policeman. And if we set up an agency here which can prevent cutthroat competition on the basis of low wages, certainly it is going to contribute something to solving this problem of unemployment; don’t you think?
Mr. Levy. I would answer your question in this way, Mr. Ramspeck. A traffic policeman only has a legitimate function where there is a good deal of traffic. Out in the country where I live we don’t need them. There is not any traffic to speak of. There is nothing in this bill that helps to create traffic. What our country is suffering from is not a lack of policemen, but lack of traffic in the form of employment. We have so many millions of people, and it is debatable how many millions they are who are not going places because they have no places to go. That is, they have no employment.
I am much more interested m finding places for those people to go first, before I can think of providing a policeman to keep them within bounds.
Representative Ramspeck. Yes, Mr. Levy; but the businessmen in this country have for a great many years contended, and whether honestly or not—the question is open to debate—that they wanted to pay more wages but they were prevented from doing so by a manority within their industry who would not go along. They said to the Labor Committee, “If you give us the right to make agreements and enforce them on the minority, we will have solved this situation.” Now, we are proposing here to give them a board and a law which does not apply to any given industry until the board applies it, which can stop this cutthroat competition on the basis of wages, and thereby give the employer an opportunity to do what he says he has wanted to do.
Mr. Levy. I would take that kind of testimony somewhat sparingly. Without question, there is something in the contention, but not nearly so much as is claimed by those who advance it. In that group there are many who sincerely believe that lower wage rates by a small minority completely upset the functioning of the large majority in a given industry—but who always look elsewhere for the means of meeting such obstacles as may occur—and I should say that many of them find it easier to provide a “whipping boy” than to rehabilitate their own methods sufficiently to cope with them. Oftentimes also a mole hill is described as a mountain, an irritant as a fatal disease--and such offsetting advantages as often do exist are seldom mentioned.
Some in the group that put forth this same argument are not quite sincere. But in any case, even if the point is more important than I think it is, would not a relatively high minimum wage effectively take care of it?
The Chairman (interposing). If you will pardon me, I think I can bring out what Mr. Levy has in mind, because I heard it testified to some years ago. Now, Mr. Levy, you came down and testified in favor of the 30-hour bill, did you not?
Mr. Levy. Yes, sir.
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Chairman. You favored at that time a fixed regulation of hours.
Mr. Levy. Yes, sir.
The Chairman. And, as I recall it, you based your argument partly upon the fact that what we needed was a scarcity of labor in order that labor might itself bargain for higher prices.
Mr. Levy. Yes, sir.
The Chairman. At that time you favored that method and you still favor that method?
Mr. Levy. Yes, sir.
The Chairman. The addition to which you refer as Senator Maloney’s bill, I believe either you or the gentleman from New Orleans also discussed it, which was to the effect that if we started off, for instance, with a 30-hour-week bill that there should constantly be taken a census of unemployment, with the idea that when unemployment reached beyond a certain degree or percentage that the hours should be reduced; and if unemployment got down and everybody was employed, probably the hours should be raised. That is the mechanics of the bill to which you refer, is it not?
Mr. Levy. Yes; it is, Senator Black. That did not occur at the original hearing on your bill in January 1933. I have not wanted to bring the point out, because I do not want to appear----
The Chairman (interposing). The testimony to which I refer was the gentleman who was engaged in the textile business in New Orleans, who came up with that plan. But this is what I want to get clearly before the committee. You favor a straight congressional enactment limiting the number of hours, and you do not favor reposing any authority in a board to fix those hours?
Mr. Levy. Excepting as the facts as provided for in Senator Maloney’s amendment indicate the need therefor. I want to take it out of the realm of five men’s judgment and put it on the basis of economic facts.
The Chairman. As to the number unemployed?
Mr. Levy. That is right. It seems so simple that it answers itself. If we have too many people unemployed, we must get our hours down, and as the number of unemployed comes down we can again increase our hours.
The Chairman. Before we start the questioning may I state to the committee, so that they will know, that we have waiting Gen. R. E. Wood, the president of Sears Roebuck, and James E. Emery, of the National Association of Manufacturers, and two other witnesses, and Mr. Fletcher, of the American Railway Association. I think we can easily get through with all of them and ask any questions that we desire.
Representative Lambertson. You would have to depend on the judgment of what these five men was as to what the facts were, wouldn’t you?
Mr. Levy. Oh, no. Senator Maloney’s amendment provides for an impartial constant census, just as every good business has a running inventory. We would nave a running inventory in the United States at all times of the number of people who are out of work.
The Chairman. Are there any other questions ?
Representative Griswold. Mr. Levy, referring again to Mr. Ramspeck’s proposition of the policeman, is it not one of your objections
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to this bill that through the powers granted to this Board we are substituting the force of policeman’s club for the moral persuasion and contractual relations and all of those things?
Mr. Levy. And voluntary and mutual good will, sir. That is more important to us than policing, if we can govern ourselves that way.
Representative Griswold. We tried to govern things with policemen’s clubs under prohibition rather than moral suasion.
Mr. Levy. It cannot be done that way. I live with working people; they are my neighbors and my friends, and I have had the experience of looking a pay roll in the eye for 25 years. I know what working people think. They want to work with you if they can. We don’t need a policeman where I live.
Representative Griswold. Just another thing. I note in your figures of your yarn-making schedules, that where the average hourly wage rate showed the least increase, showed the greatest increase in production per man-hour. I don’t know if it has anything to do with it, but 1 was just wondering if you could explain that ?
Mr. Levy. Yes. The fixing of wages among a group of people in which mutual confidence prevails—please have that right at the bottom of everything that I say—takes into account many factors, and one of the most important factors in any industrial society is that the wages between people that are of one age and one occupation, bear a relation to the wages of people of other ages and other occupations, that seems right and reasonable and satisfactory to all concerned.
Representative Griswold. You do not think that one man can live his one life alone?
Mr. Levy. No, sir.
Representative Wood. I did not get here to hear your testimony. Are you in favor of the provisions of this bill providing for maximum hours and minimum wages?
Mr. Levy. I am in favor of maximum hours, not left to anybody's discretion, but to be determined by the facts of employment in the United States. As to a minimum wage, you can put one on and make it as high as you please—I don’t care; but if you keep the employment where it belongs, the people themselves will see to it that they are properly paid. You can only beat down people when there is large unemployment. I do not object to a minimum wage if anybody wants it—only make it high enough. But get the employment going and have it so steady that people may confidently count on it from year to year.
I do not know where you origin is, sir, but if you come from some country place in the United States, you know that when you were a lad 7 years old, the carpenter in your town just looked forward to having work. Is that correct, sir? He did not think when it was going to start, he just looked forward to having work.
Representative Wood. He wanted to work.
Mr. Levy. Yes. And he had it. That is the big point.
Representative Wood. You favored the Black bill, the 30-hour a week bill?
Mr. Levy. Yes. Representative Wood. If we have a competent census on unemployment; for instance, if we should adopt a 6-hour day and a 30- hour week, and that 6-hour day did not pick up the slack in
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unemployment to spread it along sufficiently to reduce the unemployment to a minimum, wouldn’t you favor instead of a further reduction in hours, some change in the standard of wages or the purchasing power? It would be far more preferable to raise the wage instead of lowering the hours below six. Then, if that did not do it, then there would be some reason for lowering the hours below six a day.
Mr. Levy. I am sorry, sir, that you did not hear that part of my testimony that dealt directly on that point.
The Chairman. Suppose you let Mr. Wood read that part of your statement?
Representative Wood. The thought that I am trying to bring out is this-----
Mr. Levy (interposing). The two things have to be right, Mr. Wood.
Representative Wood. It is not that men and women do not desire to work 6 or 8 or 7 hours a day? That is not in the picture at all.
Mr. Levy. That is right.
Representative Wood. Almost any normal man or woman is quite willing to work 6 or 8 hours a day or even 9.
Mr. Levy. Correct.
Representative Wood. The purpose of the legislation is not to reduce the hours so that people may have a lot or leisure time.
Mr. Levy. No, sir.
Representative Wood. But people really like to work 6 or 8 hours a day.
Mr. Levy. The purpose of the legislation, I think, is to see that people have the work.
Representative Wood. So the question or the necessity of reducing the weekly hours below 30 is not for the purpose of improving the morale of the worker.
Mr. Levy. It might have very serious adverse effects.
Representative Wood. But to see that they earn enough for an abundant life.
Mr. Levy. Yes, sir.
Representative Wood. So I should think if when we reach the 6- hour basis, that then with this constant census, it would be well to establish a higher minimum.
Mr. Levy. You could do it very well.
Representative Wood. How could you do it if you did not do it by the enactment of law?
Mr. Levy. You must do it by enacting a law.
Representative Wood. How can you do it if you do not set a base by the enactment of law?
Mr. Levy. You cannot do it any other way.
Representative Wood. You favor then establishing a floor?
Mr. Levy. Absolutely, And not at the discretion of any given five men, but-----
Representative Wood (interposing). You would leave it to the discretion of the employers, or the partnership between the employer and the employee and the Government?
Mr. Levy. The establishment of the facts by the Government, and provision by Congress than in the presence of certain facts, certain things should be done.
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Representative Wood. The figures that you have produced here tend to reveal the fact that has been oftentimes disputed, that if you lower the weekly hours or the daily hours of work by the employees and increase his standard of living or increase his wages, that does not necessarily add to the cost of the article produced, but would tend to increase it, because you could speed up the machines, and the worker would be glad to produce more in 5 or 6 hours than if he had to work 8 or 9 or 10 or 11 hours, and he would be more capable. He could not follow the machine if he had to work 10 hours a day, but he could follow it at short periods of say 3-hour periods, or even 6- hour periods.
Mr. Levy. I would not even say that, Mr. Wood. I would not say that our 8-hour day today is more fatiguing than 8 hours was 20 years ago. On the contrary, I think in many lines of endeavor, and certainly in my own industry, there is less fatigue at the end of 8 hours today than there was at the end of 8 hours 20 years ago; but the technological improvement as to methods and equipment has been so rapid that there is no question that a man can produce more for less money, and that higher wages and shorter hours do not necessarily mean higher costs.
Representative Wood. In other words, he could produce more or as much in 6 hours with less fatigue than he could in 8?
Mr. Levy. Let me read something—it is only a short paragraph— that I said at the first hearing of Mr. Black’s 30-hour bill in 1933. It was this: “In 1912, a weaver in the worsted business, if he was a good weaver, earned $15 in a working week of 60 hours, or 25 cents an hour. If we were to pay a weaver $30 a week or $1 an hour for 30 hours, he would still weave a yard of similar cloth at 57 percent less than the cost of weaving it in 1912 at 25 cents an hour.’’ That has been aggravated since I said that 4 years ago.
Representative Wood. Your statement here which you have handed me answers the questions I asked.
Mr. Levy. Thank you.
The Chairman. Thank you, Mr. Levy.
The next witness is Mr. R. E. Wood.
The Chairman. Mr. Wood, we will be glad to have you make a statement on the bill. I understood you desired to make one.
Mr. Wood. Mr. Chairman and members of the committee, I had prepared no statement. I want to say I am appearing as a citizen and not as president of Sears-Roebuck. As far as my firm is concerned, we are perfectly willing and able to meet any standards that the Government sets, so I am not interested in it from the viewpoint of my own business.
There were just one or two facts that I thought might be interesting to members of the committee. I have had an unusual opportunity of observing manufacturing all over this country. We deal with 6,000 manufacturers, I think, located in every State except Nevada, and I have had an opportunity to see more of manufacturing than the ordinary man does in the United States, and there are a number of new factors that have come up.
In the first place, your manufacturing was largely concentrated in New England and the Middle Atlantic States, because that was where
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the bulk of our immigration settled. Since you have stopped immigration, the only growth of population is the natural increase of birth over death, and 14 southeastern and southwestern States, including Texas, with 29 percent of the population, are furnishing 50 percent of the increase of population; in other words, the State of North Carolina with 3,000,000 people has an excess of births over deaths of 36,000 in 1935, and the State of New York, with 12,000,000 people, has an excess of births over deaths of 34,000; in other words, the growth of North Carolina is greater than the growth of New York. The State of Alabama with less than 3,000,000 people has a great deal larger increase than the State of Illinois with 7,500,000 people.
Now, unless you are going to force the youth of the South up to the great cities of the North, or unless you force the people from the small towns and farms of Illinois and Indiana up to the big cities, you have got to decentralize your manufacturing, and in the great cities I have had an opportunity to observe, for instance, if I pay $30 a week to one of my employees in Chicago, a married man, I am not paying him $30 a week; I am paying 70 percent to him and 30 percent to the landlord.
In other words, with the rentals in the great cities where a large part of this manufacturing has been concentrated so great, they take away from the real income, and the real income of the worker is not nearly as great as if that manufacturing were in the smaller towns or in the South.
And the only thing that I am fearful of and I am frank to say—I have never been a lawyer and have never written a bill—but I do not see how to change the bill or to change the Board ; how to remedy it. But I think that there must be some stronger provision that you have got. Perhaps where in section 14 on page 28 you have got, “may,” you ought to have “must.”
The Chairman. You refer to section 14 reading, “before making an order under section 5 establishing a minimum fair wage or a maximum reasonable workweek or both, for employees in any occupation”—the bill reads, “the board may,”—and you suggest that that read, “the board must, if it considers it necessary or appropriate”, and so forth—to appoint an advisory committee.
Mr. Wood. I would say that it must appoint an advisory committee, and that advisory committee should have local or State representation ; in other words, so that a board of five men here in Washington should have to listen to those people from Alabama or Indiana if a new industry is established there.
Now, there is another point in connection with it. I do not want to argue for low wages or long hours because I do not believe in either. That is, that an industry that is just starting, where the workers are untrained—say that you start a new plant at Albany, Ga.; say that it is a garment factory and it is competing with New York City. The worker in New York is trained, he is skilled, and at the beginning, that worker down in Georgia or Alabama or southern Indiana cannot produce as much as he may, and he cannot earn as much as the worker in New York City or Boston.
In other words, the point I am trying to bring out is, you do not want to freeze industry where it is located now. The healthiest movement in this country is to decentralize manufacturing; not have it concentrated in a few big cities or any one section or corner of the
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country. The best thing that is happening for all of us today is to get our manufacturing decentralized, and it is particularly important to the South in that the South is producing the only labor supply at the present moment. I mean, there is a considerable increase in the population in the South. There is not any more land for it to settle on, and it has got to go into industry. And if you take away the opportunity of locating industry in the South or in the rural sections of the Middle West—Indiana and Missouri and Illinois—and if you freeze that industry so that it has got to stay in the great cities. I think it is a very bad thing for this country.
As I say, I am not wise enough to introduce any amendments to this bill, and I believe thoroughly in the objective of the bill. I have some fears from the limited experience I had with the N. R. A. that if it breaks down that it will be in the administration of this Board. I saw the trouble finally that they got into in N. R. A. A group of men here in Washington were trying to settle wages and hours and practices all over the United States, and prices. It got in such a terrible mess that I don’t think anyone really knew what they were doing, and I foresee a lot of administrative difficulties for this Board. I confess I have no improvements to suggest, Mr. Chairman, on the bill except that single suggestion, but I hope it will be in the mind of the committee that we do not want to freeze industry in the big cities of the United States or in one section of the United States. We want to spread industry over the United States, and it is perfectly feasible and possible to do it, and it will be the healthiest thing that was ever done in this country. And I say that irrespective of any personal interest, because my own company being merchants, we are perfectly able and perfectly willing to meet any standards that are set up and are glad to do it.
That was really all I had to say.
The Chairman. Are there any questions?
Representative Thomas. Just one question, Mr. Wood. Your broad experience and your many outstanding accomplishments give your testimony much weight to this committee, and we respect your opinions highly. Your thought about freezing industry strikes me most forcibly. But do you mean in your admonition there, General, that we should set up a differential between different sections of the country in order to prevent a freezing, or just will you spell that out in detail please a little more, sir?
Mr. Wood. Well, I think there has got to be a differential. Whether that differential could or should be incorporated in a bill. I doubt, because it is such a complicated thing that you cannot foresee every eventuality in advance, and I question whether you could, but the trouble is with a board, if it was a wrong kind of a board, it might refuse to recognize any differentials. Now, you are from Texas, are you not?
Representative Thomas. Yes.
Mr. Wood. Well, you take Texas. It produces more wool than any State in the Union today. Eventually there ought to be a woolen mill in Texas. The woolen industry is largely in New England and the man, whoever he is, that will start, that mill, he is going to have to have a force of untrained operatives, and it will be some time before that operative in Texas can be as skillful and
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earn as much money as the operative in Lawrence, but if he has to start in at the same wage, it means that the mill cannot go.
Now, I think that the proper kind of a board, or if it is a fair board, if it regards all or the interests of the country, it can take those things into consideration. All that I am afraid of is that it may not, and when I say a differential, I do not mean to use a differential as an excuse for sweatshop wages in any part of the country.
Representative Thomas. General, that is fine, and it is very clear. It seems to me, also, that the success of this act will largely depend upon how well your board functions. Are you familiar with section 5 (a) of the act? I think it is on page 13. I wonder if you are prepared to give us any criticism of section 5 (a) of the act. That section attempts to lay down a limit, a yardstick for the guidance of that Board; and within that yardstick the Board has unlimited authority. That sets a yardstick within the limits of which the Board will be measured. 1 wonder if you think that the provisions of that section are wise, or do you think that Board should have any such authority and as delegated to it by section 5.
Mr. Wood. Well, that is the whole question. I think you are between the devil and the deep sea. If you write into this bill and try to anticipate every contingency, I think that is impossible. On the other hand, you give a board a tremendous power and a tremendous job—a job that I would say is almost impossible from the administrative standpoint And yet I cannot offer anything helpful as to which one of those you should take.
Representative Thomas. Well, in the first place, this number— five members—is that enough for the Board ?
Mr. Wood. I think it is enough; yes; I think it is enough. I think the smaller it is the better.
Representative Thomas. It is not a question of quantity, but a question of quality.
Mr. Wood. But I don’t know whether it would be wise to have that Board represent certain sections of the country. I would not want that Board packed for one section of the country, and I would not want a board that wanted to maintain the status quo in manufacturing. The only suggestion I have is that the Board, even if these committees are advisory, if an industry is going to be established in Mississippi, for instance, I would insist on that Board hearing the Mississippians. Or if a new plant is going to be started in southern Indiana, I would say that the Board must listen to those people from southern Indiana.
Representative Thomas. Thank you very much.
Representative Lambertson. Do you think that establishing a minimum wage and a maximum hour might be interpreted by industry as a guarantee of profits ultimately to come to them in consumers’ goods?
Mr. Wood. I don’t think.
Representative Lambertson. If they comply with the law and lose, that they might ask a bonus from the Government.
Mr. Wood. Of course, I have had a business that has never had to ask anything or any favors from the Government, but I do not see that they would. They might with the railroads.
Representative Lambertson. Do you think the establishing of a minimum-wage and a maximum-hour provision might tend toward labor being hired on a commission basis or a piece basis?
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Mr. Wood. Oh, you could prevent that easily enough. I should think that you could prevent it easily enough. You could establish a minimum of that kind that they could not go beyond whether they were on piece work or on a drawing account. I think you could get around those two, the question of hours is the tough one. I listened to this discussion. Your tendency on hours is to go down all the time. It is just how fast can you increase the productivity of your machines so as to allow shorter hours? We have come from 72 to 60 and 40. Now, whether we are ready for 36—I expect my grandchildren will see a 30-hour week, but it is just a process of evolution, depending upon how fast you can get the productivity of your machine up.
Representative Lambertson. Mr. Lubin, the statistician of the Department of Labor, testified that it is desirable to have legislation winch would establish a planned competition, to use his exact words. Doesn’t that sound to you to be in exact opposition to our antitrust laws?
Mr. Wood. I was wholly out of sympathy with that portion of the N. R. A. I think the moment you try to fix prices in any industry, then you are doing away with the reason of business. You cannot freeze the prices. The only excuse for the existence of business is to try to devise means and methods to produce more goods for less money.
Representative Lambertson. Thank you.
The Chairman. Mr. Jenks?
Representative Jenks. General Wood, do you think that lowering the hours and increasing the wages would increase prices to the consumer?
Mr. Wood. Well, it depends on how fast it is done. In manufacturing, whether you can devise machines that can overcome it, or in retailing whether your volume is sufficient to overcome that. When I say the volume, we have increased wages three times in the last year and a half, but we have not increased spread, which, in retailing, is the difference between what you buy and what you sell, because the increase in volume of things sold has cut down our overhead to the extent that it has absorbed the wage increase. Now, that has happened in a great many businesses. It is happening in a great many businesses. There will be a point, however, when the rise in wages in certain industries will probably result in increased prices.
Representative Jenks. Over a period of a great many years we have had peaks and valleys of business, and always when business has gone down, wages have gone down with it, because employment has been less. There simply has not been the business. Now, if there is a fixed price for wages and a fixed time for the hours with the people employed half of the time, with prices staying up, what will be the result of that?
Mr. Wood. The effect, of course, will be to make it worse. And then there is one other thing. We have got to keep our balance between industry and agriculture. This country is different from any other industrial nation in the world, in that you have 14,000,000 people in manufacturing and mechanical pursuits, but you have got 11,000,000 people in agriculture; and if you get your prices so high in industry or if you get your wages so high in industry that the
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cultural population cannot buy, I don’t care what laws you pass, the wages will go down.
In other words, if you go back to 5-cent cotton and 20-cent corn, I don’t care what kind or a law this committee passes, your wages will go down and you cannot hold them up. In other words, if the buying power of tnese 11,000,000 people in agriculture is destroyed, you cannot hold wages up in industry.
Representative Allen. Is it your opinion that the N. R. A. was a complete failure?
Mr. Wood. No; I would not say that it was a complete failure. I think some good came out of it. I think that the social part of the N. R. A. in this hour and wage matter was good. But the part in the codes where you tried to set prices was all bad.
Furthermore, on the administrative standpoint, when a code authority here in Washington were trying to fix the wages of a barber in Salt Lake City, they got into such a terrible administrative mess that they could not disentangle themselves. It is just a practical matter. That is the fear I have in this.
The Chairman. Mr. Wood, I do not like to interrupt you, but this bill does not provide for the regulation of barbers under any possibility.
Mr. Wood. Well, then, that is all right.
Representative Smith. Your organization retails, wholesales, and manufactures, does it not?
Mr. Wood. We do not wholesale. We are primarily retailers. We have some manufacturing plants.
Representative Smith. Do you provide the same workweek in both activities, manufacturing and retailing?
Mr. Wood. No; we do not. In manufacturing we take the workweek of the industry.
Representative Smith. What do you have in retailing as the workweek?
Mr. Wood. There again, in our stores, we adopt the workweek of the local merchants, as a rule. I mean, if we have a store in Gadsden, Ala - and they are working 44 hours a week, we work 44 hours a week.
Representative Smith. What do you think they might average throughout the country?
Mr. Wood. Well, I could not tell you that offhand. In our mail-order plant, we work 41 hours a week.
Representative Smith. Would you object to a 35-hour week in your retail stores?
Mr. Wood. I don’t think you can do it, sir. Certainly not in the agricultural sections of the country. When we have, say a store in Hutchinson, Kans., and if those farmers come in and see our men working 35 hours a week, I don’t think we can get away with it. And another thing, in retailing, too, you do not have the advantage of a machine. In manufacturing, if you shorten your hours, you can devise machines that in time will produce just as much as, we will say. in the 35 hours a week work and in 40 hours of work.
Representative Wood. General, the employees in your store in Hutchinson. Kans., work about 45 hours, don’t they?
Mr. Wood. I have got 450 stores and I don’t know the work hours of each store. I do know this, that they are instructed to have as low hours as any merchant in town and just as good wages, they are instructed to pay, and more.
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Representative Wood. In connection with the questions asked you by Mr. Jenks, in times of slack business, if wages did stay up, that it would have an effect to depress business. Did you ever know of a time when we had depressed conditions, that either wages or prices stayed up?
Mr. Wood. No.
Representative Wood. And it certainly did not in the last depression.
Mr. Wood. And in our country, if the commodity prices go down as they did in this last depression, with cotton, with wheat and corn and hogs and cattle all down, there is nothing in the law or anything that Congress could pass that would hold them up.
Representative Wood. Or keep wages from going down also?
Mr. Wood. No.
Representative Wood. You spoke about the differential. You don't mean this differential applied by the N. R. A., drawing a line across the country?
Mr. Wood. Well, I think there should be some differential between the North and the South, and I think there should be some differential, we will say, between Chicago, Ill., and Wabash, Ind.—between the large cities and the small towns. Yes; I do, because I think the real wages to the workman will be more.
Representative Wood. How would you establish that differential?
Mr. Wood. Well, you could not write it into a bill. There is where the Board will get into trouble, too. You have got to take each case on its merits.
Representative Wood. It would be pretty hard to establish a minimum wage if you did not have a board to make an investigation and carry on the administration.
Mr. Wood. You could not, of course. A board is necessary.
Representative Wood. You could not establish a minimum just by enacting a law and saying that 6 hours a day is a day’s work, without having any administrative machinery to carry out the purpose and the intent of the law.
Mr. Wood. You have got to have the board.
Representative Wood. And Congress cannot do that, but they must necessarily delegate that power to some board appointed by the President with the advice and consent of the Senate, isn’t that true?
Mr. Wood. I should think so.
Representative Wood. Thank you, sir.
The Chairman. Mr. Griswold?
Representative Griswold. General Wood, Mr. Jackson testified before the committee and of his own volition mentioned the name of your firm. As I recall his testimony, it was to this effect in regard to this particular example that he was using, that if the local merchant, being strictly local and doing strictly an intrastate business in some of these small communities that you have mentioned, because he was doing that strictly intrastate business, would not come within the provisions of this act, but that if the substandard labor conditions or methods of doing business competed unfairly with the terms of the bill with your firm doing an interstate business, that you would have the right to go into court and demand that he be haled before this board for his unfair competition with you due
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to his unfair labor practices. Is that the way you understand the bill?
Mr. Wood. Well, I did not understand the bill. [Laughter.] I do not know Mr. Jackson, but I did read his testimony in—that is, I did read his testimony and I did not understand that the bill meant that.
Representative Griswold. You did not construe the bill that way?
Mr. Wood. No; but I am not a good lawyer; in fact, I am not any lawyer at all.
Representative Griswold. But you are the man that is going to have to survive and continue in Business under this bill, and so is that local merchant.
Mr. Wood. Well, as I told the chairman of the committee, I am perfectly willing to take chances on any standards they set up. I don’t care what they are.
Representative Griswold. I am wondering whether that local merchant back there doing a strictly intrastate business is willing to take these chances the same as you are.
Representative Ramspeck. General, I want to ask you one question. You mentioned the illustration of your Chicago employees receiving $30 a week and paying 30 percent of it for rent. As a matter of fact, what a man gets in actual dollars as a wage does not mean anything; it is what he can buy for those dollars, is it not?
Mr. Wood. Exactly.
Representative Ramspeck. If you have an employee in Atlanta, for instance, and you pay him $30 a week and he only pays 20 percent of it for rent, as a matter of fact the Atlanta employee, with $30 a week, is better off than the Chicago employee, is he not?
Mr. Wood. Certainly.
Representative Ramspeck. Therefore, if we fix wages in this country they ought to be fixed on the basis of the facts and circumstances surrounding the employment at the time and place where the person is employed, ought they not?
Mr. Wood. Exactly.
Representative Ramspeck. That, as I understand it, is your position?
Mr. Wood. Yes, sir.
Representative Smith. I want to ask a question along that line. You contend that there is to be a $16 minimum wage established. That is not any too much for the man and his family, educating his children, whether he is found in the North, South, East, or West, is it?
Mr. Wood. Yes; I would agree with you, but I would say the $16 minimum wage is enough for some boys or girls.
Representative Smith. It is not enough in any section for a man and his family? It is not any too much for a man and his family in any section, is it?
Mr. Wood. A man and his family, certainly, I will agree to that.
Representative Smith. Now, why not bring up the wage in the West and the South to that level where it will give him a chance to support his family even not in the proper way, rather than to break down the law?
Mr. Wood. As I understand it, your minimum wage applies not only to men but to women, not only to married men but to single
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men, to boys and young women. You do not make, as I understand, any distinction in this bill.
Repiesentative Smith. But we are more thoughtful about the man and his family, who has several children, don’t you thing so?
Mr. Wood. Certainly, and your $16 a week is low for that man. It is not low, though, necessarily, for the girl, or for the young aprentice boy.
Representative Smith. When establishing a minimum wage, at least you are thinking of the man who has a wife and two or three children. Would that not be the right thing to do?
Mr. Wood. Yes; if you make it apply to him alone, if you make it apply to adult males.
Representative Smith. But a minimum wage for a man with three or four children is not any too high at $16, is it?
Mr. Wood. No.
Representative Smith. Any way that you may classify him?
Mr. Wood. No.
Representative Smith. Then why make a differential between East and West because of living conditions? Why not protect them with a wage sufficiently high that at least part of the people will get shelter by having a wage that is satisfactory?
Mr. Wood. Well, you have got to consider, though, that there is a tremendous number of women and young boys in the industry, young boys between 18 and 21 in the industry. If you take $16, which I perfectly agree with you is not too much for anybody anywhere, but when you get it into the earnings of a single girl, a single boy under 20, from 18 to 20, perhaps you are hurting an industry in certain sections.
Senator Holt. General, would not the differential be offset by the low living costs?
Mr. Wood. In a sense it would.
Senator Holt. In other words, the factories would go to the place where they could get the low living cost and in turn get low wages?
Mr. Wood. They do not necessarily get low wages. You do not have to have much of a differential. I say if you do not want that youngster from your State flocking up to Akron and Detroit, or the youngster from Georgia flocking up to Philadelphia or New York, you have got to put the industry in your State, and the industry has got to start, it has got to get a market, it has got to get organization and skilled workers.
Senator Holt. You believe the worker, though, should be penalized in order that the business could get started?
Mr. Wood. I am saying it is for the benefit of the worker. You do not get my point. It is for the benefit of the worker. The worker, in getting $20 a week in Parkersburg, W. Va., is getting more real wages than the worker in Chicago at $22 a week. It is the real wages that count with the worker.
Representative Welch. General, you stated a few moments ago that there should be a wage differential between Chicago, Ill., and Wabash. Ind.
Mr. Wood. I just used that as an illustration for comparison as between a big city and a small town.
Representative Welch. You named these two cities. Will you explain a little more fully why there should be a differential between those two places?
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Mr. Wood. Well, because the cost of living is so much greater in Chicago than it is in Wabash, and you ought to encourage the decentralization of the industry into these smaller towns and into the States of the South and Middle West. The point of it, Congressman, is that under the present system you force the worker to migrate outside of the State to a big city, just as the European peasants came over here, and flocked into New York. I am saying it is as much or more for the worker than it is for the employer.
Representative Welch. Should there be a differential in the wage scale paid in the steel mills in the Gary plant, in Michigan City, Ind., and the steel mills in South Chicago?
Mr. Wood. No; because you are practically in one great metropolitan district where the cost of living is practically identical.
Representative Welch. Well, Wabash, Ind., and Chicago are not far apart.
Mr. Wood. Oh, yes; 160 miles, whereas the area around the lake, the lower end of the lake, all that metropolitan area of Chicago.
Representative Gemwold. Will the gentleman from California yield?
Representative Welch. Yes.
Representative Griswold. In Calumet you cannot tell from one town to another?
Mr. Wood. That is right.
Representative Welch. The cost of living in the city of Washington is much higher than perhaps in any other city in the country, is it not?
Mr. Wood. You haven’t got any industry here.
Representative Welch. Would you favor paying a higher wage scale to Federal employees doing the same kind of work in the city of Washington than you would in the city of San Francisco?
Mr. Wood. No; I do not think so.
Representative Weight. Then why should wages be regulated in proportion to the cost of living.
Mr. Wood. I do not say they should be regulated in proportion to the cost of living. I am simply saying to get industries started in sections where the surplus population is you have got to establish that differential. You may not have to have it indefinitely. I think the trend will be for different sections of the country to approach each other.
Representative Welch. Industry has been trying to establish itself in small cities and towns for years. The purpose is to take advantage of a lower wage scale that adds more profits than it had when it was in larger communities. It does not give the employees the benefit of it, however. It does not spread employment by reason of its increased profits.
Mr. Wood. I do not agree with you at all.
Representative Welch. Industry can get labor cheaper in a country village than in a large center of population, can they not?
Mr. Wood. That industry, as a rule, has got to go out and get its market.
Representative Welch. It had the market before it left the large city. It is just a question of changing plants from a large city to a country town.
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Mr. Wood. I do not think you have got very much of that, sir, where they have actually moved out of the large city to a small town. I think it has been more in the nature of new industries, just like the paper industry going into the South now. There is no mill being moved out from the North; they are all new mills going into the South.
Representative Welch. That is all.
Representative Thomas. Mr. Chairman, may I ask just one short question?
The Chairman. Mr. Thomas.
Representative Thomas. I think it is generally agreed that your store that is selling goods in interstate commerce, say, the Packard Store, would be covered by the bill. There is some doubt as to whether your retail stores all over the country will. I, for one. happen to guess that they will be covered by the terms of this bill, for the simple reason that a store that receives a substantial part of its stock in interstate commerce and is constantly selling to get that stock, is constantly replenishing that stock through interstate commerce, will be included. For the sake of the argument, assume that you will come under the terms of this act, that it will cover retail stores; I think you said a minute ago that your minimum wages were $16 a week; would that affect the stores that are not paying that much?
Mr. Wood. As far as I know, we pay all adult males more than that in every part of the country. I cannot answer for 450 stores.
Representative Thomas. I did not mean to ask you to give a bill of particulars. Now, the trouble will come, if any, on the question of hours; is that correct?
Mr. Wood. Yes; more or less.
Representative Thomas. Suppose this Congress were to establish a maximum of 36 hours a week, would that adversely affect the retail trade?
Mr. Wood. Not if they were all affected alike.
Representative Thomas. That is just the point. If it is uniform, it will not hurt them, will it?
Mr. Wood. No.
Representative Thomas. As a matter of fact, many stores now open at 9 and close at 5:30, whereas 25 years ago they opened at 7 and close at 9 at night?
Mr. Wood. Yes. The great question, if you make it 36 hours, is whether it will raise costs. I cannot answer you. I do not know. I do not know whether the proper hours are 40 or 38 or 36.
Representative Thomas. Well, we do not know either. We are all trying to arrive at a fair answer to that question. How much will it raise the cost in your particular business?
Mr. Wood. Well, I would say it would raise the cost somewhat. How much, I do not know, because retailing is, you might say, a hand occupation. I mean the customer is waited upon by the man or woman and they do not have a machine to aid them. In certain types of manufacture I think it would make very little difference; in other types of manufacture I think it would raise costs decidedly. In retailing I think it will raise the costs.
Representative Thomas. Decidedly?
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Mr. Wood. I think it will raise it quite a bit, but I do not know how much.
Representative Thomas. You cannot give us any definite figure, can you, General, say a figure of 30 or 40 cents an hour, and a maximum workweek or 40 hours and a minimum of $16 a week? Could you give us any general information as to how much it would cost— how much it would increase the cost in the merchandising business?
Mr. Wood. I could not tell you. Now, we can stand a 40-hour week in the mail-order business, because that is a machine industry; and I believe we could probably cut it some more there, because you have the advantage of the customer not coming into your mail-order house, does not ask to be waited on, you schedule out the orders and increase the efficiency. I believe you can cut the hours of business there, but I think if you come into a store and have a man or girl trying on a pair of shoes I do not think you can do it there without increasing the cost. I think the shorter hours will increase the cost.
The Chairman. Thank you very much. The next witness is Mr. Charles Whitney Dall.
The Chairman. You are with the National Rayon Weavers Association?
Mr. Dall. That is correct.
The Chairman. We would be very glad to have your statement.
Mr. Dall. The outstanding feature of the bill is the tremendous power lodged in the Labor Standards Board through the medium of which there would be centralized in the Federal Government not only direct control over minimum wages and maximum hours of work for individuals, but also through the discretionary powers granted by the bill, possible control of prices, production, and the use of machinery. The Labor Standards Board is given vast and sweeping powers by which, in its discretion, it may fix, for a given industry or a group of establishments, a craft, or class of employees, any minimum wage considered “nonoppressive”, which is its only limitation. It may, if it finds collective-bargaining facilities inadequate, fix entirely different minimum-wage rates for particular classes or establishments or employees. It may set different minimum-wage rates for particular classes of establishments or employees. It may set different minimum-wage rates for a large establishment as against a small establishment, or different rates for establishments in urban as against rural areas. It may describe varying limitations on maximum hours for different classes of establishments. It may regulate conditions under which overtime might be permitted or prevented. To the establishment of such a board with such powers, only a few of which have been here enumerated, we are unalterably opposed. We believe there is nothing in the present industrial situation which requires such drastic action.
As the obvious intention of this bill is to raise wages, it naturally follows that costs will increase. This will invite more foreign competition, which, if not checked, may very readily work to the disadvantage and unemployment of the American working man and woman. The Labor Standards Board has the power to prohibit the movement
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in interstate commerce, of goods made under “oppressive” wage and hour conditions in any one of the States. It does not have the power to prohibit the entry into the United States of goods made under “oppressive” wage and hour conditions in foreign countries which compete directly with American-made goods. For example, in the year 1935, rayon woven fabrics were imported into the United States from Japan to the extent of 42,000 pounds. In the following year 1936, Japanese imports rose to 265,000 pounds, an increase of 528 percent. While the total amount of these imports is small as compared to the total consumption in this country, should they continue at the present rate, spurred by higher domestic costs, the American rayon weavers will be faced with disaster. Therefore, in order that the employment of American workmen should be secure from this menace, which will increase with higher wage rates, we suggest that there should be incorporated in the bill, in its final form, a provision similar to section 3 (e) of the National Recovery Act, under which the President, was empowered to lay down conditions under which goods might be imported, to prescribe fees, and to limit the quantity of imports, and so forth.
We are in hearty accord with the framers of this legislation in their objective to control the sweatshop and the chiseler. We believe that if there is to be Federal regulation in the form of establishment of a minimum wage, it should be simple in principle, be based on a careful survey of the facts, and fixed by the Congress, to apply to every employer in the industry.
We are heartily in accord with the establishment of maximum hours of work for individuals, but we suggest for your consideration a certain flexibility, based on various types of work. This industry 1 operated on a 40-hour workweek, for machine operators, under the code set up under the National Recovery Act. Since the invalidation of that act, it has continued generally on a 40-hour workweek, and runs on this basis today. There was, in the code for this industry, a tolerance of 10 percent in the hours of labor of such classifications as repair shop crews, engineers, electricians, watchmen, and so forth. There was also a provision for emergency time such as might develop from the break-down in power machinery, the results of a fire, or mechanical accident of some sort. To such flexibility we invite your favorable consideration. Otherwise, manufacturing operations will be severely hampered.
There is, and there has been, no employment of children under 16 years of age in the rayon weaving industry. We are fundamentally opposed to such a practice. This is, we feel, more a social matter than an industrial one, and respectfully suggest that this be eliminated from this bill, but its prohibition enacted in a separate bill, the administration and enforcement of which would be lodged in already existing Government agencies, such as the Children’s Bureau. We are not in favor of the practice of working women and minors between the hours of midnight and 6 a. m., and suggest that this might appropriately be incorporated in the bill heretofore mentioned.
In closing this brief discussion, we hope this bill will be discarded in favor of a new and much simpler measure. It is clear that the desire for Federal regulation, as opposed to that by the individual States, is that uniform conditions of wages and hours may be secured. The very provisions of this bill, in which such wide
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discretionary powers are given to the labor standards board, is an admission that it is not the intention to provide a uniform standard. Therefore, we urge a different bill in which a standard work week and minimum wage, after a careful examination of the facts, may be so fixed that the sweatshop and the chiseler will be eliminated from the industrial scene. We beg of you, gentlemen, don’t use a sledge hammer to mend a Swiss watch.
Representative Jenks. May I ask the witness just one question!
The Chairman. Yes, sir.
Representative Jenks. You suggested a careful survey. Did you mean before any legislation was passed by Congress, or after it was- passed by this Board that was set up?
Mr. Dall. I mean before the Congress fixed the minimum wage, if it decides to do that.
Representative Jenks. How would you suggest that survey be made? By whom?
Mr. Dall. That I would be glad to leave to this committee, but it is simply a fact-finding commission, if you wish to call it that, provided that commission has the power to secure those records.
Representative Jenks. Then you would suggest that Congress would set up a sort of a commission to make a survey beforehand?
Mr. Dall. I would, sir.
Representative Jenks. Thank you.
Senator Black. Will you inform the committee of the amount of domestic consumption which may be compared to the Japanese imports in 1936?
Mr. Dall. We keep our records in linear yards, not pounds, as is done by the Bureau of Foreign and Domestic Commerce. Consumption for 1936 of rayon-woven cloth was approximately 800 million yards. At an average of 5 yards to the pound, it would show about 160 million pounds.
Senator Black. Thank you very much Mr. Dall.
The Chairman. Thank you very much, Mr. Dall. Mr. Emery.
The Chairman. Mr. Emery, you appear, do you not, as the representative of the National Association of Manufacturers?
Mr. Emery. I appear as the general counsel of that association, Mr. Chairman and gentlemen of the committee, and with your permission I would like to present the general approach to the measure before you and then deal with the legal phases and construction of the measure, and leaving to Mr. Noel Sargent, the economist of the association, the discussion particularly of its economic detail, to be followed by two representative members of the association dealing with more practical phases of the bill from a manufacturing viewpoint.
I am submitting a list of organizations who have expressed themselves as being in opposition to the Black-Connery wage and hour bills.
(The list submitted by Mr. Emery is as follows:)
Associated Industries of Cleveland, Cleveland, Ohio.
Associated Industries of Kansas, Topeka, Kans.
Associated Industries of Missouri, St Louis, Mo.
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Associated Industries of New York State, Inc., Buffalo, N. Y.
Associated Industries of Oklahoma, Oklahoma City, Okla.
Associated Industries of Rhode Island, Providence, R. I.
Associated Industries of South Dakota, Sioux Falls, S. Dak.
Federated Industries of Washington, Seattle, Wash.
Indiana Manufacturers Association, Indianapolis, Ind.
Michigan Manufacturers Association, Detroit, Mich.
Texas State Manufacturers Association, San Antonio, Tex.
Virginia Manufacturers Association, Richmond, Va.
California Manufacturers Association, San Francisco, Calif.
West Virginia Manufacturers Association, Fairmont, W. Va.
Employers’ Association of Chicago, Chicago, Ill.
Employers' Association of Detroit, Detroit, Mich.
Employers’ Association of Milwaukee, Milwaukee, Wis.
Employers' Association of Western Massachusetts, Springfield, Mass.
Industrial Association, Cincinnati, Ohio.
Industrial Association of San Francisco, San Francisco, Calif.
Industrial Conference Board of Tacoma, Ina, Tacoma, Wash.
Landis Award Employers Association, Chicago, III.
Luzerne County Manufacturers Association, Wilkes-Barre, Pa.
Mahoning Valley Industrial Council, Youngstown, Ohio.
Manufacturers Association of Bridgeport, Conn.
Manufacturers Association of Erie, Erie, Pa.
Manufacturers Association of Meriden, Meriden,
Conn. Manufacturers Association of Wilmington, Wilmington, Del.
Merchants and Manufacturers Association of Los Angeles, Los Angeles, Calif.
Muskegon Employers Association, Muskegon, Mich.
National Metal Trades Association, Cincinnati, Ohio.
Peoria Manufacturers and Merchants Association, Peoria, Ill.
West Michigan Legislative Council, Muskegon, Mich.
Employers’ Association of Eastern Massachusetts, Boston, Mass.
Minnesota Employers Association. Employing Photo Engravers Association, Chicago, Ill.
National Erectors’ Association, New York, N. Y.
National Sand and Gravel Association, Washington, D.C.
Southern Garment Manufacturers Association, Nashville, Tenn.
Metal Manufacturers Association of Philadelphia, Philadelphia, Pa.
Employers Association of North Jersey.
Mr. Emery. Mr. Chairman and gentlemen of the committee, the measure under consideration by your honorable committee will profoundly affect the political and economic life of the American people. It is easy to agree with many of its primary objectives, but methods are quite as important as the purposes they are intended to accomplish. Good intentions are not the only test of sound legislation. The pathway to eternal torment is reputed to enjoy a model pavement. The purpose of a youth to provide for the declining years of his aged mother is a most commendable objective. Its attainment by separating a citizen from his wallet is not an approved method or accomplishment.
We submit the subject with which this measure deals is so vast and complicated that the effects of error or haste in determining its underlying law and policy deserve the mature consideration of an extensive, indeed a special, congressional investigation. The time spent upon inquiry will merely anticipate that which must be employed by an administrative body, but you alone can determine a formula of administration calculated to adapt practical means to a socially desirable end.
The National Association of Manufacturers believes in the exclusion by law from employment in manufacture of all persons under 16. It would equally exclude from demonstrably hazardous employments all under 18. It believes in wages and hours adjusted in accordance
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with merit and efficiency by free agreement with employees and recognizes that minimum compensation should find a base in local law and maximum hours be safeguarded against abuse. But the wage earner must be protected against the larcency of his earning power and the public against the injurious effects of arbitrarily restricted production
The problem of child labor may be readily separated from other subjects in this proposal and eliminated by the application of principles of regulation free from legal uncertainty. Such measures as have been proposed by Senators Wheeler, Johnson, and Clark would secure a cooperation between the States and the Nation that will practically exclude the products of child labor from the markets of the United States. They would refuse interstate transportation to goods produced in violation of the laws of the State of origin or destination. By congressional regulation securing the identification of such goods the legislation would be immediately effective, not only to close all major markets to them but to pillory the producer who offers them for sale.
This bill rests upon a declaration of intention to provide administration in terms or local conditions. We believe local authority and experience is best applied, as it clearly possesses the power, to fix minimum wages. We believe it demonstrable that that cannot be validly or practically done in the manner here proposed. No legislation, Federal or State, and no decision of the highest court of either jurisdiction suggests that an arbitrary limitation of all industry to 35 or 40 hours for adult persons would be sustained as a valid exercise of police power.
This measure is not confined to the administrative regulation of hours or wages. By its terms and from the declaration of its proponents, it is intended to supplement the National Labor Relations Act. It would thus in effect divide the administration and seriously modify the terms of that legislation. Those for whom I speak believer firmly in the right of all men to freely associate or decline to associate with others as to them seems best to promote their own interest. We believe in the right of all workers to establish and support such forms of legitimate organization as they desire and to select representatives for collective bargaining, free from coercion or surveillance by employers. We believe likewise in the right of employees to deal collectively or individually with their employers as they may freely choose, without coercion or intimidation from any source. We further believe it essential that every organization of labor, like every other form of combination, should in the public interest accept responsibility for its conduct and that of its agents and meet reasonable social standards as a condition of its legitimate operation. There is no place in our interdependent industrial society, nor under our institutions, for the growth and exercise of collective power without corresponding responsibility for its use.
The manufacturers of the United States are as anxious as this committee to expand facilities, enlarge employment, and increase purchasing power. Self-interest impels them to do so. The condition of their own progress is good government, industrial peace, distributed prosperity, and reasonable stability. We are emerging from the most far-reaching and destructive economic storm in the experience of our people. We have suffered vast losses in capital,
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and 50 percent of our productive mechanism is out-worn or outmoded and requires replacement. A most recent reliable survey of 25 manufacturing industries, employing more than 1,500,000 persons in the diversified occupations which the pending bill would reach, made by the National Industrial Conference Board, shows encouraging progress in employment and earnings.
The average workweek therein is 41 hours as against 48.3 in 1929. The gain in average hourly earnings increased l1.6 percent since April 1936, and is 15.9 percent higher than in 1929, while employment is 1.9 percent higher than in 1929.
The chief threat now to recovery and advance is uncertainty. The manufacturer knows and accepts the risks of his calling. They are numerous and serious. They are inherent in industry and vary with the character of the operation. In addition to these intrinsic conditions we ought to avoid the loss of time, energy, and capital dissipated and jeopardized in constant adjustment to rapidly changing public policy and the interruption or threatened interruption of production by the prevalent costly and extensive labor disputes which not only imperil service to the public but. increase its cost and cause serious wage losses to our working population.
With these preliminary considerations we approach the proposal before you with great anxiety, not through any lack of sympathy with many of its objectives, the best of which we believe may be accomplished without the application of dubious and destructive legal principles or methods of administration that threaten to multiply confusion and encourage business hesitation.
We believe the underlying conception of the commerce power here asserted is erroneous. As proposed to be applied, it will obliterate the last vestige of local self-government.. The vast and ambiguous power granted to a board of five to limit the earning power of labor, the hours of production, and conditions of employment are so indefinite in their nature and extent, and accompanied by penalties so severe, that it exaggerates the description which Mr. Justice Cardozo applied to the grant of authority under the N. I. R. A. of “delegation running riot.” This ocean of authority is to be vested in a board of five. The members have no official independence, are not required to possess any special qualifications, are not safeguarded against partisanship, and may be appointed wholly from any group or class.
The distinguished proponents of this measure rest it upon the fundamental proposition that the power to regulate commerce includes the right to arbitrarily exclude from it any article which Congress chooses. The proposition is sought to be reenforced by the use of every regulative hook upon which its validity can be hung. Frequent reference to it suggests it is clearly recognized that the famous dissent of Mr. Justice Holmes, in the first Child Labor case, must be sustained to support the fundamental theory of the bill. He did not rest that dissent upon the right to control local production, with which he denied the power to Congress to “meddle.’’ He then believed regulation included the right to embargo domestic commerce, but no reference has been made in argument here to the second Child Labor case, 2 years later, which sought to employ the taxing power for the same purpose for which the commerce power was to be employed. It was, said Mr. Justice Taft, “indistinguishable” from the first case. The Chief Justice spoke not only for
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himself but for all who dissented in the first case, save Justice lark. The gratuitous presumption that Justice Holmes did not change his mind with respect to his own dissent is faced by the demonstrated fact that he did.
But just as it is clear that the States have reasonable control of minimum wages, so it is equally clear from the most recent cases that no support is given to the theory that under the guise of regulating commerce, congressional control of hours and wages is supported by any recent decision of the court. In the Schechter case the unanimous opinion of the Court held, in the language of the Chief Justice, that “hours and wages have no direct relation to interstate commerce.” Justice Cardozo, in a separate opinion, declared he could find no constitutional authority “for the regulation of wages and hours of labor in the intrastate transactions that make up the defendant's business.” In the Bituminous Coal case (Carter v. Carter Coal Co.) that followed, the Court denied without dissent that the commerce power could reach into the control of local hours and wages. The Chief Justice, in his separate opinion, pointed out that while the commerce power could protect commerce from injury from any source, nevertheless:
Congress may not use this protective authority as a pretext for the exertion of power to regulate activities and relations within the States which affect interstate commerce only indirectly. Otherwise, in view of the multitude of indirect effects, Congress in its discretion could assume control of virtually all the activities of the people to the subversion of the fundamental principle of the Constitution. If the people desire to give Congress the power to regulate industries within the State, and the relations of employers and employees in those industries, they are at liberty to declare their will in the appropriate manner, but it is not for the Court to amend the Constitution by judicial decision.
Counsel will seek to persuade this committee that the National Labor Relations case changed this view, but certainly the Court will not ignore its own statements made in that case that the principles of the Schechter and the Carter decisions are the law of the land.
But let it even be assumed that this misconception of the commerce power should prevail, what of the extraordinary manner in which it is sought to delegate the power of Congress to the Board created? It is as vague as to when and under what, circumstances it shall be exercised as was the authority indefinitely delegated to the President in the Hot Oil cases. It is as vague in extent and limitation as that attempted to be granted to the Chief Executive in the N. I. R. A.
Furthermore, the authority given contradicts in terms its own asserted purpose and policy. The Board may vary upward and downward, not the hour or wage rate which Congress may establish in the bill but the standard itself. The yardstick is not a fixed quantity but a sliding measurement to be adjusted to the character of the cloth. Again, after definitely defining what constitutes “oppressive” hours and wages, the Board is expressly authorized in its discretion to continue in effect the oppressive condition which it finds to exist if it is paid for in terms of time and a half. Oppression is thus licensed if bought.
Now, with reference to what I have said as to these ambiguous provisions in the delegation of power, Mr. Chairman, permit me to become more specific. You will remember that, in the two chief cases that have been reviewed in recent years, the Panama Refining case and the National Industrial Recovery Act examined in the Schechter
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case, that in the first case the Court found that the power that the President was to exercise was there present, it was to prohibit the movement in interstate commerce of oil produced in violation of quotas fixed by the State, but the circumstances or the conditions under which that power was exercised was not defined by any intelligent standard.
In the second case the subject matter with respect to which the President was to exercise power possessed no boundaries. It was, in the opinion of the Court, turned over to the unfettered discretion to determine what should be done and what agencies should be created, what persons should be employed, and what steps should be taken to effectuate the general purposes of the act.
Now, of course, the power possessed by the bodies of which you are distinguished Members authorizes implicitly a delegation of its authority under circumstances in which agencies may be created to become its own servant in the execution of its own purposes, but under the Constitution all the legislative power of the United States is vested in the Congress of the United States, and Congress cannot delegate the power to pass a law, but it can pass a law to delegate the power to ascertain some facts or circumstances or condition upon which the previously intelligent standard established by the Congress is made effective.
The question here is whether the standards that are established in this act are intelligible standards, whether they are definite as to the nature of the power to be employed, or whether they vest in the body which you create discretion with respect to determining the justice of any particular condition, or the rule of conduct under which those who are to be subjected to the act are to determine in advance what it is that they may do and what they are forbidden to do.
You gentlemen will recognize that you are confronted in this act with the most drastic penalties that have ever been proposed in any legislation of Congress, for they are both civil and criminal, and they apply, as I think we can presently show you, to an enormous number or persons, but the standard itself is as indefinite as the persons to whom it may be applied. I think we shall be able to show you that it participates in some of the difficulties of the legislative act that was once referred to in Kentucky which provided that it was to be made a criminal offense for anyone to discharge a firearm on any public road whether loaded or not, and the courts of that State have never yet determined whether the penalty applied to the weapon or to the person who discharged it.
It is my purpose to discuss solely the problem of the delegation of legislative power to the proposed Labor Standards Board to be established by these bills.
It is my purpose to discuss solely the problem of the delegation of legislative power to the proposed Labor Standards Board to be established by these bills. In discussing the question of delegation two other related problems must be distinguished. First, inasmuch as particular conduct in violation of this proposed Fair Labor Standards Act and of orders issued by the Board thereunder is made criminal, subject to penalties of fine and imprisonment, there is much in the bill to be criticized under the fourth and fifth amendments to the extent that this legislation would require compliance with ambiguous and uncertain standards and prohibitions. Illustrations of
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these defects will be enumerated later. Second, there is a further problem relating to due process under the fifth amendment created by numerous provisions m these bills entirely aside from the question of any infringement of liberty of contract guaranteed by the fifth amendment. Several provisions of the bills, both with respect to the standards set forth and in connection with powers conferred on the Labor Standards Board, can be demonstrated to be clearly arbitrary and capricious. Illustrations of such defects in the bills will be deferred until a later point.
The nature of permissible delegations of power, as well as their limitations, are clearly set forth in the decisions. Perhaps the clearest discussion of this power of Congress to delegate a portion of the legislative function is contained in Hampton v. United States (276 U. S. 394). There the Court pointed out the historical and legal basis for maintaining the separation of the three powers of government into the legislative, executive, and judicial branches. The Constitution, article I, section 1, provides that: “All legislative powers herein granted snall be vested in a Congress of the United States.” While this provision might import that any grant of legislative power by the Congress would offend against the Constitution, the courts have gone far in sustaining delegations to meet the needs of complex economic and social conditions. The Supreme Court has never imposed such rigidity upon Congress that the business of government would be stifled or impeded. In considering statutes conferring part of the legislative function upon executive branches of the Government, including independent commissions, the Court has been willing to sustain such delegation where it appeared that Congress had established “an intelligible principle” to which the executive or administrative officers must conform in filling in the details of the law. The Court has emphasized that in establishing such an “intelligible principle”, Congress must use care to avoid conferring such broad discretion on the executive or administrative officers as would in fact leave to their determination “the expediency of just operation of such legislation.”
The limitations upon these broad principles enunciated in the Hampton case have now been more clearly disclosed in recent cases arising under the National Industrial Recovery Act. In the case of the Panama Refining Co v. Ryan, decided January 5, 1935, the Court held invalid section 9 of the Recovery Act, because it involved an unlawful delegation of legislative power to the President. This section of the act gave the President power to issue proclamations prohibiting the interstate shipment of “hot oil.” Such a delegation of power was held unlawful, because no standard was set forth in the law to govern the President’s discretion as to when or why interstate shipments of “hot oil” should be prohibited. While the Court found that the nature of the President’s authorized action was clearly defined, namely, to prohibit interstate shipments, there was no standard imposed to guide the President in determining whether such action should be taken. This determination was left to his unfettered discretion. As the Chief Justice pointed out in speaking for eight members of the Court:
As to the transportation of oil production in excess of State permission, the Congress has declared no policy, has established no standard, has laid down no rule. There Is no requirement, no definition of circumstances and conditions in which the transportation is to be allowed or prohibited.
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In the second case arising under the N. I. R. A., the Court was considering the power conferred on the President to approve or prescribe “codes of fair competition” which were to become the law for the particular trade or industry covered thereby. In a unanimous decision the Court held that the Recovery Act gave the President power to approve, under a code of fair competition, any practice or activity which he deemed appropriate to accomplish national recovery and to make such a code of fair competition the law of the land. This, as pointed out by Mr. Justice Cardozo in a separate concurring opinion, constituted:
An attempted delegation not confined to any single act nor to any class or group of acts identified or described by reference to a standard. Here, in effect, is a roving commission to inquire into evils and upon discovery correct them.
The Court emphasized that the phrase “code of fair competition" had no defined meaning, and that it left the President absolutely free to enact any kind of restriction or prohibition, or to approve any practice which he considered to be fair. It is important to note that in each of these two cases an entirely different aspect of the delegation question was presented. In the Schecter case the question was whether Congress, in authorizing codes of fair competition, had “itself established the standards of legal obligation, thus performing its essential legislative function, or, by failure to enact such standards, has attempted to transfer that function to others.”
In the Panama case the question “was with respect to the range of discretion given to the President in prohibiting the transportation of hot oil.”
In other words, the question in the Schecter case was whether Congress had adequately defined the subject matter to be regulated by the President, while in the Panama case the question was whether sufficient standards were imposed to condition the exercise of the specific power conferred on the President. Each of these two aspects of the delegation problem is involved in a consideration of the Black-Connery bills, and this proposed legislation offends both these principles.
In examining the Black-Connery bills in the light of these principles and their application, it is essential that the proposed legislation be studied from the standpoint of those who are to be controlled or regulated by its provisions. Only by considering the nature of the obligations this legislation would impose upon them, directly or indirectly through action of the Labor Standards Board, can the real nature of the power delegated be disclosed. Such an examination will reveal the following outstanding provisions to constitute an unlawful delegation of legislative power.
One, Extension of statutory standards. In section 4 of the bill the proposed Labor Standards Board is given authority to extend the “oppressive wage” and the “oppressive workweek” standards to all employments within the scope of the act as rapidly as possible. In certain cases these “oppressive” standards may be varied “upward or downward.” An examination of this section of the bill fails to disclose any adequate standard to guide the Board in the exercise of the oppressive standards without change, the Board is authorized to act “as rapidly as possible.” It may be assumed that this standard is sufficient to avoid conferring anv substantial discretion on the Board in determining the time when these statutory
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standards should be extended. Consequently, no criticism is made on this feature of sections 4 (a) and (b). However, the Board is authorized to extend the “oppressive wage” and “‘oppressive workweek” provisions “to all employments within the scope of this act.” The term “employments” is not defined and nowhere in the bill is any indication given as to the persons, industries, trades or employments to which the Board may extend the statutory provisions under section 4.
This deficiency is clearly evident when section 4 is compared or contrasted with sections 8, 9, and 10, in which the Board at least must make some determination of fact to show the relationship between the occupation covered and the need and justification for the regulation under the commerce clause of the Constitution. The defect in standard under section 4 is not cured because orders issued thereunder are not directed or immediately enforceable against individuals, or because the Board is required by section 12 (4) to define the “occupations”, and so forth, covered. That also provides no standard, and even though the order itself may remove uncertainty of application, the cure comes too late. It is not the result of any preordained rule or principle established by Congress; it is executive law- making in the most offensive form.
The Board is provided with no guide or standard whatever in the exercise of this power to make the law govern “all employments within the scope of this act.” It is given unfettered discretion to ascertain what employments it believes to be subject to the act without following any prescribed standard or rule laid down by the Congress.
In connection with section 4 (a) and 4 (b), therefore there is clearly an attempted delegation of power clearly in conflict with recent cases decided under the N. I. R. A. The Board is given authority to make the law, but without any limitation as to those for whom it may be prescribed and without any guide which the Board must follow in determining what employments are to be considered, subject to the act or these particular orders.
Subsections (c) and (d) of section 4 are likewise objectionable for even more serious reasons. Under these sections the Board is given authority to vary “upward or downward” the statutory standards- relating to oppressive wages and to an oppressive workweek. The specific nature of the Board’s act under these provisions is clear and perhaps subject to no criticism. However, it is necessary to consider the conditions under which this particular activity of the Board may be taken, and in this respect the bill is anything but clear. The Board apparently is authorized to vary these statutory standards when it finds it necessary or appropriate “to prevent the depression of general wage levels.”
As a matter of fact, however this reference to preventing the depression of general wage levels is a limitation on the extent to which the statutory standards may be varied upward or downward; it is not a guide to govern the Board in determining when these variations are necessary or appropriate. In whatever manner this phrase is construed, however, there is no real standard or limitation on the discretion of the Board to vary the standard prescribed in section 2 (10) either “upward or downward.” The “minimum-wage standard established by section 2 (a) (10)” is in reality no standard in any sense of the word, in spite of any intention to insert a specific minimum rate of hourly pay. The term “oppressive wage” is
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defined to mean the minimum to be fixed by Congress “except in so far as another minimum-wage standard is established” by order of the Board under section 4 (c). It becomes too obvious, therefore, that even Jthe absolute statutory minimum affords no standard or guide, for immediately it may be discarded for a new standard, not prescribed by Congress but promulgated by the Board without reference to any “intelligible principle. Not only may the Board vary the standard “oppressive wage” either up or down, it may substitute its own standard and in due course vary that either “upward or downward” without limit. The same is true with reference to the so-called “oppressive workweek.” Subsections (c) and (d), therefore, contain the most vicious forms of “delegation run riot.” If there is any doubt in this respect under section 4 alone it is certainly removed by consideration of sections 6 and 12 of these bills. These sections will be discussed more at lentil. At this time it is sufficient merely to call attention to the fact that any apparent limitation on the discretion of the Board by virtue of section 4 alone is entirely removed by consideration of sections 6 and 12 of these bills. These sections will be discussed more at length.
At this time it is sufficient merely to call attention to the fact that any apparent limitation on the discretion of the Board by virtue of section 4 alone is entirely removed by these later sections of the bill providing for exemptions and for provisions which the Board is authorized to include in “any labor standard order.”
Two, promulgation of fair-labor standards. Under section 5 of the bill the Board is authorized to establish fair standards for minimum wages and for a maximum workweek. A careful examination of this power conferred on the Board will disclose no real standards to control the discretion of the Board in prescribing minimum wages and maximum hours. Under this section the Board is authorized to act after an investigation if any one of three conditions shall appear.
First, the Board may act if it determines “that wages lower than a minimum fair wage are paid in such occupation to a substantial extent.”
The second standard to guide the Board in determining whether to promulgate a fair wage or hour standard is whether the payment of substandard wages “threatens to undermine a fair labor standard maintained by others.” The third standard set forth is that the establishment of a minimum fair wage (or a fair workweek) “will not unreasonably curtail opportunities for employment.”
While these standards may be adequate from the standpoint of delegation of power, they may be objectionable as arbitrary under the due process clause. This aspect of the problem, however, will be discussed later. From the standpoint, solely of the delegation question, the most defective part of section 5 involves the alleged standards to guide the Board in establishing a minimum fair wage or a maximum air workweek.
It is said that these standards, with reference to wages, are taken almost bodily from the New York State minimum-wage law. Presumably it is felt that in the light of the Supreme Court decision sustaining the Washington minimum-wage law this method of computing a fair minimum wage is beyond question under the Federal Constitution. This is certainly not the case.
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In the first place, the method for computing minimum wages under State legislation thus far questioned before the Supreme Court has not been attacked on the ground that it involved an unlawful delegation of legislative power.
As a general proposition the Supreme Court will not pass on the question of delegation of legislative power where State legislation is involved. Such a question involves solely the construction of the State constitution and the Supreme Court will accept the verdict of the highest courts of the State.
If any doubt exists as to this point it can be settled by reference to the case of Highland, Farms Dairy v. Agner, decided March 29, 1937. This case involved the validity of the Virginia milk control law and one of the major arguments presented against the validity of the statute under the fourteenth amendment was that it contained “a grant of discretionary power overpassing the limits of lawful delegation.”
Mr. Justice Cardozo, speaking for the Court, said:
The Constitution of the United States in the circumstances here exhibited has no voice upon the subject. The statute challenged as invalid is one adopted by a State. This removes objections that might be worthy of consideration if we were dealing with an act of Congress. How power shall be distributed by a State among its governmental organs is commonly, if not always, a question for the State itself. • • • Cases such as Panama Refining Co. v. Ryan (293 U. S. 388), and Schechter Poultry Corporation v. United States (295 U. S. 495), cited by appellants, are quite beside the point • * • So far as the objection to delegation Is founded on the Constitution of Virginia, it is answered by a decision of the highest court of the State. • • • A judgment by the highest court of a State as to the meaning and effect of its own constitution is decisive and controlling everywhere.
It is obvious, therefore, that the decision of the Supreme Court sustaining the Washington minimum-wage law, and overruling the prior decision in the Adkins case, has no bearing whatever on the validity of the standards set forth in section 5 of these bills to guide the Labor Standards Board in prescribing fair wages or a fair workweek.
The validity of these standards, as involving an unlawful delegation of legislative power under the Constitution, must be examined de novo.
With respect to establishing a fair minimum wage standard the Board is given no discretion, perhaps, as to when it should be done. Satisfactory standards are prescribed to guide the Board in ascertaining the existence of facts justifying the exertion of this power to establish a fair minimum wage. The alleged standards for determining a fair wage, however, are not standards at all; they are merely suggestions to be accepted or rejected by the Board, to be given whatever weight the Board desires, or to be completely ignored if it sees fit. This section provides that the Board “shall take into account” the cost of living and all other relevant circumstances affecting the value of the services rendered, “shall be guided” by like considerations as would guide a court in an action to recover the reasonable value of services rendered, or “shall consider” wages established for work of comparable character in collective agreements, and “shall consider” wages paid for comparable work by employers who voluntarily maintain fair wage standards.
As a result it is clear that the Board is given absolute discretion to establish a fair minimum wage on any basis it sees fit. Compared with
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the standards imposed in the Walsh-Healey Act to guide the Secretary of Labor, those in the Black-Connery bills confer unfettered discretion on the Labor Standards Board to establish any fair minimum wage it might desire.
Not only is the Board free to ignore any one or all of these standards; the standards themselves are conflicting and inconsistent, one with another.
The first of these so-called standards in substance authorizes the Board to consider any factors it may deem to be relevant without limitation.
The second is clearly inadequate for the simple reason that it would be impossible for the Board, m considering a fair wage or workweek for an entire occupation, to take into consideration all the elements bearing on individual ability, efficiency, and suitability for employment which would guide a court of law in ascertaining the reasonable value of services rendered.
The third and fourth standards set forth in section 5 involve as serious a delegation of power as the method employed in the Guffey Coal Act, declared invalid in 1936. The Guffey Act endeavored to give legal effect to wage and hour standards negotiated in collective agreements between employers and employees. Mr. Chief Justice Hughes, concurring with the majority of the Court in this aspect of its decision, declared with respect to this form of delegation that:
* * * The Government invokes the analogy of legislation which becomes effective on the happening of a specified event and says that in this case the event is the agreement of a certain proportion of producers and employees, whereupon the other producers and employees become subject to legal obligations accordingly. I think that the argument is unsound and is pressed to the point where the principle would be entirely destroyed. It would remove all restrictions upon the delegation of legislative power, as the making of laws could thus be referred to any designated officials or private persons whose orders or agreements would be treated as “events”, with the result that they would be invested with the force of law having penal sanctions.
(Carter v. Carter Coal Company, decided May 18,1936.)
If Congress could not confer authority on the Bituminous Coal Commission to prescribe as a fair wage-and-hour standard the terms agreed on through collective bargaining, it would likewise seem that Congress could not authorize this Labor Standards Board to promulgate a fair wage-and-hour standard based upon the wages or workweek established in collective agreements or voluntarily maintained by other employers in the same occupation who voluntarily maintain fair wage standards.
The attempt in section 5 (a) to limit a fair minimum wage to a fixed amount in order to avoid conferring arbitrary authority on the Board, clearly fails in imposing any limit on the Board’s discretion.
The maximum fair wage is stated in the alternative; the Board may not fix a wage which will return to the employee an annual wage in excess of $1,200, or an hourly wage in excess of 80 cents, “except for overtime, night, or extra-shift, work.”
If the minimum is fixed on the basis of an hourly rate, the Board may vary the extent of the reasonable workweek to such a point that an annual income in excess of $1,200 would be authorized. The $1,200 limitation therefore is no restriction or guide whatever.
Also, inasmuch as neither the annual wage nor the hourly rate includes any pay for overtime, the authority conferred on the Board
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in section 6 (b) to include in its order “such terms and conditions relating to overtime employment, including the wage rates to be paid therefor”, obviously nullifies these apparent limitations in a minimum wage. These same defects apply in general to the establishment of a fair workweek under section 5 (b).
Third, classification of occupations, and so forth. The broad powers conferred on the Board m paragraphs 5 and 6 of section 12 clearly conflict with the principles enunciated by the Supreme Court in the Schechter case. It is impossible, by a reading of these paragraphs, to conclude that the Board is restricted in any sense with respect to the subject matter that might be incorporated m any labor standard order.
Under paragraph 5 the Board may classify “employers, employees, and employments within the occupation to which such order relates according to localities, the population of the communities in which such employment occurs, the number of employees employed, the nature and volume of the goods produced, and such other differentiating circumstances as the Board finds necessary or appropriate.”
Here the Board is given unlimited discretion to classify without reference to any guide or standard imposed by Congress.
This paragraph does not even contain any of the safeguards carried in the Interstate Commerce Act to avoid discriminations or unjust or undue preferences to any class or locality. The Board’s authority is broad enough to bring economic ruin to any employer or class of employers or to any locality, and no standard whatever has been prescribed to limit this uncontrolled discretion.
Paragraph 6 of section 12 is equally objectionable in authorizing the Board to incorporate in any labor-standard order any terms and conditions it deems necessary “to prevent the established minimum wage becoming the maximum wage and to prevent the discharge or reduction in wages of employees receiving more than the established minimum wage.”
This section is broad enough in its grant of power to authorize the Board even to fix wages above the minimum expressly authorized in either section 4 or section 5 of the bill.
If the Board should decide that it is necessary to fix wages above the minimum in order to avoid a reduction in wages of employees receiving more than the minimum there is absolutely no standard whatever imposed to guide the Board in fixing this type of wage.
Such broad delegation of power to enact wage standards is clearly unlawful under the principles established in the Panama and Schechter cases.
Four, authority to grant exemptions. Under sections 6 and 21 of the bill the Board is given unlimited authority to grant exemptions from different provisions of the act and this power is nowhere restricted by any legitimate safeguards or standards prescribed by Congress.
Under section 6 (a), the Board is given absolute license to deny exemption to employers having less than the required number of employees necessary to bring them within the scope of the act.
Under section 6 (b), relating to work in excess of the maximum workweek, the Board is authorized to issue an order that overtime employment in any occupation may be continued only “upon such terms and conditions” as the Board may prescribe
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The attempt is made to limit such action of the Board to those cases where it finds “that the maintenance of a workweek that is not oppressive or substandard in such occupation is necessary or appropriate.”
In effect, however, it gives the Board authority to prescribe “a workweek that is not oppressive or substandard”, and since such a workweek is presumably different than a “reasonable workweek” established under section 5 (b), the Board is actually authorized to prescribe a workweek without any guide or standard supplied by Congress.
Under section 6 (c) a similarly broad delegation of power is conferred for the treatment of learners and apprentices, handicapped workers, or other cases or classes which, because of the nature and character of the employment, justify special treatment.
In this connection likewise, there are no limitations on the action of the Board in prescribing minimum wages or in fixing overtime in periods of seasonal or peak activity or in maintenance, repair, or other emergency work. Again the Board is given a blank check to write its own wage-and-hour standards and to permit any exemptions it deems desirable.
Section 21 (d) contains a broad delegation of authority absolutely novel in Federal law. Under this section the Board is given power to “exempt any goods from the operation of any provision of this act” if the Board finds that the person owning such goods had no reason to believe they were produced under a substandard labor condition or if it finds that such exemption “is necessary to prevent undue hardship or economic waste.”
Here, in substance, the Board is given authority to exempt individuals from criminal penalties attaching to conduct declared unlawful in sections 7 and 11 of the bill.
As an illustration, the Board, by exempting goods produced under a substandard labor condition, would in effect pardon any person who caused the goods to be transported in interstate commerce or aided and assisted in obtaining the transportation prohibited in sections 7 and 11.
This grant is clearly arbitrary, is protected by no safeguard and such action may be taken by the Board without reference to any limitations imposed by the Congress,
In conclusion it is obvious from this examination of those provisions of the bill conferring specific lawmaking power on the Labor Standards Board that the bill is clearly repugnant to those principles reaffirmed in the Panama and Schechter cases. In substance the Board has authority to prescribe minimum wages, as well as specific wages above the minimum, authority to alter standards fixed by Congress with respect to minimum wages and a maximum work week, has arbitrary power to classify employments and localities and is given absolute discretion to grant various types of exemptions to particular employers or classes thereof.
While lip service is paid to the necessity for establishing legal standards to guide the Board in the exercise of these tremendous powers, careful analysis of the bill and the so-called standards included therein demonstrates that the Board would be given unfettered discretion to roam at will among every trade and occupation in the country and establish whatever conditions of employment
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it saw fit. Like the National Industrial Recovery Act, this bill is a clear example of “delegation run riot.”
Numerous illustrations can be plucked from the bill, both substantive and procedural, to demonstrate violation of the fifth amendment.
Of the substantive provisions perhaps the most important are those dealing with the fixing of minimum wages and maximum hours without any reference whatever to the reasonableness of the standards fixed from the standpoint of the employer and without any regard whatever for the ability of the employer to continue in business under the standards to be prescribed.
On the procedural side, three items may be segregated for particular mention. In section 13 of the bill no employer is given any right to be heard before any order shall be issued by the Board. This section provides that hearings may be held on the Board’s own motion or on the complaint of any labor organization or any person having a bona-fide interest (as defined by the Board). This section obviously leaves it entirely within the discretion of the Board to determine whether or not any employer may be afforded a hearing prior to the issuance of a labor standard order even though it may be directed against that employer. In the same section it is provided that the Board shall not be bound “by any technical rules of evidence or procedure.” Any rule of evidence or of procedure may be technical in the mind of any litigant required to observe it, but the term “technical” is certainly meaningless as used here in defining the form of procedure to be followed by the Board.
It should be noted that this provision goes further than that normally contained in legislation concerning administrative proceedings in which the administrative agency is excused from complying with “legal rules of evidence.”
Even more serious than these procedural defects already discussed is that involving the nature of the notice to be served on any employer prior to a hearing or the issuance of a labor standard order. In fact, no actual service of any notice is mandatory.
Section 12 merely provides that a labor standard order shall be made only after a hearing held pursuant to section 13 of the bill.
Section 13 merely provides that notice shall be given by publication in the Federal Register.
Inasmuch as any such hearing may result in a labor standard order directed against any trade, industry, or subdivision, or even against an individual employer under sections 8, 9, and 10, the bill provides absolutely no assurance that actual notice will be served upon those interested parties whose rights may be seriously affected by the proceeding before the board. This failure to provide for service of notice upon parties to be affected by the order is a complete departure from the general administrative practice and constitutes a violation of the fifth amendment.
Aside from these provisions offending against the due-process clause, the bill is even more defective in the light of the many ambiguous provisions and prohibitions, violation of which would subject the employer to penalties or fine and imprisonment. The principle has been clearly established that criminal offenses must be clearly defined to inform those subject to the law of their obligations.
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The doctrine was defined in the case ofConnally v. General Constrution Co. (269 U. S. 385) in the following language:
That the terms of a penal statute creating a new offense must be sufficiently explicit to inform those who are subject to it what conduct on their part will render them liable to Its penalties is a well-recognized requirement, consonant alike with ordinary notions of fair play and the settled rules of law. And a statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law.
The principle has more recently been applied in the case of Champlin Refining Co. v. Corporation Commission (286 U. S. 210). In that case the Court condemned a Texas statute prohibiting “economic waste” in the production of oil and imposed severe penalties for violation of the act or an order of the Corporation Commission issued under it. The Court held:
It is not the penalty itself that is invalid, but the exaction of obedience to a rule or standard that is so vague and indefinite as to be really no rule or standard at all.
The same principle has been applied to acts of Congress in relation to the fifth amendment. The wartime Lever Act was similarly declared invalid under the fifth amendment in the case of United States v. Cohen Grocery Co. (255 U. S. 81).
Applying the principle of these decisions to the Black-Connery bills, it becomes obvious that several provisions are so ambiguous that no man of reasonable intelligence could comprehend the conduct forbidden or the obligations imposed by its terms. The following examples are typical:
1. Section 7 prohibits the interstate sale or shipment of “unfair goods” and the employment of employees in their production. Any person violating this provision of the act is subject to a fine of $500 or imprisonment for 6 months, or both. What are “unfair goods”?
Section 2 (a) (21) defines the term “goods” to include all articles of commerce or trade “or any part or ingredient thereof.”
It is quite obvious, therefore, that the penalty for shipping or selling goods in interstate commerce may attach under conditions where the person involved had no control whatever of the conditions under which “any part or ingredient thereof” was produced, but still may be held liable to fine and imprisonment. He would be in the position of shipping or selling goods in commerce at the risk of criminal prosecution for practices over which he has no control and many times not even knowledge.
2. From a mere reading of sections 7 and 11 of the bill, and other applicable sections, it is absolutely impossible for any employer to know if or when he would be violating the act with respect to the workweek observed in his establishment. Section 7 would prohibit the employment of “an oppressive workweek.” Section 11 would make unlawful any violation of a Board order establishing a “reasonable workweek.
Section 6 (b), on the other hand, would authorize the Board to establish a workweek that is “not oppressive.” This latter section likewise provides that the maintenance of an oppressive or substandard workweek shall not constitute a substandard labor condition if employees receive time and one-half for overtime. This again is subject to modification by the Board. It is absolutely impossible in the light of these conflicting provisions to ascertain the exact legal
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obligation of any employer covered by the act. The imposition of criminal penalties for violations of sections 7 and 11 therefore would clearly constitute a violation of the fifth amendment.
3. Section 8 of the bill, providing for protection of interstate commerce from the effect of substandard labor conditions in purely local enterprise contains another fatal ambiguity. Under this section the Board is authorized to order the discontinuance of a substandard labor condition, and it would then become unlawful “for any person to employ any employee” in violation of any provision of such order.
Presumably the Board is authorized merely to direct the discontinuance of a substandard labor condition in the production or handling of the particular product, which competes against a similar article shipped in interstate commerce. On the other hand, the practice declared to be unlawful is the employment of “any employee.” Would the employer be subject to criminal prosecution for employing workers in entirely different occupations from that which the Board found gave rise to the unfair competitive advantage against goods sold or shipped in interstate commerce? It is absolutely impossible from reading this section of the bill to determine the exact legal obligation of any employer engaged solely in local enterprise. In this connection it should be noted that section 27 (a) considers as a separate violation of the act the employment of each separate employee in violation of any provision of the act or order of the Board.
4. Perhaps the most serious ambiguity in the entire bill relates to the criminal liability imposed on persons who “directly or indirectly” cause, or aid or assist in transporting or obtaining transportation for goods defined as “unfair” or of goods produced in violation of a labor standard order issued by the Board.
While the definition of the term “goods” apparently exempts the ultimate consumer from any criminal liability for any part he might play in the interstate transportation of such unfair goods, this exemption certainly does not clarify the nature of this unlawful conduct.
Presumably any retailer, service trade, hotel, or even restaurant which purchased goods in interstate commerce could be held in violation of sections 7 and 11 if it should later be developed that goods purchased by such service trades were found to constitute “unfair goods.”
It should be noted that section 27 (a) imposes a penalty of fine and imprisonment upon any person “who willfully performs or aids or abets in the performance of any act declared to be unlawful by any provision of this act.”
Unfortunately for the sake of clarity and uniformity of application, these unqualified prohibitions and penalties are further confused by section 21 (d). There the Board is authorized to exempt “any goods from the operation of any provision of this Act,” under conditions previously discussed. As a result no purchaser of goods for further sale or for further manufacture can tell with certainty whether any part played by him in the interstate transportation of such goods would subject him to criminal liability.
Not only does this aspect of the bill offend against the fifth amendment because of ambiguity, it is even more serious because an act which otherwise would be unlawful may be excused or
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pardoned by the Board after it has been committed. Such uncertainty of application and enforcement of these crimes and penalties is the most serious deprivation of due process contained in the bill.
5. Section 27 (d) provides an even more severe penalty for discharge or discrimination against employees under certain conditions. A fine of $1,000 or imprisonment for 1 year could be imposed on any employer who discharged “or in any other manner discriminates against” any employee who has filed a complaint “or instituted or caused to be instituted any investigation or proceeding” under the act, or if discharged or discriminated against because the employer “believes that such employee has done or may do any of said acts.”
This latter prohibition, depending as it does upon the state of mind of the employer, and the inclusion of any act which discriminates in any manner, is so broad that any discharge, demotion, or even disciplinary action against an employee could be construed as a violation.
A misdemeanor defined in such broad and ambiguous language most certainly violates the spirit and principle of the decisions already discussed.
Let me call your attention now to the fact that every weapon of the law is made available to the Board. Law and equity are at its service. Recoveries for underpayment are appropriately authorized and fine and imprisonment threatens from every section. It is therefore essential not only that the authority of the Board shall rest upon an intelligible standard previously fixed by Congress but that the citizens may know in advance what is permitted, what is forbidden, to whom the act applies, and within what limits. In this regard the bill is so ambiguous that thousands of citizens will be uncertain as to when and where the law applies to their industry and the character of their obligation.
This bill does not apply merely to goods in commerce; it applies to anything intended for commerce or produced for it or sold in it. It applies not only to the primary producer within the field of his intention, but it may cover anyone who handles his goods at any stage, the materials which he uses, and those who supply them. It is applicable to any business, however local, which the Board may find to be in competition with goods introduced in commerce. The only express limitation is that it is not applicable to the “ultimate consumer.” But he, too, may fall within its criminal provisions if he aids or abets in the violation of an order of the Board or the introduction through commerce into a State of any goods produced in violation of that State’s law'. Anyone may come within the indeterminate range of the bill’s artillery, and no one knows how far it shoots.
By the fifth section of the bill and by the definition of what constitutes “oppressive labor practices”, the measure, in effect, amends the National Labor Relations Act. It authorizes the Labor Standards Board to intervene where collective bargaining is inadequate or insufficient to accomplish the objectives of this measure. The fact is for the Board to determine. It will likewise administer what may be termed the “strikebreaking” provision, by which anyone who employs another to take the place of either a striker, or one unemployed because of a labor dispute, engages in an oppressive labor
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practice, except where such employment is necessary to prevent irreparable damage to property or carry on an essential public service. This practice covers likewise the employment of anyone to ascertain the organization activities or the economic or political views of an employee. Such acts taint the production of goods by the offending employer, prohibit their shipment in commerce, and subject him to the criminal and civil penalties of the act. If any justification can be found for imprisoning or exiling from commerce any person who employs another to undertake work which has been abandoned, we submit that no justification can be found for dual and conflicting administration of measures aimed at employment relations.
If the Congress is determined to enlarge the field of what has been described as “unfair labor practices” and in effect to supplement the National Labor Relations Act, we submit that the protection of the public to prevent the arbitrary interruption of production and service now makes it vitally necessary that Congress should consider the establishment of reasonable social standards and controls of labor combinations in the field of commerce. We are confronted at present with unjustifiably interrupted production where collective agreements have been made, local disorder is spreading, and costly strife will reflect itself in commodity prices. We cannot believe that the labor organizations of the United States are unwilling to accept the same responsibility to the public within the field of commerce that is properly imposed upon business organizations. We therefore urge that the Congress will consider, if further controls are to be established in industry, the necessity of adequately providing public protection against the constant interruption of commerce without just cause.
The principles of the Supreme Court decision in the National Labor Relations case apply equally to combinations of employers and employees or other persons when their conduct is aimed at the interruption or obstruction of commerce. Indeed, if the indirect control of production in the name of commerce proposed in this bill is valid, it is equivalent to an assertion that every strike is a restraint of trade and an obstruction of commerce.
But, apart from such a consideration, we ask Congress and the public if the time has not arrived to require labor combinations to meet reasonable limitations upon their conduct which are essential to protect the public interest in commerce. Is it not jut to make it an unfair labor practice for any labor organization to combine to stop production without the previous presentation of a demand or a request, with reasonable opportunity for its consideration; to call strikes in violation of the terms of any labor organization’s own voluntary agreement or of an arbitration award to which it has been a voluntary party and by the terms of which it has agreed to be bound; to interrupt production by jurisdictional disputes without referring the determination of the issue for settlement to some higher authority of its own selection within its own national organization ; to call strikes for the purpose of compelling employers, particularly in public services, to violate the law; to call strikes for the purpose of preventing the operation of any department of the Government or the performance of any of its functions; to call sympathetic or general strikes against those with whom the strikers have no dispute; to strike and occupy or remain in possession of the
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property of any employer for the purpose of enforcing a demand against him?
If your honorable committee is determined to test the validity of the conception of the commerce power which underlies this bill, we still urge the practical necessity of more clearly defining the qualifications of the board proposed, the nature and extent of the power it is to exercise, in terms that may be clearly understood. Nothing could be more unjust than to expose citizens to the drastic penalties of commercial exile and prison without clearly permitting them to understand in advance the nature of their obligation. Everything i indefinite is a costly and confusing contribution to uncertainty at a critical moment in industrial recovery. It is likely to seriously dislocate the economic mechanism of the United States. It will afford to foreign competitors, particularly in substandard countries, opportunity for injurious trade invasion. It will react upon our own people in rising costs and, by the deliberate encouragement and promised support of collective demands, without corresponding responsibility for the exercise of collective power, it will further threaten the public peace and the efficiency and continuity of production. While the farmer is exempted from the bill, he, like the wage earner, cannot escape its economic effect upon his buying power, all of which is a most serious threat to the coordination of State and Nation in our dual Government and a menace to the foreign and domestic trade of the United States in a time of critical and difficult adjustment.
Representative Wood. I would like to ask him one question. Are you now, or have you been, a member of the American Liberty League?
Mr. Emery. I am not and I have not.
Representative Wood. Did you participate, in a legal capacity, in any of the cases before the Supreme Court to test the validity of the Wagner Labor Relations Act, the minimum-wage law, or the Social Security Act?
Mr. Emery. I did not.
Representative Wood. That is all.
Representative Ramspeck. Mr. Emery, do you think Congress has any authority to pass a flat minimum wage and maximum hour bill without vesting any discretion in a board?
Mr. Emery. You mean under the commerce power?
Representative Ramspeck. Under any power.
Mr. Emery. Well, it must be attributed to some power, and, of course, I would have to ask you to what power you would attribute it before I would undertake to give an answer.
Representative Ramspeck. Of course, it would be under the commerce power and related to business in interstate commerce only, the interstate commerce affected by the action of the law, on the same theory that the Wagner Act was upheld.
Mr. Emery. I think that is quite a different theory, because the court has repeatedly held that the regulation of wages and hours indirectly affects commerce, and for that reason has invalidated provisions that undertook that objective. You remember under the Schechter case two indictments against the Schechters involved the violation of the wage and hour provisions of their code, and those indictments were overruled on that ground.
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I do not believe that Congress, under the commerce power, possesses the power to fix wages and hours, except in the employments which. are clearly subject to its authority. I do recognize that there are many employments that are subject to the exercise of the commerce power, as, for instance, those embraced within the Railroad Labor Act, and all instrumentalities of interstate commerce are subject to it. Of course, all public employees are within the jurisdiction of Congress.
But I think it is clear that Congress may not regulate the production within a State. I think that is clearly the state of the law at present, under the two cases to which I referred, which included Mr. Justice Cardozo’s assent in the Schechter case, and under the cases that have subsequently followed. As late as the decision of the Supreme Court of the United States in the Social Security case, a few short weeks ago, where Mr. Justice Cardozo referred again to the first Child Labor case, to the principles therein involved, approved the principles and distinguished them from the case before the Court.
Representative Griswold. It is the primary principle of the law that Congress cannot delegate power that it does not have itself, is it not?
Mr. Emery. Certainly.
Representative Griswold. If Congress has the power to delegate to a board these things, to fix minimum wages and hours, it would also have that power to do those things itself?
Mr. Emery. If Congress possessed the power to do that, which I do not believe it has, it could, within limits, delegate the authority for the executive execution of its policy. It does that many times. We have many examples of delegation of authority for that purpose.
Representative Griswold. If Congress did not possess the power, then it could not delegate it?
Mr. Emery. No, sir. Of course, even although it possess the law- making power, it cannot delegate that.
Representative Griswold. I agree; but I am talking about the question of fact, that if Congress defined that a certain minimum wage and maximum hours should be established in certain industries in which interstate commerce is involved, could not Congress itself find that as a fact instead of having a board find it?
Mr. Emery. Certainly; within the exercise of its power.
Representative Griswold. In other words, could not Congress, if that be true, write a law that simply provided minimum wages and maximum hours, and let it go at that without any boards?
Mr. Emery. Assuming it has the authority to do that, it unquestionably can do it, just as it possesses the rate-making power. It could fix the rates for every railroad in the United States, for every interstate communication, if it so pleases; but on account of the complexity and detail involved, it delegates the authority to make a rule by which it is executed within standards laid down by the Congress.
Representative Griswold. If, for the general welfare and general good, because of the economic situation, it is necessary to establish a minimum wage and maximum hours, why cannot it be done by just a few words that fix those things in a legislative enactment and provide penalties for violation, just the same as the penalties are provided in this bill
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Mr. Emery. Of course, it could do so if it had the power. But, of course, if the distinguished Representative will permit me to say so, I do not think Congress possesses the broad power to legislate for the general welfare. If it did, there would not be any use for enumerating and limiting the powers of Congress.
Representative Griswold. I am simply assuming that Congress has the power to delegate the powers, and if Congress itself has the power i to do these things it has the power to delegate.
Mr. Emery. It cannot delegate what it does not possess. That is. it can only delegate authority within limits.
The Chairman. One question, Mr. Emery.
Mr. Emery. Yes.
The Chairman. Assuming that Congress does have the power to regulate interstate commerce, as contemplated by the bill—recognizing, of course, that your whole thesis is based on the fact that it does not-—do you think it is possible for Congress to exercise that right by a minimum-wage bill, an arbitrary flat minimum wage, or to leave that to some agency with some flexibility in establishing the minimum wage?
Mr. Emery. Well, that involves really an economic question upon which my opinion, Senator, is not as good as that of Mr. Sargent, for example, but I should say this, that if Congress possesses, as you say, the power to do this and were about to exercise it, then the important thing is that the standard that it fixes be a very clear one.
The Chairman. You believe that it should do it itself, or that it should delegate to some agencies with certain standards?
Mr. Emery. I think it would have to delegate within certain standards.
The Chairman. Of course, you realize that there is a possibility of passing such a bill?
Mr. Emery. Certainly.
The Chairman. If your organization would be interested in supplying to this committee for its use in consideration of the bill more definite standards, such as you have suggested, removing criticisms, at least some of them, which you have made, I am sure I, for one member of the committee, would be delighted to have them before we take the bill up for consideration.
Mr. Emery. Thank you, Senator. Of course, we may be confronted with a condition and not a theory.
The Chairman. That is right.
Mr. Emery. The importance of making any legislation enacted as clear as possible is a vital matter, because it would make a big difference whether one was to live under an ambiguous statute or whether he was to live definitely under a Cromwellian code in which there were 100 penalties involving death. The penalties of this bill are so severe that unusual care ought to be taken in the formulation of the penalty.
The Chairman. I want you to understand that I am not suggesting that for any purpose. I would be very glad indeed to have the suggestion of the organization in connection with the standards, that we could take and consider if we do enact legislation, if we wanted to redraft or amend.
Mr. Emery. I assure you, Senator, that we would regard it as an obligation to be of any assistance that we can.
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The Chairman. Thank you very much. We will recess until 2 o’clock.
(Whereupon, at the hour of 12:50 p. m., the committee recessed until 2 p. m. of the same day.)
(The hearing was resumed at 2:10 p. m., pursuant to adjournment for the noon recess.)
The Chairman. Mr. Sargent, will you come forward please and make your statement?
The Chairman. Will you state your connection with the National Association of Manufacturers?
Mr. Sargent. I am secretary and economist of the National Association of Manufacturers.
The Chairman. How long have you been with them?
Mr. Sargent. Seventeen years.
It has already been stated that the National Association of Manufacturers approves the basic objectives of this bill, but that we have certain specific objections related to (1) the fact that it tries to cover too much territory in one omnibus bill; (2) the fact that it creates additional business and employment relations complications; (3) the fact that in many respects it is complicated and cumbersome.
It is my purpose to analyze some of the economic aspects of the pending proposal, particularly as it relates to wages and maximum hours. We believe we have an obligation to express our views as to the economic effects the bill would have if enacted—to assist you in determining whether the alleged benefits are worth the probable costs.
Summarizing my conclusions as to the economic effects such legislation might have, I believe—
(1) There is not now, and is not here proposed, any equitable national yardstick by which to either measure or fix “fair wages” for all the industries and sections of the country.
(2) Even if such a yardstick existed it would be just about impossible to administer fairly without creating economic confusion.
(3) Attempts to fix industrial wages on a basis of “economic fairness” are apparently designed to raise average wages; if this is so, then it will naturally result in increased living costs to the housewives and farmers oi the country.
The proposal favors so-called “big business” as compared with “little business”.
(5) By raising domestic costs it will handicap the manufacturers—and their employees—who export goods abroad.
(6) By raising domestic production costs it will handicap American firms—and their employees—faced by increased foreign imports.
(7) It does not reach the problem of sweatshop labor conditions.
(8) It would tend to make the next depression worse than would otherwise be the case.
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SWEATSHOP LABOR
At its last annual meeting our association declared itself “unequivocally opposed to * * * sweatshops in manufacturing” and as supporting “appropriate legislation” for their elimination.
The pending measure would not really touch this problem.
I realize that there is no specific wage minimum or hour maximum in the bill, but there has been much current discussion of 40 cents and 40 hours. Now, I submit that these figures don’t get down to what are considered real “sweatshop” conditions; the bill seems, therefore, to be really designed to control what Mr. Richberg terms “economic” wages and hours instead of “sweatshop” wages and hours.
In the second place, it seems to be generally assumed that the bill will not apply to employers of less than 15 or 20 persons; and I think most of the really oppressive sweatshop conditions we would like to remove are thus excluded.
The bill, moreover, would exclude purely intrastate industries, thus further actually providing protection to sweatshops. I am aware that the bill does permit some intrastate industries under certain circumstances to be subject to Federal wage and hour control, but even this limited exception apparently does not apply to the service industries, trades, and occupations, in which lie probably the bulk of sweatshop labor.
I must believe, therefore, either that the bill is not really intended to eliminate sweatshops or that it seeks to do so in an utterly inadequate manner. Sweatshop conditions are essentially local conditions; they vary widely from industry to industry and community to community, even within the same State; it is a problem especially difficult for Federal legislation to cope with in any intelligent and effective manner.
WAGE CONTROL
The pending measure would establish a Federal yardstick of wages, with power to a Federal Board to “vary such standard upward or downward.”
The evidence indicates, although the bill does not specifically so state, that it is thought the measure would result in higher average wages, regardless of other economic forces which might be operating. Indeed, one of the apparent backgrounds of the wage-control proposal is the so-called purchasing-power argument, widely advocated by many persons ever since 1929. This theory assumes that if we can only increase the money people have to buy goods with, we can assure prosperity. This was the basis of the effort in December 1929 to persuade employers to keep up wage rates at all costs; they did so with the result that millions of men became unemployed because the goods they could produce couldn’t be sold for enough to enable anyone to hire them at the former wages. This “purchasing power” theory was also the basis of the N. R. A.; in its penetrating analysis of the N. R. A., the Brookings Institution reports (pp. 757, 760):
The main outlines of the purchasing-power theory are fairly simple. Employers were to raise wages and thus expand their pay rolls. The return flow of these enlarged payments in the form of demand for the products of industry would increase the physical volume of goods and services sold.
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Employers must not raise their selling prices as fast or as far as they raised wage rates. * * * In practice it did not work out as planned. * * * The anticipated lag of price advances behind wage increases did not in general occur. * * * On the average, prices rose ahead of wage rates.
The pending Black-Connery Federal wage and hour control measure seems to be predicated upon the same economic error; it is in substance a new N. R. A. from the standpoint of its economic basis, even if the method used differs.
The purchasing-power theory of wages is a phase of the so-called underconsumption theory as to the cause of the business crisis—an inability to sell part of the goods produced at a price equal to or exceeding their cost.
It is sufficient to say at this point the the theory is condemned by leading economists. Thus, perhaps the world’s principal authority on business cycles concludes (Dr. Wilhelm Ropke, of Istanbul University, Crises and Cycles, pp. 86-90):
If we pump purchasing power into the hands of the masses without treading the path to inflation, there must occur a diminution in the incomes of entrepeneurs, so it is only the composition of demand and not its total amount that is changed. • • • The question arises here also whether the composition of demand as determined by the distribution of income and its changes is not an important factor for the explanation of disturbances of economic equilibrium. • • • Lets us take • • • the idea that the share of the workers’ income in the total national income is too small • • • to secure equilibrium in the economic system. Then the objection immediately presents itself that the crisis is not preceded by a slack time but by a boom in which the Income of the worker rises along with the total income. In the same vein it must be objected that, contrary to what the underconsumption theory would lead us to expect, it is the consumer’s goods industries which are usually the least and the last affected by the depression • • • This is really fatal to the idea that it is the appearance of a deficiency of consumers’ purchasing power which is the factor bringing the boom to an end.
And Dr. Gustav Cassel of Stockholm University, perhaps the world’s leading economist, declares (Quantitative Thinking in Economics, pp. 66, 67) [reading]:
Certain Charlatan teachings that have recently taken a conspicuous place in popular discussion of social economy as well as in political agitation * * * particularly in the United States, lay much stress on a supposed insufficiency of income for buying the whole product of the community * * *. This conclusion is wrong. It has simply overlooked that the costs of production of new capital goods for replacement represents an income for those engaged in this reproduction. This income—which is at disposal for buying the net product—is equal to the total value of the replacement goods, and thus also to the total sum written off for depreciation and debited to the cost of the net product. Thus total income suffices for buying total net product.
But suppose, for the sake of argument, we accept the “purchasing power” theory as a sound theory—even if its theory were sound there are still many grave difficulties involved in proposals to establish Federal wage control.
For example—there are only three directions at which a wage rate can be fixed, namely:
(1) At the free-market price. If it is fixed here, then obviously it is a waste of time to have any board or legislation at all.
(2) Below the free-market price. If it is fixed here then the demand for labor and its supply get out of adjustment. The demand for labor will be increased and its supply lowered. The eventual answer would have to be the rationing of consumers, in order to limit
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the demand for goods and thus reduce the demand for labor—thus limiting the freedom of consumers.
(3) Above the free-market price. If the wage rate is fixed here then once again we will find the demand for labor and its supply getting out of adjustment. The demand for labor will be reduced and its supply increased. To meet this situation the Government would have to compel an increase in production, regardless of the demand for goods at the price involved.
Perhaps these extremes would not result. But it is certain that Government cannot control wages without soon being faced with the necessity of controlling prices, either directly, or by seeking to control such other cost factors as taxes, insurance, interest rates, and so forth.
Gardiner Means, one of the Government’s economic advisers, writes (Problems of the New Economy, p. 199):
Partial planning may easily lead to uneconomic use of resources and. a distortion of economic relationships.
Industrial policy-making for each industry could, obviously, have very disturbing results if the relations among industries were not part of the picture.
Dr. Alvin H. Hansen, economic adviser to the State Department, was a member of Columbia University Committee on Economic Reconstruction which in 1934 pointed out (report, pp. 50, 217) that the true economic goal should be “planned flexibility” and that this could only be accomplished by governmental “orderly adjustment” or continuous control of such “fundamental cost groups” as (1) interest charges, (2) depreciation, (3) railroad and public-utility rates. (4) basic fuel and metal-products prices, (5) taxes, (6) wage rates
In other words, this bill could only be effective, if at all, with complete economic planning of other economic factors as well.
It is impossible to inject an act of Congress into an economic machine and stop one major part of it—the free movement of prices— and expect the rest to go on as before. Once Government starts to interfere in direct economic control, it is difficult to stop doing so.
In addition to the general problem of the economic point at which to fix wages there are other practical difficulties. Consider, for instance, the problem of differentials. The bill provides that 15 differentials may be considered in fixing wage rates:
(1) General wage level (4c).
(2) “Minimum standard of living necessary for health and efficiency” (4c).
(3) “Opportunities for employment” (4c).
(4) “Cost of living” (5a).
(5) “Value of the service or class of service rendered” (5a).
(6) “Wages established for work of like or comparable character by collective labor agreements” (5a).
(7) “Annual wage income” (5a).
Query.—Does the $1,200 “annual wage income” relate only to wage fixing where the Board finds collective bargaining “inadequate” or “ineffective” (5a)? If so, is there any general limit on the minimum to be fixed in other cases under the bill ? Again, it is not dear that either this or other differential bases (8, 9) apply to work which is customarily seasonal in character.
(8) Special character of the employment (6c).
(9) Special term of the employment (6c).
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(10) Qualifications of the employees (6c).
(11) Localities (12-5).
(12) Population of communities (12-5).
(13) Number of employees employed (12-5).
(14) Nature of goods produced (12-5).
(15) Volume of goods produced (12-5).
The magnitude of the problem involved is further realized when we find that the United States Census of Occupations reports gainful workers in over 625 classifications; the United States Employment Service now uses approximately 6,300 separate occupational classifications.
Here is the dilemma—if you don’t provide differentials you are nonrealists, refusing to recognize the fact that differentials have developed and exist, and that ignoring them would almost completely alter—and perhaps even wreck— the complicated and delicate economic machine.
If you do recognize 600 or 6000 separate occupational classifications and attempt to fix wage rates for them under the 15 differential standards in this bill, you have an administratively difficult task, one probably incapable of being carried out, with the result that administration will break down and the whole measure be repudiated in practice if not in legislation—but with great economic harm occurring in the meantime.
Isn’t this a perfectly huge task—an enormously complicated economic planning responsibility—to impose at any time—isn’t it particularly so when we are still subject to relatively new burdens imposed by the Social Security Act and the National Labor Relations Act—to now add new burdens and confusions when we are still trying to work out duties and burdens under other recent major legislation?
There are other complications involved in the wage-control features of this proposed legislation.
Will a legal minimum wage tend to become the maximum wage? I think there is no doubt that such a tendency will exist, although only in a relatively few cases will the minimum and maximum actually be identical. What will happen is that the percentage spread between the minimum and maximum will become less. The attempt by legislation, as proposed in this bill (12-6) to prevent this development by administrative fiat, is as economically ridiculous as the statement made to King Canute by his courtiers that the tide would recede at his mere command. Certainly it has been the experience in foreign nations that where minimum-wage legislation has existed that over a period of years there is an increasing tendency for the percentage spread between minimum and maximum wages to decrease.
As another complication which would result from the bill, let us consider section 5 (a) which authorizes the Board to establish a “minimum fair wage” for an occupation when it considers that collective bargaining results in payment of less “than a minimum fair wage” - in other words, to replace a collective bargaining contract with a Board order. There are several objections to this:
It establishes a basis of doubt on the part of both parties to a collective bargaining contract as to its validity.
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(2) It establishes a basis of conflict between the Labor Standards Board and the Labor Relations Board—to the further confusion of the employer.
(3) It establishes real doubt as to the wisdom of concluding any collective bargaining agreement.
(4) It raises again the possible justification of the previous strong front of the American Federation of Labor against any legislative fixing of wages for men.
But let us suppose that all previous doubts as to economic wisdom of the legislation are discarded, and that the bill is enacted and is 100 percent workable—what then?
Why simply this—two major results of overwhelming consequence:
(1) Average wages are raised—then production costs will be higher—then prices will rise—then consumers, particularly housewives and farmers, will begin to squawk. Already stores are worried about probable price rises—you have all noticed how much merchandise is being advertised on the scare plea, “Buy now; prices will be higher later.”
Suppose this development is enhanced by the Labor Relations Act and the Labor Standards Act. Can we doubt the reaction of the housewife and the farmer? It would seem economic folly to increase the costs of what farmers must pay for industrial products and further unbalance the national economy.
(2) Rigidities would be established in our economic system which would make the next depression worse than it otherwise need be. These rigidities would be first in the field of wages and second in the field of prices. Indeed, at this point, I must modify my previous statement that the objectives of the proposed measure are sound. It is stated in the bill that one of its objectives is to bring about greater “stability of prices of goods” (1a; 10-2).
I believe, on the other hand, that we need less rigidity or stability, instead of more; that we need more flexibility; that it is a mistake to adopt measures which tend to “freeze” either wages or prices into our economic system; that the result of such rigidities is to make economic adjustments more difficult and a depression more likely or more severe when prompt economic adjustments would be economically desirable.
In this connection I direct your attention to these observations by Dr. Wilhelm Kopke (Crises and Cycles, pp. 159, 160):
The success of direct interferences with the structure of production, costs, and prices, aimed at the mitigation of the trade cycle is extremely dubious. * * * The most severe of all depressions has descended upon us just in a moment when capitalism has been disfigured by an excess of interferences of all kinds (* * * wage regulations * * * restrictions on the movement of capital, etc.) until it is practically unrecognizable * * * It is palpable that we should speak not of the ‘'crisis of capitalism” but the “crisis of interventionism.”
Indeed, from the standpoint of basic economics I believe easily the worst effect of this bill would be the establishment of wage and price rigidities which would intensify the severity of our next business recession. You will recall that Secretary Wallace and Mr. Gardiner Means during the past few years have especially stressed the necessity of price flexibility, with which wage flexibility is intricately connected.
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In concluding my analysis of the economic aspects of the wage-control provisions of the pending bill, I present for your consideration the following opinions expressed by one of the country’s citizens prominently in the limelight today:
Undoubtedly there will be many who will say that the (organization) * * * betrays a lack of foresight and ability in trusting merely to the operation of natural economic laws to bring about a permanent improvement. * * * (It) must confess that it has no patent cure-all in its pantry. The American people have become so accustomed to the proffer of sure cures by politicians and economic quacks that many of them are disappointed when any man or organization fails to promise a removal of any ill by short cut, easy way, or magic formula (p. 17).
Let us admit at the outset that the * * * industry was not conceived, planned, and blue printed by scientific supermen or young critics just out of Harvard, who are fully equipped to tell us of all the mistakes our granddads made. * * * In time the industry, like others, was overdeveloped, and overproduction became chronic. This overdevelopment and overproduction would have been checked, as in most other industries, if economic law had been given free play. It is in these obstructions to the operation of fair competition in the industry and its ills, that the industry is economically most peculiar today (p. 19).
However regrettable planlessness and waste may be from an idealistic standpoint, many of us are so hardheaded as to suspect that America would never have been settled, and American Industries would never have been developed to a point where it was possible or worth while to economize, if it had not been possible to exploit our natural resources under free conditions in the beginning (pp. 19 and 20).
Private control of a monopolistic nature which could limit production according to any plan or formula being impossible, it may be worth while to consider in passing the possibility of Government control of this Industry.
It is difficult to conceive how any such control through political agencies could function without putting straitjackets upon the supply of industrial energy that would bring paralysis of initiative and enterprise in all other business lines. The quantity * * * needed for the factories and homes of America cannot be determined in advance, simply is not subject to exact forecast because it varies from day to day with the ebb and flow of business, not only in America but around the world. The writer is convinced that such an indeterminate quantity cannot be regulated artificially in a manner even to promote stability, much less insure it * * *.
The only manner in which we can hope to have the * * * industry function in tune with the rest of the industrial system, is to see that * * * (it) remains at all times subject to the same economic laws which are simultaneously determining the volume of all production and distribution of commodities (pp. 21, 22).
These statements, worth recalling today, were written by John L. Lewis, president of the United Mine Workers, in 1925 (The Miners Fight tor American Freedom).
HOUR CONTROL
Apparently the theory back of this measure is that by reducing the average number of hours of work it will increase the number of people employed.
In this field, as in that of wages, the Board is expected to take into account a wide variety of differentials. It may be noted, too, that, again as in the wage field, the Board is given virtually unlimited power, since it delegates to the Board authority to “vary upward or downward” the “standard” elsewhere to be defined by Congress in the act (4c, d-2-A-10, 11). For all practical purposes, therefore, no real check is put on the Board.
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I note, too, that the Board is supposed not to promulgate standards “unreasonably curtailing” either “opportunities for employment” (4c) or “the earning power of the employees” (4d). What is a “reasonable” curtailment and what is an “unreasonable” curtailment? Apparently the Board can answer this question in every case, as it sees fit, since there seems to be no legislative definition of an “unreasonable” curtailment, although there is a definition of another vague term appearing in the act, the words “to a substantial extent” (2ar-26).
I find myself, moreover, in doubt as to just what is meant by the statement that in determining hours the “economic health” as' well as the “physical health” of employees should be considered (5b).
Again, will it be possible for any board, no matter how competent, to determine the varying surpluses or shortages of labor in 6,300 occupations—or even a substantial fraction of that number, and to keep its record continually up to date ?
Today we have no real idea as to how many unemployed persons there are in the United States, we do know, however, that in many occupations there is a shortage of skilled labor. Thus, the New York State Department of Labor on June 2, reported that in April it had been unable to fill 900 jobs in New York City, 60 percent of them in skilled and semiskilled trades, even though it has the names and job qualifications of 450,000 unemployed persons in the metropolitan area. In the metal trades, for example, there were no takers for 125 jobs at wages ranging from 80 cents to $1.25 an hour.
I recall, morever, that William F. Patterson, executive secretary of the Federal Committee on Apprentice Training, appearing before the House Labor Committee April 26, mentioned the present “dearth of skilled workers” (Hearings on H. R. 6205, p. 71).
In short, we fear that in practice it would be difficult, perhaps impossible, for any board to adequately take into account in attempting to regulate hours of work either the surpluses or shortages of labor in different occupations, industries, and communities.
But let us assume it could be done; let us assume further that average hours of work are reduced, but the same weekly pay maintained (for that seems to be the formula). One of two results might follow—(1) Additional workers would be employed, but since the unit cost of production would be higher the consumers would pay more; or, (2) since the consumer would pay more he would buy less, demand would fall off and so would employment.
Most of the proposals advanced state that for fewer hours work per week employees should receive the same weekly pay as before. It is obvious that this would increase the wages paid per hour. For example, if wages are 50 cents per hour under a 40-hour week, then under a 30-hour week wages would be approximately 67 cents per hour, an increase of one-third. If 10 hours of labor are required on an article the labor cost would be increased from $5 to $6.67. The increase, of course, would obviously be felt in increased prices which all consumers would have to pay.
Here again we find the Brookings Institution has thus summarized the principles involved:
The much advocated 30-hour week with 40-hour pay would produce an increase in prices and the cost of living calculated to widen much further the disparity between the income of the country and the prices of things it buys.
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If the employers do not raise prices to offset the higher cost, they will be ruined and go out of business and employment will be decreased; but if they do raise prices, there will be no extra purchasing power to buy the products, the total demand will be decreased, and once again employment will suffer.
No one can whisk away the inseparable connection between costs, output, and prices. To increase costs before there is increased demand is to put the cart before the horse, and run the risk of making matters worse instead of better.
Increased living standards for the country as a whole can only result from an increased volume of work; they will not be increased by simply dividing up the existing volume of work. We need national policies which will increase the total volume of work done instead of trying to maintain the volume of work at existing shrunken levels. The Brookings Institution has soundly pointed out that—
A universal 30-hour limitation advocated in some quarters, with a practically attainable average of 27 or 28 hours, would be clearly a freezing of partial employment with a low standard of living.
We do not believe that this country desires to adopt any such policy. We reject the idea that there will be a vast permanent army of unemployed in the United States. It is for this reason that we oppose attempts to attack the unemployment problem by adopting the idea that the volume of business production in this country must always remain at any given level.
The Chairman of the Federal Reserve Board, M. S. Eccles, gave this sound caution March 15:
Increased wages and shorter hours when they limit or actually reduce production are not at this time in the Interest of the public In general or in the real interest of the workers themselves.
Certainly, Mr. Chairman, we cannot assist in the elimination of poverty by reducing the supply of goods to be consumed.
Prof. J. M. Clark, of Columbia University, former president of the American Economic Association, says (1934 Columbia University Report on Economic Reconstruction, p. 125) that—
A compulsory increase of wages, by increasing costs of production, might lead to restriction of output in the attempt to protect profits—in short to just the opposite of the desired effect.
Dr. Thomas N. Carver, of Harvard University, another former president of the American Economic Association, summarizes his observations as follows (American Economic Review, September, 1936):
The hope often often expressed, that shortening the working time of both labor and capital, with no dimunition of wages or interest, would relieve unemployment, is a vain hope, based on insufficient analysis.
EXPORTS AND IMPORTS
How would this measure, if enacted, affect our national volume of trade?
Well, there are two principal groups of manufacturers and employees directly interested.
First, those manufacturers and employees engaged in making goods which are exported in considerable quantity. If their
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production costs and resulting selling costs are raised, then the exports of competitive products will decrease.
Second, those manufacturers and employees engaged in making goods which either actually or potentially are in competition with goods from abroad. If American production and selling costs are increased then the difficulty of selling in competition with imports of foreign-made goods will be increased. The result would be decreased production and employment in many American industries.
BIG BUSINESS VERSUS LITTLE BUSINESS
I believe, moreover, that this bill would, if enacted, tend to favor so-called “big business” as compared to “little business.” No general rule can be laid down—I know many small plants which pay top wages in their industries—but generally speaking the big company tends to pay higher wages than its small competitors. The result is that if costs are raised by wage and hour control the larger company will, as a rule, have its costs increased least; the small company will be given an additional competing handicap.
I am aware that the act permits the Board to take size of companies into account (12-5), but I believe that in actual practice the Board’s rulings would inevitably result in greater proportional cost increases to companies with lower average wages than to those with higher average wages, and that this would favor the bigger companies in general.
Under the N. R. A., for example, the Government could have rejected code provisions, wages, hours, or any others, which gave advantages to the larger companies—but that was not the actual experience. Who does not recall the report of the so-called Darrow Commission, appointed by President Roosevelt, which reported that the N. R. A. definitely and substantially favored “big business” and handicapped “little business.”?
EMPLOYMENT RELATIONS
I cannot logically conclude analysis of the economic aspects of this measure without at least directing attention to some of the practical employment relations effects it would have if in operation.
First, there would be continual doubt as to whether Congress might change the base or terms at each session.
Second, and even more important, what would the Board do, since it could at any time vary the congressional standard up or down, so that Congress would in actual effect be abandoning its power to fix standards.
Third, if the employer engages in collective bargaining, and makes an agreement, how does he know this Board would not throw the contract overboard?
Fourth, if this Board fixes a minimum wage higher than the existing minimum, the employer is going to be confronted all along the line with employees in higher wage brackets demanding wage increases to keep their former differentials. Every new minimum above an existing minimum would require reexamination and controversy over the entire wage range in a company.
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Fifth, even if the employer adjusted his wages and hours in accordance with Board regulations, how could he be protected against conflicting decisions by—
(a) The National Labor Relations Board.
(b) State labor relation boards.
(c) State labor standards boards.
From a practical operating standpoint, this bill would make employment relations more complicated, more difficult of settlement, than they are today—before industry and the country have even had a chance to see if the Wagner Labor Relations Act, also on a national scale, is really workable.
CONCLUSION
There is now no national yardstick by which to fix wages and hours for the entire country.
This bill does not provide one; if applied on the terms specified it would be so complicated it would either fall of its own weight or would seriously affect our entire economic system.
If it worked as is apparently intended, it would increase prices to housewives and farmers. It would increase foreign imports at the expense of American workers; it would favor “big business” as against “little business”, and it would further complicate an already complicated employment-relations problem.
We are seeking to enact drastic and vital legislation to affect in major degree our intricate and delicate economic machine with inadequate information.
In England a special parliamentary commission studied the problems of home rule for India 6 years before it evolved a concrete proposal; they studied unemployment insurance 4 years before they introduced a proposal; after the act had operated 20 years they studied its operations 2 years before introducing measures to correct its defects. In the social-security field, certainly no more complicated than the wage, hour, and price field, we studied the problem 6 months before proposing legislation.
Perhaps less haste to enact complicated legislation in a field in which inadequate facts exist would result in more surety that our economic system would not be thrown out of balance and that future depressions would not be made more severe as a result of governmental action.
Representative Ramspeck. Mr. Sargent, for the sake of the record, I would like to ask you whether this statement is the result of your own effort or opinions, or whether you had some committee of your organization that went into this matter and made recommendations on which you based your statement?
Mr. Sargent. Well, I would say that it was a combination of the two, Mr. Ramspeck. We had meetings of our board of directors subsequently to the introduction of the legislation, and also of our employment-relations committee, and then we had a later meeting with the executive committees of three of our groups, and it is on the basis of all of this that at their request I prepared my memorandum.
Representative Ramspeck. I notice that you made the statement that you had not had time yet to see whether the Wagner Act was going to work. The reason for that is because the employers of this
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country refused to abide by it until the Supreme Court declared it constitutional; is that not so?
Mr. Sargent. You will recall, sir, if my recollection is correct, that prior to the Supreme Court decision, I think, five or six circuit courts of the United States had passed on the legislation and had expressed doubts, to say the least, as to its constitutionality, so that many employers did feel that there was sufficient doubt as to its real validity to cause them to disregard it in view of those rulings.
Representative Ramspeck. And there were some 65 or 70 injunctions to restrain the Board issued?
Mr. Sargent. Yes; I believe that is so.
Representative Ramspeck. All at the request of the employers?
Mr. Sargent. I believe so.
Representative Ramspeck. You had a good deal to say about the power in this Board here to recognize conditions in hours and wages. As a matter of fact, the bill simply recognizes, as you pointed out, conditions that already exist, doesn’t it?
Mr. Sargent. It enumerates a number of differentials which certainly are in practice and in operation; yes, sir.
Representative Ramspeck. We do have a very wide variation of minimum wages and maximum hours in industry today, don’t we?
Mr. Sargent. In industries and localities throughout the country; yes, sir.
Representative Ramspeck. And they exist within the same industry?
Mr. Sargent. That is right; in different localities and communities; yes, sir.
Representative Ramspeck. In different sections of the country and different plants in the same section, don’t they?
Mr. Sargent. Not so much in different plants in the same section There may be minor variations, but those of any substantial character are generally between sections.
Representative Ramspeck. Well, take New England, for instance. Up in Maine there have been some cases which have just come to light recently of some very low wage scales up there in a section of the country which is generally considered to be a high wage scale section.
Mr. Sargent. There have been charges made as to the wage scale. I don’t know to what extent the efforts have been made to relate them to questions of seasonal labor and the like.
Representative Ramspeck. The Secretary of Labor testified before this committee a few days ago that the worst case of cutthroat competition based on wages that she had found recently happened in up-State New York.
Mr. Sargent. Quite possible.
Representative Ramspeck. New York is generally considered a pretty good State from the standpoint of labor standards—isn’t that true?
Mr. Sargent. I believe so; yes, sir. In fact, that was my point; that because these problems do exist to such an extent in local communities throughout the country that Federal legislation is almost inadequate to deal with the sweatshop problem.
Representative Ramspeck. Well, I do not agree with that viewpoint. I think that the sensible thing for the bill to do is to take into consideration the fact that these differences do exist and try to adjust them in an orderly and leisurely manner, rather than to try
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to disrupt the existing conditions overnight, and it seems to me that representing, as you do, manufacturers, you ought to be glad the bill has that provision in it, rather than to criticize it.
Mr. Sargent. Well, I realize, as I say, that if you do not recognize the fact that differentials exist, you are not realists. If you do recognize the fact that they do exist throughout the country and have grown up by custom and actual operation over a great many years, then you are asking an administrative board to administer an act of Congress which asks it to do an almost impossible job.
Representative Ramspeck. Why is it impossible when we direct that Board not to put into effect anything in this act until they have had a complete hearing and a study of the facts?
Mr. Sargent. Well, the Board can determine for itself the completeness of the hearings, and the adequacy of the testimony, of course, and it is not governed in any way by the testimony, which I presume is proper.
Representative Ramspeck. Mr. Sargent, when is the National Association of Manufacturers, if ever, going to try to help us solve these problems instead of always coming to Congress in opposition?
Mr. Sargent. Mr. Ramspeck, we believe that the most effective way of helping to solve some problems is by pointing out errors which are proposed in the efforts made to meet problems, that that is a constructive attitude if we believe that errors do exist in the proposals which are before you.
Representative Ramspeck. Yes; but you don’t propose any alternatives. Your association has appeared before the House Labor Committee in opposition to old-age pensions, in opposition to the Wagner Act, in opposition to the 30-hour law, and we have never had from you a constructive suggestion as to meeting the problems which we all know exist.
Mr. Sargent. Well, there has been as you will recall, sir, considerable doubt, certainly m the past, as to both the constitutionality and the wisdom of much of this legislation to which you refer upon which we have appeared as you have stated and expressed the position that you state. Experience has yet to demonstrate whether those doubts as to the economic aspects of those measures were justified or not.
You will recall, sir, that only recently we communicated to the House Labor Committee our endorsement of the apprenticeship bill and the C. C. C. extension bill.
We have, moreover, recently advocated substantially the child-labor bills now advocated by the Senate Interstate Commerce Committee.
Representative Ramspeck. You realize, of course, that we cannot continue to exist in this country with eight or nine million people unable to secure employment.
Mr. Sargent. I realize certainly that we should seek to alleviate that problem by every practical means.
Representative Ramspeck. What is your theory, or how would you meet it?
Mr. Sargent. Well, I believe, Mr. Ramspeck, that there are many aspects of that problem. I believe, for example, for one thing, that we should try to bring about greater flexibility in the field of wages and prices, instead of less. I think the Secretary of Agriculture,
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Secretary Wallace, has pointed out many times that there is too much inflexibility in our economic system which has been added on, not all by legislation, but some by custom in the last several years. I believe also in the specific field that you are discussing, that there are two separate problems confronting you. One is the sweatshop wages, and the other is the so-called economic wages. I certainly believe that in the sweatshop field, because they are essentially local in character, that they probably can only be met adequately by State legislation.
I believe that in the field of economic regulation of wages that there is considerable doubt as to the wisdom of any legislation in that field unless it is put on the basis, perhaps, of voluntary agreements by industry submitted to the Government to see that they do not transgress the antitrust laws.
Representative Ramspeck. Mr. Sargent, you are too intelligent a man to tell this committee and the public that you think that we can meet these conditions by State action.
Mr. Sargent. In the sweatshop field. I believe we can.
Representative Ramspeck. Yes; in the sweatshop conditions. You know that the people, for instance, in the State of Massachusetts cannot regulate what is paid in Rhode Island, or the people in North Carolina cannot regulate what is paid in my own State of Georgia.
Mr. Sargent. That is correct.
Representative Ramspeck. And a man cannot stay in business if his competitor is paying greatly lower wages. This bill only attempts to deal with sweatshop conditions. We are not trying to fix wages above a minimum.
Mr. Sargent. For the reasons I pointed out, Mr. Ramspeck, I have very serious doubts as to whether this bill seeks exclusively to deal with the sweatshop problem, and to the extent that it does seek to deal with that problem, whether it meets it. For instance, the exclusions in the act itself operate against the purpose which you have in mind.
Representative Ramspeck. You say it is going to run the little fellows out of business, so why do you worry about them?
Mr. Sargent. For the reason that our association, despite any impression in anyone’s mind, is not an organization of big business. We are just as much interested in the fellow in little business as in the fellow in big business.
Representative Ramspeck. Granting your argument, which I do not, that it is going to run the little fellow out of business, that problem would be gone and we would meet the sweatshop conditions.
Mr. Sargent. Here is the answer, I think, on the social standpoint, since you wish to have my observation on it: There are a certain number of marginal workers in the country who actually cannot earn a certain wage. There is a certain number of marginal industries which for one reason or another cannot pay a wage which you or others might seem to think, or1 all of us might believe to be a desirable wage. Society must choose whether it wishes to have those marginal industries and marginal workers continued on a basis of what might be termed marginal wages, or whether it wishes to eliminate them from industry and their production taken off the market, and support them on relief or by other means.
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Representative Ramsfeck. This bill gives the Board authority to consider that very question.
Mr. Sargent. It gives the Board authority to take into account a vast variety of factors; yes, sir.
The Chairman. Mr. Sargent, I want to ask you simply a question. The American Federation of Labor has an economist also, does it not?
Mr. Sargent. I believe so.
The Chairman. They have had one for quite a number of years?
Mr. Sargent. I think so. I have met the gentleman, but I cannot recall his name.
The Chairman. He and you as economists do not agree upon the effects of a shorter workweek, do you?
Mr. Sargent. I have not discussed that particular problem with him.
The Chairman. You have read his articles from time to time in the American Federationist, haven’t you?
Mr. Sargent. Yes, sir
The Chairman. And you know that you do not agree as to the economic effect of a shorter workweek and workday, do you not?
Mr. Sargent. I do not agree with his opinion as to the economic effects of a shorter workweek if imposed by legislation and in an arbitrary manner. I would not be prepared to say, Mr. Chairman, that I believe that a shorter workweek brought about by economic results of increased production and efficiency in industry is not in itself desirable, because I do.
The Chairman. The point that I was getting at was that on that question, economists disagree, do they not?
Mr. Sargent. There are economists who disagree on it; yes, sir.
The Chairman. And economists have always disagreed as to the effects of various things in connection with so-called laws of economics since long before Adam Smith’s time?
Mr. Sargent. Yes, sir.
The Chairman. And frequently, it is like the case they say that when the doctors disagree, the patient dies. Sometimes while economists argue, we have considerable trouble, don’t we?
Mr. Sargent. Sometimes, however, consultations do bring about improvements.
The Chairman. What I would like to get at is this. You are familiar, of course, with the Brookings Institution studies?
Mr. Sargent. On the N. R. A.; yes, sir.
The Chairman. And you also know that they wrote several books which treated on the subject of hours and treated on the subject of employment, treated on the subject of concentration of income, and treated on tne subject of economic conditions in general?
Mr. Sargent. Yes, sir.
The Chairman. And you are familiar with the fact that since even before the 30-hour week bill was offered some years ago in the Senate, the question of shorter hours has been under discussion, hasn’t it?
Mr. Sargent. Yes, sir.
The Chairman. Very generally throughout the country?
Mr. Sargent. That is right.
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The Chairman. And naturally, on that as on most other questions, there was a very sharp conflict or opinion?
Mr. Sargent. Yes, sir.
The Chairman. Then after the 30-hour-week bill was offered, when it went over to the House, you recall that a minimum-wage provision was attached to it, do you not, Mr. Sargent?
Mr. Sargent. I do not recall that specific provision; no, sir.
The Chairman. But you do recall that about that time the subject and the discussion of minimum wages and maximum hours became very acute in the country?
Mr. Sargent. That is correct. As I recall it—are you referring to the provision that was put in that the shorter workweek should have the same weekly wage as before? Is that the minimum-wage provision that you are referring to?
The Chairman. No. I am speaking about the bill that I offered in the Senate, and which passed the Senate, on hours, and which went over to the House. When it emerged from the Labor Committee—I introduced the bill in the Senate and Mr. Connery introduced it into the House—when it emerged from the Labor Committee of the House it contained not only a provision as to work hours but also a minimum wage. You appeared and testified against that, did you not?
Mr. Sargent. I don’t believe I did. My recollection is not dear on that.
The Chairman. I am sure that I recall very distinctly that Mr. Emery appeared before our committee.
Mr. Sargent. I believe he did. I do not believe that I appeared on that measure, Mr. Chairman.
The Chairman. Then, of course, the N. R. A. was enacted, which had to do with wages and hours. That is correct?
Mr. Sargent. Yes, sir.
The Chairman. That was discussed all over the country, and it went into operation.
Mr. Sargent. Yes, sir.
The Chairman. People continued to discuss wages and hours, did they not?
Mr. Sargent. Yes, sir.
The Chairman. And it was one of the really acute things that was under discussion throughout the Nation.
Mr. Sargent. That is right.
The Chairman. You recall, do you not, that the Democratic platform contained an express provision to the effect that if the Democratic Party should come into power, that it would provide minimum wage laws and maximum hours through the Federal Government within the Constitution, if it was possible to do so, and if not., that a constitutional amendment would be adopted? You are familiar with that provision of the Democratic platform, are you not?
Mr. Sargent. As I recall it, they said that various kinds of social legislation would lie enacted on the basis you mention; yes, sir.
The Chairman. Well, to refresh your recollection, it certainly had minimum wages and maximum hours. I recall sitting up all night and helping to draw that, and it is in there. Now, quite a discussion came up in the campaign in which your organization participated?
Mr. Sargent. I beg to differ, Senator.
The Chairman. They did not?
Mr. Sargent. No, sir.
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The Chairman. Well, members of your organization. Did you not publish thousands of pamphlets, your organization, which went to manufacturers in almost every place in the country in connection with the interference of legislation with economic laws, during that campaign?
Mr. Sargent. We published then, as we had before, and as we are doing now, literature bearing on those subjects; yes, sir.
The Chairman. Did you not publish many thousands of pamphlets and documents? I am not criticizing you for it.
Mr. Sargent. I appreciate that.
The Chairman. That is your right as a citizen. But I did not think that there would be any question about that, because I happened to see some of them, and some of them were well written on that side. I did not agree with them. Do you not also recall that you published some of the Brookings Institute statements and circularized them to the manufacturers throughout the country, on the question of hours and wages?
Mr. Sargent. I don’t believe we published any of them. We quoted from some of them in our publications, Senator.
The Chairman. Did you not know that they were sent out all over the country as an argument to the manufacturers against the Democratic Party getting in control because it did propose to bring about that legislation which you considered, and many people do, that you considered an effort to interfere with the economic law ?
Mr. Sargent. I can assure you, Senator, that we sent out no literature over our own name or anyone else’s, which had any relation to the program of the Democratic Party in reference to the campaign.
The Chairman. It did not have a reference to the campaign, but it did have references to the hours law and the wages law, the social security law, and the Wagner bill?
Mr. Sargent. As I say, Senator, we sent out literature then as we had before and as we are doing now, dealing with those subjects.
The Chairman. Didn’t you send out a great deal more between. June of 1936 and November 3 of 1936 than you did in 1935?
Mr. Sargent. I think possibly we added to our campaign during the whole year of 1936 more than 1935, and I hope we will do more this year than we did last year.
The Chairman. And you were waging an active campaign were you not—I am not talking about a political campaign—you were waging an active campaign to try to convince the people who received this literature that this effort legislatively to interfere with hours and wages and collective bargaining was all wrong and economically unsound?
Mr. Sargent. I would not say that we expressed opposition to collective bargaining as a principle.
The Chairman. I am talking about the Wagner bill.
Mr. Sargent. The Wagner bill in particular; yes; we have opposed that.
The Chairman. You do know, do you not—a man testified before our committee 2 or 3 days ago—he is a manufacturer, and he stated that in January of last year he employed 150 new employees because he wanted to get ready for a law providing for minimum wages and maximum hours, knowing that it was coming, because of the issues
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that had been raised in the. campaign and the direction in which things were going. That was discussed all over the Nation, was it not, in the campaign? Wages and hours?
Mr. Sargent. Generally, the general problem; yes, sir.
The Chairman. Of wages and hours?
Mr. Sargent. Yes. sir.
The Chairman. That was one of the real issues in the campaign, wasn’t it?
Mr. Sargent. I think the problem of hours, perhaps more than wages, but certainly there was discussion of that; yes, sir.
The Chairman. There is no question from your viewpoint as an economist and as a man connected with a semipublic agency, that that matter has been under careful and painstaking discussion and scrutiny over a period of a number of years, hasn’t it?
Mr. Sargent. It has been under great scrutiny and discussion; yes, sir.
The Chairman. And you realize, of course, that if Congress carries out that platform which was submitted to the people, that it needs all the assistance it can get? I understood you to say that you considered it perfectly right to come up here and criticize the bill, and I fully agree with you.
Mr. Sargent. I think it is constructive, sir.
The Chairman. Now, may I ask you tins, approaching it from just a little different method. This committee has this bill, and my belief is that there is a real honest intention on the part of a great many Members of Congress and the Senate—probably in both parties—to try to enact legislation. If your organization would accept that as a reality, just as you said, and you would aid to try to make it the most workable bill possible, not only by the criticisms which you have offered but by cooperating with Mr. Emery and the other members of the organization and trying to aid us in not falling into some of the pitfalls which you have mentioned with reference to a too-widespread delegation or authority, but at the same time having that delegation which you have stated you believe would be absolutely essential, I think if you do make this effort, I think that you could really be of great assistance in that manner.
Mr. Sargent. Well, Senator, as you have stated, well-intentioned people may disagree about the merits of different things. We can accept that as a premise. From that premise, if we proceed on the assumption that you as the chairman of the committee or the other members of the committee ask us, knowing our belief about the intrinsic economic merits of the bill, to nevertheless assist you in devising a bill that would be as workable as possible, in our opinion, I am sure we would esteem it a privilege to cooperate with you.
The Chairman. I mean this, and I am really sincere about it. We are going to begin to consider after our hearings, the type of bill that the committee will report. If we could have from those who know something about business and labor and who recognize the fact that the probability is that a measure will be passed, a real bona fide effort to try to make it the best possible to accomplish the purposes, and coming from a number of different sources with different men trying their skill at draftsmanship—and I am not one of those who object to having any kind of a lawyer or anybody else help to draw a bill, because I have had experience in trying to. I
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know it would be very helpful in the consideration of the matter, and I know as you know, that the task of properly drafting a bill of this kind is a big task.
Mr. Sargent. That is correct.
The Chairman. I don’t know just exactly the type or what changes will be made, if any, or what alterations could be made that would come nearer bringing about legislation to accomplish the purpose. May I ask you just this one other question? Someone has suggested, and you suggested in connection with the difficulty of the administration of the law over a widespread territory—someone has suggested that the bill should provide for some kind of regional boards to act before final action is taken by the Board in Washington. Would you consider that that would be a helpful thing in connection with the administration of the act if it should be passed?
Mr. Sargent. I should imagine that in practice, whether it was provided in the bill or not, that the operation would have to be set up in some such way if the bill were enacted, as to provide for regional groupings or zones of the Board or divisions of the Board or something of the sort.
The Chairman. You do not believe, do you, Mr. Sargent, that you and the economists of the Federation of Labor—I am just using you as illustrations—just as I might use myself, for instance, and Dr. Multon, of the Brookings Institution—you do not think that you and the economists for the American Federation of Labor would be much closer on the effect of legislation or legislative declarations on wages and hours if we waited 6 months than you are now, would you? I am not talking about the details of the bill, but I am talking about the general principles of application.
Mr. Sargent. I think if we were to have 6 months—if we had 6 months’ conferences with the economists and representatives of the American Federation of Labor, for example, that we might at the end be quite as far apart as we are now on the hours problem, but we probably would be pretty close together as to the effects of the wage limitations.
The Chairman. Your idea is that it should clearly provide that the purpose is to fix a minimum wage—with which all of us, I think are in accord—and not attempt to fix all wages up and down the scale. That is what you oppose?
Mr. Sargent. I believe it would be impractical for Congress to try to establish hundreds of differentials such as exist throughout industry, certainly.
The Chairman. As I understood your objection, it was that you construed the bill to be an effort to carry fixed wages all up and down the line.
Mr. Sargent. Well, no. The bill itself does not do that. What I said, Senator, was that if you tell an employer, for example, who has a 38-cent minimum hiring wage, for illustration, that that should be 45 cents, and the men in the next grade above that are now receiving 48 cents, then they would want to get 55 cents to maintain their differential, and that would cause the employer in his practical operations to have the problem of reviewing all of the wage classification up the line. I did not say the bill itself did that, Senator.
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The Chairman. As a matter of fact, whether we act on this legislation next week or next year? you and I know that there would still be the sharp conflict of opinion that we have had over this.
Mr. Sargent. I imagine even after the bill had been in operation, there would still be differences of opinion as to how the bill was working and would work.
The Chairman. Thank you. Mr. Emery, did you say you have another witness?
Mr. Emery. Yes, sir. Mr. Robert B. Dresser.
The Chairman. Mr. Dresser, this statement says that you are the acting chairman of the Committee on the Relation of Government to Industry of the National Association of Manufacturers?
Mr. Dresser. That is right, sir.
The Chairman. In what business are you engaged, Mr. Dresser?
Mr. Dresser. I am a lawyer.
The Chairman. A lawyer.
Mr. Dresser. And I am a member of the board of directors of the National Association of Manufacturers.
The Chairman. Where do you come from?
Mr. Dresser. My home is in Providence, R. I.
The Chairman. Very well. You may proceed with your statement.
Mr. Dresser. I am appearing before you in my capacity as acting chairman of the Committee of the National Association of Manufacturers on the Relation of Government to Industry.
With the broad objectives of the Black-Connery bill we are in entire accord. Our statement of principle, adopted last December, opens with the following pronouncement:
Better living, better housing, more of the necessities, comforts, and luxuries of life, steadier work, more certainty of a job, more security for old age—these are the natural desires of every human being. They are the progressive objectives of American industry.
This embodies the same aims and purposes as the proposed legislation which we are considering today. Therefore, there is no disagreement between the sponsors of this bill and the manufacturers of the Nation as to the goal toward which we are heading.
We agree that there is no place in this country for the exploitation of children in gainful employment; a survey of the association’s membership made last year revealed virtually no child labor; you are aware that the National Association of Manufacturers has twice this year urged upon the Congress enactment of child-labor legislation based upon the Prison-Made Goods Act.
We agree, too, that there is no place in this country for the exploitation of adult labor in what has popularly become known as “sweatshops”, and the association at its last annual meeting pledged itself to support legislation against sweatshops.
Yet, while agreeing 100 percent upon objectives, it often happens that men differ upon the means of accomplishing the desired ends. With the methods proposed by the Black-Connery bill, we must
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respectfully differ. Since the introduction of this bill in Congress, our board of directors has expressed its disagreement with the methods by which it is proposed to reach our objective. There has not been time, as you are aware, for us to hear from our entire membership, but from the expressions that we have received I have no hesitancy in stating that the views which I shall express are representative of a preponderant majority of those who operate the manufacturing industries of the Nation.
In this connection, I should like to quote to you the pronouncements of our last two annual conventions upon the principles involved in this bill.
In the declaration of principles, adopted last December, it was stated:
Under our industrial system wages have been raised, working hours lowered, and living standards at the same time have greatly advanced. This has been made possible by improved methods in manufacturing, In agriculture, and in the service industries. We believe this Improvement wiU continue under the American system of free entereprise, and that wage and hour changes will be made as the improved production methods make them possible. Should arbitrary reduction of working hours limit necessary production, the unavoidable increasing cost will reduce the consumer purchasing power we desire to enlarge.
We dedicate ourselves to further Improve methods to the end that the advance may continue both in working conditions and in living standards.
And in the 1935 Platform of American Industry several factors were listed as hampering progress toward the goal of better living for all. These included:
“Attempts, by centralized decisions, to regulate or control production.” It was pointed out that these discourage initiative, and the. incentive to improve methods and products, and to reduce cost, and thus perpetuate inefficient methods, uneconomic production, and high costs.
It was further pointed out that national “attempts to regulate * * * hours of work, rates of pay, and other working conditions in industry” must inevitably in practice ignore varying local and other conditions and the economic factors resulting therefrom.
I wish that it were possible to come before this committee and urge the enactment of this bill, because of its high purposes and intent. But we who have seen N. R. A. fail cannot believe that success can be found by going even further in the wrong direction. Public opinion, which had lost its faith in the old N. R. A. even before the Supreme Court acted, will not, I believe, find encouragement for future progress through the revival of old experiments in a somewhat different garb.
To those who seek to belittle the objection to the present bill that it confers on the Federal Government powers that should be exercised, if at all, by the States, I quote from an address by President Roosevelt made in 1930 when he was Governor of New York:
The preservation of this home rule by the States is not a cry of jealous commonwealths seeking their own aggrandizement at the expense of sister States. It is a fundamental necessity if we are to remain a truly united country.
Gentlemen, the decision which you will make upon this bill will be one of the most historic in the history of the United States. For 7 years now we have sought to meet emergency conditions with emergency measures. The recovery period is now well under way. If, as
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a permanent procedure of government, we embark upon a program of virtually eliminating State lines and erecting enormous powers in the hands of a centralized government, then we have altered drastically the course of the Nation.
Let me ask you to go back momentarily into history with me. Some one hundred and fifty years ago when the Declaration of Independence and the Constitution were promulgated in this country, they marked an epoch. Until that time the divine right of kings held sway throughout the world. The individual was subservient to the will of the king’s henchmen. The centralized government said to its citizens, “So far shall you go and no further in your liberties.” But with the coming of the Constitution, the people said to the Government, “So far shall you go and no further. You, Mr. Government, have only those powers that we have delegated to you and beyond that you shall not transgress.”
Then, for more than 125 years practically every change in the form of Government in any country was towards democracy and increased power to the people.
That process continued until the World War, when the trend was reversed. In 1918 Russia adopted Bolshevism. Once again, under Communism, we saw liberties taken from the people and restored to a centralized government. Once again the people became pawns in the hands of a powerful dictatorial force. And since then every change in the form of government has been in the same direction.
Call it Bolshevism or Communism, if you will. Call it Socialism, Naziism, Fascism, or what you will, they are all blood brothers under the skin and in the blood stream. Each says to the people that they must bow to the will of the State.
That trend, gentlemen, has been in progress now for some 20 years. The bill we are considering, setting up a 5-man board with powerful control over the rights and opportunities of the people of this country to earn a livelihood, certainly would be a step in this same direction. For this reason, gentlemen, we cannot support the bill now before you, much as we would like to see its objectives accomplished.
On the contrary, we believe that the proposed legislation would be destructive of the very thing it seeks to improve. To enact it into law, with its broad grants of power handed over by the Congress to this 5-man board, would place in jeopardy the recovery or the last 8 years and make a gamble of our future progress.
Almost exactly 2 years ago, this Nation began its real emergence from the depression when the National Industrial Recovery Act was invalidated. Since then, conditions have rapidly continued to improve. For example, there are millions fewer person on relief now than when the Blue Eagle was flying its highest. Employment in manufacturing industries is above the 1929 levels. In many communities and industries a shortage of skilled labor is being felt.
The Federal Reserve Board has just announced that industrial production in April and the first half of May stood at 118 percent of the 1923-25 average. It says factory employment was 102.2 percent of the 1923-25 average, and, more important even than that, it says that pay rolls stood at 104.8 percent. Thus, not only are more goods being produced and more persons employed than even in the normal years 1923-25, but employees are getting more money with which to buy the goods.
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All of this has been accomplished since the N. R. A. was invalidated. It would seem that this object lesson is not enough; we must experiment again.
The N. R. A. was invalidated by public opinion long before it fell in the courts. One reason was that it sought to delegate such great power to a Federal administrative agency. N. R. A.’s delegated powers were small compared with those contemplated in the new legislation.
Legally, the N. R. A. was invalidated because its administrators sought to control a purely local poultry business. Instead of recognizing that the powers of the Federal Government do not extend that far, the new bill seeks to declare specifically that even though a man is not engaged in interstate commerce he shall be subject to Federal control if that what he produces competes with something induced by someone else which does enter interstate commerce. There is not a person in the land—laborer, pants’ presser, housewife, farmer, or manufacturer—who would not feel the impact of this law if enacted. There can be no doubt that the outcries of the farmers and the housewife against soaring prices will reach back here to Washington in a wail and will wipe from our memories the anguish of N. R. A. days. The last thing that any sane person wants is to see soaring prices outstrip purchasing power to the detriment of every person in the land.
Generally, wages are higher and hours are shorter than ever before in our history. Compared with workmen in other lands, where restrictions of N. R. A. characteristics are imposed, American workmen are living in a paradise. An American worker can earn in 1½ hours enough money to buy a dozen eggs, a loaf of bread, a bottle of milk, and other items. Even in England he must work 3¾ hours, in Germany 7 hours, and in Belgium 14 hours for the same things.
Our comparatively few troubles are not caused by general standards and practices. They are caused by exceptions—-by what were described as “chiselers” in N. R. A. days. The lowest wages and longest hours exist among those employed by shoestring operators. Although there are exceptions, most oppressive wages and hours undoubtedly occur where only a few persons are employed.
The new proposal would not reach these. In fact, it would specifically permit wage and hour exceptions for those who employ fewer than a specified number of workers. It would not reach the worst “chiselers.” In fact, it would encourage them by leaving them free from regulation while their competitors across the street would be forced to meet increased costs.
A broader point to consider is the general effect of the proposed legislation. N. R. A. tried unsuccessfully to halt the depression by forcing higher wages before the economic system was ready for them. Naturally, N. R. A. failed. The new legislation would seek to do the same thing; that it, too, would fail seems almost certain.
In discussing some of the more specific aspects of the bill before you for consideration I should like to point out that this bill goes far beyond its stated purpose—to establish rudimentary standards of decency in employer-employee relations—and is really four bills in one.
(1) Termination of child labor.
(2) Maximum-hour regulation.
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(3) Minimum-wage regulation.
(4) Further restrictions of the employer in labor relations.
The National Association of Manufacturers believes these subjects should be separated in their consideration for the following reasons:
(a) They are not sufficiently related.
(b) They are capable of separate analysis and treatment.
(c) The public believes that it all has to do with relieving substandard conditions.
(d) Deliberate and reasonable action on each subject according to merit would be safer procedure; and
(e) Failure to oppose certain undesirable phases may be brought about by enthusiasm to gain general objectives.
To summarize—-the protection of labor from oppressively long hours is a laudable objective. But the quite different purpose, less emphasized with the public, of “spreading work”, “creating employment”, “increasing purchasing power” is a proved economic fallacy leading us even beyond the utter confusion of N. R. A. days. In fact, the measure quite outdoes the previous Blue Eagle effort. At the very crux of the proposal is the wholly untenable theory that the mere process of working less enables persons to have more—which, irrespective of hope, ambitions of misplaced fervor of legislators, employers, or employees, has never proved successful.
The “economic dislocation” that may come from hasty action cannot be too much emphasized. To repeat the confusion and uncertainty of N. R. A. at this time would be a serious economic error, unquestionably detrimental to our prosperity.
There is no crisis that justifies another hastily drawn piece of legislation through which industry will have to wallow while proving the costliness of such legislative experimentation.
Industry is ready and willing to analyze and help correct the problems of our American life, but it is possible to impose upon it one experiment after another until its ability to function in behalf of the general welfare is sadly impaired while the fallacies of such legislative experiments are being demonstrated to the Nation—and at a great cost to it.
The Chairman. Have you any questions, Mr. Jenks?
Representative Jenks. None, sir.
The Chairman. Mr. Wood?
Representative Wood. I did not know, Mr. Dresser, whether you were testifying about the N. R. A. or this bill. You said more about the N. R. A. than about this bill. Which one are you speaking to?
Mr. Dresser. I was referring to the N. R. A. by way of comparison.
Representative Wood. Is it the contention of the Manufacturers’ Association that the N. R. A. was a fallacy and was perfectly unworkable and failed to accomplish any good purpose? You have reiterated that in a number of statements here.
Mr. Dresser. No; I think some good was accomplished by N. R. A., but I think the general effect of the N. R. A. was detrimental rather than helpful.
Representative Wood. You stated, “But we who have seen N. R. A fail cannot believe that success can be found by going even further in the wrong direction.” That is your statement?
Mr. Dresser. Yes, sir.
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Representative Wood. How did you see the failure of the N. R. A., and on what do you base your opinion that this also goes in the wrong direction?
Mr. Dresser. Well, I appreciate that there is a difference of viewpoint, but my honest conviction is that the only way that we can work out of this situation successfully is by allowing economic forces with some regulation to pull us out. 1 do not believe that we can by legislative fiat or Executive decree—
Representative Wood (interposing). What do you mean by “economic forces”?
Mr. Dresser. I believe there are certain definite economic laws that cannot be denied. That, for example, in every returning period of prosperity, we start with prices as a result of low cost and low wages, which in turn stimulates buying, and as buying is stimulated, that puts more people back to work, starts new factories going, increasing the purchasing power, and you have the cycle of prosperity.
Representative Wood. If N. R. A. was going in the wrong direction, according to your statement, and this bill is going even further in the wrong direction, just how do you think that we should go in the right direction? What do you suggest for Congress to do?
Mr. Dresser. I suggest this, that our objectives, of course, are the same. I think some law honestly seeking to accomplish what is for the most good of the people at large. It is simply a question of the difference in viewpoint.
Representative Wood. Do you think business is trying to do that?
Mr. Dresser. I think so, yes. Such business as I am connected with is certainly attempting to do that. That is my own desire, and I certainly have no desire to see one group in a community exploited for the benefit of another group. I believe very sincerely that the only way for us is to give business an opportunity to put people back to work.
Representative Wood. Do you really think there is any necessity for any legislation now at all?
Mr. Dresser. I do not think there is any necessity for any Federal legislation at the present time.
Representative Wood. You would not recommend any type of legislation now?
Mr. Dresser. I think it would be quite appropriate for the States to pass laws which would attempt to eliminate and would control the sweatshop conditions in the States, but so far as any Federal legislation is concerned, it would seem to me that it is a mistake.
Representative Wood. Well, if as you say, business is operated for the general welfare, and if in the 12 years when business was almost practically controlled by industry, how do you account for the action of businessmen then in 1933 when they came to Washington to ask the Congress and the President to enact the N. R. A. or to enact some legislation that would protect them from the cutthroat competition which they were then subjected to and which they admitted frankly was destroying business; and Mr. Harriman, of the National Chamber of Commerce, frankly admitted that he did not know where we were drifting, that we were at a very dangerous brink of destruction and dissolution?
Mr. Dresser. I think perhaps there was----
Representative Wood (interposing). He and his associates, including the National Manufacturers’ Association, for the basic industries
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of the Nation, asked this administration to pass legislation such as the N. R. A. dealing with fair trade practices or unfair trade practices. And the Congress enacted that law by and with the advice and consent and through the request and the urgency of the manufacturers of this Nation, and after the law was passed, the manufacturers had almost sole control over the administration of the law, due to the fact that they drew the codes. The manufacturers themselves established the fair practices of competition. They established the rate of wages and the rate of differentials throughout the United States. The administration of the law was almost wholly theirs, that is, the self-administration of it, within the hands of the employers of this Nation, and because it was in their hands is that the reason that you say that it was a failure?
Mr. Dresser. You have made a certain statement of fact which no doubt are true, but I was not aware of the fact that the National Association .of Manufacturers came to Washington at that time and requested Federal legislation. That might be true; I was not connected with the association at that time.
Representative Wood. There was not a single employer organization this country that did not express themselves in the same manner up here.
Mr. Dresser. I must accept your statement.
Representative Wood. Individual groups, basic industries, the textile trades, and all of them. There were some 40 or 50 appeared before the House Labor Committee and before the Senate Committee on Labor and Education, and they all appeared and appealed to the. Congress to do something. They all admitted that they were unable to police the industry, and they were unable to control their members from dealing in the cutthroat competition, and they begged Congress and the President to do something about it, and they did.
Mr. Dresser. Well, as I say, I will of course accept your statement and assume that that is the fact. Nevertheless, even if they felt that way at that time, I think that experience has shown that the N. R. A. was not successful, and I had supposed it is quite generally conceded among manufacturers that they were not satisfied with the N. R. A. and that they thought it was a mistake rather than otherwise.
Representative Wood. You state that since the N. R. A. was declared void, that the recovery started. Do you think there was any recovery before the N. R. A. was declared unconstitutional?
Mr. Dresser. I think the real impetus to recovery occurred right after the N. R. A. was declared unconstitutional.
Representative Wood. Is that what you mean to tell the committee, that there was no recovery until after the N. R. A. was taken out of the way and brushed aside by order of the Court? And then after the N. R. A. was brushed aside and after you were then able to exercise your freedom, and the industrialists immediately started business revival, and that they revived business by raising wages and shortening hours, or what do you say?
Mr. Dresser. My recollection is that in 1933 when the N. R. A. was enacted, we had a period of rising prices, a distinctly inflationary period, in which there was good business. My recollection is, and 1 do not recall the exact date, but I think it was in 1934, the trend was downward. We had gotten by the effect of this inflationary impulse
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which had caused people to go ahead and to buy and to manufacture through fear of rising prices which resulted from the adoption of the N. R. A. codes, and that we were in a definitely deflationary trend at the time when the Supreme Court held the N. R. A. to be unconstitutional. My recollection may not be correct, but that is as I recall it.
Representative Wood. We relaxed the antitrust laws and gave trade associations the right to make trade agreements and stabilize prices. Wasn’t it the Manufacturers’ Association and the chamber of commerce that really wrote those sections of the law?
Mr. Dresser. The codes, of course, were adopted by the effort, I suppose, of the various manufacturers and trade associations, and the Federal body that had the power to approve or disapprove of the codes, and I think that there is quite a difference between a code and an agreement which is voluntarily adopted by any industry after it has been approved by some regulatory authority, and a situation where a code is imposed or wages and hours are imposed upon the industry without its consent. It all comes back to what I believe to be the crux of the entire matter, and that is that you cannot legislate a nation into prosperity. That the only way that we can ever accomplish what we seek is by giving industry an opportunity to put people back to work. And I do not believe that anything which tends to increase prices hastily before the public are ready to buy, is going to be in the long run beneficial, because it discourages purchasing by the consumer, and without purchasing by the consumer, obviously there cannot be production, and without production there cannot be the employment that we all so much desire.
Representative Wood. After the voiding of the N. R. A. numerous employers throughout the country immediately began stretching their hours and reducing wages.
Mr. Dresser. Yes.
Representative Wood. It has been testified before this committee that since we started the hearings on this bill, that some industries have stretched their hours 8 or 10 hours a week since the voiding of the N. R. A. Do you think that that tended to start the upward trend of industry? Just what did the manufacturers do? Just what did the employers do to bring about this trend of better prices and better wages that you state? Any specific thing they did?
Mr. Dresser. It was the removal of the threat of undue governmental interference with the actions of the manufacturers and the businessmen, which was necessary in order to bring about recovery. I think it tended to restore confidence, which is all important if we are to have business recovery.
Representative Wood. Well, you were begging for interference in 1933. Now, you say that it was undue interference.
Mr. Dresser. I was not begging for it.
Representative Wood. You were not individually, but the manufacturers and employees’ associations and the industrialists of the Nation were. That cannot be denied.
Mr. Dresser. It may be that they did not know what was good for them.
Representative Wood. Maybe they don’t now.
Mr. Dresser. That is quite true. I certainly do not pretend to be infallible.
Representative Wood. Maybe they do not profit by their experience.
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Representative Ramspeck. You stated in your prepared statement that this proposal will result in practically eliminating State lines. How can any State regulate a company, for instance, like Sears, Roebuck?
Mr. Dresser. Well, I suppose it can regulate the activities of the branches of Sears, Roebuck within its own lines.
Representative Ramspeck. Well, General Wood said here this morning, and I thought he made a very fair statement—he has a branch m my district. I apprehend that if the State of Georgia undertook to impose hour and wage regulations which they thought were not in line with those in other places where they operate, that they would simply close up that branch and sell their merchandise through the United States mail, and how could you regulate them?
Mr. Dresser. Well, I suppose it depends upon conditions in the local States, and I suppose that you would be dependent upon the good sense of the legislature in passing legislation that would not have that effect.
Representative Ramspeck. Well, of course, that is just a difficulty with your proposal of State laws. Any law that goes beyond those of competing States simply means that business goes to the State where the lower standards and the less onerous conditions prevail. Isn’t that your theory?
Mr. Dresser. I think there would be danger of that if the States did not exercise due care in the legislation which they passed.
Representative Ramspeok. I believe you said you were from Rhode Island?
Mr. Dresser. Yes, sir.
Representative Ramspeck. What effort has Rhode Island made to meet the conditions which this bill proposes to meet?
Mr. Dresser. We have a minimum-wage law in Rhode Island.
Representative Ramspeck. When was it passed?
Mr. Dresser. I think it was a year or two ago.
Representative Ramspeck. What are the regulations there?
Mr. Dresser. There is a commission which is set up for the purpose of making an investigation of any industry, and on the basis of that investigation, after public hearing, fixing the minimum wages for the particular industry.
Representative Ramspeck. I remember 4 years ago Mr. McMahon, who was at that time President of the United Textile Workers, and who came from Rhode Island, testified before the House Labor Committee that employment conditions in the textile industry in Rhode Island were just as bad as any State in the Union. They were then working 55 hours a week.
Mr. Dresser. That was 4 years ago?
Representative Ramspeck. Yes. Mr. Dresser. They had a 54-hour law at that time, and I flunk that is true. I think they were working 54 hours a week.
Representative Ramspeck. And at the same time, the competing State of Massachusetts had a 48-hour or 44-hour week, did it not?
Mr. Dresser. I believe that they did.
Representative Ramspeck. So that when you go to dealing with this matter through State laws, you have a lot of discriminations, at least handicaps, through which a manufacturer must apply to compete, don’t you?
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Mr. Dresses. Would it not be possible to do this? Would it not be possible to have each State fix a minimum, wage which was socially desirable, not economically desirable, but socially desirable, so as to relieve against abject poverty? That is fair.
Representative Ramspeck. Have you ever had any experience with trying to get a uniform law passed by the 48 States?
Mr. Dresses. No ; I have not.
Representative Ramspeck. Well, you have got a lot to learn if you ever undertake it. You stated in your prepared statement also, that the employment in the manufacturing industries was above the 1929 level. You did not say about wages as compared with the 1929 level. Do you happen to know how they compare?
Mr. Dresser. I have not got the figures here. 1 have no doubt that Mr. Sargent, our economist, has them.
Representative Ramspeck. Your statement shows that industrial production in April and May of this year stood at 118 percent of the 1923-25 average, whereas wages stood only at 104.8 percent.
Mr. Dresser. That is right.
Representative Ramspeck. Indicating that production has increased 13.2 percent more than the wages to the man who produced that production.
Mr. Dresser. That is right.
Representative Ramspeck. And that is all under State regulation.
Mr. Dresser. Well, I suppose it might well be that the purchasing power had increased, particularly. I take it that this is in terms of dollars and not in terms of real wages.
Representative Ramspeck. I am just using your own figures. 1 don’t know anything about it except what you have given us, but it indicates that the manufacturer has gained the 13.2-percent advantage. That is what it indicates to me, over the employees.
Mr. Dresser. The production has increased, but the price may at the same time have decreased, so that the increase of wages would buy just as much or more than it did before.
Representative Ramspeck. Judging from what I pay for goods- that I buy, I do not think they are any lower than they were in 1923 and 1925. I rather think they are much higher. Just one other question and I am through. You say in here that the N. R. A. tried unsuccessfully to halt the depression by forcing higher wages before the economic system was ready for them. I beg to diner with you on that. What the N. R. A. did, and Mr. Wood is right when he said the manufacturers came before us and begged and pleaded for further action. I do not say the Manufacturers’ Association, because I do not really recall whether they appeared by their representatives or not; but any number of individual manufacturers and trade associations did appear and did say to the committee that they were helpless, that they were faced with cutthroat competition, and were going to be forced out of business, and the only answer was Federal action. And isn’t it true that what the N. R. A. did do, in spite of all its shortcomings and criticisms, was to stop child labor, put a bottom on prices and wages, thus giving business a chance to be revived?
Mr. Dresser. Well, I had supposed that there was practically no child labor in at least the great part of industries even before the N. R. A.
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Representative Ramspeck. Well, if you suppose that your information is terribly deficient^ because we had one witness who testified before us in that hearing 4 years ago about a shirt manufacturer in Pennsylvania who was paying a top price of $3 a week for 55 hours of work for girls 14 and 15 years of age, and on top of that, forcing them to make weekend trips to New York to entertain buyers. And the Governor of Pennsylvania, to his credit, later investigated that industry and stopped that practice. So we did have child labor. We had more deplorable conditions in this country at that time than we have ever heard of, I think. N. R. A. did stop those sort of things. It did give the decent manufacturer who wanted to pay a decent wage a chance to stay in business and not be put out of business by the sweatshops and the cutthroat competitors who were gradually forcing him out in 1933. That is all.
The Chairman. Mr. Dresser, I note the continuity of your argument, which is strangely familiar to me, but I see one argument left out, which I wonder if you do not want to incorporate in your argument. I note that you say that prosperity really started after the N. R. A. was invalidated.
Mr. Dresser. That is my understanding.
The Chairman. As a matter of fact, did it not start back in 1932, under Mr. Hoover, and was it not then arrested when the Democrats went in in 1933?
Mr. Dresser. Well, I would rather you say that than I.
The Chairman. That argument is left out. Who wrote this argument? Would you mind telling me?
Mr. Dresser. I beg your pardon?
The Chairman. Would you mind telling me who wrote this argument here?
Mr. Dresser. This was a composite job of certain members of the National Manufacturers’ Association.
The Chairman. Who wrote it?
Mr. Dresser. I don’t know as I can tell you who was the chief compositor.
The Chairman. You did not write it?
Mr. Dresser. I did not; no, sir.
The Chairman. Who told you that in England a man must work 3¾ hours to buy as much as he could buy in this country with 1½ hours of work?
Mr. Dresser. I got that from Mr. Noel Sargent.
The Chairman. You got that from Mr. Sargent?
Mr. Dresser. Yes, sir.
The Chairman. You cannot, of course, vouch for that?
Dresser. Oh, no, sir.
The Chairman. And who told you that it took 7 hours of work in Germany to buy as much as 1½ hours’ work would buy in this country ?
Mr. Dresser. I assume that that was Mr. Sargent’s work also.
The Chairman. Who told you that it took 14 hours of work in Belgium to buy as much as 1 hour’s work would buy in this country
Mr. Dresser. I assume that that was the work of Mr. Sargent, our economist.
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The Chairman. Do you know anything about the wage levels in this country and in England?
Mr. Dresser. Only by hearsay. I have been told that in the steel industry, for example, the average wage in this country in the steel industry at the present time is about 90 cents an hour; that in England is from 25 to 30 cents an hour.
The Chairman. Do you know anything about the price levels in England?
Mr. Dresser. I do not.
The Chairman. Have you ever bought a suit of clothes over there, for instance?
Mr. Dresser. I have not; no.
The Chairman. Have you any idea how a suit of clothes over there, made out of good wool, compares with a suit of clothes bought over here?
Mr. Dresser. I think it is very good.
The Chairman. It is a good deal cheaper, is it not?
Mr. Dresser. I believe so.
The Chairman. The thing that I am interested in, Did you make any speeches in the last campaign?
Mr. Dresser. I did not; no sir.
The Chairman. You made no speeches very much like this argument here? You did not write any of this?
Mr. Dresser. I did not. I rephrased a part of it.
The Chairman. Are you in the manufacturing business yourself at all?
Mr. Dresser. I am not; no, sir. I am a lawyer.
The Chairman. You took no part in the 1936 campaign and did not contribute to either party?
Mr. Dresser. Yes, sir.
The Chairman. Which one, the Democratic Party?
Mr. Dresser. No; the Republican Party.
The Chairman. Did you discuss any of the questions of hours and wages in the campaign, or was it discussed in Rhode Island?
Mr. Dresser. As a part of the campaign?
The Chairman. Did you hear the present Senator, Senator Green, speaking in Rhode Island in the campaign of 1936?
Mr. Dresser. I did not.
The Chairman. Did you hear any speeches in which it was stated frequently that the prosperity really started after the N. R. A. fell down?
Mr. Dresser. Well, I have heard those statements made on numerous occasions, but I do not recall whether it was during the campaign or not; but I have no doubt they were.
The Chairman. Well, I heard it made many times in the campaign by those who were speaking against the present administration, of course. When was this 54-hour law enacted in Rhode Island?
Mr. Dresser. We have had it there for some years. I could not tell you just when, but it has been there for a good many years.
The Chairman. I recall a gentleman testifying before our committee on the 30-hour-week bill, Mr. Levy, who testified here today.
Mr. Dresser. Oh, yes.
The Chairman. He is from Rhode Island. Do you have considerable silk business in Rhode Island?
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Mr. Dresser. Not so much. It is mostly cotton and wool. Mr. Levy, I believe, is in the woolen business and worsteds.
The Chairman. I remember this same manufacturer testified, and the tears came into his eyes—he was a manufacturer—that he had been driven to compete with competitors who were working women 16 hours a day in the silk mills in Rhode Island, and he was begging as a manufacturer that we do pass a law against long hours of work Did they have that 54-hour law there then?
Mr. Dresser. They have had it for some years, and either 1 or 2 years ago they enacted a 48-hour law.
The Chairman. Who was Governor then ?
Mr. Dresser. Governor Green, I believe.
The Chairman. Did they enact a minimum-wage law under Governor Green?
Mr. Dresser. I believe so.
The Chairman. You state here that industry is ready and willing to analyze and help correct the problems of our American life. What suggestion do you make that industry can do now if we do not pass this law? What suggestion can you say that the Manufacturers Association and the interested manufacturers will make to prevent high hours and to provide a minimum wage?
Mr. Dresser. Well, I have no question but that the manufacturers will be very glad to get behind legislation to be adopted by the States for the purpose of limiting the hours of work, and within reasonable hours and fixing minimum wages.
The Chairman. How long have you been a member of the board of directors of the National Manufacturers Association?
Mr. Dresser. This is my first year.
The Chairman. Do you know whether they have ever backed a State law to provide a minimum wage and maximum hours?
Mr. Dresser. I am not able to say.
The Chairman. Did you ever hear a rumor that they did? [Laughter.]
Mr. Dresser. It would not necessarily follow that they had not. because they have done a great many things that I have not known of.
The Chairman. I believe you said that we ought to adopt a law by States. How would you say that one State would protect itself from the goods of another State where they were right side by side, like Rhode Island and some of its neighbors?
Mr. Dresser. I suppose that could be done by interstate compacts, as has been suggested, and was suggested here some time ago.
The Chairman. Do you know how long efforts have been made to get interstate compacts in this country?
Mr. Dresser. I don’t know; no sir.
The Chairman. Do you know whether any have ever been adopted yet in connection with wages and hours?
Mr. Dresser. I think there was an interstate compact adopted or initiated with respect to minimum wages by several States a year or two ago, if my memory serves me rightly.
The Chairman. You made a very severe criticism of the N. R. A. on the ground of delegation of power. Were you down here when that bill was up?
Mr. Dresser. I was not; no.
The Chairman. You were not connected with any association of this type then?
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Mr. Dresser. I was not; no.
The Chairman. You don’t know whether the Manufacturers Association took a position either for or against the law? May I ask you, Mr. Emery? I do not recall, myself. Did they take a position either for or against it? Did you testify?
Mr. Emery. Yes; sir; I did. I argued against it before the Committee on Finance in the Senate, and a thousand manufacturers came here to Washington twice. We were invited into a conference by the President.
The Chairman. What features in it did you testify against?
Mr. Emery. Against the delegation of power in the form in which it was presented. Against several of the features.
The Chairman. Against 7-A?
Mr. Emery. 7-A?
The Chairman. That was the labor provision.
Mr. Emery. Yes; we offered some amendments to that.
The Chairman. Did you testify for or against the provision with reference to the antitrust laws?
Mr. Emery. We have always opposed exemptions from the antitrust law.
The Chairman. Did you testify against that then?
Mr. Emery. Yes, sir.
The Chairman. Do you know what the chamber of commerce did?
Mr. Emery. I don’t know. I know that Mr. Harriman appeared before the Ways and Means Committee. I don’t know whether that was official or personal. I am not sure. But I should prefer that the record should answer for him.
The Chairman. I thought you might know.
Mr. Emery. My recollection is that he approved of features—I don’t know' as a whole—I am relying on my memory now and I might be doing him a great injustice, but I want to make it clear that the National Association of Manufacturers did not believe the law would work as it was.
The Chairman. Did they pass a resolution of any kind on it?
Mr. Emery. Yes, sir.
The Chairman. And you put that in the record?
Mr. Emery. Yes, sir; and they met by invitation of the President, with a committee of five—and with the committee that had charge of the formulation of the bill and expressed their views then and thereafter they made various suggestions with regard to the proposal, because they were confronted, of course, with a condition, and they did not believe that the bill would practically operate in the form in which it was put together.
The Chairman. I asked you those questions because I assumed from your coming up that you could clear them up.
Mr. Emery. Yes; because I was very anxious to have the record clear about it, that the National Association of Manufacturers and the manufacturers whom they represented, never requested legislation of that character, but on the contrary, publicly opposed it.
Representative Wood. Is it not a fact that sections 3 and 6 and one or two other sections with reference to the antitrust law was referred to the Manufacturers Association while they were here, and they approved it?
Mr. Emery. No, sir; it is not. I did not get the number of the section correctly perhaps—which one?
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Representative Wood. The section with reference to relaxing the antitrust laws.
Mr. Emery. No, sir; they did not.
Representative Wood. They opposed that whole portion of the bill, did they?
Mr. Emery. Well, we had consistently opposed the theory of exemption from the antitrust act.
Representative Wood. Didn’t that provide for the setting up of the codes of fair competition?
Mr. Emery. Yes.
Representative Wood. Do you mean to tell me that the manufacturers opposed that section?
Mr. Emery. The manufacturers suggested a very different provision, a provision for the modification of the administration of the act by which authority could be placed in the Federal Trade Commission or otherwise to determine upon an application and the presentation of that code, whether or not the proposals in it were in violation of or in conformity with the act or not. That was the proposal for improving the administration of the law, and that they might not proceed to operate under it when in doubt.
Representative Wood. The newspaper men were misquoting you then.
Mr. Emery. You will find the newspapers were full-----
Representative Wood (interposing). Everyone knew that the National Association of Manufacturers and the chamber of commerce at that time-----
Mr. Emery (interposing). Not the Manufacturers Association: they were not----
Representative Wood (interposing). That they were in favor of those sections particularly.
Mr. Emery. The Manufacturers Association held two largely attended public meetings here, one of which at his request was addressed by General Johnson, in which he outlined the purposes they had in mind, and the second meeting was held, I think, thereafter.
The Chairman. Mr. Emery, did you or any other members of the Manufacturers Association meet in connection with drafting the bill?
Mr. Emery. We met with the committee—that was the committee on the bill, which was composed of Senator Wagner, General Johnson, Mr. Douglas, Mr. Dickinson, and Mr. Richberg—and we had a conference with them at the invitation of the President. The proposals were, of course, then very general; but we discussed some of the proposals offered to us for suggestions, and I gave them the view of our committee on it at that time and made countersuggestions to them as to what we believed the situation required.
Senator Pepper. Mr. Dresser, speaking about the Manufacturers Association being helpful in the enactment of State laws, what was the attitude of the association with respect to the adoption by the several States of the child-labor amendment?
Mr. Dresser. As I say, I have only been director of the association this year.
Senator Pepper. I mean you have not just recently been acquainted with those conditions, have you ?
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Mr. Dresser. Just recently; yes, sir. I have been associated with it for a year or two, but I have been a director only this year, so I fear you will have to address the questions to Mr. Emery or Mr. Sargent, who will give you authentic information.
Senator Pepper. What legislative proposal that you know of has emanated within your knowledge from the Manufacturers’ Association, either for States or for the National Government?
Mr. Dresser. You mean with respect to child labor?
Senator Pepper. With respect to anything.
Mr. Dresser. Well, within the past month or 2 months they have advocated the passage of a measure which would assist the States that had adopted child-labor laws in the enforcement of those laws, so as to prevent the shipment into those States through interstate commerce of goods which had been manufactured elsewhere by child labor, and the shippers in the State in which the goods were snipped would be in violation of the laws of that State.
Senator Pepper. Do you know of an instance within the period of your knowledge of the association’s affairs where they have advocated the adoption of that amendment in any State?
Mr. Dresser. The adoption of what amendment?
Senator Pepper. Of the child-labor amendment in any State of the Union.
Mr. Dresser. No.
Senator Pepper. Well, you have been on the board of directors for a year, haven’t you?
Mr. Dresser. Since the 1st of January.
Senator Pepper. Did you know that the Florida Legislature met within the last 2 months?
Mr. Dresser. No ; I was not aware of that, sir.
Senator Pepper. Did you know that something like one-third of the legislatures of the country met in the last year?
Mr. Dresser. Yes.
Senator Pepper. Now, during that year has the Manufacturers’ Association in a single American State attempted to influence favorably the ratification of the child-labor amendment?
Mr. Dresser. Not to my knowledge, and I suppose that they would have taken action against it.
Senator Pepper. 1 see.
Mr. Dresser. I think they were not in favor of the enactment of an amendment to the Constitution. They were in favor of the passage of a Federal law which would have assisted States which had passed child-labor laws in enforcing those laws.
Senator Pepper. The Manufacturers’ Association were not careless in the corporate sense. What was the objection of the Manufacturers’ Association to the child-labor amendment?
Mr. Dresser. Well, I think they felt it was rather a youth-control movement rather than a child-labor amendment.
Senator Pepper. What does the Manufacturers’ Association have to do with the youth-control movement? What about the Federal Reserve amendment? Did they have anything to say about that? What has the Manufacturers’ Association done if it was concerned about the youth movement? If you are concerned about the youth movement, what should you do about the education of youth?
Mr. Dresser. I do not know as anything has been done about education.
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Senator Pepper. You are concerned about the youth of the country, are you not?
Mr. Dresser. Yes.
Senator Pepper. Have you sent out any literature with respect to the Harrison-Black bill, the purpose of which was to make it possible for the Federal Government to aid the States in the education of the youth of the country?
Mr. Dresser. I am not certain whether they have done anything. Not to my knowledge.
Senator Pepper. They have not sent out any literature against it?
Mr. Dresser. I do not think so.
Senator Pepper. What would be your attitude toward that bill?
Mr. Dresser. I am not sufficiently familiar with the terms of the bill, sir, to be able to discuss it.
Senator Pepper. Well, what have you done during the last few months, during your directorship, about public health?
What legislation have you proposed for the public-health conditions of the country, or about the care of the delinquent children? What was your attitude toward the modification of the banking laws?
Mr. Dresser. You mean several years ago?
Senator Pepper. No : recently, in the last year or two.
Mr. Dresser. As I say, I have been director only since the 1st of January, this year.
Senator Pepper. What about the guaranteeing of deposits of less, than $5,000 in the bank?
Mr. Dresser. That goes back prior to my connection with the association, sir.
Senator Pepper. So, except in respect to its desire to alleviate the suffering youth of the country from the aggrandizement of Federal power, you have not proposed much legislation lately, have you?
Mr. Dresser. As I say, the legislation that they advocated at that time was not the amendment to the Constitution but the passage of a Federal law which would assist the State in enforcing their own laws.
The Chairman. I have been struck right recently by the remarkable, purely coincidental I am sure, effort on the part of a great many people to bring about a separation of the child-labor features of this bill from the entire bill. I notice that people from various parts of the country, manufacturers, and so forth, seem to be very much disturbed about uniting the two. What is your objection to having that in this bill?
Mr. Dresser. In the first place, it seems to me that that is a matter that can be dealt with separately.
The Chairman. Why?
Mr. Dresser. In the first place, I do not feel that there is any serious child-labor question.
The Chairman. Then you are just not for any child-labor legislation?
Mr. Dresser. Yes; we are entirely willing that there should be-----
The Chairman (interposing). You are willing that there should be child-labor legislation?
Mr. Dresser. We are against child labor.
The Chairman. You are against child labor?
Mr. Dresser. Absolutely.
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The Chairman. Are you for or against child-labor legislation?
Mr. Dresser. We are in favor of appropriate child-labor legislation ; yes.
The Chairman. But you are against child-labor legislation that makes it against the law to ship goods in interstate commerce produced by children in sweatshops
Mr. Dresser That is right; we are against that.
The Chairman. You are in favor oi letting the condition go on, so far as the use of the Government’s power over interstate commerce is concerned, and you are against legislation which would prevent children-made goods in interstate commerce?
Mr. Dresser. We are against that.
The Chairman. That is the reason you want to get it separated from this bill, is it not, to try to get it through under the prison-made goods?
Mr. Dresser. We believe that will adequately take care of it.
The Chairman. You do not think that would be as effective as the other, do you, Mr. Dresser?
Mr. Dresser. I suppose there must be grave constitutional difficulties with the other proposal.
The Chairman. Are you against the other on constitutional grounds or because you just do not want it done that way?
Mr. Dresser. As far as I am personally concerned, I see no objection to having that done, if it can be done constitutionally.
The Chairman. Then, so far as you are concerned, as chairman of the National Association of Manufacturers Committee on Relation of Government to Industry, you are perfectly willing to let Congress, pass a law prohibiting the shipment of goods in interstate commerce made in violation of the State laws?
Mr. Dresser. You must understand I am simply a member of the committee and I do not want to take a position for the committee that I should not properly take. As I see it, you have a constitutional difficulty if you attempt to pass a law which absolutely prohibits the shipment oi goods manufactured by child labor in interstate commerce.
The Chairman. You are against it, then, because of its unconstitutionality?
Mr. Dresser. Yes.
The Chairman. You are against the constitutional amendment that would make that constitutional, are you not?
Mr. Dresser. I think that can be better taken care of.
The Chairman. You are against the constitutional amendment which would put it within the Constitution, are you not?
Mr. Dresser. Yes.
The Chairman. Your association is fighting the constitutional amendment that would make it constitutional, and now you are fighting the bill which would prohibit it on the ground it is unconstitutional, are you not?
Mr. Dresser. Yes.
The Chairman. That is correct, is it not?
Mr. Dresser. Yes.
The Chairman. So the attitude of the Manufacturers Association on child labor is that it is unconstitutional and the Manufacturers Association is against amending the Constitution to make it constitutional?
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You are against the law that would make it constitutional and you are against the provision in this bill to stop goods made by children from interstate commerce?
Mr, Deesser. The only position which we have taken with respect to the amendment to the Constitution is with respect to the proposed amendment on the ground that that was not essentially a child-labor movement.
The Chairman. Have you suggested any other that would be a child-labor movement?
Mr. Dresser. We have not, because, as I say, we felt it could be adequately taken care of under the Constitution as it exists at the present time.
The Chairman. About the prison-made goods?
Mr. Dresser. The prison-made goods.
The Chairman. Oi course, we realize that sometimes the court changes its opinion.
Mr. Dresser. That is true.
The Chairman. We are to assume that if the Court did change its opinion and held it to be constitutional to prohibit the shipment of children-made goods that your objection would be withdrawn, because your sole objection is that it is unconstitutional?
Mr. Dresser. Well, I suppose there is another principle involved, and that is the extent to which you want to interfere with the right of States to control that question for themselves.
The Chairman. Then you are against it on other grounds than its constitutionality?
Mr. Dresser. I would say the other one was a valid objection also. In other words, it seems to me that that is something that can be properly left to the States, and if the States legislate against it then, under the prison-made goods decision, the aid of the Federal Government can be given to enforcing the laws of the particular States that have enacted that legislation.
The Chairman. Those who actually favor the prolongation of child labor by all methods that can be adopted seem to be actually against child labor and believe it is not right and want to stop it. It seems inconsistent.
Are we to understand that your association, which has been fighting the child-labor amendment, is now fighting this phase of the bill which prohibits the shipment in interstate commerce of children-made goods, and as I understand it, you are in favor of the other measure?
Mr. Dresser. In favor of the measures that were pending in Congress.
The Chairman. You are familiar, of course, with that policy which has frequently been that sometimes the best way to defeat something is to do something else, or to suggest something else that would not work in the same way, are you not?
Mr. Dresser. It seemed to us that was a perfectly practical way to handle it and did not interfere with the rights of the States to adopt such operating rules as they might see fit I can well see that in some districts of the country, some States, it might be thought thought desirable, whereas, in other States, because of different conditions, different types of labor there, it might not. I would think it was more appropriate to permit the States to legislate for themselves and then to protect them by appropriate Federal legislation.
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The Chairman. The only reason you want to cut it out of this bill is because you want to defeat the child-labor legislation!
Mr. Dresser. We want it dealt with separately.
The Chairman. You want to defeat the bill because you want to keep us from passing any child-labor legislation which prohibits the shipment of children’s goods in interstate commerce, don’t you!
Mr. Dresser. No; we are against child labor. We want you to assist the States that have passed legislation, in order to enforce that legislation.
The Chairman. I understand, but you also want to separate child labor from this bill. That is right, is it not?
Mr. Dresser. We would like to see that dealt with separately; yes.
The Chairman. And you are against that feature of the child-labor legislation that uses the commerce clause to prohibit the shipment of goods, are you not?
Mr. Dresser. Yes.
The Chairman. Therefore you believe, do you not, that if you can get it separately that you will have a better chance to defeat that phase of the bill?
Mr. Dresser. We are still against child labor and we still desire to assist the States that have passed the child-labor laws to enforce the laws.
The Chairman. That is all.
Representative Wood. One more question. I was very much interested in one remarkable part of your prepared statement, page 5. It says:
In 1918 Russia adopted bolshevism. Once again, under communism, we saw liberties taken from the people and restored to a centralized government. Once again the people became pawns in the hands of a powerful dictatorial force. And since then every change in the form of government has been in the same direction.
Call it bolshevism or communism, if you will. Call it socialism, nazi-ism, fascism, or what you will; they are all blood brothers under the skin and in the blood stream. Each says to the people that they must bow to the will of the state.
That trend, gentlemen, has been in progress now for some 20 years. The bill we are considering, setting up a five-man board with powerful control over the rights and opportunities of the people of this country to earn a livelihood, certainly would be a step in this same direction. For this reason, gentlemen, we cannot support the bill now before you, much as we would like to see its objectives accomplished.
In what way do you think this is a trend toward communism, fascism, or bolshevism? Do you mean to say that Congress has deliberately presented a piece of legislation that trends bolshevism, fascism, nazi-ism, or communism
? Mr. Dresser. It tends toward government control of industry, which is basic in these various things that I had referred to.
Representative Wood. Do you call that fascism?
Mr. Dresser. Well, in fascism that is one of the elements, government control of industry and the activities of the people.
Representative Wood. Is that the reason why the Manufacturers Association has always opposed in every State the enactment of legislation limiting hours of work for women, and the enactment of legislation prohibiting child labor? Is that the reason why you opposed that legislation for 25 years?
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Mr. Dresser. I do not think that they had opposed State legislation.
Representative Wood. They have opposed it, of course, in every State, and have opposed it for 25 years. No one ever knew of the Manufacturers Association advocating such legislation. They were always on the other side. That is a matter of common knowledge, of course.
Mr. Dresser. I believe most of the States have legislation of that character.
Representative Wood. That is control by government, is it not, setting the limit for women? Do you call the minimum-wage law government control?
Mr. Dresser. To a certain extent. It is a question of degree, sir, as I see it.
Representative Wood. Would you call that a trend toward communism, fascism, nazi-ism, and bolshevism?
Mr. Dresser. It is a step in the direction of Government control. As I say, I think it is a question of degree, and what we object to is the sweeping character of this proposed measure which gives such absolute control over industry to a five-man board. We do not think that that is for the good of the country.
Representative Wood. How else do you think this law can be enforced except by a board?
Mr. Dresser. Well, you assume that I think the law should be passed.
Representative Wood. With reference to Government control or dictatorial power, what, do you think about that startling act, and I believe it was about the first act of the Roosevelt administration: what do you think about that startling act that so many people were startled by, when he closed all the banks? Do you think that is a trend toward Fascism or Communism?
Mr. Dresser. What bill do you refer to, sir ? I did not get your remark.
Representative Wood. What do you think about the President’s first act, practically the first act after election, when he closed all the banks so we might, rehabilitate the financial structure?
Mr. Dresser. Of course, we were facing an emergency at that time, and heroic measures had to be adopted.
Representative Wood. You do not call starvation wages and the sweating children in industry an emergency, you think there is no emergency there at all?
Mr. Dresser. I am certainly not in favor of starvation wages or sweatshops, either.
Representative Wood. You do not think that is any particular emergency when yon have 8 or 9 or 10 million men unemployed, who are unable to feed their families, and the Government has to provide them with relief, and we have to have children in industry working under 16 years of age, and we have men and women, millions of them, working for substandard wages, you do not consider that an emergency?
Mr. Dresser. I think our objectives are exactly the same. sir. I think I, just as much as you. want to see distress relieved, and I am sure the great bulk of the manufacturers do. It is simply a question of the method that is to be pursued.
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Representative Wood. Mr. Dresser, don’t you think it is an emergency where we have 8 or 9 million men unemployed, unable to find employment? Don’t you think that constitutes an emergency?
Mr. Dresser. I do not believe the adoption of measures which will put industry in a strait jacket is in any way going to help to relieve that situation, sir. 1 do not believe you will put those men back to work until you restore confidence and give industry a chance to go ahead and do the job. The Government cannot do it. The only force that can do it is industry.
Representative Wood. Industry had a chance for 4 years under Hoover.
Mr. Dresser. Of course, we were going through a period of rehabilitation.
Representative Wood. You were not in a strait jacket then.
Mr. Dresser. We were going through a period of rehabilitation, which happens once in so often.
The Chairman. That was a world-wide depression.
Mr. Dresser. That is quite true, sir. I am glad you suggested that, Senator. Under our system, I suppose it is common knowledge, business runs in cycles. We have our periods of depression and our periods of prosperity.
Representative Wood. How are you going to absorb 8 or 9 million men?
Mr. Dresser. Just as we have always absorbed them in the past, by giving industry a chance to do the job.
Representative Wood. What remedy would you suggest?
Mr. Dresser. I would leave industry alone. I would give industry a chance to go ahead.
Representative Wood. Leave industry alone?
Mr. Dresser. Give them a chance to go ahead and put the people back to work.
Representative Wood. How did it do that in the 4 years of Hoover? He left them alone.
Mr. Dresser. As I say, that was in the descending period of the cycle. We have had those periods ever since the country started, as yon know.
Representative Wood. The country was left alone for 12 years, that is, industry was left alone for 12 years and then they were not satisfied to be left alone. Why did they come to Washington and ask that we put them in a strait jacket, as you say?
Mr. Dresser. Those who did that perhaps thought that was the best course at that time. I would venture the suggestion that a great many of those who came to Washington at that time feel quite differently about it at the present time. No man is infallible. Men frequently make mistakes.
The Chairman. They are making more profits now than they were making then too, are they not?
Mr. Dresser. In 1933?
The Chairman. In 1932.
Mr. Dresser. There is no doubt about that, sir. We are in the period of ascending cycle, the period of prosperity. There is no reason in the world why industry could not go ahead and put people hack to work if they are given a chance. It they are going to have new legislation forced on them year after year there is no chance for them doing the job.
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Representative Wood. Can you put people back to work when the people do not have any purchasing power? You must increase the buying power of the Nation before you put people back to work.
Mr. Dresser. I know, but putting them back to work automatically increases the purchasing power.
Representative Wood. Yes; but you must have purchasing power, you must have the market before you can put them back to work.
Mr. Dresser. May I repeat what I suggested a moment ago, or partially suggested—and mind you I am very likely wrong, this is simply my own opinion, which is, however, shared by a good many people—my theory on the situation is this: We have our periods of prosperity and our periods of depression. During the period of depression we stop purchasing, first of all the purchasers stop their buying, or reduce their buying, and the effect of that is to throw a certain number of people out of employment. As they are thrown out of employment that reduces the purchasing power automatically.
Representative Wood. Sure.
Mr. Dresser. That in turn causes other people to be thrown out of employment, and you have the descending cycle known as the depression, which comes about once in so often.
Representative Wood. This comes in a regular cycle?
Mr. Dresser. I believe that is the fact, sir. We finally reach a point where, in order to start buying again, costs have to be reduced, and radically reduced. In order to reduce costs and for the manufacturer to stay in business he must naturally reduce wages. Costs are reduced, and what happens? We will take the case of a man who has been without a new suit of clothes for several years, and he talks with his wife one day and his wife says, “Here is a suit of clothes that you used to pay $30 for, that you can buy for $15. You better get the $15 in the bank and buy a suit of clothes.” It is the low price that persuaded him to buy. He buys the suit of clothes. Now, if a good deal of people do that what happens? It means you put people back at work, and as you put them back to work automatically the purchasing power is increased and you have the ascending cycle or prosperity, but this always started as I understand, in the past by getting your costs down so prices can be reduced to a point' where they will tempt the purchasing and consuming public, and then as people are put back to work automatically the purchasing power is increased, until you get up to a point where wages can properly be increased, and that necessitates an increase in prices.
Representative Wood. The thing we should have done, according to your theory, in 1933, was just to let the employers put the people back to work and Congress not do anything about it, you just put them back to work and then have your purchasing power. You should not have come here for any legislation at all.
Mr. Dresser. You could not have done it overnight. I very firmly believe that if the people had been left to themselves that confidence would have gradually been restored. That has happened in every depression in the past. We would eventually have come out of it.
The Chairman. They were getting their backbones stiffened in the bread lines.
Mr. Dresser. Beg pardon ?
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The Chairman. They were getting their backbones stiffened in the bread lines, they were getting their confidence restored in the bread lines.
Mr. Dresser. That is, of course, a matter of opinion. Other nations did it, of course, without similar experiments.
Senator Pepper. Your economic philosophy could well be associated with the good old Presbyterian doctrine of predestination, could it not?
Mr. Dresser. Unfortunately, I am not a Presbyterian.
The Chairman. Thank you very much. We were delighted to have you.
Mr. Dresser. Thank you.
The Chairman. Mr. Bent.
The Chairman. Mr. Bent, whom are you with?
Mr. Bent. My name is L. N. Bent. I am vice president of the Hercules Powder, Wilmington, Del. I am also a member of the labor relations committee of N. A. M.
Hercules Powder Co. operates 38 manufacturing plants located in practically every section of the United States, and at present employs about 5,700 workers, both salaried and pay roll. Some of these plants are small, employing less than 20 men; others are larger, having in some cases more than 700 individuals on the pay roll. All classes of labor are represented—skilled, semiskilled, ordinary labor—both male and female—colored and white.
The company realizes that its successful operation depends very largely upon the enthusiasm and loyalty of its workers, that it is good business to maintain such working conditions as will promote a feeling of security and satisfaction on the part of its employees, and that the interests of company and men are, in the broad sense, mutual.
House bill no. 7200 and Senate bill no. 2475 introduced by Representative Connery and Senator Black, have as their objective the establishment of “fair labor standards” in employments affecting interstate commerce with the exception of agriculture.
We are in favor of the purposes cited, and will endorse any legislation which will positively and permanently improve the American standard of living. However, we feel that the bills, as written, will fail to accomplish their intended objective.
Establishment of high wages and a short workweek will not in themselves insure a better standard of living for the wage or salaried worker. A high wage is of no avail if the purchasing power of the dollar declines proportionately with the rise in wages. It would seem inevitable that artificial control of wages and hours would be followed by attempted control of prices, and this, of course, would immediately bring up the question of international trade agreements, tariffs, and other devices to protect the American wage earner.
The bills specifically exempt agricultural labor from the wage and hour standards to be established. Our experience, particularly in the South, indicates that this exemption is not real. At certain of our southern plants we employ large numbers of colored workers.
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These men come from a locality which also furnishes labor for turpentine farms, tobacco and cotton growers, and other agricultural activities. Already these agriculturists are complaining that they are unable to compete with industrial wages and that men are leaving their farms to work under the more attractive conditions offered by industry. Control of industrial labor is bound to affect agricultural labor, whether we want it to or not.
The purpose of a short work week is ostensibly to reduce unemployment. This theory presupposes that labor is fluid and will immediately flow from one place to another. Our experience indicates that this is not so, and much time must elapse before final equilibrium takes place.
Many of our plants are located in small towns built up around a few industries. In such locations the supply of labor, particularly skilled and specially trained men, has been developed over a long period of time to take care of these industries. Any sudden changes in the work week must result in reduced production, as it takes a long time to train new men and to induce men to move from one location to another.
The practical difficulties of administering the proposed legislation are enormous. Differentials based on geographical location, racial differences, physical and mental qualifications of workers, housing facilities, competition of different industries producing different goods but selling in the same market, foreign competition, fluctuations in the cost of living—all must be considered and reconciled with one another.
None of these difficulties are solved by the Black-Connery bill. It is left to a board of five men to write the laws which will apply. The uncertainty as to the nature of these laws is bound to be particularly upsetting to industry and the consuming public. No intelligent stabilization of employment is possible when any group of men may, at will, change such vital economic factors as wages and production of goods.
We do not believe any group of five men—unless superhumanly endowed—is capable of successfully administering this legislation.
We will not attempt to discuss the wisdom or delegating to a board of five men the power of absolute control over the economic and social welfare of our country, but have tried to point out only a few of the practical difficulties attending the proposed legislation.
It is our recommendation that a competent commission be appointed to thoroughly study the question and report back to Congress facts on which adequate and proper legislation may be founded. Such legislation should be definite and specific, and any board appointed should have power only to administer laws made by Congress and not to make new laws.
The Chairman. Thank you, Mr. Bent. May I ask you whether Mr. Sargent wrote this statement?
Mr. Bent. No, sir; I wrote, it myself.
The Chairman. You are the vice president. Where did you write it?
Mr. Bent. I wrote it in Wilmington yesterday morning.
The Chairman. Is that one of the Du Pont organizations?
Mr. Bent. Not at all. There is no connection.
The Chairman. What group is it connected with?
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Mr. Bent. Hercules Powder Co. is not connected with any group. It is an independent corporation, operating solely under its own management. It manufactures various kinds of industrial explosives, cellulose derivatives, purified cotton linters, naval stores, paper makers chemicals, and so forth. In short it is a chemical manufacturing company.
The Chairman. It does business in all States?
Mr. Bent. Yes.
The Chairman. Who is the head of it?
Mr. Bent. R. H. Dunham is the president.
The Chairman. Mr. Fletcher.
Mr. Fletcher. Mr. Chairman and gentlemen, unfortunately, I have no prepared statement. My name is R. V. Fletcher. I live in Washington. I am counsel for the Association of American Railroads.
The Chairman. Counsel for the Association of American Railroads?
Mr. Fletcher. Yes. That association, Mr. Chairman, is composed of substantially all of the class 1 railroads of the United States. By ‘‘class 1 railroads” I mean, of course, those railroads which, under the. classification of the Interstate Commerce Commission, have a gross revenue of as much as 1 million dollars a year.
There is another association here known as the Short Line Railroad Association, which is composed of class 2, 3, and 4 railroads. I do not speak for them. I do, however, speak the sentiment of the class 1 railroads as expressed through the officers of their association. and particularly through the policy adopted by the board of directors of that association. That association has a board of directors.
My only purpose in appearing here, Mr. Chairman, is to ask the committee if they will permit the employers and employees in this industry, who have united in this request, to be exempted from the provisions of this law.
When I say that I speak the sentiment of the employees I do not mean to say that I am their spokesman, or that I hold any brief for the standard labor organizations. I simply happen to know, by reason of our friendly contact with their committees and with their counsel, that they join in the request that the railroad industry be exempted from the provisions of this proposed law.
May I say, too, Mr. Chairman, that I would not feel like making a request of that kind unless I was prepared to give some substantial reasons for it, and to give those substantial reasons in anything like a satisfactory way would require a half hour. I am very mindful of the signs of weariness which must affect the members or this committee. and I am. therefore, profoundly apologetic for asking for such an amount of time at this late hour of a tiresome day. If the committee feels I should not occupy so much time and that I might be heard, probably, at a later day, I am right here in Washington and would be glad to come.
The Chairman. I suggest that you go ahead now.
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Mr. Fletcher. I will try to get through as soon as I can. Now, the reasons why the railroads—and I think, perhaps, their employees, although one of their spokesmen will come before the committee later, if permitted, and will express their own views— should be exempted is because what is sought to be accomplished by this bill has already been accomplished in the case of the railroad industry by the various regulating statutes to which they are now subjected.
I believe I am correct in saying that when Mr. Jackson, who was the first witness before this committee, appeared earlier in the week and undertook to justify the constitutionality of this legislation, and also to explain its provisions, he stated, in response to a question by a member of the committee, that it was not intended to include the railroad companies or their employees. I have so been advised that that was his statement.
In any event, I think that an examination of the text of the act will disclose that, while it is very likely that its provisions are so broad as to include the railroad industry, if it became a matter of construction by the courts, apt language has not been used throughout the bill to make it applicable to the railroad industry: and, in fact, there are throughout the bill many places where it would appear that the draftsmen of the bill----
The Chairman (interposing): I think? without going through the bill as to whether they are or are not included, it would be more helpful for both of us, and save you considerable time, to just state the reasons why you do not think the railroads should be under this bill, because the committee will pass on that anyhow.
Mr. Fletcher. I think I am perfectly safe in saying that they are included under the text of the act. I have heard no dissent from this view from any person who has examined the act. So I will hasten along and omit that, as far as that is concerned.
In the first place, the railroads, of course, are industries affected with the public interest. They are subject to regulation by Congress in many special ways which perhaps do not apply to ordinary industry. Congress gets the authority to regulate their rates, their labor practices, and many other things that it would be tedious to enumerate at length, by reason of the commerce clause of the Constitution.
From the very inception of the theory of regulation there have been acts of Congress which have been passed regulating, in one fashion or another, the labor conditions that prevail in this industry. I shall not stop to do more than to name the titles of those acts.
Congress, as far back as 1898, passed, you remember, the Erdman Act, which was an act to regulate and to control controversies with respect to wages and working conditions in the industry. Without stopping to analyze that act it is sufficient to say, I think, that it was a process of conciliation and arbitration set up with complete machinery to carry out processes of conciliation and processes of arbitration.
In 1913 the Congress passed, you remember, the Newlands Act, which repealed the Erdman Act, also an act providing for conciliation and arbitration in a somewhat different way, with different machinery from that which prevailed in the Erdman Act.
In 1916, within the knowledge of all of us, was passed the Adamson Act which established an 8-hour day, or possibly to be a little more
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accurate, an 8-hour base day, because its real purpose was to affect wages rather than to limit the hours of labor. That act went to the Supreme Court of the United States and was held constitutional, by a very narrow margin. I am not going to discuss the opinion, or whether it was properly or improperly held to be constitutional.
In 1920 there was enacted, as a part of the Transportation Act of that year, a very elaborate system of settling controversies in the field of labor relations, so far as railroad labor relations were concerned. That was the Esch-Cummins Act which set up a labor board, a National Labor Board, composed of nine men, three chosen by employees, three chosen Dy employers, and three public representatives appointed by the President, which had actual authority to fix wages and to determine labor conditions. That board functioned for a period of oh, 6 years.
Now, that did not prove to be a very satisfactory method of handling the affairs in this field; at least labor was not satisfied with the decisions of the Labor Board, and they were particularly critical of placing in any governmental board, or governmental authority, the exact power to determine wages and working conditions, since it was their contention that the matter should be left to collective bargaining.
As a result of that Labor Board, the way it operated in certain decisions that it had made, we had the only Nation-wide strike among railroad employees that occurred in my time. But in 1922 there was a strike of railroad shopmen which was Nation-wide in its extent, and which was a very unfortunate and a very unsatisfactory state of affairs.
Now, in 1926 there was passed the Railroad Labor Act, which is now in existence, although it was amended in many important respects in 1934.
The Chairman. Might I make this suggestion?
Mr. Fletcher. Yes.
The Chairman. I think all of us are reasonably familiar with those statutes. I do not think there has ever been any idea that the high-paid, organized railroad men ever would, under any circumstances, come under this act. I would be very greatly interested to know about those who are not organized.
I have a letter, for instance, which I received this morning from a man who says that he worked 12 hours every day, 7 days a week, working for a railroad, and he gets $90 a month. I have here the figures from the Coordinator’s statement that more than 155,000 railroad employees, about 14 percent of the total number, are reported as receiving 35 cents an hour or less. I have equivalent daily, weekly, and monthly rates during the pay-roll period June 1, 1933, that more than 110,000 employees, or 12½ percent, worked more than 48 hours per week during the pay-roll period studied in 1934.
Mr. Fletcher. I am just trying to show you how the legislation has evolved. Until now we have had labor acts to correct all those things.
The Chairman. Does it refer to those who are in the lower-paid class?
Mr. Fletcher. It refers to all.
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The Chairman. No one ever thought that the men running the engines, the conductors, the brakemen, or the brotherhoods, for instance, would come under the effect of this act.
Mr. Fletcher. All railroad labor is highly organized now. They all belong to these brotherhoods.
The Chairman. What is the pay of the lowest-paid employee?
Mr. Fletcher. I am not quite sure, but I know there are some maintenance-of-way men, in sections where colored labor prevails, that are pretty low.
The Chairman. The one from whom I received the letter this morning was not in the South; he was in the North.
Mr. Fletcher. There are some cases there, I suppose.
Representative Wood. Pardon me, right there. In regard to the maintenance-of-way men, there are very few of those that you say- are highly organized that get 40 cents an hour; very few get the maximum of 40 cents. The great preponderance of them get far below 40 cents an hour.
Mr. Fletcher. The only thing I am trying to say is that we already have in existence laws—we have machinery which is just as effective in bringing this about as the machinery you propose to set , up in this act.
The Chairman. Is there a minimum-wage law in effect for the men who make the lowest wage?
Mr. Fletcher. No; there is no minimum-wage law in effect in the railroad industry, but there are provisions whereby the organizations, to which these men belong, may bring that question up and have it settled if it is desirable to have a minimum wage established.
Representative Wood. When were those provisions made?
Mr. Fletcher. In 1926, and made more emphatic in 1934.
Representative Wood. Eleven years have elapsed, and yet 75 percent of the maintenance-of-way employees make far less than 40 cents an hour.
Mr. Fletcher. You must bear in mind that a good many of the maintenance-of-way men have other compensating advantages in connection with their employment. For instance, as you well know, they are furnished a place to live, they have a garden, they have opportunities to raise vegetables, and things of that sort. I did not have it in mind now to argue so much about whether it is fair or just to pay them 20 cents an hour or 35 cents an hour or 40 cents an hour, as to try to make my thought clear to the committee that the machinery existing is just as satisfactory to bring about these results as if you left that to a specially created board which you might establish under this act.
Representative Ramspeck. Are all of them organized?
Mr. Fletcher. Oh, yes. I do not mean to say that there may not be, on certain railroads, men who do not belong to their organizations; I mean there are organizations that cover the work of all these men.
The Chairman. I have a letter from a man who says that he is working 14 hours a day, 96 hours a week, and gets $80 a month, working for a big railroad.
Mr. Fletcher. I am not in a position to make an investigation to see whether he has made an erroneous statement
Representative Wood. A great many railroad men are unorganized; that is, among themselves.
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Mr. Fletcher. On certain railroads.
Representative Wood. On class A railroads.
Mr. Fletcher. There are national organizations that represent those men, provided the majority of men on that railroad desire to belong to that organization.
Representative Ramspeck. The point I want to get from you is this: Suppose they do not belong to the organization, does the law provide any means by which the unorganized employees can get relief?
Mr. Fletcher. Yes; they do, if the majority of the men on that particular railroad belong to an organization, or if they think it proper to make an organization of their own.
Representative Ramspeck. Suppose the majority of them do not belong to any organization?
Mr. Fletcher. Well, they can organize for that special purpose.
Representative Ramspeck. They have got to be organized either in a company union or in a recognized union in order to avail themselves of this act?
Mr. Fletcher. Theoretically, no; practically, yes. Theoretically, if five, two, or one man desire to do so, they can go and make a grievance, under the act, and have their grievance adjudicated by the proper authorities.
Representative Wood. As a matter of practical application, though, two to five men could not do it?
Mr. Fletcher. Practically, that small group could not.
Representative Wood. Or 10 men or 100 men?
Mr. Fletcher. You would have to have a larger group than that in order to attract attention sufficiently to bring it about.
Representative Wood. Do you know of a railroad that has entered into collective bargaining with its employees with less than the majority of employees at any given point? Can you call to mind any instance where, at any given point of the terminal—I am speaking now of shopmen and not the brotherhoods—can you call to mind any single terminal or shop or roundhouse where the railroad company had entered into collective-bargaining agreements with employees where they did not have the majority of employees?
Mr. Fletcher. I do not think I could mention one, Congressman. There may be some, but I am not prepared to say.
Representative Wood. As a matter of fact, there has never been a contract entered into, whether it be a contract between the railroad and its employees, or any other manufacturer, where the minority of employees negotiated that contract, where they were bona-fide trade-union men?
Mr. Fletcher. I do not know what you mean by “bona fide trade unions.”
Representative Wood. Or the company union, where the minority of employees have entered into an agreement with that company?
Mr. Fletcher. I am unable to cite to you instances of that kind.
Representative Wood. Any kind of union?
Mr. Fletcher. I cannot say that there is such a situation. It would be possible under the law, but not practical.
The Chairman. What law is there that these low-paid long-hour workers have that has protected them from low pay and long hours in the past that the average citizen has not had, either in the Wagner law or some other law?
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Mr. Fletcher. The Railroad Labor Act. I did not discuss it. because you said you were familiar with it. The Railroad Labor Act, as drawn in 1934, absolutely permits the organization of men into collective bargaining groups.
The Chairman. And the Wagner Act permits everybody else to do that.
Mr. Fletcher. Yes.
The Chairman. So there is no difference there. What is there to protect these men? From the communications I have received it would seem strange, if either the Railroad Labor Act was not amended or some law passed, if you were going to put everybody else on a living wage and you would exclude one group who have not been protected.
Mr. Fletcher. Here is what I want to say, and will be glad to have the privilege to say, that under the Railway Labor Act of 1934, which is the one under which we are operating now, it is permitted for any group of men who have any grievance with reference to hours or working conditions to express that grievance to the company, and an effort is made then, under the terms of the law, to settle those questions.
The Chairman. This man working the 84 hours can make the agreement?
Mr. Fletcher. Sure he can. I do not suppose, if he is working there, that he is an isolated case. He can join with others who have similar grievances and make that grievance known to the company, and they can make an effort, as best they can, to settle that controversy by conciliations and by agreements.
The Chairman. You have some employees that have excellent contracts.
Mr. Fletcher. Yes.
The Chairman. They have excellent consideration, they are well organized, therefore they have been able to get it, and of course they do not need this law, but are there other people who need either this or some other law so they do not have to work 84 hours for $80 a month?
Mr. Fletcher. I am just telling you.
The Chairman. All right.
Mr. Fletcher. Under the machinery of the Railway Labor Act. if these men fail in their application to the company to have their grievances redressed, they may then demand arbitration. I do not know of any case so far where the railroad companies have refused arbitration.
I do not know of any kind of machinery that you can set up here which would be more effective or fairer than the kind of arbitration which would be brought about by the demand of the men under those circumstances; but if the company refuses to arbitrate upon those issues then, of course, we have the power of the President to appoint an emergency fact-finding commission which will undertake to see what is the justice of the claim one way or the other, and I do not know of any case where any railroad company has refused to follow the recommendation of an emergency commission.
Now, it seems to me, in all fairness, Mr. Chairman, that that method of procedure, if you could apply it to all industry here, would
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be just as effective, or more effective, as a practical matter, than you propose in this act.
The Chairman. A man that is making $80 a month and working 84 hours a week----
Mr. Fletcher (interposing). You would hardly expect the question would be decided by fiat of Congress without making some inquiry into the circumstances surrounding it. I work a lot more than that.
The Chairman. Maybe so, but you probably get more pay.
Mr. Fletcher. Maybe just a little more pay than they are getting.
The Chairman. If we pass a law providing maximum hours for everybody else that is not organized, engaged m work, where would be the fairness in leaving out the low-paid, long-hour working railroad men? I know there are men working for the railroad who are strong enough in their union to protect themselves.
Mr. Fletcher. Now, Mr. Chairman, if it is the thought here that you should take over, through the medium of this act, the whole question of contracts between the railroads and their employees and scrap the results of 50 years of evolution and progress and negotiation, that is one thing; but I had assumed that where you have such elaborate provisions for redressing grievances of the railroad employees, the fact that it may have failed in some cases is no reason why you should tear down the whole house.
The Chairman. The Coordinator’s report shows that there are more than 155,000 men receiving 35 cents an hour and less. That is what it says.
Mr. Fletcher. Yes; I am familiar with that report. I have it here before me.
The Chairman. And 110,000 men who are working more than 48 hours per week.
Mr. Fletcher. Your plan here in this act provides for an investigation of that situation by this Board, with power in the Board, of course, to establish minimum wages and maximum hours of labor, according to what circumstances they may find. Now, here is a situation where the railroad industry already has the machinery for bringing that about. I wonder if you are not going to do a great deal more harm than good.
Representative Ramspeck. Mr. Fletcher, could this Board that you are talking about, on its own initiative, investigate the condition of the 155,000 employees?
Mr. Fletcher. No; there has got to be a grievance, there has got to be a complaint filed by somebody with the Board.
Representative Ramspeck. They do not have the same machinery that this sets up, do they?
Mr. Fletcher. I do not suppose you have the same machinery identical in all of its functioning, but it seems to me it would be machinery which would prove to be more practical than occurs here in this case, machinery which would allow any man to bring the question before the proper authorities and have his rights adjudicated. Now. I do not want to talk too much about the N. R. A., because I assume the purpose of this bill is not to accomplish all the things accomplished by the N. R. A., but I would like to mention this in connection with N. R. A. experience.
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The N. R. A. act, the National Industrial Recovery Act, was so written as, in my opinion, by its very terms, to exclude the railroad industry. However, there was a good deal of controversy about that, and for a time it was a matter of consideration by the President of the United States and by the Federal Coordinator of Transportation, and by others, as to whether the railroads were under the National Industrial Recovery Act. It was finally decided that they were not.
In connection with that investigation I have here a memorandum which was submitted to the President of the United States by the then Federal Coordinator of Transportation, Mr. Eastman, who, after discussing the legal questions and reaching the conclusion that, under the terms of the act, railroad workers were not under the act, goes on and gives most cogent reasons why they should not be under the act with respect to this very question of maximum hours and minimum wages, and I should like to commend that most respectfully to the attention of the committee.
The Chairman. Did Mr. Eastman comment on the fact that there were 155,000 employees who worked for 35 cents an hour and less?
Mr. Fletcher. He did mention the fact that there were a considerable number.
The Chairman. Did he comment on the fact that 110,000 were actually working over 48 hours a week?
Mr. Fletcher. That report had not been made at that time.
The Chairman. Did he report that to the President?
Mr. Fletcher. He reported that there were a considerable number. He did not know how many there were at that time.
May I have the privilege of filing that with the committee?
The Chairman. Yes; just hand it to the stenographer.
(The memorandum referred to is as follows:)
Application or National Industrial Recovery Act to the Railroads
Two questions will be discussed:
1. Whether as a matter of law the National Industrial Recovery Act is applicable to the railroads.
2. Whether as a matter of policy the National Industrial Recovery Act should be applied to the railroads.
THE QUESTION OF LAW
With his letter of August 17 to the President, Chairman Whitney, of the Railway Labor Executives' Association, submitted a memorandum entitled. “Jurisdiction and Power of the President under the National Industrial Recovery Act” It supports the proposition that under that act jurisdiction is vested in the President to establish and put into effect a code governing the relations of railroad companies and their employees, and gives reasons why this should be done. I have been supplied with another memorandum, a copy of which is submitted herewith, entitled, “The Railroads and the National Industrial Recovery Act”, and prepared by General Counsel Fletcher, of the Association of Railway Executives. This supports the proposition that the railroads are not included in that act and, if they were, ought not to be dealt with under it.
Upon the question of law there are, therefore, two opposing memorandum* prepared by vitally interested parties. If a decision upon this question is deemed important, it would seem appropriate to submit these memorandums to the Attorney General with a request for his opinion.
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For what it may be worth, my own opinion is that the railroads are not included in the National Industrial Recovery Act. I base this opinion chiefly upon these considerations:
1. There is considerable evidence, as the general, counsel of the Association of Railway Executives points out, that the Congress did not, when the National Industrial Recovery Act was under consideration, regard its provisions as applicable to the railroads. The railroads were being dealt with contemporaneously in a separate act. In the discussion of that act the question of a shorter workday for railroad employees came up very definitely, but no provision therefor was finally made.
2. Consideration of the provisions of the National Industrial Recovery Act and of the language used therein supports the conclusion that it was not intended to apply to the railroads. For example, the codes are described throughout as “codes of fair competition'’, an apt description in the case of private, competitive industry but not in the case of a quasi-public industry, such as the railroads, already subjected to comprehensive and drastic public regulation. Violations of the “standards of fair competition”, provided in the codes, are to be deemed an “unfair method of competition in commerce within the meaning of the Federal Trade Commission Act.” The railroads, of course, have never been subject to that act, and are instead most elaborately provided by the Interstate Commerce Act with standards governing their activities. The provisions of the National Industrial Recovery Act with respect to licenses are obviously inappropriate to the railroads, although most appropriate for private, competitive industry. Attention may also be called to the “declaration of policy” in sect on 1, which contains many references which have no application to the railroads, and to the title of the act with its words, “to foster fair competition.” Clearly the act was designed to provide a measure of control for hitherto uncontrolled and unregulated private industry.
3. In the Emergency Railroad Transportation Act, 1933, passed and signed contemporaneously with the National Industrial Recovery Act, it was clearly and emphatically provided that the wages and working conditions of railroad employees should remain subject to the Railway Labor Act, at least until the enactment of further transportation legislation.
Section 10 closes with the following proviso: “Provided-, however, That nothing herein shall be construed to repeal, amend, suspend, or modify any of the requirements of the Railway Labor Act or the duties and obligations imposed thereunder or through contracts entered into in accordance with the provisions of said Act.”
Section 7 (a) provides that carriers by railroad, whether under control of a judge, trustee, receiver, or private management, shall be required to comply with the provisions of the Railway Labor Act and with the provisions of certain paragraphs of the amendment to the Bankruptcy Act approved March 3. 1933. One of these paragraphs, which is thus made applicable to all railroads, reads as follows:
“(o) No judge or trustee acting under this Act shall change the wages or working conditions of railroad employees, except in the manner prescribed in the Railroad Labor Act, or as set forth in the memorandum of agreement entered into in Chicago, Illinois, on January 31, 1932, between the executives of twenty-one standard labor organizations and the committee of nine authorized to represent class I railroads.”
However, the possibility of improvement in railroad labor conditions and relations was recognized, and therefore section 13 makes it the duty of the Federal Coordinator of Transportation “forthwith to investigate and consider means, not provided for in this title, of improving transportation conditions throughout the country, * * * including, also, the stability of railroad labor employment and other improvements of railroad labor conditions and relations”, with a view to submitting “such recommendations calling for further legislation to these ends as he may deem necessary or desirable in the public interest.” Clearly the purpose was to make improvement of railroad labor conditions and relations the subject of future legislation, in the meantime providing definitely that wages and working conditions should be changed only in accordance with the procedure prescribed in the Railway Labor Act.
FIND FOOTNOTE “1”
Section 7 (a) of the N. I. R. A. provides that every code of fair competition, agreement, and license shall contain conditions giving employees the right of 1 The railroad act was, however, signed at 12 : 05 p. m., whereas the National Industrial Recovery Act was signed earlier, at 11: 55 a. m.
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collective bargaining through representatives of their own choosing; freeing them from the interference, restraint, or coercion of employers in the designation of such representatives or in self-organization; and providing that they shall not be required as a condition of employment to join any company union or to refrain from joining, organizing, or assisting labor organizations of their own choosing.
Instead of relying upon the provisions in the N. I. R. A., the same subject was most comprehensively covered in the Emergency Railroad Transportation Act by reference to the following provisions (in addition to the one above quoted) in the Bankruptcy Act, which were made applicable to all railroads, however managed:
“(p) No judge or trustee acting under this act shall deny or in any way question the right of employees on the property under his jurisdiction to join the labor organization of their choice, and it shall be unlawful for any judge, trustee, or receiver to interfere in any way with the organization of employees, or to use the funds of the railroad under his jurisdiction, in maintaining so- called company unions, or to influence or coerce employees in an effort to induce them to join or remain members of such company unions.
“(q) No judge, trustee, or receiver acting under this act shall require any person seeking employment on the property under his jurisdiction to sign any contract or a agreement promising to join or to refuse to join a labor organization; and if such contract has been enforced on the property prior to the property coming under the jurisdiction of said judge, trustee, or receiver, then the said judge, trustee, or receiver, as soon as the matter is called to his attention, shall notify the employees by an appropriate order that said contract has been discarded and is no longer binding on them in any way.”
THE QUESTION OF POLICY
Assuming that a code for the railroads could lawfully be established under the N. I. R. A., would this be wise? Aside from wages and working conditions, there seems nothing which such a code could accomplish. The United States railroads are subject to more comprehensive public regulation than any other privately owned industry in this country, if not in the world. There is no need for a “code of fair competition.” The Interstate Commerce Act was originally enacted as much to control the competition of the railroads with each other as to prevent monopolistic extortion, and the Emergency Act has for one of its main purposes further control over such competition to avoid wastes incident thereto. Overproduction of railroad facilities and service is prevented by the provisions of the Interstate Commerce Act which enable the Commission to control new construction and to authorize the abandonment of lines no longer useful. The Commission may bar the operation of antitrust laws, both Federal and State, to permit railroad consolidations and acquisitions of control and the pooling of traffic and service. The Coordinator is given even more extensive power to bar the operation of the antitrust statutes. The insurance of railroad securities is also under complete public regulation.
A code for the railroads could, therefore, serve no useful purpose, outside the field of wages and working conditions. But in that field, also, the railroad situation is quite different from that which exists in other industries. The principle of collective bargaining has not only been recognized in practice for many years on the railroads, but it is recognized by law in the Railway Labor Act and a procedure prescribed therefor. As shown above, the Emergency Act was so drawn as to protect this procedure in every possible way, and at the instance of railroad labor. It Is true that company unions exist on many railroads for certain classes of employees, to the dissatisfaction of the so-called standard unions; but the Emergency Act, as above indicated, contains provisions to safeguard this situation.
There are several other acts designed for the protection of railroad employees. Safety is protected by the Safety Appliance and Boiler Inspection Acts. Hours of service are covered for train and engine employees by the Hours of Service Act. For these same employees the principle of the S-hour day was established by the Adamson Act. and this principle has since been voluntarily extended to most other railroad employees. Legislation proposing to establish the principle of a 6-hour day for railroad employees has been considered but not enacted, although the Commission, by direction of Congress, made an elaborate report on this subject in December 1932.
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As a result of public regulation, railroad rates and charges have been protected during the depression against the reductions which commodity prices generally have suffered. There have been some reductions, forced by truck and waterway competition, but a very large body of railroad rates still stand at 50 percent or more above the pre-war level. The same is true, very largely, of railroad hourly wage rates. The reduction from the peak has in most instances been no more than 10 percent. It is true that railroad labor has suffered severely from dismissals or part-time employment, but similar conditions have prevailed in many other industries combined with a much larger reduction in hourly wage rates.
Statistics in regard to railroad wage rates, in comparison with those in industry generally, are given in the memorandum submitted herewith and prepared for the Association of Railway Executives. Without accepting these at face value, for I have not undertaken to check them, I call attention to a fact in connection with railroad wage rates which is of manifest importance in the present discussion. Acting under the Railway Labor Act, the railroad managements gave notice last June of an intention to make a large reduction in railroad wages. At the request of the President, I conferred with both sides in an effort to postpone this controversy, because of the disturbing effect which it might have upon the administration’s plans for reviving business. As a result, an agreement was reached under which existing wage rates (including the 10-percent reduction) were definitely continued until June 30, 1934. This was hailed by the labor organizations as a victory.
So far as I am aware, there is comparatively little need in the railroad field for minimum wages, such as have been provided in the various codes adopted under the National Industrial Recovery Act. The main thing which it may be urged that a code for the railroads could do would be to spread work with a consequent increase in employment. There are many complexities incident to establishing a shorter work day for railroad employees, as is pointed out in the memorandum from the Association of Railway Executives. Disregarding these difficulties, however, could such a shorter workday be established without an Increase in hourly rates of pay and consequent large increase in railroad operating expense?
I have seen no indication that railroad employees generally desire such a shorter workday without an increase in hourly rates of pay, and probably an Increase sufficient to preserve their present daily earnings. In other industries, where an increase in operating expense has been caused in this way through codes or the President’s Reemployment Agreement it is contemplated that some offsetting increase in prices may be made. Within reasonable bounds such action seems to be officially sanctioned. In the case of the railroads, however, this could not be done without the consent of an independent tribunal, the Interstate Commerce Commission.
Recently the Commission has closed an investigation, instituted at the urgent demand of several of the great industries of the country, to determine whether or not a general reduction in railroad rates ought not to be ordered. By a vote of 7 to 3, the Commission refused to order such a reduction, but the very fact that this investigation was had illustrates the situation with respect to railroad rates. They are still relatively very high, compared with commodity prices generally, and this marked disparity in level is held by many business men. and also economists, to be one of the important factors hampering a revival of trade and commerce. The desirable thing is to bring commodity prices up to the level of railroad rates, rather than to increase the latter, and there is a long distance to go before this result will be reached
Not only would an increase in railroad rates and charges be subject to the consent of the Interstate Commerce Commission, but it would be of questionable advantage in any event, owing to the sharp competition which the railroads meet from motor trucks and water lines, where wages and working conditions are far less favorable to the employees than on the railroads.
But, if it is both impracticable and undesirable for the railroad to increase their rates and revenue to meet an increase in wage expense, what would be the situation if such an increase in expense were suffered without a compensating increase in revenue? A thing much to be desired under present conditions is that the railroads should be able to resume now construction and the purchase of new equipment, materials, and supplies. In prosperous times they are among the largest buyers in the country, and their comparative
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withdrawal from the markets is an important factor in the depression of the so-called heavy industries. Railroad credit is now practically nonexistent, except so far as loans from the Government are concerned, and the railroads are reluctant to borrow money even from the Government. However, railroad earnings are improving, and credit conditions may soon be better. It is possible, therefore, to anticipate that in the not remote future the railroads may be able to increase their purchases materially, with advantage to all concerned, including railroad labor. But this hoped-for result might be indefinitely postponed If the railroads should experience a substantial increase in expense without compensating increase in revenue.
Under all the circumstances I am of the opinion that the adoption of a code for the railroads under the National Industrial Recovery Act would not be wise, even if it were legally practicable. In saying this, I do not mean that railroad labor conditions are all that they should be. In the memorandum from the Railway Labor Executives’ Association it is stated that the railroads employ 1,750,000 in normal times and are now employing 1,000,000, leaving 750,000 unemployed. This is, I think, an overstatement, for improvements in transportation methods make it improbable that anything like 750,000 would be reemployed even if traffic should be restored to 1929 proportions. There is a bad unemployment situation on the railroads, but the best hope for improvement lies in an increase in business activity which will add to the traffic and earnings of the railroads, enabling them not only to increase their train service but also to make up much deferred maintenance. Anything which would interfere with the improvement of railroad net earnings would also stand in the way of such a program of reemployment.
There are situations which ought to be corrected where certain classes of railroad employees are working longer hours than are necessary in comparison with others. Informally, I was taking steps to see whether these situations cannot voluntarily be corrected, and am hopeful of favorable results. It may be possible, also, to provide for minimum wages consistent with those adopted in the codes, in the few instances where such minimum wages may be necessary.
In the above discussion I have not gone into one phase of the question which might be important from the labor standpoint. I understand that the codes so far adopted have gone no further than to fix minimum compensation and maximum hours per week, leaving wage rates to be fixed by such bargaining. In the case of the railroads wage rates have been fixed by such bargaining, in definite agreements which do not expire until June 30, 1934. Either the code would leave these agreements unimpaired, thus preventing any increase in wage rates through collective bargaining to compensate for the shortening of hours, or they would strike down the agreements and leave many matters governed thereby in doubt and confusion. I do not know which results would follow, but presume it would be the first of these alternatives.
Federal Coordinator of Transportation.
Mr. Fletcher. I wish time would permit me to read some of the extracts from Mr. Eastman’s report which gives the reasons why this is impractical, so far as labor relations are concerned. There is one thing you must remember, gentlemen, and that is this, that there is this fundamental difference between the railroads and other industries besides other questions, and that is the inability of the railroad industry to recoup the increased expenses that are put on them by an act of this sort, if it does result in increased expenses. I take it for granted that this act takes care of the manufacturers’ increased operating costs by reason of this act, where they have the privilege, in fact are invited to add that much to the cost of their product. Is that not so?
The Chairman. They certainly will not be invited by me.
Mr. Fletcher. I think everything in the act indicates that- they might be expected to that—I have heard a good deal of this discussion—but the railroads cannot do that, because of the fact that their rates are controlled by a public authority. So that we have, as we have always had, this singular, incongruous and unhappy
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situation where the Congress and other bodies are fixing the costs to railroads through regulation of the railroads, and another distinct body, entirely answerable to Congress and the Government, by different considerations, fix their income.
Now, if it were possible for railroads to say, “Yes, we have had our expenses increased and therefore we will recover the amounts by increasing the only thing which we have to sell, which is transportation”, that would be one thing, but that is a situation which I think yon cannot ignore or neglect in considering the situation of the railroads.
Representative Wood. You made the statement awhile ago that the passage of this law would scrap the 50 years’ effort to give railroad employees collective bargaining.
Mr. Fletcher. I said it would have that tendency. It would set up a rival system of regulation which would be inconsistent, it seems to me, and difficult to operate. Why, take for instance the transportation brotherhoods, it would affect the minimum wage of transportation brotherhoods.
The Chairman. What is the difference between a man who works below a minimum wage because he happens to work for a railroad and a man who works below a living wage who happens to work in the cotton mill, or what is the difference between the man who works too long hours because he happens to work for the railroad and the man who works too long hours because he happens to work for somebody else?
Mr. Fletcher. Well, there cannot be any difference in the way yon state it, Mr. Chairman, of course, so far as one is a citizen and the other is a citizen, and one has obligations to society and has a family, and so does the other. As far as that is concerned, there is no difference, but what you are trying to do here is to find some way to correct an evil, as I understand.
The Chairman. That is right.
Mr. Fletcher. And we insist, with great deference, that we have worked that plan out with the railroad industry.
The Chairman. You worked it out but it hasn’t worked.
Mr. Fletcher. You cannot accomplish everything at once.
The Chairman. Are these figures right?
Mr. Fletcher. I do not know. I nave no reason to think that they are right or wrong. I haven’t checked them so I cannot dispute them. Bear this in mind: The relationship between the railroads and their employees is one of constant improvement. In the last year we have settled six major controversies, rather important controversies, by negotiations.
Representative Wood. What part did you take in them? Have you participated in the conferences on wages?
Mr. Fletcher. I have nothing to do with wages.
Representative Wood. You had nothing to do with the conferences?
Mr. Fletcher. We do not handle that.
Representative Wood. Do you know anything about these wage agreements that are negotiated between the railroads and their employees?
Mr. Fletcher. I know something about them.
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Representative Wood. Do you know anything about the wage agreements that have been negotiated between the railroads and maintenance-of-way employees since 1924?
Mr. Fletcher. I do not believe there has been any adjustment of wages there except the restoration of the reduction that occurred in 1932.
Representative Wood. You realize now that the maintenance-of- way men have contracts with the railroads where some of the men receive only 25 cents an hour, or 23 cents an hour?
Mr. Fletcher. I do not know just what the wage base is. I know some are low.
Representative Wood. Don’t you know that very few of the employees receive over 40 cents an hour in any wage agreements?
Mr. Fletcher. You are not talking about section foremen now?
Representative Wood. Very few foremen, very few of those get 40 cents an hour.
Mr. Fletcher. You are talking about the track laborer?
Representative Wood. Yes.
Mr. Fletcher. In certain sections of the country they get less than 40 cents an hour, but I think in certain other sections of the country they get more than that.
Representative Wood. Very few. There are about 250,000, near 300,000 but more than 250,000 maintenance-of-way employees, and there are more than 150,000 now that are below 35 cents an hour, and approximately 200,000 receiving less than 40 cents an hour.
Mr. Fletcher. I think, generally speaking, north of the Ohio River and east of the Mississippi River the wage scale is more than 40 cents an hour.
Representative Wood. There is not much differential between them.
Mr. Fletcher. They have a low wage scale south and southwest.
Representative Wood. And they have a very low wage northeast and northwest.
Mr. Fletcher. There is not much in the northeast below 40 cents.
Representative Wood. The Missouri Pacific, Santa Fe, and Rock Island.
Mr. Fletcher. Southwest; yes.
Representative Wood. They run northwest and northeast and their contractual relation is just about the same. I do not think there is 3 cents difference an hour between the North and South on class A railroads.
Mr. Fletcher. There is a wage demand now pending, as you know, by the maintenance-of-way employees. I do not know how it is going to come out. That is in process of negotiation now.
Representative Wood. Do you think that these section men are worth 40 cents an hour, or do you not?
Mr. Fletcher. I think anybody is worth 40 cents an hour, if he can get it; yes. I do not know anybody in the world that has any higher respect for the dignity of labor than I have.
Representative Wood. I do not believe there is a single railroad executive that would tell this committee that a section man was worth less than 40 cents an hour, an experienced section man. It is not common labor, it requires a great deal of skill.
Mr. Fletcher. I believe that.
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Representative Wood. Why haven’t they paid them more then?
Mr. Fletcher. The railroads haven’t had the money.
Representative Wood. Why have they paid others more wages, the blacksmiths, boilermakers, and shopmen?
Mr. Fletcher. Because it is a different class of labor. You do not mean to say there should be the same basis of pay with track labor as with the skilled mechanics, do you?
Representative Wood. Not at all. The differential ought not to be as much as it is, however.
Mr. Fletcher. That may be so.
Representative Wood. My opinion is that the reason why the maintenance-of-way men do not get the higher wages is because they have not been organized in all these years.
Mr. Fletcher. I think they are very well organized. I happen to know their chief officer, lie seems to me to be a very competent and a very able man.
Representative Wood. The skilled mechanics that belong to the maintenance-of-way organization are comparable with the building men and other various skilled types of men but they have received far less wages than the machinists, boilermakers, blacksmiths, and shopmen. Why is that? Are they less efficient? Are they worth less to the railroad company, or what is the reason ?
Mr. Fletcher. I would be very glad if you would address that question to some of the labor leaders. They have a labor leader up here.
Representative Wood. I would rather have you answer that.
Mr. Fletcher. I do not know.
Representative Wood. How does this affect the 50 years of collective bargaining between the employees and railroads that you spoke of when the bill merely establishes the 40-cent minimum?
Mr. Fletcher. It has not been shown that it does that.
Representative Wood. How would that break up the collective bargaining?
Mr. Fletcher. I do not think it establishes the 40-cent minimum. I do not read it that way.
Representative Wood. If it does, how would it affect it?
Mr. Fletcher. Because there would be a lot of contracts which would have to be scrapped at once, would they not?
Representative Wood. A lot of what?
Mr. Fletcher. Contracts.
Representative Wood. No, no.
Mr. Fletcher. Yes; my dear sir. I do not want to be offensive by my manner.
Representative Wood. What contracts are you speaking of?
Mr. Fletcher. The contracts which provide what their wages shall be.
The Chairman. You mean you have contracts with unions for a smaller amount?
Mr. Fletcher. There are contracts, according to the statement made here, with unions which call, in certain sections of the country, for a smaller amount.
The Chairman. What union is that?
Mr. Fletcher. The Brotherhood of Maintenance-of-Way Employees.
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The Chairman. Do they have representatives here?
Mr. Fletcher. In the room here today?
The Chairman. Yes, sir.
Mr. Fletcher. I am not sure—yes; I see there is one here.
The Chairman. We can hear him later.
Mr. Fletcher. Oh, yes.
The Chairman. I judge that these 110,000 and 155,000 are not organized, are they?
Mr. Fletcher. I would not be able to say whether they belong to the union or not. I know there is a union that covers every part of railroad labor. Whether all these men belong to the unions or not I am not sure, but I do venture this assertion that the wage scale for those who do not belong to the unions is the same as the wage scale for those who do belong to the unions in the same sections of the country, and where they are doing identically the same work. You see, whatever contract is made with the union sets the scale, and if you call them company unions, or organized employees, or what not, why, that scale then prevails.
The Chairman. I venture the assertion that there is no union that has a contract that works men 12 hours a day 7 days a week, and there is no union of railroad men that has a' contract that works men 84 hours a week for $80 a month.
Mr. Fletcher. It is very possible that this man who wrote to you may have belonged to some clerical staff of some officer of the road that is not organized; that is possible. Some of us do have to work pretty hard.
The Chairman. What I am interested in is the number of men who are not organized and who are compelled, by reason of their lack of organization, to work for unduly long hours and for wages which are not considered to be a living wage.
Mr. Fletcher. I do not think it grows out of their lack of organization.
The Chairman. The letter I had today said that this particular group was not organized.
Mr. Fletcher. It might not be organized. I venture to say. if the facts are found, that you will find that whatever wages are paid to organized groups on that railroad in that particular work will apply also to this man. It is true that there are clerical employees, especially those who are attached to the staffs of the hard-working officers of railroads, who probably do have to work overtime. I might work my stenographer overtime, I am sorry to say it, and that is true of the people attached to the staffs. I could not tell without having that particular case looked into. I can only speak in general terms as to groups.
The Chairman. Would there be any way, Mr. Fletcher, to give us the figures of the men who work for the railroad who do not belong to the unions?
Mr. Fletcher. How many of them there are?
The Chairman. How many of them there are and how many of them are drawing wages under 35 cents an hour.
Mr. Fletcher. I could, if you give me a little time.
The Chairman. That would take some time?
Mr. Fletcher. I would have to circularize the railroads. I would be glad to do it.
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[PAGE 705]
Representative Wood. You said you were speaking the sentiments of both the railroads and employees.
Mr. Fletcher. Only what they told me. They will have their own spokesmen.
Representative Wood. You mean the 21 standard railroad organizations?
Mr. Fletcher. Twenty only
Representative Wood. You mean to say that you had conferences with them about this bill?
Mr. Fletcher. Yes; with their leaders.
Representative Wood. Have their leaders expressed themselves in opposition to this bill?
Mr. Fletcher. Twenty of them have; yes, sir.
Representative Wood. Twenty?
Mr. Fletcher. Twenty.
Representative Wood. Will they appear before the committee?
Mr. Fletcher. They will.
The Chairman. Are there 20 or 21?
Mr. Fletcher. There are 21 standards unions but only 20 belong to the legislative group.
The Chairman. What is the other one?
Mr. Fletcher. The trainmen.
Representative Wood. Does this include the maintenance-of-way employees’ organization?
Mr. Fletcher. Yes.
Representative Wood. When did they have their meeting?
Mr. Fletcher. On the 7th of this month.
Representative Wood. On the 30th?
Mr. Fletcher. On the 7th of this month. That is what I am informed.
Representative Wood. Three days ago?
Mr. Fletcher. They held the meeting three days ago.
Representative Wood. They held the meeting in Washington?
Mr. Fletcher. In Chicago.
Representative Wood. Then they will ask to be exempt from the law?
Mr. Fletcher. They would like to be exempt from the law, as I understand it. I only have what was told me by their spokesman. I say I have no brief for them. I would not want to be held too rigidly about their statement about their position.
The Chairman. I think you are correct. I understood from Mr. Harrison that that was true.
Mr. Fletcher. That is where I got my information, from Mr. Harrison and his counsel, Mr. Hay.
The Chairman. The reason I asked these questions is because we have got to know something about the men in the low-pay brackets who do not belong to any organization, who cannot help themselves, before we can determine what should be done.
Mr. Fletcher. Very well. I can get that information. I do not know whether it would be soon enough for the purposes of the committee, but I can get it, I think, in 20 days. I am afraid that would not do you very much good.
The Chairman. It might not.
Representative Wood. It would take you 20 days to get that information?
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Mr. Fletcher. I would have to do this, Congressman, I would have to write to each one of the railroads and ask them to give me an answer by a special questionnaire, which would be sent out, to give me the number of their unorganized employees who were getting less than 35 cents an hour.
The Chairman. Or less than 40 cents an hour.
Mr. Fletcher. Or less than 40 cents an hour. I could probably get it in less than 20 days.
The Chairman. There could be no work, could there, if you could get an agreement from the Association of Railroads that whatever minimum wage is adopted as a fair living standard the railroads would accept and would not employ their people for a smaller amount?
Mr. Fletcher. I will say this. Senator: I do not think I have got authority enough to answer that, but I do know this: We have been recently in conference with our maintenance-of-way employees. It grew out of a bill—am I getting too far off the record, or too far away from the subject? I hope you will rebuke me if I do—it grew out of a bill pending in the Congress to have maintenance and bridge conditions put under the control of the Interstate Commerce Commission. We have been trying to work out some kind of plan whereby what they seek by that bill could be done through the medium of agreement, as was done in the pension situation, the dispatchers and some others. In connection with that, while those negotiations are for the moment not pending, a statement has been received by the railroads from the officers of the maintenance-of-way organization, men of high character and great ability, for whom I have the utmost respect, in which they have set forth certain conditions in the maintenance-of-way industry which they think should be corrected, and I will say in all candor, not for the purpose of this hearing, but with such candor as I am capable of that those complaints are being given most serious consideration by the railroads. Now, I do not know that I am privileged to have the authority to say that I can pledge the railroad industry. Certainly not without conference.
The Chairman. I understand that.
Mr. Fletcher. That is to adopt voluntarily the same standard that might be set here. My information is, Mr. Chairman, that the Secretary of Labor, who I suppose is one of the greatest authorities in the country on relations between employer and employee, advocated not putting into this law any fixed minimum wage.
The Chairman. That does not make any difference in the final conclusion as to what should be done.
Mr. Fletcher. Except it is a very high authority.
The Chairman. I might say, as far as I am concerned, I would prefer personally to let the railroad organizations operate under the laws which are established for themselves, because they have been built up over a long period of years.
Mr. Fletcher. Yes.
The Chairman. I would prefer to let the Maritime Commission, for instance, handle the situation there, but I would feel that this committee was derelict in its duty if it sat here and heard evidence and finally passed a law which protected all the other workers in interstate commerce who were making less than a living wage and
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[PAGE 707]
failed to see that the men who work for the railroad did not have that same protection.
I have enough confidence in the brotherhoods to believe that they would feel the same way, if they had the facts, before making up their conclusions about coming under this bill. I do not believe that they would be willing, if the facts come to them, to have men working for the railroad at smaller than a living wage, at hours such as I learned. I do not believe that they would be willing to let that go along and be responsible in any way for preventing protection to come to those men.
My own opinion is that the sound way to do that would be for the Association of Railroads to agree in some way with these men that are organized. I am sure the men who are organized want to see their fellow workers who are not organized—and maybe they will not let them be organized in some instances—that they want to see them protected. I do not see why something could not be worked out, when they are left out, maybe deliberately left out, when there is evidence that they would be living under a poorer standard than others that the bill protects.
Mr. Fletcher. Senator, I think, generally speaking, I am in accord with the philosophy that you have just stated. I hesitate to speak about specific instances because it is so likely to be misunderstood, but I do know—I lived for 18 years in the South and I know something about conditions there, I know branch line railroads in the State which I call my home State, where colored labor is employed, and I am not saying here a good colored man should not have the same consideration as a white man, not for a moment, but I do know cases where men work on the section 2 days a week, about all that the railroad has for them to do. 2 days a week, and around their own homes they have their gardens, they have their crops, and I appeal to you, Mr. Chairman, as knowing conditions in the South, if you will not agree with me that with that 2 days a week he would be permitted to carry on his work as an agricultural laborer.
The Chairman. Do they do the same in the North?
Mr. Fletcher. I do not know.
The Chairman. Should we pass a law which gave the colored men in the South in every other industry a minimum wage and leave them out simply because they are working for the railroad?
Mr. Fletcher. Suppose you have got a colored farmer, he works on his farm 4 days a week and makes his crop, and he gets 2 days extra work on the railroad, which is just that much extra money for him. Whether it is right or wrong, I would not want to leave the impression that that man, who gets less than 40 cents an hour, in view of the fact that the work he does on the railroad does not interfere very much with his regular profession, is in such a sad condition as might be inferred.
The Chairman. There might be some instances where that would be correct, but at the same time that might be correct where they work for other industries, and the point that the committee would have to decide is whether to leave out men who are working for one industry because the industry pays other people well and leaves out those who are not paid a living wage, and at the same time require other activities to pay a living wage.
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[PAGE 708]
Mr. Fletcher. Yes; and it is for the committee to decide, pardon me, I would assume, whether it is wise to apply to this highly organized industry, protected by the law, with the provision in the law which does not even allow the railroad company to encourage or to contribute any expense to the company union, or to send out literature advocating the company union, whether it is wise to undertake to apply the same standards to ordinary industry as it does to the railroads, in view of the provisions ot the law giving a machinery for redressing their grievances.
The Chairman. I would much prefer to have the railroad settle these things with their own laws, if the laws can settle them on as fair a basis as can be settled for their employees under this law.
Mr. Fletcher. I am sure you will agree with me that the men who have the welfare of the workers at heart, who are charged with responsibility as the officers of the union, are exceedingly intelligent, competent, and active men.
The Chairman. I think that is correct. I am not sure that all of them do not belong to the union.
Mr. Fletcher. I do not think you will find any difference in the union men and others, as far as wage scales are concerned. You will not find on the Santa Fe Railroad that the scale for track laborers is different for the union men and the non-union men.
The Chairman. No union would make a contract for 84 hours a week and wages of $80 a month. The only conclusion I can reach is that these people are not organized. I do not believe there is a union in America that will agree to such wages and hours.
Mr. Fletcher. You will have to find that out from the union.
The Chairman. I do not mean now that they have not sometimes worked long hours running an engine, which is a different thing and I am thoroughly familiar with it, and the conductors, and so forth.
Mr. Fletcher. You understand the law will not work at all with the transportation men.
The Chairman. What is that?
Mr. Fletcher. The transportation men do not work on an hourly basis. It is a combination of hours and miles, you know.
The Chairman. I understand that. I offered twice in the Senate a bill which takes care of that particular situation.
Mr. Fletcher. I thank the committee.
The Chairman. Thank you very much, Mr. Fletcher. The committee will recess until tomorrow morning at 10 o’clock.
(Whereupon at the hour of 5:20 p. m. the committee recessed until 10 a. m. of the following day, Friday, June 11, 1937.)
