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Records of the Wage and Hour Divison, U. S. Department of Labor

FAIR LABOR STANDARDS ACT OF 1937

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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[PAGE III]

Statement of—

Bannerman. Mrs. Mary T

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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

United States Senate, Joint Committee op 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, 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 3 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 2 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

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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 37 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 2 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 7 percent increased their business by 21 percent, whereas those who cut them by more than 7 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 12 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 12 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., 42 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 27 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 27 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 27 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 27- 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 49-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

________________________

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.

_________________________

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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STATEMENT OF COURTENAY DINWIDDIE, GENERAL SECRETARY, NATIONAL CHILD LABOR COMMITTEE

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.

STATEMENT OF LUCY RANDOLPH MASON, GENERAL SECRETARY OF THE NATIONAL CONSUMERS’ LEAGUE

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, 10, 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.

STATEMENT OF FRED M. WYLIE, WISCONSIN TRADE PRACTICE COMMISSION, MADISON, WIS.

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.

STATEMENT OF DR. HOWARD A. DAWSON, NATIONAL EDUCATION ASSOCIATION

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.

STATEMENT OF WILLIAM H. COLLINS, WALTHAM WATCH CO.

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.

STATEMENT OF E. L. OLIVER, EXECUTIVE VICE PRESIDENT, LABOR’S NON-PARTISAN LEAGUE

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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STATEMENT OF WILLARD A. MAXWELL, PRESIDENT PRO TEM, AMERICAN FEDERATION OF THE UNEMPLOYED, THE AGED, AND THE HANDICAPPED

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 21 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 5 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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FAIR LABOR STANDARDS ACT, 1937

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.

STATEMENT OF MSGR, JOHN A 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 1 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.

STATEMENT OF C. 0. SHERRILL, OF THE AMERICAN RETAIL FEDERATION

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.

STATEMENT OF HARVEY WILLSON, REPRESENTING THE NATIONAL UPHOLSTERING 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

STATEMENT OF ROY A. CHENEY, MANAGING DIRECTOR, UNDERWEAR INSTITUTE, NEW YORK, N. Y.

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.

Filed Statement of Roy A. Chenny, Managing Director, Underwear Institute

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.

Cost Brief of the Underwear and Aij.ted Products Manufacturing Industry in Connection With the Fair Labor Standards Act of 1937

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.

Table 2

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Tables 3, 4, and 5

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Tables 6, 7, and 8

General Economic Brief of the Underwear and Allied Products Manufacturing Industry, by Francis E. Simmons, Director of Research, Underwear Institute

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:

ECONOMIC BRIEF OF THE UNDERWEAR AND ALLIED PRODUCTS MANUFACTURING INDUSTRY

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 32 cents North, or an average of 31 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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Table I

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 24 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:

Table II

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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.

Table III

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.

Table IV - Wholesale price indexs

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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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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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.

Comparison of U.S. and Canada houly wage rates in knit goods manufacture

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.

STATEMENT OF RALPH EMERSON, LEGISLATIVE REPRESENTATIVE, NATIONAL MARITIME UNION OF AMERICA

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.

STATEMENT OF BENJAMIN C. MARSH, EXECUTIVE SECRETARY, PEOPLE’S LOBBY

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.

______________________________

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.

STATEMENT OF ARTHUB BESSE, PRESIDENT, NATIONAL ASSOCIATION OF WOOL MANUFACTURERS

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 53 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 57 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 57 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.

STATEMENT OF JOHN P. DAVIS, NATIONAL NEGRO CONGRESS

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.)

AFTERNOON SESSION

(The hearing was resumed at 2:05 p. m. pursuant to taking of recess.)

The Chairman. Mr. Constantine, will you come forward please!

STATEMENT OF EARL CONSTANTINE, NATIONAL ASSOCIATION OF HOSIERY MANUFACTURERS

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 bef