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FRIDAY, JUNE 11, 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. in., 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. Mr. Harrington, will you come forward, please?
The Chairman. You have a statement which you desire to make to the committee?
Mr. Harrington. I have; yes.
The Chairman. You may proceed, please.
Mr. Harrington. The publications which we represent very widely in the character of their contents. Included in the association’s membership are general magazines, women, family, and fashion publications and educational, religious, business, and farm journals. All of them have a national circulation. Their pages reflect to a remarkable degree, the desires, tastes, and social character and economic status of a cross section of the entire population of the country. Their circulations are peculiarly sensitive and quickly react to social and economic changes. In many ways they are closely associated with the Nation’s welfare. Their success has and must continue to depend upon the ability of their editors and owners to interpret, reflect, and at times guide the thoughts and desires of millions of readers.
A portion of the members of the National Publishers Association own and operate the plants in which their magazines are printed and are consequently comparatively large direct employers of skilled labor. The remaining portion of its members indirectly contribute to the employment of large forces of labor in commercial printing
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plants with whom they contract for the publication of their publications.
The publishing industry is unique in character inasmuch as it is engaged in producing a commodity and at the same time rendering a service to the manufacturers of other commodities. As a manufactured product distributed and sold, magazines are a commodity. They also provide a medium for the exploitation of products of thousands of national advertisers who purchase space within their pages for that purpose. Advertising also like the circulation of magazines is highly sensitive and quickly reacts in either increased or lessened volume to actual or threatened changes in economic conditions.
In that connection, during the recent automobile strike, thousands and thousands of dollars of automobile advertising was canceled temporarily in the pages of periodicals.
Obviously a complete analysis of the bill now under discussion, namely, the Fair Labor Standards Act of 1937, comprising as it does nearly 48 pages of printed matter, cannot be made in the limited time assigned to us. Moreover, we represent an industry, magazine publishing and printing, which pays its labor a higher wage rate than that of almost any other industry, with a maximum workweek generally within , the 40-hour limit. We are not, therefore, apprehensive as to the financial effect this bill would have on our interests, providing the provisions so far suggested are not changed.
Accordingly, our comments will be confined to what we consider to be the more important provisions and implications of the bill.
Effect of establishing minimum-wage standards: No one can conscientiously object to reasonable or equitable measures taken by the Government or anyone else to eliminate so-called “sweatshop practices in industry.” It is not a matter which industry itself can correct.
As a matter of fact, probably there are laws on the statute books which would prevent industry as a group or individually to attempt to correct those evils. They could not interfere with other industries to that extent.
Representative Thomas. What are those statutes that you have reference to?
Mr. Harrington. Well, the protection of property. I mean the sweatshop practices—those people have a right to protect their own property. Other industries could not force them to do this or that without an infringement on their property rights.
Representative Thomas. You mean that this act is unconstitutional because of the violation of the due-process clause?
Mr. Harrington. This act now?
Representative Thomas. Yes.
Mr. Harrington. Nothing of the kind. I think you misunderstood me.
Representative Thomas. Maybe I did. Pardon me.
Mr. Harrington. I said that industry was unable to eliminate sweatshop practices. Industry itself was not in a position to do that.
Representative Thomas. You mean by its own help?
Mr. Harrington. I mean by its own help.
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Representative Thomas. And you mean to infer from that that it is going to require help from the Government?
Mr. Harrington. That is right.
Representative Thomas. I beg your pardon. I did grossly misunderstand you.
Mr. Harrington. Such practices are not, however, sufficiently prevalent to warrant penalizing or heavily burdening all industry to correct it. The old much-used adage. “Why burn the barn in order to kill a few rats”, certainly holds good in this instance. Before for any reason or purpose establishing a minimum wage, either general or by industries or localities, the probable and known results of such a step should be carefully considered.
First. The establishment of a minimum wage by the Government would result in a graduation of wages in the higher brackets to the minimum. That happened under the operation of the N. R. A. Government fixing of minimum-wage standards means Government fixing of wages. That logically follows. For all practical purposes it would transfer the control of wages from the business man to the Government.
Governmental fixing of wages in the past has always resulted in increased commodity prices and finally governmental price fixing of commodities and control of production. History from ancient to modern times is literally strewn with instances where so great a participation of governments in industry has resulted in disaster and despair for many millions of people.
Second. And this is my opinion only, it is highly probably that the fixing of wages by the Federal Government is an infringement on State rights.
Third. There is a class of substandard workers: Industry will employ only those workers who will produce a minimum wage. The establishment of a minimum wage would therefore throw all substandard or marginal workers out of employment as a burden to society.
Part II, section 6-C of the bill, it is true, provides for the employment of substandard workers at wages lower than the minimum through the licenses issued by the Labor Standards Board. As there are unquestionably many thousands of such workers, this procedure we wish to point out would greatly add to the problem of administering the law if and when enacted.
Fourth. There are also substandard industries, industries engaged in producing very low-priced and very cheap goods, the nature of whose products is such as to preclude the payment of a standard minimum wage and show a profit. The fixing of a standard minimum wage would throw many of the employees of substandard industries out of work.
These are only a few of the contingencies that would arise as a result of the establishment of a standard minimum wage.
We do not believe it is necessary to set up an expensive, burdensome organization to accomplish at least some of the purposes to which this bill is directed. We believe the unions of the country, if they desired to do so, could wipe out “sweatshop” practices in industry. Our study of this bill gives us the impression that the Government is not satisfied with having given its support to labor and now proposes to take a hand in some of the functions which hithertofore have been performed by labor organizations.
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Law would create industrial uncertainty: I want to use an illustration which I think will more graphically illustrate that statement than anything else. I have not seen it used elsewhere up to this time.
The location of thousands of industrial plants now existing in this country have been determined as a result of careful surveys of the comparative advantages of various locations. Whole communities have been built up around these plants. No new plants of any size are located and built without first instituting similar surveys.
The principal factors which determine the location of a plant beside the availability of power are transportation costs of raw material to the plant, transportation costs of the product or products to potential markets and the availability and cost of a suitable supply of labor.
Law would create industrial uncertainty: Labor costs are of major importance in all industrial operations.
In percentage relationship, they run, roughly speaking, depending upon the character of the commodity produced, from 20 percent to 70 percent of total production costs. In magazine printing for instance, cost of paper excluded, labor costs constitute approximately 65 percent of the total cost of operating a printing plant.
In view of the intricate factors which have been instrumental in determining plant locations and the importance of labor costs in production, simply the existence of a board endowed with the power to fix a maximum work week and minimum hours and thus seriously affect labor costs would certainly create great industrial uncertainty and apprehension.
The decisions of such a board based on competitive conditions in distant markets as provided for in the bill, rather than on the local supply of labor and living costs, might easily destroy the advantages of any plant locations or whole groups of plant locations.
Industrialists not being able to predetermine with accuracy labor costs of particular localities would hesitate to build new plants. In that manner, decisions of the Board could and in many instances probably would retard production and industrial expansion which in turn would retard increases in employment or create unemployment.
Instead of eliminating “industrial dislocations which directly burden and obstruct interstate commerce”, mentioned in part I sections 1-4 of the bill, the Fair Labor Standards Act in operation, in our opinion, would greatly increase such dislocations.
Power’s of the Labor Standards Board: Of unusual interest to us is the tremendous power delegated and otherwise with which the Labor Standards Board would be endowed under this act. Frankly, we know of no similar grants of bureaucratic power outside of Russia, Germany, and Italy.
If we interpret the act correctly, and we believe we do, this Board would hold the power of life or death sentence over all industry embraced within its provisions.
The power granted in part II, section 4 (c) (d), to vary standards of both the minimum wage and maximum workweek up or down at the unrestrained discretion of the Board alone could be so exercised as to force any or all industrial organizations in the country into bankruptcy. The Board could hold a club over the head of industry at all times. Throughout the bill many additional
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discretionary powers to make rules and regulations having the force of law would be delegated to the Board by Congress.
Seldom if ever before has Congress been asked to make so extensive grants of power in time of peace.
We submit that there is neither a place nor the need of a place in the statutes of this country for such drastic proposals as this bill contains. They are not in keeping with our American system of government as we have known it up to the present time.
Administration of the act: In the next few words, I refer to the N. R. A., not. because it is similar to the proposal now made, because it is not similar in any respect or only to a very limited degree, but simply to illustrate my argument.
We have been advised by some of those who took a prominent part in the administration of the N. R. A. that that organization, had it not been declared unconstitutional, would soon have broken down under the weight of its own inefficiency.
The great problem of the N. R. A. was to secure satisfactory determination in regard to wages and hours. In this, it never succeeded. That organization became clogged up with and snowed knee-deep under a multiplicity of exceptions and orders relating to wages and hours.
The act before us, while it deals largely with wages and hours, provides also in part V, section 12 (5), for the classification or industrial organizations not only by industries and localities but also by population of communities, number of employees, nature of goods produced, which would greatly increase the problems of administering the act.
Are we to again witness the building up of a great Nation-wide bureau or organization requiring the expenditure or waste of millions of the taxpayers’ money and then another failure? In our opinion, the proposal before us presents the same difficulties of administration that the N. R. A. did.
It is a characteristic of all Government to ask, after each successive failure, for more and more power in attempts to correct those failures. This bill is a good example of that procedure. Unchecked, it leads to complete centralized power. And that does not refer particularly to the Government of the United States, but all governments.
Centralization of Federal power: Taken alone this bill enacted into law would result in the centralization of tremendous power in the hands of five persons controlled by the President and an extensive governmental thrust into the economic and industrial field of this country. It would seem that many people are not willing in these times to heed the object lessons of the past. In principle, there is nothing new in the measure before us. What is herein stipulated has been tried many times and failed. Rome, 2,000 years ago, fell because the government began fixing the prices of services and commodities. There is nothing new m the participation of government in industry. We, however, know what has always happened when governments have tried to superintend the industry of private persons. The final result has always been distress, misery, and despair.
This bill, taken with other recent proposals such as the reorganization of governmental bureaus, assumes a still deeper significance—
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the complete centralization of Federal power—a change from a limited form of government to an unlimited form of government.
The Chairman. Are there any questions?
Representative Thomas. Mr. Harrington, you have given us some conclusions here without much support in argument, but if your conclusions are correct, certainly this bill should not be passed. I believe you state that if the bill should be enacted, that eventually the bill will control the price of all labor; secondly, that if the bill is enacted, it is going to increase commodities.
Mr. Harrington. Yes.
Representative Thomas. Your third charge is that it will ultimately control all production?
Mr. Harrington. Yes.
Representative Thomas. Furthermore, that it is going to cause a serious industrial dislocation.
Mr. Harrington. That is right.
Representative Thomas. Let us examine those conclusions briefly. I believe, in the first place, you admit in your opening statement, the first few words of it, that industry itself is helpless when it comes to formulating any plan that loots toward a minimum wage or maximum-hour law.
Mr. Harrington. I did not say that. I said that industry was helpless to eliminate sweatshop practices.
Representative Thomas. Well, we won’t quibble over words. That is what this bill is for, one of its purposes.
Mr. Harrington. Frankly, no one has ever been able to give me a definition of “sweatshop practices” which was satisfactory, but I will say in that connection that we all have a very definite idea of what constitutes sweatshop practices.
Representative Thomas. First, will you explain, if you will, in some detail, just how this bill will ultimately control the price of all labor? I think it is in section 5 of the act which specifically says that a man who earns as much as $1,200 a year, that this act will not affect him in any way in the world.
Mr. Harrington. If they fix that maximum limit, that is true, but the big volume of average cost is in the brackets below $1,200 a year, as you know.
Representative Thomas. Assuming that the Board will ultimately fix the price of all wages up to $1,200 a year, which I am not at ail certain that it will do, the Board has the power under this act if they find a man is earning a wage in excess of a minimum wage, but it is still not a fair wage, that they can go in and set that wage provided it does not exceed $1,200 a year. I do not follow your conclusion when you say this act will eventually affect or control all wages.
Mr. Harrington. Below the upper limit, of course. It would not affect wages above the upper limit, but it would even affect these wages, because all wages up to the executive division of an organization are graduated to the lowest wage scales.
Representative Thomas. Do you think it would affect your business adversely—and I assume that you are interested primarily in your own business—if the workers of this country were paid up to a standard wage of $50 to $100 a month? Would that affect your business adversely?
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Mr. Harrington. Yes; it might. But we are also interested in the welfare of other organizations, because we depend upon them for our business.
Representative Thomas. I understand that. In the first place, your immediate business, though, pays wages in excess of what is contemplated in this bill.
Mr. Harrington. Except our office workers. The lower limit in New York City at the present time, the minimum wage is $15 a week for office workers.
Representative Thomas. What about maximum hours?
Mr. Harrington. The maximum hours in New York City is less than 40.
Representative Thomas. Does that include your editorial staff, too?
Mr. Harrington. Yes; they work under a similar arrangement, although their hours may not be definitely limited to the procedure in our routine operations. Editors sometimes work at home.
Representative Thomas. As a matter of fact, they have no stipulated hours in that sense.
Mr. Harrington. They have to perform their duties.
Representative Thomas. Therefore, this bill may not affect the minimum wage you are now paying, but it is going to greatly reduce the hours in some branches of your business.
Mr. Harrington. This bill as now proposed would not change our hours.
Representative Thomas. What about this industrial dislocation! You say that when a business is set up in a given community, many factors are examined in advance?
Mr. Harrington. Yes.
Representative Thomas. How many factors?
Mr. Harrington. I named them. Transportation costs of raw materials, and of commodities, location with reference to available markets, availability of power, and the cost and availability of a suitable supply of labor.
Representative Thomas. Those are the five or six important elements?
Mr. Harrington. Those are the five or six important elements.
Representative Thomas. Suppose you just deal with one in its effect on labor only. If you increase the cost of one 10 or 15 percent, when you are dealing with five or six, on a mathematical basis it would not increase it more than 4 or 5 percent.
Mr. Harrington. Well, it might.
Representative Thomas. How can that cause a serious dislocation if it is only 4 or 5 percent?
Mr. Harrington. In some locations, the cost of transportation to the markets is very high.
Representative Thomas. But the cost of your local labor is not going to affect the transportation, is it?
Mr. Harrington. No; but it is going to affect your total cost.
Representative Thomas. I understand that. How is it going to affect the cost of transportation?
Mr. Harrington. It would not affect the cost of transportation. It would affect your total production cost.
Representative Thomas. Yes; that is true.
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Mr. Harrington. We will say, for instance, a plant that has a high cost of transportation to its available markets for its product, a high cost. It may have selected that particular locality or location because of low labor cost due to low living-wage costs.
Representative Thomas. The point I am making, Mr. Harrington is and what I am asking you about is this, the labor cost is the only one of a half dozen of their important elements in the location of the plant.
Mr. Harrington. Yes.
Representative Thomas. After all, by increasing the cost of one of those elements 10 or 15 percent, it should not be very serious.
Mr. Harrington. The labor costs may amount to as high as 55 or 60 percent of the production cost.
Representative Thomas. On the other hand, it may amount to only 15 percent.
Mr. Harrington. Fifteen or twenty percent. In the manufacture of paper, it runs around 20 percent.
Representative Thomas. Well, take that as a fair example, 20 percent. And then increase that cost by 15 or 20 percent, and the sum total of that is an increase in cost of 4 or 5 percent.
Mr. Harrington. Do you know what the average profits of industry were in 1929?
Representative Thomas. No; I have no idea.
Mr. Harrington. Around 4 or 5 percent. It does not leave much margin.
Representative Thomas. Do you mean profit on their capitalization, including watered stocks?
Mr. Harrington. The entire investment, whatever it is. It may have been watered or it may not; I don’t know.
The Chairman. I want to ask you one or two questions, please. I read your statement here. I am wondering if the McFadden Publications is connected with the organization that you represent?
Mr. Harrington. Yes.
The Chairman. Are you a publisher?
Mr. Harrington. I am connected with the McFadden Publications.
The Chairman. You are connected with McFadden yourself?
Mr. Harrington. Yes.
The Chairman. Are you on the editorial staff?
Mr. Harrington. No.
The Chairman. What other big publishers are in the organization beside McFadden?
Mr. Harrington. The Curtis Publishing Co., the Crowell Publications, the McCall Publications.
The Chairman. What does Crowell publish mainly?
Mr. Harrington. The Woman’s Home Companion, Collier’s, The American, and a farm magazine.
The Chairman. And what other large publications?
Mr. Harrington. What other large publications?
The Chairman. Yes; besides Crowell and McFadden.
Mr. Harrington. And Curtis. Curtis publishes the Saturday Evening Post and the Ladies Home Journal, and they also have a farm magazine in addition.
The Chairman. What other large publishing concerns now?
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Mr. Harrington. The International (Hearst) Magazine Co.
The Chairman. I notice here that you make the definite positive statement that Rome 2,000 years ago fell because the Government began fixing the prices of services and commodities?
Mr. Harrington. Yes.
The Chairman. Under which Roman administration did that occur?
Mr. Harrington. That followed the reign of Augustus Caesar. During the reign of Augustus Caesar, Rome was operating under a capitalistic system, and they enjoyed a period of great prosperity. The deterioration of Rome began to take place about 300 or 400 years after that.
The Chairman. I see. Augustus Caesar began to fix prices----
Mr. Harrington (interposing). No; Augustus Caesar did not. The fixing of prices began after that period.
The Chairman. Which administration did begin to fix prices?
Mr. Harrington. At the moment, I don’t recall.
The Chairman. At the moment you do not recall. How long was it after Augustus Caesar ceased to reign until this happened?
Mr. Harrington. It was 200 or 300 years after that time.
The Chairman. Why did you mention Augustus Caesar?
Mr. Harrington. Prior to that time, they had had a period of very great prosperity.
The Chairman. I see. How long had they had prosperity?
Mr. Harrington. Well, I cannot tell you that.
The Chairman. Do you remember whether it was 1 year or 100?
Mr. Harrington. I cannot tell you that.
The Chairman. But you recall that 2 or 3 hundred years after Augustus Caeser’s time, they began to fix prices and services?
Mr. Harrington. Well, I don’t recall it. [Laughter.]
The Chairman. Was it at that time that services began to be fixed, was Rome still an empire? Did they have an empire or what was the form of government?
Mr. Harrington. Yes; it was under an empire.
The Chairman. Three hundred years after Augustus Caeser?
Mr. Harrington. I don’t recall the exact time—you are asking me questions and asking me to recall information which I covered rather thoroughly about 2 or 3 years ago.
The Chairman. Would you object to telling us from what bibliography this information was obtained?
Mr. Harrington. As a matter of fact, a man who wrote a book and became an authority on Roman history was my source of information. If I am not mistaken, he was a member of the United States Senate at one time and he came from Missouri and was prominent in the political affairs of the State of Missouri.
The Chairman. What was his name?
Mr. Harrington. I don’t recall his name now, but at that time he became considered an authority on Roman history, and particularly on the economic situation in Rome.
The Chairman. Did you ever read Ferarra’s economic history of Rome?
Mr. Harrington. No; I never did.
The Chairman. Did you ever read any of the other economic histories except this one that some man that used to serve in the- Senate from Missouri wrote?
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Mr. Harrington. He wag considered an authority. That is the reason I mentioned him.
The Chairman. Did you read Gibbon at that time?
Mr. Harrington. Yes; I have read Gibbon.
The Chairman. Do you recall whether he referred to the fixing of prices?
Mr. Harrington. At the moment I cannot.
The Chairman. You make the direct and positive statement that Rome fell on that account, and I have heard and read of some conflict of ideas as to the real reason that Rome fell.
Mr. Harrington. Yes.
The Chairman. It may have fallen for this reason, but I really had not heard that reason assigned before. But you make the direct and positive statement that the reason that Rome fell was because several hundred years after Augustus Caeser they began to fix prices and services.
Mr. Harrington. That was one of the contributing causes. I am only expressing my opinion.
The Chairman. What were some of the other reasons?
Mr. Harrington. The attacks from without, the degeneration of its social system and social life, and that sort of thing, probably were contributory factors. No question about that.
The Chairman. Could you give us the name of that man that wrote that book?
Mr. Harrington. Yes, sir: I would be very glad to do that. I will do that as soon as I get back to my house.
The Chairman. I would like to see about the fall of Rome at this time. You, of course, have read a number of editorials in Collier’s and McFadden’s in 1936, didn’t you?
Mr. Harrington. I think I have probably read all of the editorials in both—do you mean Liberty Magazine?
The Chairman. Liberty and Collier’s?
Mr. Harrington. I think I have read most of them if not all of them. I have certainly read all of them in Liberty.
The Chairman. You remember that during that time they were giving out editorials each week on the centralization of power and the danger of the falling of this Government, and its transition from a democracy to something else.
Mr. Harrington. I don’t recall that they went so far as to say the danger of the falling of the Government. I don’t recall any that went as far as that.
The Chairman. Did you read those editorials they had against the shortening of hours by law?
Mr. Harrington. You know, there are 52 editorials a year in each one of those publications, and for the moment I cannot recall. I know that Liberty has carried editorials relative to that subject I cannot recall offhand any particular editorials.
The Chairman. You do know, do you not, that you recall that what you have read here is practically a continuation of the same arguments that were made in Liberty and in the Saturday Evening Post against the election of the present administration?
Mr. Harrington. I am sorry to say that I cannot admit that.
The Chairman. You do not admit that?
Mr. Harrington. No.
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The Chairman. Could you get for me and send to us the editorials—you are with McFadden’s?
Mr. Harrington. Yes.
The Chairman. Would you object to sending us the editorials that appeared in the McFadden publications last year?
Mr. Harrington. Not at all. I would be very glad to do that.
The Chairman. In 1936, before November, signed by Mr. McFadden.
Mr. Harrington. I will be very glad indeed to do it.
The Chairman. With reference to the danger of the continuation of the administration which might shorten hours and which might aid in protecting labor unions.
Mr. Harrington. I remember that editorial now as you mention it. I remember that editorial very distinctly.
The Chairman. You do remember it?
Mr. Harrington. I remember it.
The Chairman. And it is very much in line with your argument.
Mr. Harrington. It happens to be. It has no connection with this presentation here.
The Chairman. Of course, I understand that it is wholly disconnected with this, but it does go along the same line.
Mr. Harrington. Well, it really has no connection with this.
The Chairman. But it goes along the same line? It has the same ring and the same argument.
Mr. Harrington. Somewhat, yes; I will admit that.
The Chairman. And those editorials went out all over the country before the election in 1936 about the dangers of shortening hours, did they not?
Mr. Harrington. Well, of course, Liberty has a circulation of 2½ million a week, and it went all over the country to that extent.
The Chairman. How long has the McFadden Publications been in business?
Mr. Harrington. Do you mean the company as McFadden Publications?
The Chairman. Yes.
Mr. Harrington. Or Mr. McFadden as a publisher?
The Chairman. Were they in business in 1932 in New York?
Mr. Harrington. Yes.
The Chairman. Is it still in business in New York and in the same business?
Mr. Harrington. Yes.
The Chairman. Did it cease and go out of business in 1932, one of the McFadden publications?
Mr. Harrington. One of them?
The Chairman. Yes.
Mr. Harrington. Well, at times we have had several publications that we began to publish and then discontinued.
The Chairman. In 1932, there was fixing of hours by law, was there?
Mr. Harrington. No.
The Chairman. There was no minimum wage?
Mr. Harrington. No.
The Chairman. Do you recall whether or not one of the McFadden publications was in receivership in New York in 1932?
Mr. Harrington. Magazines or newspapers?
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The Chairman. Whatever it was. You remember that.
Mr. Harrington. Of course, I am only discussing magazines.
The Chairman. What was it that was in receivership then?
Mr. Harrington. A newspaper that Mr. McFadden owned at the time was in receivership.
The Chairman. That was in 1932?
Mr. Harrington. I think that was the time.
The Chairman. And there was no fixing of hours or wages at that time?
Mr. Harrington. No.
The Chairman. Are any of them in receivership now?
Mr. Harrington. No.
The Chairman. What is the condition of their business now as compared with 1932—the McFadden Publications.
Mr. Harrington. The earnings, as I recall them now, as compared with 1932—I mean last year’s earnings—were more.
The Chairman. What about the volume of circulation and advertising?
Mr. Harrington. Of course, you are asking me now for figures that I, of course, have seen repeatedly, but at this moment I cannot recall. I want to answer your question. Circulation volumes were down very low, but that was in 1933 and not in 1932.
The Chairman. 1933?
Mr. Harrington. Yes; not ’32. The volume of circulation now is very much higher than it was in 1933, if you will permit me to use that date instead of 1932.
The Chairman. Is it not about double?
Mr. Harrington. Oh, no.
The Chairman. Is the advertising not about quadrupled?
Mr. Harrington. No.
The Chairman. Do you remember the Saturday Evening Post, the size of it, as it was on sale in 1932 and 1933?
Mr. Harrington. Yes; of course.
The Chairman. Do you remember when it got down to about a little thinner than that [indicating]?
Mr. Harrington. Yes.
The Chairman. Have you seen it recently?
Mr. Harrington. Yes.
The Chairman. How does it compare now with 1932?
Mr. Harrington. Of course, it carries a great deal more advertising now than it did then.
The Chairman. It is about four or five times the size.
Mr. Harrington. Possibly. On some issues, yes; on an average, no.
The Chairman. On an average it is not more?
Mr. Harrington. More, yes; but not four or five times more. If this committee desires the figures on the increase in advertising since 1933, those figures are easily available.
The Chairman. I will be very glad to have them.
Mr. Harrington. They can be obtained very easily, and I will be very glad indeed to send them to you.
The Chairman. I will be happy to have them.
Mr. Harrington. There has been a great increase in the volume of advertising since 1933, but I would like to say, if I may, that during this year, increased costs, unusually large increased costs, have greatly lessened the profits that normally would be secured in the publishing
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business. In other words, costs have been going up more rapidly than increased volume of business.
The Chairman. Have your wages gone up this year?
Mr. Harrington. Yes; but this situation is not due to wages entirely. It is due to the increased cost of paper. You may or may not know it, but there is a world-wide shortage of wood pulp. It applies not only to this country but to all the world, and paper prices in the magazine publishing business have increased very drastically.
The Chairman. How much?
Mr. Harrington. About 35 percent. Of course, that is a tremendously big item in the publishing business.
The Chairman. Paper has gone up 35 percent this year?
Mr. Harrington. Not this year, but since 1933.
The Chairman. Since 1933?
Mr. Harrington. In the magazine publishing business; not the newspaper publishing business.
The Chairman. What did you pay in 1938, do you recall?
Mr. Harrington. Of course, you ask me what we paid----
The Chairman (interposing). Just generally.
Mr. Harrington. There are so many grades of paper. We use eight or ten grades of paper.
The Chairman. And could you give us the price of any one of them?
Mr. Harrington. Not offhand. I will be glad to give you the information if you want it.
The Chairman. How are the wages now? How many more employees now do you have in McFadden’s than you had in 1933?
Mr. Harrington. Since 1933, the whole industry, from the figures which I receive as compared with 1929 is 107 percent.
The Chairman. What about 1933?
Mr. Harrington. That I cannot tell you. Of course, there was a considerable slump in the number of employees employed in the magazine publishing business between 1929 and 1933. I would say this, however, and this is based on definite statistics that the industry gathered during the N. R. A. days, that there was less of a slump in the magazine publishing business than there was in other industries. It was a more stable operation. Fewer employees were discharged than was the average with other industries.
The Chairman. This is the first time you have appeared in any of these hearings in connection with these laws here in Congress, isn’t it?
Mr. Harrington. No; I appeared in connection with the 30-hour bill 2 years ago.
The Chairman. You appeared against it?
Mr. Harrington. Yes.
The Chairman. Have you appeared on any others?
Mr. Harrington. Yes; against the Wagner labor bill.
The Chairman. Any others?
Mr. Harrington. No; that is all.
The Chairman. Did you appear against the N. R. A.?
Mr. Harrington. No; I did not.
The Chairman. You did not appear on that at all?
Mr. Harrington. No; not when it was being proposed as a law.
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[PAGE 722]
The Chairman. Did you call attention in your appearance in the Wagner labor bill to the great dislocation that would appear in business and the great injury that it would cause to the Nation?
Mr. Harrington. No; I think what I did say was that it would not work.
The Chairman. It would not work?
Mr. Harrington. The purposes for which it was established would not be achieved. In other words, the purpose was to tend to decrease strikes. Well, you know whether that has resulted or not.
The Chairman. You appeared against it on the ground that they ought not to pass that law which would protect labor unions.
Mr. Harrington. No; not on that basis at all.
The Chairman. You did it on the ground that it would actually injure labor unions? Did you appear to defend labor unions?
Mr. Harrington. No; I appeared as a neutral. We are not against labor unions.
The Chairman. Your editorials have not been against them at all in McFadden’s?
Mr. Harrington. No; they are not against the labor unions. Repeatedly Mr. McFadden has expressed his support of labor unions in his editorials.
The Chairman. When you came down at his insistence against the Wagner labor bill----
Mr. Harrington (interposing). Not at his insistence.
The Chairman. You discussed it before you came?
Mr. Harrington. I did not.
The Chairman. He did not know you were coming?
Mr. Harrington. Yes; he knew that I was coming. My association with Mr. McFadden is sufficiently close so that if I did come. I would tell him I was coming.
The Chairman. Are you the vice president, or what is your association with him?
Mr. Harrington. I am assistant to Mr. McFadden.
The Chairman. You are his personal assistant?
Mr. Harrington. I don’t know whether you would call it personal or not. I simply told Mr. McFadden I was coming, and that was all.
The Chairman. He is the only one you discussed it with?
Mr. Harrington. In my organization?
The Chairman. Yes. Did you discuss it with the Curtis Publishing Co.?
Mr. Harrington. No; it was not necessary, because this matte comes under my direction as chairman of the labor committee of the National Publishers Association.
The Chairman. Of course you knew it was not necessary to discuss it, because your article is so much in line with the policy that they had had for several years.
Mr. Harrington. I would like to stress the fact that there is not any connection----
The Chairman (interposing). Naturally there is no possible connection between them, but it is along the same lines.
Mr. Harrington. It just happens that they think and we think alike on this particular subject.
The Chairman. I understand. Thank you very much.
Representative Wood. Just one question. I did not get in here in time to hear all of your testimony. You oppose this bill?
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[PAGE 723]
Mr. Harrington. Yes.
Representative Wood. Your reasons are that it will depress business and be unfair to the publishers?
Mr. Harrington. That it could be so administered that it would. I will put it that way.
Representative Wood. Did you ever read the Literary Digest?
Mr. Harrington. Yes; not recently.
Representative Wood. Did you draw your conclusions from any poll or prophecies that might have been made by the Literary Digest?
Mr. Harrington. None whatsoever.
Representative Wood. Are your employees organized?
Mr. Harrington. What do you mean?
Representative Wood. The employees of your papers?
Mr. Harrington. Our company employees?
Representative Wood. Yes.
Mr. Harrington. Do you mean the office force or the labor force in the printing plants?
Representative Wood. All of them.
Mr. Harrington. We do not own our printing plant. We contract out our printing with three of the largest printing plants of the country.
Representative Wood. Do you represent the literary Digest here?
Mr. Harrington. They are not now members of the association.
Representative Wood. You did not draw any of your conclusions, whatever, from anything in that publication?
Mr. Harrington. None whatsoever.
The Chairman. Thank you very much.
Mr. Harrington. Thank you very much. And that information— I want to be sure that I give you the information you want. Will you communicate with me?
The Chairman. We would be glad to have the statement of the business of McFadden and the Curtis publications from 1932 yearly up to date.
Mr. Harrington. You are asking me now to give you something that I am afraid that perhaps, so far as the Curtis Publishing Co., I would not be able to produce, but I will be glad to give you a record of the increased advertising and increased circulation from 1933 down, and the increased volume of advertising of our own.
The Chairman. All right. The increased volume of advertising and increased circulation.
Mr. Harrington. Yes.
The Chairman. And the volume of business. If there is any objection to that——
Mr. Harrington (interposing). I will have to make that contingent on my being able to get that information from the Curtis Publishing Co.
The Chairman. I meant from the McFadden Publishing Co., if you haven’t it from Curtis.
Mr. Harrington. No objection whatsoever to that. I will be glad to give it to you.
Representative Dickstein. Would you include in that, Mr. Harrington, the amount of new machines you have purchased in your business since 1933?
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Mr. Harrington. In our printing plants?
Representative Dickson. Yes.
Mr. Harrington. I cannot give you that information because our publications are printed in three different printing plants; two in Chicago and one m Dunellen, N. J.
Representative Dickson. Do you know whether or not they have put in new machines?
Mr. Harrington. Oh, yes.
Representative Dickson. That would be figured in the cost of production?
Mr. Harrington. I doubt if there has been very much new machinery recently installed in any of the plants with whom we do business which would result in decreasing the cost of production, but nevertheless I am not sure about that. That is not a definite answer to your question.
Representative Dickson. If you could, would you send that to us?
Mr. Harrington. I would be very glad to.
Representative Welch. Your prepared statement, which reads in part as follows:
Government fixing of minimum wage standards means Government fixing of wages. For all practical purposes, it will transfer the control of wages from the business then to the Government.
The Government has fixed a minimum wage for women, as you know.
Mr. Harrington. Yes.
Representative Welch. Are you opposed to that policy on the part of the Government?
Mr. Harrington. I don’t think I am.
Representative Welch. What is the difference then, of the Government fixing a decent living wage for women who have to work for a livelihood, and fixing a decent minimum wage for a married man with a family to support?
Mr. Harrington. Well, it is an entirely different proposition. In regard to women, they constitute only a very small proportion of the employment of the country.
Representative Welch. The same principle is involved, is it not?
Mr. Harrington. The same principle is involved; yes. As a matter of definite principle, I would be opposed to it. As a matter of general welfare, I would not. We believe any such laws should be State laws, not Federal laws.
Representative Welch. Why did not business provide a decent living wage for women and thereby make it unnecessary for the Government to step in and fix a living wage?
Mr. Harrington. Of course, a decent living wage for everybody is desirable.
Representative Welch. Yes; but business did not give women a decent living wage, and it had its chance for years.
Mr. Harrington. If I may be permitted, I would like to answer the question this way. Any arbitrary increase in wages that is not accompanied by increased production will result in increased commodify prices, so that real wages will not be increased, and the very important thing in any wage proposal is not actual wages but real wages. Real wages is the sum we should deal with and not actual wages. Does that answer your question?
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Representative Welch. No; it does not. If bacon, for instance, is selling for 25 cents a pound and a man has not the money to buy it, or if it is selling 3 pounds for 25 cents and he has not the money to buy it, how does that regulate commodity prices? He must have the money to buy.
Mr. Harrington. Oh, sure.
Representative Welch. And if he has not the money to buy, the price is immaterial.
Mr. Harrington. I will put it this way. If real wages do not go up in proportion to any increase in commodity price, it is of no benefit to the worker.
Representative Welch. He has to have a job.
Mr. Harrington. He certainly does.
Representative Welch. He has to have the money with which to buy.
Mr. Harrington. He has to have an income.
Representative Welch. To purchase the necessities of life.
Mr. Harrington. But we are talking about people already employed, as I understand it, and not people out of work. I mean, m connection with your question.
Representative Welch. If he has steady employment with a decent wage, he is less concerned in the price of commodities.
Mr. Harrington. Oh, yes; he is. I am, too.
Representative Welch. I know more about those things, perhaps, than you do.
Mr. Harrington. Pardon me.
Representative Welch. What he requires is a living wage and steady employment.
Mr. Harrington. Yes.
Representative Welch. This bill is aimed in that direction.
Mr. Harrington. Well, if we believed, or if I believed that it would produce that result, we would be in favor of it. I do not believe it will.
Representative Welch. I think if you will study it you will come to that conclusion.
Mr. Harrington. Well, the only thing we can go by is past history. Not Rome alone, as we have discussed, but many other countries where this same sort of thing has been tried; in France, and in England. It has been tried and tried and tried again, and it has never been a success. That is the only thing that we can use as an index as to whether this will work or not.
The Chairman. Since you have said that, when it was tried in France?
Mr. Harrington. Under Louis XIV. A man named Colbert, as I understand it, under Louis XIV. As a matter of fact, a program similar to that was tried under the mercantilist system in England. Your are asking me questions now—
The Chairman (interposing). When was that?
Mr. Harrington. The definite date I cannot tell you now. You are asking me to refresh my recollection on information that I have secured over a period of 10 years.
The Chairman. May I ask you, in order that we may get the background into the record, are you an economist?
Mr. Harrington. I am not.
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The Ch airman. How long have you been with Mr. McFadden?
Mr. Harrington. Since 1922.1 think it was.
The Chairman. What have been your positions with Mr. McFadden?
Mr. Harrington. Treasurer of the company, and assistant to Mr. McFadden.
The Chairman. Before that what was your business?
Mr. Harrington. The publishing business. In the newspaper business, originally.
The Chairman. Where?
Mr. Harrington. Oh, in New York City with the New York World, and in St. Joseph, Mo.
The Chairman. In St. Joseph, Mo.?
Mr. Harrington. Yes.
The Chairman. How long were you in the newspaper business?
Mr. Harrington. 6 or 7 years. I published a medical journal for several years.
The Chairman. Published a medical journal also?
Mr. Harrington. Yes.
The Chairman. What medical journal?
Mr. Harrington. The Long Island Medical Journal and the---
The Chairman (interposing). You have always been a publisher?
Mr. Harrington. Always.
The Chairman. That has been your business?
Mr. Harrington. Yes.
Representative Wood. What paper in St. Joseph did you publish?
Mr. Harrington. The St. Joseph Daily News was the publication I was connected with.
Representative Wood. A daily paper?
Mr. Harrington. Yes.
Representative Wood. When was that?
Mr. Harrington. You are asking me questions that go back a good many years—1906.
Representative Wood. How did they establish their minimum wages in France that you speak of? What enactment was it ?
Mr. Harrington. Along similar procedures that you are now proposing—fixing wages and fixing prices.
Representative Wood. Was it under edict or a legislative matter?
Mr. Harrington. It was by Colbert under Louis XIV.
Representative Wood. Was that a flat minimum, or what was the figure?
Mr. Harrington. You are asking me to recall information which as I told you before, was gathered over a period of time, and I do know that they fixed prices at that time. That, definitely, I know. That is practically all of an answer that I can give to your question.
Representative Wood. Was that administered by setting a flat price for all industry, or how was it done?
Mr. Harrington. As I recall, at that time it was a flat minimum wage. As I recall, if I recall correctly, wages were fixed and prices of commodities were fixed.
Representative Wood. The prices of commodities were fixed also?
Mr. Harrington. Yes.
Representative Wood. When was that, do you know?
Mr. Harrington. Under Louis XIV.
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Representative Wood. Approximately?
Mr. Harrington. Under Louis XIV; whatever year that was. You are asking me to go into historical dates, and I am not good at remembering dates.
The Chairman. What history did you read that in? I have read that part of history rather carefully, because I was interested in it.
Mr. Harrington. I don’t even remember that.
The Chairman. Do you remember what particular tax they had at that time that they objected to, and what it was that they wanted?
Mr. Harrington. No; I do not.
The Chairman. Do you not recall that the main trouble then there was that they would not tax those that were best able to pay, and they put what was called a road tax on the poor people?
Mr. Harrington. Yes; I remember the road tax.
The Chairman. And the court, by a majority opinion, of one, held that, that was unconstitutional in France and that thereafter they had considerable trouble, and it was only a short time until they had the revolution. Do you not recall that the trouble was not trying to fix prices and wages, but the trouble was that the poor people could get nothing, that the revolution came from that reason and not because they attempted to protect them by a wage law?
Mr. Harrington. Well, Colbert introduced a revival of business under Louis XIV, which was followed by disaster, and part of his program was along lines similar to what is now proposed here. That is all the information I can give you.
The Chairman. I would appreciate it if you would send me the name of that history, with the particular reference, if you can get it, to the statement you have made.
Mr. Harrington. If I can get it, I will.
The Chairman. Thank you very much.
Mr. Charles Warner.
Mr. Warner. Yes, sir.
The Chairman. Mr. Warner, you represent the National Sand and Gravel Association?
Mr. Warner. I do not directly represent the National Sand and Gravel Association, Mr. Chairman. My company is a member of that association and several allied associations, and the organization that is mentioned here arranged for my short statement on questions of fact in these industries.
Representative Schneider. You represent your own company?
Mr. Warner. I represent my own company.
Representative Schneider. And no other?
Mr. Warner. That is right. And I propose to speak only on present-day conditions, Mr. Chairman.
[Laughter.]
The Chairman. Thank you very much. I really believe they might be applicable.
Mr. Warner. I feel so too.
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Mr. Warner. The constitutional and general aspects of this proposed legislation will not be commented upon by me, as these angles have been quite fully covered by others, but I do wish to place on the record a few of the important operating problems winch some of the major industries have to encounter, in the hope that your committee will appreciate the extent of the individual problems that will be thrown on the new board to investigate and properly apply adjusted rulings that undue hardship may not be suffered by both employers and employees.There are many operating practices that can be approved and that will make for less costly operations without an oppressive work week, hence helping to reduce the necessity for advancing commodity prices with the broader hardships that result therefrom.
My life’s work has had to do with the development and management of companies engaged in the manufacture, transportation and retail distribution of sand, gravel, crushed stone, ready-mixed concrete, and lime products. The production of sand, gravel, and crushed stone must change materially from week to week because of seasonal demands, fluctuations in peak-load requirements and adverse weather conditions. These materials in their prepared form sell at very low prices, ranging from 40 to 80 cents per ton at the plants; such prices do not admit of double handling on any large-scale basis into stocks and out again. As construction work gradually gets under way in the spring, the business of a plant unit may build up enough shipments to take care of the 40-hour week shift. Then a further step-up in demand requires an output of about 50 hours per week for such a unit. Our regular employees, sufficient for one shift, insist on these 50-hour weeks on a single-shift basis so as to offset the shorter working weeks during winter seasons or bad weather conditions.
Unless it is the intent of these bills to have the new board definitely permit such leeway to above 40 hours, a situation of this kind could only be met by organizing a second shift and throwing the regular crew onto 25 hours a week with the reduced weekly income per man resulting therefrom. We have found this creates great dissatisfaction among our regular year-round employees, who recognize the fluctuations in the business and want through the year some weeks of 50 hours to balance up the year’s income.
The low selling prices for such bulky materials do not permit of minimum weekly wages based on an hourly rate for 40 hours to meet such a condition. When such a plant unit has to step up to 60 hours of operation a week, as the spring business further expands, it is not so much a hardship temporarily to place the regular employees on a 30-hour shift, with the new crew taking the other 30 hours; this situation is, therefore, more practicable.
One important branch of the sand and gravel industry faces even more severe operating conditions. It dredges materials from navigable waters and transports them from the point of dredging to the point of distribution by scows and tugs. Such operations are faced with conditions that do not exist for the operator of a land plant. They are subject to serious interruptions by weather conditions, tides,
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fogs, locks, high and low water, ice, and other factors too numerous to mention.
Employees on a large proportion of these vessels are housed and fed aboard; the very nature of the operations is such as to make this necessary. The housing is available for only two crews and in no case so far as I have been able to determine for more than two full crews. Whatever housing is available is designed and built as an integral part of the vessel. In practically no case, as any marine engineer can testify, would it be feasible to increase housing facilities without rebuilding the boat in a large measure.
Under these circumstances it should be obvious that the application of a limited workweek is entirely impractical.
In the manufacture of lime we have a different problem in that the operation of kilns requires continuous attention for the full 168 hours in a week. Four crews operating on a week’s run, with 8-hour shifts, and a limit of 40 hours per week, only provide for 160 hours out of a total of 168 hours. There are 8 hours missing. If we try to divide the work among five shifts it reduces the work-week hours and the week’s pay per man, and the employees are dissatisfied. In relatively small rural plants of this type it is oftentimes not possible to have an extra crew only to handle one 8-hour shift in a week, so that four regular crews can secure 40 hours per week of work.
After exhaustive trials of this problem under the N. R. A., our kiln operations at our various plants have been satisfactorily worked out so that four crews handle the week’s work and one of these crews take an extra 8-hour shift, or 48 hours a week, each week in rotation. Thereby each crew has to handle an extra shift only once every month. We have found in practice that these adjustments are not injurious to our employees either physically or mentally, and that they do aid our regular forces to secure more satisfactory year-round income while working in these low-price, basic-commodity industries, which yield but moderate profit when at capacity operation.
The packing, shipping, and retail distribution of many of these products are subject to extreme fluctuations by reason of great variations in seasonal demand and interference by weather conditions.
Agricultural lime products are subject to extreme seasonal demands due to the short liming periods that are practical, on account of weather conditions and times of planting and harvesting. In this department we have to pack and ship over 80 percent of our year’s output within the periods of 6 spring weeks and 4 fall weeks, a total of 2½ months. In the rural communities where such plants are located, as a rule there is not an excess of reliable, semiskilled workmen, and if we should be required to employ a sufficient number of men for the rush seasons to keep within a 40-hour week, during off seasons of 7 or 8 months we should not have sufficient work to employ these men for an average of even 10 hours per week. It must be obvious that to average up with adequate annual employment and income for such rural workers much longer hours are necessary at reasonable rates of pay during the short, highly seasonal periods. As a matter of fact, the demand is constantly upon us from our employees in these classes to provide them with the longer hours during the rush season, for the purpose of augmenting their annual income; and this condition is offset, by relatively
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easier hours of service, permitting time for personal work around their homesteads, during the off-shipping seasons.
Under such conditions we do not believe that for a few weeks a workweek of 60 or 65 hours constitutes an oppressive condition any more so than in agricultural work, and the general good health of our workmen indicates that this situation is not injurious to their physical or mental welfare.
The extent to which such variations can be permitted without an oppressive workweek is left to the proposed Labor Standards Board, but we trust nothing will be inserted in the final draft of the bills which will restrict the authority of your new Board to the extent that agricultural lime shipments will be retarded and the costs substantially increased when the farmers need such materials for quick and cheap delivery.
In our retail building-material yards bulk- and bag-building materials are handled and delivered by trucks to the construction jobs. In addition, the modern practice of fabricating and delivering ready-mixed concrete has increased largely. Most unionized construction jobs operate on an 8-hour day basis when the weather permits, but the building-material yards servicing such construction work are frequently pushed to 10 and 11 hours of work a day in order properly to take care of the 8-hour customers. Loading and deliveries must start at the yards upwards of an hour before the starting time at the jobs, and at the end of the day the trucks and other yard work incident thereto are not returned and properly cared for for at least an hour after the construction job closes down. The average building-material yard, therefore, finds it necessary to operate during good-weather weeks as high as 50 hours a week in order to take care of its 40-hour customers. Particularly in the handling of ready-mixed concrete, a perishable material with but 1 hour of life from the time of fabrication to the time of placing in the forms at the point of delivery, do we find a highly troublesome manufacturing and delivery problem.
A typical peak summer month in Philadelphia yards of my company has shown a daily average of concrete mixing and delivering of 5,000 tons, with 2 peak days demanding over 6,500 tons each, 130 percent of the average, and with 2 days under 1,600 tons each, only 30 percent of the average. This shows the fluctuation in demand and the problem in maintaining semiskilled labor forces on a reasonable working week while at the same time guaranteeing to these men a minimum of 40 hours’ work per week, as provided for in some union contracts.
In these cases our union agreements have recognized the problem by maintaining the standard hour rates up to 48 or 50 hours per week, and time-and-a-half rates in excess of such weekly schedules to meet the occasional need of even longer weeks if good weather and contractor’s demands require it temporarily. Again I would like to state that these conditions do not produce oppressive overwork in the occasional high weeks, and the employment is regulated to keep between the 40-hour minimum and the 50-hour maximum to avoid the payment of overtime rates, or payment for idle time.
I give you these several illustrations of working problems with which I am intimately connected that you may see the importance
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of incorporating flexibility in the law, as well as reasonable assurances that the policy back of the new law will definitely require that the proposed Labor Standards Board meet such conditions by careful investigations and open hearings before the issuance of suitable and reasonable regulations.
It must also be apparent from these several illustrations that if the earnings of employees are not to be seriously curtailed in the type of industry with which I am identified, the Labor Standards Board must have sufficient discretion to adjust the congressional standard to the peculiar operating problem of the various industries with which it must contend. To develop intelligent standards for each line of business entails a problem of the first magnitude for the new board and ample time must be allowed for its careful handling.
As I understand the wording of your bill, section 13. there is not positive authority extended to employers to file complaints or requests for investigations of such problems heretofore cited. You are leaving it to the Board to define those who may have a bona-fide interest, and this does not to me appear equitable.
My company has been actively identified for many years with the work of the National Sand and Gravel Association, the National Ready Mixed Concrete Association, and the National Lime Association. The knowledge which we have thus gained of industry conditions throughout the United States leads me to believe that the operating circumstances which I have described in this presentation are typical of the industries concerned.
Representative Ramspeck. I would just like to ask you this one question. If I correctly interpret your statement, Mr. Warner, it is that you think that this Board should take the existing conditions in each industry and disturb them as slightly as possible in order to prevent cutthroat competition based on unusually long hours and unusually low wages.
Mr. Warner. I think that is right, except that we do not subscribe to unusually long hours as standard practice at all. We think it is all wrong.
Representative Ramspeck. I am not charging you with that. As I understand it, you claim that you do not have those in your particular business, but if you had a competitor who did have them, you would want him stopped?
Mr. Warner. Yes, sir; most decidedly.
Senator Walsh. What is the practice in your industry now in regard to hours?
Mr. Warner. It varies greatly.
Senator Walsh. What is the variation?
Mr. Warner. The variation in the production end varies from an average of 37 hours in some plants to as high as a temporary seasonal average of 50 hours in other departments.
Senator Walsh. A general law limiting the hourly week would affect you in what way?
Mr. Warner. For the temporary rush periods.
Senator Walsh. And as I understand your position, you would like to have this Board to have authority in certain specific cases in certain lines of your industry, to have discretion in determining whether it should be more than the maximum?
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Mr. Warner. I think that is highly important.
Representative Ramspeck. Have you figured out what would be the increased cost of the commodities if there were a general law fixing the workweek to 40 hours?
Mr. Warner. You mean that that would be the top limit under any conditions at any time of the year?
Representative Ramspeck. Yes.
Mr. Warner. We have not attempted to figure that out in detail, because it involves so many factors. In the first place, if we were limited to a 40-hour week completely at some of our rural plants, when the rush season comes on we would have to go down to the city markets or some place else and bring an extra crew out for a short time to assist, for instance, in packing agricultural lime. That condition would not alone involve the paying of higher rates and temporary housing of those extra crews, out it would upset the labor rates on the year-around basis at those plants, so that it might be quite disastrous.
Representative Ramspeck. It would increase the price of the commodities?
Mr. Warner. Very definitely.
Representative Wood. How long have you been in this present business?
Mr. Warner. Well, that is getting back to my age. I went into it when I was 21, and I am 60 now; so it is about 40 years.
Representative Wood. What was the wage 25 years ago?
Mr. Warner. The minimum wages in our own plants 25 years ago were around 22 to 25 cents for common labor.
Representative Wood. What hours did you work then? The maximum and the minimum.
Mr. Warner. The maximums would run up to 65 or 70 hours a week. In many jobs, such as firing lime kilns, for instance, because that was a 7-day job. Those have all been changed, of course, in the last few years.
Representative Wood. What were the daily hours then on the average?
Mr. Warner. Back in those days?
Representative Wood. Yes.
Mr. Warner. Some of those kiln-firing jobs used to run as long as 12 hours a day. There were two shifts, as in the old days of the steel industry, which of course were abominable and which have been abandoned to a large extent now.
Representative Wood. Twelve was a regular day’s work then, 12 hours?
Mr. Warner. Yes.
Representative Wood. What is it now?
Mr. Warner. Well, we are down now to the 8-hour shifts on all of those jobs, and as I describe here----
Representative Wood (interposing). Eight hours in 5 days or 6 days?
Mr. Warner. Eight hours in 5 days, except that one crew out of five has to take once each month an extra shift during a week. You see, between the Lord and man we have 168 hours in a week of total time, and they don’t divide very evenly when you come to dividing it between four shifts or five shifts or whatnot. We are
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trying to move down to the 40-hour-week basis in practically all of our operations except during the peak or rush periods in certain locations.
Representative Wood. What is your minimum wage rate now?
Mr. Warner. The minimum rate now is 48 cents an hour.
Representative Wood. Is that common labor?
Mr. Warner. That is common labor; yes, sir.
Representative Wood. What is your maximum?
Mr. Warner. The maximum, going up to mechanics in the rural plants and some especially skilled men would be about 90 cents.
Representative Wood. I am not talking about the especially skilled men; I am talking about your average maximum for your mechanics. Some specially skilled men might get 90 cents, but the rest of them might get 70.
Mr. Warner. Yes, sir; on these year-around jobs, the average at these plants is between 60 and 65 cents; the average of all the employees.
Representative Wood. What effect has the ready-mixed method of using concrete had upon the prices of concrete?
Mr. Warner. I don’t think it has made much of a difference on the price of concrete, because still there are quite a number of jobs that are job-mixed. That is, buying the materials and mixing them on the job, so that we are in constant competition with that condition; so that the prices are about the same.
Representative Wood. You say that the ready-mixed is in competition with the job-mixed practice?
Mr. Warner. Yes, sir.
Representative Wood. You have the edge in the competition, don’t you?
Mr. Warner. We have; that is true. We sell both materials.
Representative Wood. The ready-mixed takes the place of many men, does it not, by that new method? Many more tons of concrete can be mixed in 1 day by a man by the new method than prior to the institution of the ready-mixed method?
Mr. Warner. It has taken the place of some men, but not as many as is generally thought. It takes more chauffeurs on the trucks to deliver the average quantity in concrete form, the revolving type of trucks which you may have seen in town here, than it does to handle dry materials. We use more man-hours on our trucks. We have more men around our yards in making concrete which offsets the labor that was done on the jobs.
Representative Wood. How did you get this concrete to the jobs before this ready-mixed was established?
Mr. Warner. We did not do it; it was not serviced that way. It was all job-mixed up to the time of the development of the modern agitator or revolving drum truck.
Representative Wood. I am informed that one man can do the work formerly performed by three or four in the dry-mixed process.
Mr. Warner. At the job that would be so, but that does not take account of the additional labor that the material man has at his yards in mixing and testing and handling that material there, and the extra man-hours for delivery.
Representative Wood. You have less labor at the yard, don’t you, with the ready-mixed?
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Mr. Warner. Oh, no, sir. We have considerably more work at the yards with the ready-mixed plants there. At the yard-mixing unit, we have to have both an operator and an inspector.
Representative Wood. When ready-mixed was instituted, did that make any difference in the hourly rates of pay for operating those machines?
Mr. Warner. You are referring to our trucks?
Representative Wood. No ; your employees at the plant.
Mr. Warner. At the plant?
Representative Wood. Yes.
Mr. Warner. Well, we had not had them before. It was a new job for us to mix at our plants.
Representative Wood. Has there been a difference in the wage scales in the plants, though? Your employees produce three or four times more.
Mr. Warner. We had to employ more men.
Representative Wood. From what I have noticed in Missouri, there was not any difference in the wage scale and wage standards or any employee, irrespective of what they produced.
Mr. Warner. All I know is that we are employing considerably more men to handle a ton of material in the ready-mixed concrete form than we did in the dry form.
Representative Wood. The ready-mixed has not been very much benefit to the contractor, then, has it?
Mr. Warner. I think it has.
Representative Wood. Did it lower the price of concrete?
Mr. Warner. It has been a benefit in many types of jobs, where especially quick handling was desired, where the engineer desired a better job of concrete than job-mixed provides; it improves the quality situation, it is a better inspected product. It has several advantages.
Representative Wood. The saving to the contractor was really due to the fact that he could use less men on the job to pour the concrete
Mr. Warner. Yes.
Representative Wood. That was a benefit to the contractor, a monetary benefit or a saving.
Mr. Warner. Yes.
Representative Wood. Then your plant could produce much more concrete per man hour. Of course, that benefitted your firm, but I have been unable to ascertain anywhere along the line where labor has reaped any benefit from this device or any invention of labor-displacing machines.
Mr. Warner. I have explained that we have to employ considerably more labor per ton of material handled in that case than simply manufacturing this dry material.
Representative Wood. Do you-mean to tell me that you have to employ more men per ton produced now than before you established the ready-mix?
Mr. Warner. Exactly so, sir.
Representative Wood. Then why did you establish the ready-mix?
Mr. Warner. Because it was an improved product and because the contractors could pay us the advanced price that they saved on their own labor, so we could put it in our labor.
Representative Wood. Did not you say that you had a little advantage in the dry-mix with reference to prices?
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Mr. Warner. Oh, no, sir. We have considerably more work at the yards with the ready-mixed plants there. At the yard-mixing unit, we have to have both an operator and an inspector.
Representative Wood. When ready-mixed was instituted, did that make any difference in the hourly rates of pay for operating those machines?
Mr. Warner. You are referring to our trucks?
Representative Wood. No ; your employees at the plant.
Mr. Warner. At the plant?
Representative Wood. Yes.
Mr. Warner. Well, we had not had them before. It was a new job for us to mix at our plants.
Representative Wood. Has there been a difference in the wage scales in the plants, though? Your employees produce three or four times more.
Mr. Warner. We had to employ more men.
Representative Wood. From what I have noticed in Missouri, there was not any difference in the wage scale and wage standards or any employee, irrespective of what they produced.
Mr. Warner. All I know is that we are employing considerably more men to handle a ton of material in the ready-mixed concrete form than we did in the dry form.
Representative Wood. The ready-mixed has not been very much benefit to the contractor, then, has it?
Mr. Warner. I think it has.
Representative Wood. Did it lower the price of concrete?
Mr. Warner. It has been a benefit in many types of jobs, where especially quick handling was desired, where the engineer desired a better job of concrete than job-mixed provides; it improves the quality situation, it is a better inspected product. It has several advantages.
Representative Wood. The saving to the contractor was really due to the fact that he could use less men on the job to pour the concrete
Mr. Warner. Yes.
Representative Wood. That was a benefit to the contractor, a monetary benefit or a saving.
Mr. Warner. Yes.
Representative Wood. Then your plant could produce much more concrete per man hour. Of course, that benefitted your firm, but I have been unable to ascertain anywhere along the line where labor has reaped any benefit from this device or any invention of labor-displacing machines.
Mr. Warner. I have explained that we have to employ considerably more labor per ton of material handled in that case than simply manufacturing this dry material.
Representative Wood. Do you-mean to tell me that you have to employ more men per ton produced now than before you established the ready-mix?
Mr. Warner. Exactly so, sir.
Representative Wood. Then why did you establish the ready-mix?
Mr. Warner. Because it was an improved product and because the contractors could pay us the advanced price that they saved on their own labor, so we could put it in our labor.
Representative Wood. Did not you say that you had a little advantage in the dry-mix with reference to prices?
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Representative Wood. Would you be in favor of the bill if that were done?
Mr. Warner. I think it is worth trying.
The Chairman. Thank you, Mr. Warner.
Mr. John W. O’Leary.
The Chairman. Mr. O’Leary, you are with the Machinery and Allied Products Institute?
Mr. O’Leary. Machinery and Allied Products Institute.
The Chairman. What is that?
Mr. O’Leary. It is a federation of trade associations that number about 50, all of whom are engaged in the manufacture of machinery.
The Chairman. Where is your place of business?
Mr. O’Leary. Chicago.
Senator Walsh. It has industries all over the country?
Mr. O’Leary. Yes, sir.
The Chairman. You are the representative of that organization?
Mr. O’Leary. I am appearing here as president of that organization; yes, sir.
The Chairman. All right.
Mr. O’Leary. The following statement is addressed to the national legislation proposed in H. R. 7200 (Connery) and S. 2475 (Black) entitled “Fair Labor Standards Act of 1937” and is presented as the views on the related subjects of the manufacturers and trade associations affiliated in the Machinery and Allied Products Institute :
As manufacturers of machinery and equipment, we feel that the proposed legislation would affect us not only in all of the respects common to manufacturers in general, but, because ours are capital goods industries, it would burden us particularly with handicaps to profitable and efficient operation. These burdens would result in damage not only to the employers and employees of those industries but also to the public in general, whose welfare is closely linked with the capital-goods enterprises.
All of us, assuredly, desire to see the general welfare of the people of the Nation improved. And it is our earnest hope that the statement of our conclusions may be helpful to the members of these committees in their consideration of the legislation proposed.
Two fundamental questions are involved in this type of legislation. One is whether it is based upon economic principles which will lead to the ends sought. The other is whether the social methods to be employed by the legislation will serve the best interests of the people of the Nation.
Evidence bearing upon these questions should contribute to an intelligent decision as to whether the legislation proposed is wise or unwise. The best sources of answers to these pertinent questions are experience, economic and sociological research, and authoritative opinion. It is to these sources that we have turned, not only
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to find evidence for the proper answers but also to determine what are the most important basic principles involved. Let us consider first, the social methods which administration of the proposed legislation would employ.
I
Can the American people best achieve their goals of economic and social progress by centralized Federal regulation of such matters as wages, hours, trade practices, prices, and production?
Unless the answer to this question is yes the proposed legislation will handicap the attainment of America’s goals. The best source of information upon which to base an answer to this question is experience—the experience not only of other nations as we can observe them and their failure to attain either the ideals or practical achievements of America, but also our own experience with Federal economic planning which received a liberal trial under the National Industrial Recovery Act.
The experience and observation of machinery manufacturers of the application of the N. R. A. was that it did not achieve the ends set for it. 1
Our conclusions, based upon detailed statistics as to employment, wages, and real wages, before, during, and after the N. R. A. code period, are typical of those reached by others who have made exhaustive studies of the effects of the act throughout the economic system. The Brookings Institution, for example, which presented its findings in a book of more than 900 pages,2 made among other significant statements the following [reading]:
It is our view that the National Recovery Administration has had the effect of restricting production below the levels it would otherwise have attained, hence that it has reduced the total amount of employment as measured by the number of man-hours of work done. * * * ,
In the end the temporary advantages of work spreading as a relief measure cannot be compared with the importance of getting a greater total production. The spreading of work accomplished by the present codes gave part-time employment to less than a sixth of those unemployed at the time they became effective. The remaining 10 million unemployed must look to an expansion of production. * * * Merely dividing a smaller amount of work among more workers is neither recovery nor a good substitute for it. * * * For the individual worker the N. R. A. usually shortened working hours as it advanced hourly earnings. Hence the weekly income in most cases either failed to respond fully to increases in rates per hour or actually declined.
That the break-down of compliance with N. R. A. was the result of too broad an application of its principles, that it should not have attempted to cover the gainful pursuits of the people so widely, is a fact which frequently has been stated by supporters of that legislation. What this means is that governmental regulation as embodied in the N. R. A. or in the proposed legislation can be applied only in a limited way. This makes it important that its limited application be correctly pointed. Yet the experience of N. R. A. reveals clearly that the long hour’s, low wages, and other conditions desired to correct, existed in avenues of employment to which this proposed legislation does not specifically or presumably apply.
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1 Machinery and Allied Products Institute, Employment Provisions in Codes of Fair Competition, 1935, Chicago, Ill.
2 Brookings Institution, The National Recovery Administration, 1935, Washington, D. C.
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The detrimental results of practices of the minority fringe in many cases cannot be corrected by the proposed legislation because most businesses in the minority fringe do not engage in interstate commerce, or for other reasons are specifically or presumably omitted from the classes to which the bill applies. The regulations imposed place serious handicaps upon other businesses and industries which admittedly do not need the regulation. Sweat-shop conditions and child labor, for instance, do not exist in the machinery manufacturing industries. Wages paid prior to, and since N. R. A. have been substantially higher than the minimum prescribed in N. R. A. codes and higher than most other industries would or could pay, regardless of Federal compulsion.
Less than 10 percent of employed persons under 16 years of age were engaged in the manufacturing industries at the time of the last Federal census. The percentage is probably considerably smaller today. Seven percent were employed in trade and 6½ percent in domestic work. The remainder, more than 76 percent, were in agriculture, who, like those in many industrial and trade occupations, are presumably not reached by this legislation.
The principal handicap of legislation such as the proposed is that there is danger that it will not permit the flexibility essential to the best interests of both employer’s and employees. This is especially true of the machinery and similar capital-goods industries whose products are made on order to specifications. The goods made by these industries cannot be built tor inventory in advance of sales'; consequently sharp fluctuations in production and need for services of employees are inevitable. Under the inflexible work periods such as existed under the N. R. A., and which are inevitable under any similar legislation, machinery manufacturers are faced with substantial increases in expenses of operation which are not determinable in advance and not recoverable from the buyer, and which neither benefit employees in larger pay envelopes nor contribute to reemployment.
It will be said in answer to this that the proposed Labor Standards Act anticipates such difficulties and constitutes it a duty of the five- man board to give consideration in its determinations and orders to the need for flexibility in operations. But this is no answer, for these difficulties were encountered during N. R. A. when industry representatives manned the code authorities. There was constant pressure from labor organizations for stringent rulings, and time required for investigation by N. R. A. administrators and the uncertainty of outcome were in themselves difficulties which very substantially retarded business. In our opinion, delegation of the much broader authority to stipulate hours and wages to a board as contemplated in these measures will materially accentuate the difficulties encountered under N. R. A.
The theory that flexibility and adjustment, are possible under the regulations of administrative agencies received a further test following N. R. A. in the Walsh-Healey Government Contracts Act.
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Despite congressional provision for flexibility, it has been the experience to date that not one of the exemptions or exceptions applied for has been granted, and numerous companies have refrained from bidding or from requesting exemptions or exceptions in view of the obvious futility of such procedure.
Capital goods, such as machinery, are sold on long-term credits, and faced with such operating uncertainty customers will be hesitant in buying and machinery manufacturers will be uncertain as to the terms upon which they can make long-term contracts. This will tend to limit the market for capital goods and defeat efforts to reemploy the idle. 3
It has already been said by proponents of this legislation testifying at these hearings that the proposed legislation differs widely from N. R. A. This is correct, but the differences are predominantly on the side of extra N. R. A. provisions, which presage far greater domination of business and industry by Government than resulted from the already described experiment in economic planning.
There is abundant evidence in the history of American business and industry to prove conclusively that higher social standards develop without Government compulsion. The best that legislation such as the proposed can do is to punish those who fall below an arbitrary standard. And here it should be borne in mind that the bottom fringe whose practices are reprehensible have not suddenly come upon the scene, nor will they disappear as a result of any legislation. There are always bottom fringes, and their practices are reprehensible because they deviate furthest from the practical ideals of the time. Unfortunately the grave danger of the proposed restraining legislation is that the most far-reaching effect of it will be to limit opportunity to raise all standards.
The developments of business and industry which have made possible the improvements in wages, prices, quality of products, and working conditions of the past have sprung out of the normal workings of an economy of free enterprise and individual initiative. They have not been forced by Government compulsion, and they never can be. The danger to the goals of widespread employment, high wages, low prices, and improved working conditions is in the inevitable tendency of Federal legislation to lead to a static economy rather than to perpetuation of the dynamic system by which we have not only learned to seek but to achieve heights that are the envy of workers throughout the world. Normal industrial progress, supplying opportunity to both employers and employees, would be curbed by legislation such as proposed. It would be curbed by a measure intended to correct practices, first, which are most prevalent in groups which would not be subject to the legislation, and second, which can be curbed by less dangerous methods or which will disappear as other undesirable practices are constantly disappearing with normal social and economic development.
It should be borne in mind that the social conscience of this generation outlaws many practices which were formerly widespread
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3Machinery and Allied Products Institute, Capital Goods and American Progress, June 1937, Chicago, III.
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and accepted with little or no opposition. This improvement in the social conscience has taken place under a system of free enterprise and not as a result of Government compulsion. By continuation of free enterprise there is opportunity for unlimited improvement not only in ideals but in achievement, whereas a static society resulting from Government regulation limits progress as truly as it might punish those who fail to meet an arbitrary standard.
We submit that rigidity in wages and hours cannot be introduced without shortly necessitating rigidity in prices; that rigidity in prices will lead to monopoly by the larger units, denial of opportunity for new enterprise, stifled competition generally, and will in turn appear to necessitate restriction of inventions and new equipment, dictation of rates, and quotas of production and finally assumption of responsibility by the Government in a socialized state and levelling of the standard of living at a lower point than will be attained in an unregulated economy.
American progress has been made in the past as a result of innumerable decisions by innumerable individuals representing the combined wisdom of our people. Our industrial future is too highly valued to base it upon the precarious decision of five men, however competent and well-advised. And our answer must be that the American people cannot best achieve their goals of economic and social progress by centralized Federal regulation such as proposed.
II
Our second question deals with the economic principles to which we must adhere in order to make either social or economic progress, and that question may be stated as follows:
Can compulsory reduction of working hours and artificial increases in wages attain the goals of full employment, greater purchasing power and the improved working conditions sought by such legislation as the proposed?
To answer this question we may turn to the research of a number of economists, all of whom have reached the conclusion that a general reduction in working hours cannot help but lead first to a reduction in the total amount of wealth produced for the Nation as a whole to share; and second, to higher prices which must be paid by workers themselves and tne rest of the consuming public. The Brookings Institution, headed by Dr. Harold G. Moulton, probably has stated these principles as logically and convincingly as any group of economists in the country, and its conclusions are based upon the most comprehensive research into the ability of American industry to produce and the ability of the people to purchase and consume that has even been undertaken.4
Following is a statement made by Dr. Moulton indicating the substance of his conclusions [reading]:
The simple truth of the matter is that we have not yet reached a stage of technological development at which it is possible for the American people to obtain the standards of living which they desire on a 40-hour week basis. These estimates (of work to be done) are based merely on the assumption of a return to the 1929 per-capita level of production and consumption. We
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4 Brookings Institution, The Recovery Problrm in the United States, 1936, Washington, D. C.
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need much higher levels than these to provide satisfactory standards of living.
The workweek has been cut approximately 20 percent since 1929 as compared to a reduction of 13 percent between 1900 and 1929. Yet this proposed legislation is presumably based upon the assumption that the standard of living can be restored and raised by further reduction in working hours. This is directly opposite to the conclusions reached by economists of the Brookings Institution, and their conclusions are identical with or similar to those of countless other economists, both in America and in other countries.
Only the economically naive believe that there is some limitless source out of which higher labor costs, resulting from shortened working hours, can be paid without expense to workers themselves and the consuming public. Consumer purchasing power is dependent as much upon prices as upon wages, and only by increasing the spread between the two is the economic well-being of the Nation improved. High wage rates are a delusion when they are attained without increasing volume of production or improving efficiency sufficiently to prevent prices from rising proportionately.
The National Industrial Conference Board, after an analysis of the factors involved in reducing hours of work,5 stated among other conclusions that the plan of a shorter workweek is a work-sharing program by which one group of workers would have their purchasing power reduced for the benefit of another group. Persons now unemployed, who would obtain employment as a result of the shortened working hours, would benefit at the expense of those workers who are now engaged in gainful occupations, and who represent an enormous majority of the available working force. It would result in a lower real wage, less production, and a lower standard of living.
In this connection it is worthy of note that wages of factory workers, who constitute the far largest group to whom the proposed legislation applies, have risen faster than the income of almost any other major occupational group. Wage increase to any one group out of proportion to the general rise in incomes of all occupational groups does not spread purchasing power, but rather takes it from the rest of the consuming public. It makes higher prices necessary, or prevents the price reductions which are essential to wide distribution of the benefits of scientific and technological advancement.
PRICE HANDICAP TO AGRICULTURE
Capital goods make their full contribution to national prosperity only when it is possible for their use to spread purchasing power to all consumers in the form of lower prices, and the tendency of legislation such as the proposed can only be in the direction of higher rather than lower prices. The prices most affected would be those of non farm products, and ability of the agricultural population to progress abreast of other segments of the population would be doubly hampered.
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5 National Industrial Conference Board, The Thirty-Hour Week, 1036, New York, N. Y.
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Inasmuch as one of the principal sources of additional funds to pay increased labor costs, resulting from a shorter workweek, must be higher prices^ expansion of many industries to which the country must look for increased employment would be impossible. Railroads and public utilities, whose rates of income are under Government control, would be additionally handicapped by inability to increase earnings to meet increased expenses, and consequently would be further hampered in their purchase of durable goods, and recovery of production and employment in the durable goods industries would be further impeded.
A shortage of skilled labor is already limiting production in a large number of companies, and any legislation which would reduce the amount of services of the skilled workers now employed in these industries would prevent employment of unskilled workers whose jobs depend upon production by the skilled group. There is grave danger that legislation shortening working hours would actually reduce total employment and increase the need for Federal relief.
RELATION TO CAPITAL GOODS
Many of the principal customers of the capital-goods industries— the prospective purchasers of machinery, tools, and other equipment—would be prevented by the combination of price and cost conditions from purchasing the products of our industries. This would result in damage not only to the industries which are currently most depressed and which might otherwise have the greatest potentialities for reemployment, but also to the public in general which would profit by the advancement in production methods which are dependent upon the installation and use of modern industrial equipment. Inability to replace obsolete equipment or to launch new enterprises retards improvement in products now being manufactured and prevents the development of new products to fill old needs or provide new luxuries and conveniences. It prevents opening of the new employment opportunities such as technological advancement has created in the past and as it must create in the future to care for the ever-increasing percentage of the population which seeks employment as a result of concentration of population in the working-age groups?6
Furthermore, the sale and use of capital equipment—the tools, machines, and other facilities of production—have contributed more than anything else to the social improvements that have taken place for American labor in the last hundred years. The conditions which the proposed legislation is designed to correct are most prevalent in the segments of business and industry where facilities for production of goods or rendering services are so inadequate that returns are insufficient to support better conditions. The origin of the term “sweatshop” indicates the type of place in which adverse conditions are found. Nothing could contribute more to improvement of such conditions than encouragement of the progressive industrial methods which are possible with the capital equipment whose sale and use will be curbed by such legislation as the proposed.
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6See series of 4 pamphlets on technology and employment and the American Standard of Living, Machinery and Allied Products Institute, Chicago, Ill.
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The Machinery Institute contends for the foregoing reasons that the legislation proposed is unwise. It is based on economic principles which experience has proved do not lead to either the economic or social goals of the American people, and it would set up social controls which would endanger both economic and social progress by sound principles.
We submit that there is far greater danger to the general welfare of the American people in conferring upon any board such powers as are contemplated m this act than there are in unregulated hours, wages, and working conditions in American industry.
This measure is not justified on the grounds of economic emergency, for no emergency in this respect exists, and before any such legislation can be designed for permanency far more study must be devoted to making it specific as to the conditions to which it is to apply and exactly how it is to be applied. Let it be determined how manufacturers in the capital goods industries can be assured that the absolute necessity of flexibility will be recognized. Let it be determined before rather than after enactment now and what distinctions are to be made between rural and urban industries. Let it be determined exactly how a measure which limits hours and prescribes wage rates can avoid leading to other measures which regulate prices, fix production quotas, and transform our economic system from one of free enterprise to one of complete government domination.
It is our view as machinery manufacturers that the frontiers ahead of America—economic frontiers of new industries, greater production and distribution of necessities and more widespread enjoyment of leisure and luxuries—are greater today than they have been for any previous generation. The march of progress which has brought us to our present height has not ended. Until there is assurance that regulatory legislation takes this into account both workers and employers must look to the methods of progress which have proved themselves, rather than to legislation.
Representative Thomas. May I ask you whether in your judgment the Walsh-Healy Act worked successfully or unsuccessfully in its primary purposes?
Mr. O’Leary. I should say it has been unsuccessful. It has not been fully implemented.
The Chairman. Thank you very much, Mr. O’Leary. Mr. John W. Lawrence.
The Chairman. You represent the American Truckers Association?
Mr. Beall. Mr. Chairman, my name is J. Ninian Beall. I am counsel for the American Trucking Associations, Inc. I am making the statement in place of Mr. Lawrence.
The Chairman. What are your initials?
Mr. Beall. J. N.
The Chairman. You are the counsel for the American Trucking Association?
Mr. Beall. Yes.
The Chairman. Your office is in Washington?
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Mr. Beall. Yes, sir; in the Investment Building.
I am not appearing in opposition to Federal regulation of the trucking industry.
We asked for Federal regulation under the Interstate Commerce Commission and supported the passage of the Motor Carrier Act, 1935.
We are primarily concerned about conflicting jurisdiction over the same subject matter, and my appearance is limited to respectfully requesting the committee to give due consideration to these matters.
Certain conflicts already exist between Federal and State jurisdiction, and that conditions will be further complicated by this bill as drawn. The interstate operations of the trucking industry including rates, hours, qualifications, and ages of employees were placed under Federal regulation by the Motor Carrier Act, 1935.
We ask this committee to consider first whether there is need for further regulation of this type; and if further regulation be deemed necessary to consider the necessity for some form of coordination of control over rates and income and operating expenses, including wages and hours, in the case of both intrastate and interstate trucking operations.
This appears to us to be necessary from the standpoint of both labor and employer.
The Motor Carrier Act, section 204, gives the Interstate Commerce Commission jurisdiction over hours of service and qualifications of employees.
The Commission has held extensive hearings throughout the country and is now preparing its orders and this bill appears to involve conflicts in jurisdiction.
The outstanding development of 100 years of “commerce clause” litigation and 50 years of Federal regulation of interstate transportation, has been the recognition of the necessity for uniform standards for and control of, such transportation, and the removal of conflicting jurisdictions.
About 30 States have regulations covering hours of service, particularly for truck drivers and we think these State regulations will be superseded by the regulations of the Interstate Commerce Commission.
Section 22 (a) of the Black-Connery wage-hour bill specifically provides that all Federal, State, and municipal regulation shall not be superseded if lower than regulations promulgated under this bill.
If the resulting conflicts are imposed on the trucking industry, it will make interstate transportation practically impossible.
In the trucking industry the ratio of wages to gross income is at present about 40 percent for companies having gross income of $25,000 or more, and this is very high in relation to most of the large industries. The Census Bureau reports shows the following ratio for a few industries which have been selected for comparison:
Percent
Petroleum refining ---------------------------------------- 5.9
Paper ------------------------------------------------------------ 15.5
Pig Iron---------------------------------------------------------- 5.0
Motor vehicles -------------------------------------------- 1 9.0
Cigarettes ------------------------------------------------------ 2.5
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1Manufacturing.
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To keep a public-service industry going, there must be some plan for coordination between the power that regulates the cost of labor and the power that fixes rates, because the margin between gross and net income is very small. A 40 percent increase in wages in the,, pig-iron industry would result in an increase of only 2 percent in the total cost ot producing pig iron but a 40 percent increase in the trucking industry would result in an increase of 16 percent in operating cost.
There is no margin available to absorb large increases in cost. Our best information is that the margin between gross and net is not more than 5 percent, and we have no control over the margin.
If wages are to be regulated and hours further regulated, there should be some arrangement for coordination between regulating bodies so that a reasonable margin may be maintained.
The Motor Carrier Act, section 216 (e), specifically provides that the Interstate Commerce Commission shall not have jurisdiction over intrastate rates even though they burden interstate commerce.
The Black-Connery bill, section 1 (a); 2 (a) (24); 8 (2) and 9 (2), appear to cover intrastate transportation if it adversely affects interstate commerce.
This would result in Federal regulation of wages and hours and State regulation of rates or income.
Some of these problems are peculiar to the truck transportation industry because under the Railroad Section of the Interstate Commerce Act, the Interstate Commerce Commission has jurisdiction over intrastate rates and railroad equipment.
The Interstate Commerce Commission does not have jurisdiction over the hours of railroad labor but does have this jurisdiction over hours in the trucking industry. The Railroad Labor Act does not apply to railroad employees engaged in driving trucks. Surely if this bill does not cover railroad labor, it should not be applied to trucking labor. The industries are competitive.
There are about six States which greatly restrict the payload which motor trucks may carry, both in interstate and intrastate commerce.
We had thought that the Motor Carrier Act, 1935. had given the Interstate Commerce Commission jurisdiction over these matters as to interstate commerce, to promote safety on the highways, and to prevent discrimination between shippers and places due to variations in transportation costs resulting from variations in payloads.
The courts have held that the language used in the act was not sufficiently specific to include sizes and weights.
Senator Pepper. What cases are those?
Mr. Beall. Barnwell Bros, et al. v. South Carolina State Highway Department, reported in 17 Federal Supplement 803, decided January 20, 1937.
Senator Pepper. That was the district court?
Mr. Beall. That was a three-judge court. That was the final decision, and a permanent injunction granted based on burdens on interstate and not on supersedure. There have been one or two other decisions by district courts, in Florida and Texas, one-judge courts, but only on preliminary rulings on motions and not on final decisions on the merits.
In Illinois and most of the other States an employer can count on a payload of from 10 to 20 tons in agreeing on wages with
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employees, but across the Ohio River in Kentucky he can only count on 5 tons.
From Georgia, to Massachusetts, a payload of at least 10 tons is permitted, but in Alabama, Tennessee, Mississippi, and Louisiana the limit is about 5 tons.
In Texas the limit is 7 tons going to a railroad station but only 3½ tons if the truck passes the railroad station.
There has never been any unemployment in the trucking industry, but on the contrary that industry has absorbed much of the unemployment from other industries.
There is a serious shortage of skilled drivers. A small percentage of the drivers are responsible for a large percentage of the accidents.
We have devoted much effort and money on safety work. All authorities agree that, as a whole, truck drivers for regulated carriers are the best drivers on the highways.
The industry and public safety cannot stand a drastic increase in the number of inexperienced drivers and competent drivers cannot be created over night by this bill.
This bill is not designed to meet the requirements of the transportation industry and of the public for transportation services.
If it be deemed desirable to apply this bill to the trucking industry, we ask that the Interstate Commerce Commission be given an appropriate degree of coordinating control; in order that wages, hours, qualifications, ages, and rates may receive consideration by one responsible body.
As a suggestion, we ask that this bill be amended by adding the words:
Nothing in this Act and no findings or orders of the Labor Standards Board shall apply to any transportation agency subject to regulation by the Interstate Commerce, unless the Interstate Commerce Commission shall, after full investigation and report, have found that the particular provisions of this Act. or the particular findings or order of the Labor Standards Board will be consistent with the policy and provisions of the Motor Carrier Act, 1965. and the orders and regulations of the Interstate Commerce Commission.
The Chairman. Are there any questions?
Representative Thomas. Mr. Beall, does the Motor Carrier Act attempt to regulate minimum pay and maximum hours of employees?
Mr. Beall. It does not cover pay; no, sir.
Representative Thomas. It does not cover hours, does it?
Mr. Beall. Oh, yes; they have power to regulate hours.
Representative Thomas. Is there a limit set?
Mr. Beall. No, sir. Congress rejected such an amendment.
Representative Thomas. In other words, your drivers, a good many of them, work 10, 12, and 14 hours a day, and after they have driven about 12 or 14 hours they drive up alongside of the road and sleep 4 or 5 hours and then go on. It is a common practice, is it not?
Mr. Beall. I do not know how common it is. I have heard of long hours in connection with owner-operators who buy and sell produce. Regulated regular route carriers generally do not permit the practice.
Representative Thomas. At any rate you are not regulated as to hours?
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Mr. Beall. The Commission has the power to prescribe maximum hours for drivers, and other employees and they have conducted a hearing, involving drivers from coast to coast. I attended the hearing. They took testimony and spent over a month in doing it. They are now preparing their report and order. The reason for that investigation was to prescribe hours for drivers.
Representative Thomas. What is the average number of hours worked as compared with railroad employees?
Mr. Beall. Well, we do not think that our employees over an annual period average over 48 hours a week as a maximum, in any branch of the industry.
Representative Thomas. Have you any accurate figures on that?
Mr. Beall. I would not say that there are any statistics that completely give the picture. There are statistics prepared by the Coordinator, and there have been some statistics prepared by the Census Bureau, but I think there are no statistics that can fairly be said to represent the present day conditions in the industry as a whole. I heard a large number of witnesses testify before the Commission on the hearing on hours, and I suppose that was the most exhaustive investigation that was ever conducted. From the testimony given there it would seem that there was no class of the industry, and of course there are many classes, in which the average employment the year around would exceed 48 hours a week. There are many operations in which the seasonal requirements are more than 48 hours a week, and perhaps the number of hours was higher on a daily basis. The public demands the services of household movers on the first and fifteen of the month and in the spring and fall. The farmer wants crops moved when they ripen and cattle moved when the market is high.
Representative Wood. On the regular route carriers?
Mr. Beall. We had very little information showing that the regular route man ran much over 9 or 10 hours a day, even under exceptional circumstances; 8 hours was the general rule.
Representative Thomas. What about your minimum pay? What is your minimum pay?
Mr. Beall. We do not have any minimum pay. There is a wide range of pay in the industry.
Representative Thomas. Do you have any idea as to what your average pay is, say, for drivers?
Mr. Beall. According to the Coordinator’s report, about 50 cents an hour for regular route carriers, and they range up to above a dollar including overtime.
Representative Thomab. Why that variation in there between 50 cents and a dollar? Where does that come in?
Mr. Beall. As I recall, the variation primarily comes in between the smaller and larger operator. The larger operators operating large fleets I believe pay higher wages. The trucking industry is an industry composed of a large number of small operators, and when you put those small operations into the average I believe it is found that the small operator is the one, generally speaking, who pays lower wages. He operates usually in small local villages and rural sections.
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Representative Thomas. Just this one further question and then I am through. Does your industry have any objection whether Congress places you entirely under the supervision of the Interstate Commerce Commission, or whether Congress, by some appropriate act, the result of which is to place your industry on the minimum pay of $16 a week and, say, the maximum workweek of anywhere from 35 to 40 hours, would you object to that?
Mr. Beall. I will have to answer it this way, if I may: Our industry has not gone on record and directed me to speak for it on that matter. I was merely directed to point out to this committee the dangers of having a conflict of jurisdiction between different boards and asking it to please not do that to us. That is as far as my instructions went.
Representative Thomas. Could you give us an answer to that question and supply the committee with the answer at any time soon?
Mr. Beall. May I have the question again, please?
Representative Thomas. Would your industry object to being regulated so that the minimum pay will be $16 a week and the maximum workweek will be 35 or 40 hours, whether the right to administer that regulation would be under this Board or under the Interstate Commerce Commission?
Mr. Beall. I do not know what their position on the wage would be, but on the hours my personal opinion, based on operator testimony given before the I. C. C., is there would be very serious objection to it. We just could not operate with such a restriction on tours. I pointed out that there is a very serious shortage of drivers.
Representative Thomas. You said you did not have authority. I am not asking you for your personal opinion but the opinion of the constituted authorities of your industry.
Mr. Beall. May I complete an answer that I was trying to make a little while ago, if I may, please, sir?
Representative Thomas. Yes.
Mr. Beall. The point I wanted to make is this, in answer to Mr. Wood, I believe it was, about the hours in the industry. I spoke of the hours of the regular route carriers. Now, a very large proportion of the trucking industry is composed of irregular route operations, not between terminals but irregular in nature, in which there is no possibility to establish interchange points where drivers may transfer, because the truck comes to a town or farm today and may not again go there for months at a time, or it may go there once a week, and it would not be possible to have relay men posted around the country. Irregular route operations are a very large and very important branch of the industry and any serious limitation to cut down the seasonal or call and demand service of these people would practically put them out of business.
Representative Ramspeck. Mr. Beall, did you ever drive a truck?
Mr. Beall. No, sir.
Representative Ramspeck. You drive an automobile?
Mr. Beall.. Yes, sir.
Representative Ramspeck. Don’t you think that if a person drives even a passenger automobile more than 8 hours a day he is liable to injure himself and others?
Mr. Beall. No, sir.
Representative Ramspeck. I do not agree with you.
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Mr. Beall. If I may explain my answer, referring to the testimony which I heard at the investigation conducted by the Interstate Commerce Commission, that testimony was to the effect that it was accumulated fatigue that caused the danger, it was due to lack of rest over a long period of time, it is the accumulation of fatigue over several days which is dangerous.
Representative Ramspeck. I will state from personal experience that I do not believe anybody can drive over 8 hours safely.
Mr. Beall. I think this is true, that an experienced truck driver can drive a longer number of hours without noticing it than perhaps you or I can drive a pleasure car.
Representative Ramspeck. It is harder to drive a truck than a passenger car, is it not?
Mr. Beall. I think it must be easier, drawing this conclusion from some of the wonderful safety records that truck drivers have. They do not go so fast, and modern trucks have air brakes; 500,000- mile-no-accident records are common.
Representative Thomas. There is a scarcity of drivers?
Mr. Beall. Of competent drivers.
Representative Wood. Mr. Beall, you made the very remarkable statement that there has not been any unemployment in the trucking industry. On what ground do you case that remarkable statement?
Mr. Beall. Well, sir, I am connected with the industry and was so connected doing the worst of the depression, and I have never heard of it.
Representative Wood. You have not made any particular survey of that, have you?
Beall. I made some investigations along that line, or we made some investigations along that line during the N. R. A. code days.
Representative Wood. What investigation revealed that there was no unemployment in the trucking industry?
Mr. Beall. My recollection is—it may be wrong—that the code investigation showed there was no unemployment. When they put in shorter hours it was for the purpose of increasing employment by absorbing unemployed from other industries.
Representative Wood. When did they hold the investigation?
Mr. Beall. They held the investigation and hearings before the codes were promulgated.
Representative Wood. You mean the truck driver is in a separate and distinct category from the rest of the employees in the country?
Mr. Beall. Yes; the trucking industry put the railroad employees to work in the trucking industry when the railroads laid them off.
Representative Wood. Where did you get that information?
Mr. Beall. From general contact with the industry and testimony given by former railroad employees at I. C. C. hearings.
Representative Wood. Of course, you are not a truck owner: you are a lawyer?
Mr. Beall. Yes.
Representative Wood. You mean to say that during the depression, during the period of the depression up to now, irrespective of whether they had anything to haul they just continued to employ those men, that there was no unemployment at all, that they have the same
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number of truck drivers today that they had last year and. the year before?
Mr. Beall. I think there is this explanation of it, that goods moved in smaller quantities than they formerly did, and that means more goods moved by truck.
Representative Wood. They did not take trucks off of these main lines, they just kept on employing the same men, the same wages, irrespective of whether they had 25 percent business or 100 percent business?
Mr. Beall. I understand they had an increased volume of business.
Representative Wood. Don’t you know, as a matter of fact, that thousands of trucks had been taken out of service all over this country during the depression?
Mr. Beall. No, sir.
Representative Wood. Don’t you know, as a matter of fact, that there were thousands of truck drivers in St. Louis alone that were unemployed during the depression?
Mr. Beall. I am speaking of the truck transportation industry, the common and contract carriers—not the private truck driver.
Representative Wood. I am talking about the men in St. Louis that drive from St. Louis to Chicago and all points, many points in a radius of 500 or 600 or 800 miles from St. Louis; I am talking about the cross-country truck drivers.
Mr. Beall. I have not heard of any such conditions as you mention, sir.
Representative Wood. You have not heard of any?
Mr. Beall. No, sir.
Representative Wood. It is your opinion that they just kept these men employed during the depression?
Mr. Beall. Yes.
Representative Wood. You certainly do not know much about the industry that you are testifying for.
Mr. Beall. I think I am pretty well acquainted with the conditions of it.
Representative Wood. It is about the only industry that I knew of in which there was no unemployment all during the depression, if your statement is correct.
Mr. Beall. I am glad to have the opportunity to tell you that there was at least this one industry which had no unemployment.
Representative Wood. I happen to know different. I happen to know that about 3,000 or 4,000 truck drivers were out of employment in St. Louis and Kansas City, and they were out of employment in every large city. I am talking about the interstate truck drivers. I am not talking about the city drivers, I am talking about the men that compete with the railroads.
Mr. Beall. I have great respect for your statement, sir, but it is news to me.
Representative Wood. Could you get us any accurate figures as to how many they employed in 1929, 1930, 1931, 1932, and 1933. and up to this year, and as to how many employees they put on in 1932?
Mr. Beall. I will undertake to get it.
Representative Wood. And how many they have now, and the number of truck drivers they had in 1932.
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Mr. Beall. We will certainly cooperate with the committee to the best of our ability. We do not have it but we will try to get it for you. I do not know when we could contact all of the 185,000 operators who operate trucks. That many registered under the code.
Representative Wood. Would you mind picking out a half dozen large trucking companies?
Mr. Beall. Certainly. I shall be glad to do so.
Representative Wood. Do you represent the large companies?
Mr. Beall. Yes; we represent all sizes and classes.
Representative Wood. You pick out a half dozen large trucking companies and give us that information.
Mr. Beall. Probably 100.
Representative Wood. You can do that very quickly. They can tell you very quickly as to how many people they employed in 1932 and how many they employed in 1936, the number of drivers.
Mr. Beall. We would certainly be delighted to do it, and I will undertake to do it immediately, sir.
Representative Wood. When you submit that information you will find out that there were just as many truck drivers, proportionately, unemployed in this country as in any other industry.
Mr. Beall. No, sir; however, I will certainly get you the information.
The Chairman. Thank you very much, Mr. Beall.
The Chairman. Mr. Gutterson, you are with the Institute of Carpet Manufacturers?
Mr. Gutterson. Yes; Senator Black. I am president of the institute. In view of the fact that you advised me that possibly I ought not to take over 10 minutes I have made a general statement and will not deal with any specific sections of the bill.
The Chairman. You were due to appear Wednesday, were you not?
Mr. Gutterson. Yes, sir; and I could not appear.
The Chairman. You may go ahead.
Mr. Gutterson. Mr. Chairman? this industry represents about 35,000 employees and we do a business of up toward $200,000,000 a year in normal times.
In presenting the views of the members of the Institute of Carpet Manufacturers of America, manufacturers of wool carpets and rugs, on this proposed legislation, let me say at the outset, in order that there may be no misconception, although it seems superfluous, that this industry is in entire sympathy with any objectives and for any appropriate laws for the elimination of indecent wages, both from a social and fair standpoint to the worker, and the elimination of those conditions surrounding the worker which every right-thinking citizen and industrialist desires. If such objectives are to be attained through the establishment of a minimum wage and limitations as to hours of work, this industry would be in full accord and would be only concerned as to what would be the most practical methods to bring about such results. We believe that as these problems are
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of a local nature, that they cannot be practically met through a national board dealing with industry on a wide scale.
For your information, this industry today is virtually working on a 40-hour work week basis, would not be disturbed as to a fair minimum wage, and is today paying an average hourly wage of 61½ cents. Therefore, we are not coming before this committee with any trepidations as to our present ability under normal business conditions on these matters. We pay as high a standard of wages as exists in the country for the type of work performed by the workers in this industry.
We wish to express our opposition to this form of legislation for two reasons: First, because this bill does not serve the purpose of doing away with sweatshop conditions, wage chiselers, and working conditions below decent standards, which the President says should be the great objectives in American industry. Second, because it is a bill imposing upon our industry, and virtually all industry in this country, a board of five men with the power of fiat legislation to fix virtually every wage of every worker. We believe this unconstitutional, not to the final benefit of the American worker; that it is fantastic in the conception of such a board being able to enter into the problems of management of thousands upon thousands of industrial units in this country.
As to the elimination of sweatshop labor, etc., this is an entirely secondary objective relegated to this board, when it is finished with the main objectives of the bill, and undoubtedly from a practical standpoint is not within the possibilities of this board to undertake. I make this statement because I believe it will be universally acknowledged that it is those units of industry which employ a very small number of workers, which are to be eliminated from this bill, where indecent labor conditions exist, by and large.
It is these conditions which the President of the United States has on many occasions referred to and in regard to which he has pointed out the necessity of action, but this bill does not really deal with that problem. It is pointed toward an effort to raise the general level of wages and to give a board fiat authority to step in and fix wages and hours, where collective bargaining either has succeeded or has not succeeded in accomplishing such an arrangement between the worker and the employer.
This bill has another objective, which is not at all directed to the elimination of indecent wage or working conditions. It is an attempt by a complicated and circuitous method to create a constitutional justification for a central Federal board to dictate the wages and fix the hours to be applied to any class of employees in any part of the United States. I know that those who have appeared before your committee have pointed out such facts, and I need not repeat what you have already had presented to you as to the extraordinary powers which Congress is surrendering to this board, which powers it is even doubtful if Congress itself possesses under the law of the land.
May I point out that for a moment just by one illustration the task which would be placed on a board of this nature, and the extraordinary problem that they would have on their hands in being guided by nothing further than what is stipulated in this bill, with the cardinal responsibility, as set forth in the bill, to do nothing which would curtail employment
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In the first place, limited to manufacturing alone, this board would have many thousands of separate manufacturing establishments for their supervision and investigation. No one knows what would be the number of industrial units directly or indirectly affecting interstate commerce which would come under the supervision and direction of this board, if they attempted to carry out their full powers and responsibilities. Their job becomes almost a fantastic dream when they are directed that in determining the establishment of a minimum wage alone for any class of employment coming within a maximum hourly wage of 80 cents this board shall take into account the cost of living and other relevant circumstances affecting the value of the service: also, what would guide a court in a suit for reasonable value of services rendered; also, what are the wages established for work of like or comparable character by collective labor agreements, and, finally, by the wages paid for like or comparable character by employers who voluntarily maintain fair wage standards.
If such a board conscientiously carries out its duties among the now unknown number of industries which would come under its supervision, how could it proceed to fix the wages in various classes of labor and be sure that it would not curtail employment, without taking into consideration and investigation the problem oi the employer for maintaining a margin between income and expenses, and all those factors that contribute to actual maintenance of employment. The undertakings for this board are so far beyond those of the N. R. A. that no wonder Mr. Jackson’s assertion this bill is not a new N. R. A. is absolutely right.
I take it that the Congress of the United States has given no previous- consideration to this bill, other than is now occurring at this hearing, that it has not been drawn by any committee of the House or Senate after a thorough investigation of unemployment, of where and to what extent there are those social or economic conditions contributing to sublabor standards, of those factors which are now contributing to or depressing progress in production, of the ability to pay better wages, and of increasing the purchasing ability of our population. We respectfully submit for your serious consideration that before passing a measure of such a drastic and unprecedented nature, going far beyond the former National Industrial Recovery Act in its implications, and at a time when there is no such economic emergency, that you make an investigation appropriate to the dignity and wisdom of such a body as the Congress of the United States before any such legislation as this is passed.
May I also respectfully add that a measure which good American common sense realizes will have such a profound effect on the economic life of the American people and which has so many perils in an untried field, needs as profound consideration in your responsibilities to the American people as a whole.
The Chairman. Any questions?
Representative Wood. Mr. Gutterson, are you a carpet manufacturer?
Mr. Gutterson. No, sir.
Representative Wood. What is your occupation?
Mr. Gutterson. I am president of the Institute of Carpet Manufacturers.
Representative Wood. Are you a lawyer?
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Mr. Gutterson. I am a lawyer by profession.
Representative Wood. Haven’t you any connection at all with any carpet manufacturers?
Mr. Gutterson. Except my position.
Representative Wood. To represent this institute?
Mr. Gutterson. Yes; which is made up of carpet manufacturers.
Representative Wood. What are the minimum wages of carpet manufacturers, do you know, weekly wages?
Mr. Guttebson. I cannot tell you the exact minimum wage. I know it is over $14.
Representative Wood. What is the maximum workweek?
Mr. Gutterson. We have been maintaining just about a 40-hour workweek.
Representative Wood. The 40 hours is the maximum workweek?
Mr. Guttebson. I do not believe there are over three or four instances of where we are operating over 40 hours today. There may be some one, that, for a short period, might go to 42 or 48 hours.
Representative Wood. Is it a seasonal industry?
Mr. Guttebson. Yes, sir.
Representative Wood. You pay a minimum of about $14 a week. Is that for men or women?
Mr. Gutterson. Oh, that includes both.
Representative Wood. That is an average minimum wage, is it? Is that the minimum wage of the carpet manufacturers?
Mr. Guttebson. I will answer you this way: We had no difficulty at the time of the N. R. A., we had to make no changes virtually to meet the $14 minimum and the 40-hour maximum.
Representative Wood. You drafted your own code, did you not?
Mr. Guttebson. We tried to.
Representative Wood. Of course, you did not have any difficulty meeting it if you drafted it yourself.
Mr. Gutterson. We did not draft our own code entirely, Mr. Congressman.
Mr. Congressman. Representative Wood. What limits were there in the N. R. A. which compelled you to pay any more than you were paying? What restriction was there in the code authority that compelled you to do anything except draft your own code?
Mr. Gutterson. Well, there were certain things that we were told we could have in the code and that we could not have in the code.
Representative Wood. Just to get fair competition, that is all it was.
Mr. Gutterson. Fair competition.
Representative Wood. Those are the only limits which you had foisted upon you. It was left to your manufacturers to draft their own code, and did they draft the code of a $14 minimum?
Mr. Gutterson. That was the wage suggested to us as the proper thing to have. We had no difficulty in adopting it.
Representative Wood. Did anyone in the employment of any of those manufacturers that you represent pay less than $14 a week to anyone
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Mr. Gutterson. Oh, yes; there must be some people who are substandard, those who are old, who are injured, or something of that sort who do not receive the regular rate of pay.
Representative Wood. What percentage of them is there?
Mr. Gutterson. I could not tell you the exact figure, but it is extremely small.
Representative Wood. You do not know what the lowest wage is that is paid by anyone, do you?
Mr. Gutterson. No, sir; to answer your question as exactly as you put it.
Representative Wood. But you know you pay the average $14 minimum. How do you strike that average?
Mr. Gutterson. I should say that we have not dropped from the $14 minimum that was established during the N. R. A. days. In fact all of our wages have gone up tremendously since N. R. A. days. We pay 61.5 cents an hour average wage today.
Representative Wood. How much?
Mr. Gutterson. 61.5.
Representative Wood. That is not your minimum average, though, is it?
Mr. Gutterson. I say that is the average of all wages.
Representative Wood. It does not have anything to do with the minimum. That is what I am speaking of. Your minimum of $14—don’t you think you could operate if a minimum was placed at $16?
Mr. Gutterson. We might be able to in our industry.
Representative Wood. Do you believe $16 a week is a decent wage for a hired man?
Mr. Gutterson. I think $16 is a good wage under----
Representative Wood. You think it is a good wage, do you?
Mr. Gutterson. Under certain circumstances; yes, sir. It depends upon the locality, and a great many other things, as to whether the wage is right or not, Mr. Congressman.
Representative Wood. You would not have any objection to the $16 wage. You say you have an average of a 40-hour week. How would, this bill affect you, as far as the maximum work week and the minimum wage is concerned? Of course, it makes you pay $2 more.
Mr. Gutterson. You say a $16 minimum, and if we pay $14 of course it would have a tendency to pull up all the wages.
Representative Wood. It would not have the effect of making the minimum the maximum, would it?
Mr. Gutterson. I do not think so, in a skilled industry like ours. I do not think it would be fair to the men. I think they feel that they ought to have a proper differential between different types of skill, and if that minimum was at a certain place it ought to be regulated according to that.
The Chairman. I want to ask you one question. Have you ever made any inquiry at. all to find out what the wages paid were in the various industries of the organization that you represent?
Mr. Gutterson. Oh, yes.
The Chairman. When?
Mr. Gutterson. We do it regularly.
The Chairman. When did you do it last?
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Mr. Gutterson. We had a monthly report within the month.
The Chairman. Have you got the report with you?
Mr. Gutterson. No, sir.
The Chairman. Where is it?
Mr. Gutterson. It is in New York.
The Chairman. Does that show the wages paid by all of the different members of the units of your organization?
Mr. Gutterson. I think these figures are gathered also in the Government reports.
The Chairman. Can you tell us of your own knowledge, and not guess at it, what is the minimum wage paid?
Mr. Gutterson. I do not know what the actual minimum is.
The Chairman. Can you tell us, without guessing, what the maximum hours are?
Mr. Gutterson. Oh, we have got it from the Government reports that our maximum hours I think are 40 or 41.
The Chairman. That is the average, is it not?
Mr. Gutterson. Yes.
The Chairman. Can you tell us what the maximum hours are that are worked by the employees in the organization that you come here to testify for against this bill? What are the maximum hours of any employee that works in that industry?
Mr. Gutterson. I cannot tell you by referring to a specific concern as to 'whether they are actually, every single day, every day in the week, working 40 hours. There might be a department working 45 hours, for instance, at times.
The Chairman. You represent the institute and come here to testify against this bill?
Mr. Gutterson. Yes.
The Chairman. To contribute something against it?
Mr. Gutterson. Yes.
The Chairman. I gather you are against it, and I heard the pliilosopliical argument that you made. What I want to know is can you tell this committee and make some contribution to this committee as to the number of hours, from your own knowledge, worked by the employees who work the longest in the industry that you represent ?
Mr. Gutterson. We find that the Government----
The Chairman. Can you or can you not tell us that?
Mr. Gutterson. We compare what- data we get at the institute, Senator Black, with the Government figures.
The Chairman. All right. Now, from whatever source it is. can you tell this committee, from your own knowledge, what is the maximum hours worked by the employees that work the longest in the industry that you represent?
Mr. Gutterson. We gathered no information on that point except what is reported regularly to the Government by our manufacturers.
The Chairman. I would like to have the reporter read that question and I want you to answer it.
(The question was read by the reporter.)
Mr. Gutterson. I could not from my own knowledge, but probably by looking at the Government records I could tell you, sir.
The Chairman. Well, you do not know now and cannot tell us?
Mr. Gutterson. I do not know of my own knowledge at the moment, by actual contact with the workers.
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The Chairman. Can you tell us from your own knowledge? You come to testify against this bill, which is to provide a minimum wage and maximum hours. Can you tell us from your own knowledge what is the lowest wage paid to the employees in the various units that you come here to represent?
Mr. Gutterson. From contacts with the manufacturers that are members of the institute I have been informed that they are all paying not less than the minimum wage they had been paying during the N. R. A. days.
The Chairman. The manufacturers have all personally told you that?
Mr. Gutterson. I have made sufficient investigation----
The Chairman (interposing). What investigation have you made that is in writing that this committee can have?
Mr. Gutterson. I haven’t got anything in writing here.
The Chairman. Is there anything in writing?
Sir. Gutterson. I would be very glad to make a statement in writing to the committee.
The Chairman. Can you get a statement in writing from each of the members of your organization which would give to this committee the information as to the number of employees in all those units that make under $16 a week and that work over 40 hours a week, or worked over 8 hours in any one day last year?
Mr. Gutterson. I would be very glad to undertake it.
The Chairman. How long would it take to get it?
Mr. Gutterson. I think probably I could collect the information within a week.
The Chairman. We will appreciate it if you will send it to us.
Mr. Gutterson. You want the number of employees that are being paid under $16 as a minimum?
The Chairman. I want the number of employees which were paid under $16 minimum in 1936.
Mr. Gutterson. Yes.
The Chairman. And that got less than 40 cents in a single hour, and the number of employees that actually worked over 40 hours in 1 week, or 8 hours in 1 day.
Mr. Gutterson. I would be very glad to get that for you. I am quite sure I could.
Senator Pepper. I have been very much interested in seeing the heads of a number of institutes come before this committee to testify. Now, I am wondering what the general purpose of the institute itself is.
Mr. Gutterson. The purpose of the institutes?
Senator Pepper. Yes.
Mr. Gutterson. These trade associations, Senator, vary a good deal in the type of work that they do. Some of them just supply statistical information. Some of them develop trade; they are established for trade development. Of course, a person like myself. I am in contact with situations in Washington. Some of the activities include public relations of various types, and various types of information service which it is believed will be helpful to the manufacturers in their management and in their problems among themselves.
Senator Pepper. Now, what attention has been given by the institute to the advancement of conditions in industry and to the labor
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policies of the institute ? What are the labor policies of the institute?
Mr. Gutterson. The institute, in my instance, has had very little to do with the labor policies of the individual management in the industry.
Senator Pepper. You will perhaps indulge me if I am a little surprised. I notice that here is a great institute, and here you are the head of that institute, it has been carrying on a lot of research work, accumulating a lot of statistical data, and all that sort of thing, and in the matter of your labor policy and minimum wages it is not even a matter of enough concern for you to know that.
Mr. Gutterson. We have considered it not within the province of an institute like ours to deal with individual problems of manufacturers with respect to labor. I will say, Senator, since the N. R A. days—and I think it is a good thing—since the N. R. A. days we have collected some general information about work hours, and things of that sort. I think the trade associations are doing it more and more.
Senator Pepper. When did you suppose that wages would increase in your industry and hours of work per week would be reduced?
Mr. Gutterson. I do not think the hours of work in our industry need to be reduced. The manufacturers, as I say, are living very closely to the 40-hour week. We find it profitable to do it.
Senator Pepper. What has been responsible for the wage increases which have occurred in the past, and the hour reductions which have occurred? Has it come from the initiative of the institute?
Mr. Gutterson. I think the hour reduction, the 40 hours came out of the depression, at the time of the N. R. A. Of course, the increase in wages has been due to the general improvement of economic conditions.
Senator Pepper. How long has the institute been in existence?
Mr. Gutterson. Ten years next month.
Senator Pepper. During the time of its existence what recommendations, if any, has the institute made with the view of increasing minimum wages and decreasing the maximum hours of work?
Mr. Gutterson. We have not found that problem coming very acutely from the social standpoint even to our institute, because our industry has paid probably the minimum wage that is the highest minimum paid in the textile industry and as compared to a good many other industries.
Senator Pepper. Your institute is characteristic of a great many others. There has not been any instance of an initiative in the improvement of wages and improvement of working hours that comes from the institute itself, but such improvement has occurred in those industries from the pressure of the workmen themselves, and the social pressure that is put on them through legislative bodies.
Mr, Gutterson. I do not think that is a general statement that ought to be made, Senator. There are many informal discussions among our manufacturers about labor conditions.
Senator Pepper. Why have you not been agitating yourselves about the question of whether you can pay more or not? You do not mean to sit here as an American citizen and say an American family can live in a decent house, send their children to school, wear
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decent clothes and have comfort in their home, have a decent amount of medical care, have a decent amount of education, and the like, on $14 a week, do you? You don’t mean to tell the people of the United States that, do you? Yet, in spite of that fact, you have not even concerned yourselves about that, have you?
Mr. Gutterson. The question of wages cannot be completely controlled always from a social standpoint.
Senator Pepper. If somebody else did not do something like that you never would concern yourself about it, would you?
Mr. Gutterson. I think you are drawing some wrong reflection here that is a little bit unfair to myself.
Senator Pepper. No; I do not intend. I am talking about a social question. You are a very nice gentleman, of course. I do not mean that. I have seen a parade of one institute after another coming before this committee. Why do you not do some research of that sort? Don’t you think it would help the industry?
Mr. Gutterson. It would help the industry that needed it.
Senator Pepper. Did you ever hear the Scripture reference that where one’s interest is there is his heart also?
Mr. Gutterson. Yes. I happen to be the son of a minister myself so I know the Scriptures pretty well.
Senator Pepper. Thank you.
The Chairman. I have some figures here that were given on wages in your industry. From March to September for instance, 1933, carpets and rugs, 50.4 percent had earnings of less than 40 cents an hour; 3.8 percent had earnings before the codes of less than 25 cents an hour, and I find that the average hours in your industry, according to February 1937 were 40.1.
Mr. Gutterson. I said 40 to 41.
The Chairman. On the average hours of 40.1. That means that some worked more and some less.
Mr. Gutterson. There may be a few that worked more.
The Chairman. Have you testified against any of the other bills in reference to labor?
Mr. Gutterson. The Ellenbogen bill; yes, sir.
The Chairman. Any others?
Mr. Gutterson. No.
The Chairman. Did you testify on the Wagner bill?
Mr. Gutterson. No, sir.
The Chairman. Did you testify on any other legislation in the last 2 or 3 years?
Mr. Gutterson. I have been down on some tariff matters.
The Chairman. Tariff matters?
Mr. Gutterson. Yes, sir.
The Chairman. The institute does push tariff matters?
Mr. Gutterson. I do not know what you mean by “push”.
The Chairman. They are active in connection with tariff legislation?
Mr. Gutterson. We are when it is necessary and for our protection.
The Chairman. Have they ever appeared here against any tariff that you know of?
Mr. Gutterson. I do not know. I have only been with the institute 6 years.
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The Chairman. How many times have you appeared in hearings?
Mr. Gutterson. I expect to appear in a hearing soon. I hare not actually appealed myself yet.
The Chairman. You appear here by action of the members of the industry themselves?
Mr. Gutterson. Yes, sir.
The Chairman. You did not appear against the Wagner bill?
Mr. Gutterson. No, sir.
The Chairman. Did your institute have a representative here against it?
Mr. Gutterson. No, sir.
The Chairman. Did they support it?
Mr. Gutterson. They did not come down and advocate it: no. sir. They did not appear in Washington in respect to the bill.
The Chairman. Did not appear. All right, thank you very much. Now. we have two witnesses for the afternoon, Mr. Edgerton and Mr. Murchison, both of whom I understand are long, more than the usual time, and I think when we get back it would be wise to really divide the time of the afternoon between those two witnesses.
If it is satisfactory to the committee, I would like to get back before 2 o'clock.
Representative Wood. Let us come back at 1:30.
The Chairman. All right. We will recess until 1:30.
(Whereupon, at the hour of 12:50 p. m., the committee recessed until 1:30 p. m. of the same day.)
(The hearing was resumed at 1:40 p. m., pursuant to taking of recess.)
The Chairman. Is Mr. Edgerton here?
Mr. Edgerton. Yes, sir.
The Chairman. We will be glad to have a statement from you in line with your request to make same regarding this bill.
Mr. Edgerton. Mr. Chairman and gentlemen of the committee, although I am president of a textile corporation which employs enough labor to be directly affected by the act under consideration. I appear before you primarily as president of the Southern States Industrial Council for the purpose of presenting the views of the constituency of that organization, which embraces approximately 10,000 industrial units in 15 southern States. While it is easily possible for anyone favoring this bill to point out its merits or offer suggestions for its improvement in a very short time, it is wholly impossible for any opponent who has read the proposal carefully to enumerate and make clear all of his valid objections within any period of time that you have been kind enough to grant or possibly could grant for this purpose. On this account, and in appreciation of your courtesy in granting me the privilege of appearing as a witness, I shall endeavor to confine my remarks to only a few provisions and implications which are of the greatest concern
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to the southern States in particular, requiring the consumption of not more than a half hour of your valuable time.
Industry in every part of the Nation is today in the throes of wrestling with the problem of adjustment to new and far-reaching problems only recently imposed upon it by other acts of a character similar to this one. At the very hour when the wages throughout the country are the highest, hours per week the shortest, and prospects the brightest that they have been since 1929, we are witnessing the strange effects of more fear and uncertainty in industry today than it has perhaps ever known before. With both volume of production and commodity prices too, at the highest peak since the same year, 1929, we confess our failure to understand how it is possible to improve the condition of the underpaid or the overworked by a statute whose inevitable effect will be to increase greatly the cost of production. thus an inescapable advance in prices. Against the dark background of these facts, the necessity tor any such legislation at this time and in these circumstances is not clear. Our first point, therefore, is that since there appears to be no appreciable demand in our present national situation for precipitate action of the sort contemplated in this bill, it would be better to take more time to work out in more rational ways the problem of minimum wages and maximum hours, in the meantime giving nature itself and the American spirit more opportunity to make their contributions to our social progress.
Southern industry will welcome any scheme of control of minimum wages, maximum hours, and the abolition of child labor that would be fair in its application to all industries, to all sections, and to all elements of our working population, and that would not have in it those dangers of concentrated power and arbitrary authority that do not belong to a democratic government.
What southern industry is mortally afraid of is the result of domination of all industry in the United States by a board with headquarters in Washington—be it a five-man board or any kind of a board. Inevitably, the majority of such a board would represent majority interests in other sections with which the South must compete. Such was the experience under the N. R. A., and more recently under the Walsh-Healey Act. The latter specifically provides that the Secretary of Labor shall determine [reading]—
prevailing minimum wages for persons employed on similar work, or in the particular or similar industries or groups of industries currently operating in the locality.
But, under this act the administrative board which has set minimum wages for only one industry—the men’s work-clothing industry—set a rate that was practically the same as the union rate tn the New York City area, despite the fact that there is a decided concentration of this industry in the South, thus disregarding the specific provisions of the law.
The bill as a whole presents itself to us as a reincarnation of N. R. A. in more virulent form. As far as southern industry as a whole is concerned, the N. R. A. which was unanimously invalidated by the Supreme Court, demonstrated itself to be a devastating experiment. Waiving any discussion of the doubtful constitutionality of this bill, we believe that its practical effects would be altogether worse than those of its legislative ancestor. The fact of the
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tremendously wide variation in the physical or mental abilities of .people to earn and of their efficiencies or inefficiencies in performing the tasks for which they are to be compensated does not appear to have been taken into anything like serious consideration.
Since we have been accustomed to thinking of compensation for labor in the light of not only its physical and moral needs but in the light of its demonstrated capacity to produce and thereby justify on a competitive basis the compensation which it gets, it is difficult to think wholly in terms of what workers may want or actually need for their sustenance. We do not think, therefore, that this act in anything like its present form would be at all practical in its operation or helpful to even that segment of society which it is primarily intended to benefit. But, assuming that it would be immediately and permanently beneficial to a considerable number of wage earners, we can see no good or logical grounds for withholding such benefits from even larger numbers of wage earners. Why should such favors be held from workers on the farms, in the kitchen, and in other places where fewer people are employed? Whose purchasing power at this time is more important to industry and the Nation than that of the farmers and those engaged in agricultural pursuits? In our new, the purchasing power of the farming population of this country is far more fundamental to the Nation’s welfare and progress than is the purchasing power of any other group of consumers. Would not the natural and inevitable effect of this act be to either raise violently the wages of farm labor and thereby throw out of economic balance the entire scheme of agricultural adjustment or to accelerate the abandonment of farms by farm labor to the great embarrassment of the Nation’s industrial centers? Would there not be in these circumstances, a multiplication of the already daily calls upon industry to get busy and absorb the unemployed? Would not the philanthropic agencies, both public and private, have more embarrassing problems in trying to take care of the increased number of the inefficient, the untrained and the otherwise incapacitated to earn a fixed minimum wage?
Our second point is that because an act of this sort which leaves out of consideration both the obligation to earn and the wide diversity in earning power, cannot be made fair and beneficial to all the people in all sections and of all races; therefore, it is not justified as an instrument of progress.
But, Mr. Chairman and gentlemen, whatever the other particular objections to this bill may be, or whatever improvements may be suggested or made in any of its details, the most repugnant of all its features is the manner of its administration. It is at that point where most of the dangers lie. There is to be another board, which is to have virtually the power of life or death over practically every industry in the Nation. That means, in the first instance, another stupendous subtraction from the rights and powers of both the States and the individuals thereof, and a transference of all the power and rights thus subtracted to the Central Government in Washington. The forcible taking away of the rights of States and individuals, however constitutional it may be declared to be. is still odious, we believe, to most of the natives of this country. Upon that most vital and most, dangerous point, we stake our chief objections to this bill.
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To administer the act with a sufferable degree of fairness, to all of the elements involved, this all-powerful board would require undoubtedly, another tremendously big and growing army of assistants, comprising secretaries, attorneys, examiners, regional directors, special consultants, experts, and others. This means in the first instance, an additional and an increasingly large burden upon the taxpayers of the Nation who have to pay the cost of all experiments, as well as the ordinary expenses of government. In addition to that, it means that every industry that is able to do so will have to add to its own private staff of lawyers and experts to represent it and otherwise assist in protecting it and helping it solve its multiplying problems. Those industries that are not able to employ lawyers and experts on questions growing out of governmental control, and to assume the expense of frequent visits to the seat of the National Government, would all probably have to shut their doors.
America is still operating under the competitive system. There is competition not only between different industries, but between sections and between communities within the same section. The administrative board created by this act is to be composed of five members, two of whom are to constitute a quorum. It is most likely and probably inescapable that this board will be controlled by the most highly developed industrial section in our country. Those areas in the Nation, therefore, which are still in their industrial adolescence and are still dreaming of the development of their resources, cannot contemplate without extreme anxiety the commitment or their industrial future into the hands of competing interests. We of the South know that we have never yet profited from the sacrifices of any of the rights of States and individuals to Federal discretion.
The council has received innumerable letters from southern manufacturers who are convinced that one of the reasons that industry in many of the highly industrialized centers is not opposed to this bill is because it will provide a means by law to do away with the competition from the immature rural South. In the natural course of progress, changing and shifting of industry has occurred throughout the years, and the pioneering spirit has raised the United States to the greatest industrial country in the world. Always those who lose out are anxious to retard by every means possible the natural progress and development in that part of the country which offers greater advantages than the old, wornout sections.
It is interesting to note that during the past several years when there has been much accusation from other sections that the textile industry was moving South to take advantage of long hours and low wages that that industry continues to move South despite the fact that during the past several years textile wages have increased more rapidly than in the North and at present the average hours per week: are lower than in the North. In 1933, the average wage rate in the textile industry in the South 25.3 cents. In February of this year the average was 37.4 cents, or an increase of 47.8 percent. During that same interval the average wage rate in the North increased only 34.9 percent with the average rate being 35.8 cents in 1933 and 48.3 cents in 1937. The active cotton spindles in the
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South were 66.8 percent of the total for the United States in 1933 and for the year 1936 this proportion had increased to 72.3 percent.
What is true of the continued growth of the textile industry despite ever-increasing wages and shorter hours in the South, is also true of other industries. The latest census figures reveal the fact that for the year 1935 the South produced 14.6 percent of all the manufactured products in the United States as compared with only 12.4 percent in 1929. It is also interesting to note that manufacturing did not decrease as much in the South from 1929 to 1933 as it did in other sections. Since the low of the depression in 1933 the South has increased its total value of manufactured products practically as much as any other- section, and despite more rapidly increasing wage rates, employment in the South has increased more rapidly month by month than in the United States as a whole.
We find that In 1933 the average wage rate for all industries in the South was 31.6 cents, as compared with 43.3 cents in April of this year, or an increase in wages of 36 percent. This increase is almost twice as much as has occurred in other sections, where the increase has been only 20.4 percent. Thus the differential in wages between the North and the South is vastly lower than it was 3 years ago. At that time southern wages were about one-third lower than those in other sections but now this difference has been reduced to 24.3 percent.
It should be pointed out that much of this difference is not due so much to a difference in the rates paid for identical occupation but rather in the difference between types of industries predominating in each section. It is well known that in the South a larger percentage of workers are employed in industries that require proportionately fewer skilled workers than is true in most industries in other sections. Such industries as the automobile industry, manufacturers of machinery, precision tools, watches, medical equipment, airplanes, and many similar industries which require highly skilled workers are not prevalent in the South. Instead, the bulk of southern manufactured products copies from the manufacture of lumber, iron and steel, fertilizer, chemicals, tobacco, stone and clay products, textiles, and similar industries primarily engaged in preparing the abundant raw materials of this section, oftentimes for use in the manufacturing of finer products in other sections.
It may be argued that there are also raw materials in other sections and that this is not peculiar to the South. In this connection it is a fact that labor costs per unit are often greater in the South than in other sections despite lower per-hour rates. Illustrations are the coal mining and the lumber industries. In coal mining the size of the veins of the coal has much to do with the labor cost per ton. In the South the veins are usually much narrower thus requiring more manual labor and adding to the cost of labor per ton.
In a recent survey made by Bernard H. Topkis, of the Bureau of Labor Statistics, we find that it cost more to produce and distribute 1,000 board feet of lumber in the South than it does in any other section of the country. Quoting from this survey, a report of which appears in the May 1937 Monthly Labor Review, we find that:
More man-hours were required to produce and distribute 1,000 board feet of lumber in the southern hardwood region than in any other region studied. The production of timbers in the southern hardwood region required over 33 percent more man-hours than the average for all regions. The number of
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man-hours required to produce and distribute 1,000 board feet of yard lumber in this section exceeded the average for all regions by 28 percent and those required for planing-mill lumber exceeded the average by 28 percent. The higher labor requirements were due primarily to the specific gravity and density of the wood produced in this region. Lumber in the southern hardwood region, moreover, is produced in smaller size stock and in smaller producing units, requiring more labor per unit of output and are much less highly mechanized than the modern mills on the west coast.
Felling and bucking in all regions averaged 1.5 man-hours per thousand board feet. This ranged from 1.1 man-hours in the western pine and Douglas fir, western hemlock, and cedar regions to 2.7 man-hours in the southern hardwood region was accounted for by the smaller size of the trees, the nature of the wood, and the average skill of the workers.
Because of the inherent characteristics of the wood and because of local labor conditions, manufacturing required a greater number of man-hours in the southern hardwood region than elsewhere.
Labor costs per unit are greater in many industries in the South due as well to differences in mechanization. This is very understandable when we realize that 85 percent of all southern manufacturing plants employ 50 or fewer workers and, as a rule, they are owned by one individual or partnership. Such relatively small plants do not have the capital to replace obsolete machinery with new and modern equipment. In fact, it is quite often the case that southern manufacturers constitute an eager market for machinery that has been discarded by northern and eastern plants.
If uniform wage rates, whether minimum or otherwise, are applied to all manufacturing, it is easy to see how impossible it would be for many southern products to compete in the markets of this country. Is it the purpose, then, to follow a dogmatic policy of uniformity even at the cost of jobs and plants, simply because theoretically the plan should work? Are workers better off without jobs, and is it sound economics to sacrifice the hope of development or a section because arbitrary and rigid law is believed by some to be necessary?
Until such a time as uniformity can be established in all circumstances affecting production and distribution in all parts of the United States, a fixed wage rate can do nothing but discriminate against certain sections in favor of those sections that have been arbitrarily set up as a standard for all. The South, with inherent characteristics much different from other sections, is on the threshold of an era of real industrial development. But if a bill such as the one under consideration becomes a law, the South can look forward to the folding-up and bankruptcy of innumerable small manufacturing enterprises which employ the majority of southern workers. The rigidity of a uniform minimum wage standard will make it impossible for southern manufacturers to compete and to ship their products long distances to the consuming centers of the country, especially in view of the fact that the average haul on freight from the South to the North is more than twice the average haul within the North; and, in addition to this, freight rates are higher mile per mile.
According to a report entitled “Income and Economic Progress”, by the Brookings Institution, profits of manufacturers over a period of years are small. Therefore, wages increased suddenly over the prevailing wage in a community cannot be absorbed by the manufacturer, and since, generally speaking, small southern manufacturers are operating on scanty capital, many inevitably would be forced into bankruptcy.
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Presumably it is one of the main purposes of this bill to increase the real wages of workers. During the N. R. A. the theory was that increased wage costs would not decrease profits for profits were expected to increase because of expanded volume of business. This theory may have been true at a time when the volume of production was only half of what it now is, but with the volume of production as high as it was in 1929, and in some industries even higher, it cannot be assumed that such increases can be taken care of by added volume. There is a point at which increased volume cannot be expected to absorb increased w ages and where price increases must result. When that point has been reached, the only road left open to the manufacturer is to increase the price of his product. When he does this the real wages of workers are reduced.
In this connection it might be pointed out that because of the decrease in real wages despite an increase in nominal wages, workers in highly industrialized and thickly populated centers are grossly discriminated against when a uniform minimum wage rate is applied. It was the experience under N. R. A. that the minimum often becomes the maximum and in actual practice there is no doubt that the establishment of a uniform minimum wage tends to level the rates of skilled workers in the higher brackets. It is generally conceded that living costs are lower m rural communities whereas those in urban centers pay more for practically everything that they buy. Manufacturers in such areas get a better price for their products than do those who must ship similar products long distances in order to reach the population centers and still compete with metropolitan manufacturers.
Manufacturers in highly industrialized areas should pay their employees a higher wage because conditions under which the workers live are entirely different from those of workers in rural sections, such as the South. If the employer is not required to pay a higher wage the employee is simply contributing toward a greater profit for the employer, and because of relatively lower real wages is forced to accept a lower standard of living. It is a fact proven beyond doubt by the Bureau of Labor Statistics in its studies, that the cost of living for approximately the same standard varies as much as 65 percent between rural communities and metropolitan centers. Only recently Secretary Wallace illustrated magnificently the contention that living costs are lower in the South when he announced a new policy of cutting homestead investments down to $1,200 in the South and $2,100 in the North. If this factor is ignored a great injustice is done to all workers who live in the higher cost of living sections.
The eventual result of such a policy of uniformity inevitably would be the migration of skilled workers to those sections where they can secure a better standard of living for less money. To hold them it would be necessary to increase their wage rates even above the standard or uniform rate. Thus, within not so many years the workings of economic law would create again approximately the same picture as we now have, provided industry in the rural sections could survive. The council is convinced that economic planning that runs counter to economic law cannot prove helpful to anyone and while the experiment is being proven impractical untold and irreparable harm can result.
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Now if the object of this bill is to prevent the migration of industry from one area to another, especially from the North to the South, there is scarcely a doubt that the object would be attained by the enactment of this law. But the stopping of such migration would not be due to the removal by the act of any advantages that the South and other relatively undeveloped areas have but rather to the distinctive disadvantages that would accrue from the act. It should be stressed at this juncture that the South as a section has never been interested in taking industry from any other section and there has been very much less of this than is generally supposed in connection with legislation of this sort. Our section is, however, very much interested in its industrial development with its own money, as well as that which it may attract from other sources by reason of its superior opportunities for profitable investment. I reject as something not true, the statements often made that the South wants any advantage or any sort to which it is not entitled by its natural endowments.
In conclusion, gentlemen, we know that unless in such a bill as this there is written into the body of the act itself a definite, clear, and unmistakable provision that any minimum wage or maximum hour fixation shall be on the basis of the prevailing minimum wages and maximum hours, not only in the industry affected but in the localities involved, southern industry cannot compete and thereby preserve its present industrial opportunities or multiply them through orderly development. We know, beyond any question, that there are some small, powerful, selfish groups and persons who have the idea that there is no basis in fact for wage-and-hour differentials, and that they are constantly endeavoring to fasten upon the industrially immature sections of this country legislation that disregards natural conditions and natural laws. They ignore in this position every adverse fact of human experience and they are still undertaking to standardize human deficiencies and inefficiencies by mechanical and rigid fixation of things that nature will not allow to be fixed in a competitive and orderly society.
Also, to avoid untold confusion, farm labor and workers in other enterprises such as retail establishments and small service establishments of various types should be included unless it is the purpose to legislate for one class of workers without consideration for other less well-organized groups that need the help more than do those who are already amply cared for under the provisions of existing law such as the Wagner law and the Walsh-Healey Government Contracts Act.
Filed herewith is a copy of my arguments against the Ellenbogen textile bill, fully presenting the reasons why differences in wage rates are a natural result of economic laws, and therefore cannot be legislated out of existence.
There are just two or three facts in that connection to which I wish to call particular attention. These tabulations in this brief on the Ellenbogen bill show how this fact of the difference in the living conditions and other diversities in various parts of the country have been recognized by various agencies of the Government.
Take in the W. P. A. projects. Mr. Hopkins stated to the Committee on. Appropriations in the House of Representatives:
This order established schedules of monthly earnings for four different regions of the country with earnings varying within each region according
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to the degree of urbanization of each county and according to the degree of skill required for various kinds of work. The several States were grouped under four regions on the basis of general wage levels and cost of living. The degree of urbanization of each county was to be determined by the 1930 (?) population of the largest municipality within the county. * * * these variations were due not only to the different levels of wage rates specified in the established schedule for these regions, but also to the varying importance of the other components of the wage-rate differentials. Outstanding among the latter is the variation in wage rates provided for workers assigned to work requiring different degrees of skill and experience.
There is a variation in the W. P. A. wage rates from $24.35 to $54.55, between the first and the fourth regions. The fourth region and the third region comprise the Southern States. In one of those parts of the third region it is $26.63. In the fourth region it is $24.35; whereas in the first region is it $54.55, and the second is $38.80. That was for unskilled labor.
Then, in the matter of the distribution of relief funds, we find that in studying the reports of the Labor Department, that in one State relief funds were distributed presumably on the basis of living cost at the rate of $6 per week, whereas in another State the relief funds were distributed on the basis of $30 per family per week.
We have never felt ourselves that there was anything like that wide diversification of 500 percent difference in cost of living, nevertheless that principle was recognized in that distribution of the W. P. A. projects, and by Mr. Wallace when he prescribed a $1,200 house for the man who lives in the South, and a $2,100 house for a man who lives in colder sections of the country.
There are other very interesting tables there; farm wage rates varying from $1 in the East farm Central States, $1 per day without board, $1 per day on a farm there, to the Pacific coast with $2.70 per day without board. And New England, where it is $2.50 per day without board, more than twice as much in each instance.
Those farm wage rates indicate again a tremendous difference of some sort, or the difference would not be reflected economically in such figures as those.
That, Mr. Chairman, concludes my statement.
Brief of Argument by Southern States Industrial Council Against National Textile (or Ellenbogenj Bill Before Subcommittee of House Labor Committee May 19, 1937, Washington, D. C., Relating Particularly to Geographic Differentials
Mr. Chairman and gentlemen of the committee: In this presentation of objections to the national textile bill under consideration by this committee, I appear as president of the Southern States Industrial Council, which embraces in its constituency approximately 12,000 industrial units of all sizes and branches of industry in 15 Southern States. Of. this number, whose views I am undertaking to reflect, approximately 1,000 of them are manufacturers of textiles. In this southern territory covered by this organization there are, according to the Government census of 1935, 20,378 establishments classified as manufacturing. The vast majority of these plants are widely scattered, representing in large measure the typical small manufacturing plant of the country. In fact, 85 percent of these southern plants employ 50 or fewer workers each, and as a rule, they are owned by one individual or partnership. Thus we see that the backbone of southern industry is the small manufacturer, and upon his well-being and relative prosperity depend the well-being and relative prosperity of the vast majority of southern industrial workers. None of the 33 major industrial areas outlined by the Bureau of the Census is located in the South, and only 26 percent
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of the total value of manufactured products in the South is produced in the 20 southern cities with populations of 100,000 or over.
The recital of these facts is intended only to emphasize the industrial immaturity of the South and to indicate the empire of possibility for the future of American industry in that territory. The development of this empire of natural resources would be in a large part the answer to the increasingly serious problem of the unemployed in our Nation. The only cloud that can now be detected in the firmament of these promising possibilities is the threat of political handicaps in the form of legislation that will either unduly restrict the God-given opportunities of this section or deprive it of its natural advantages. It does not covet or expect the conferment by government of any advantage over its neighbors. It wishes only an equality of opportunity to develop itself in normal ways and on a sound basis.
It should not be surprising, therefore, that not only the textile industry but the overwhelming proportion of all other industries in this section for which I am undertaking to speak, should be strongly opposed to the enactment of such a law as that which has become generally known as the Ellenbogen bill. For, quite obviously, this proposal by the distinguished gentleman from Pennsylvania reaches in its implications and portentous suggestions far beyond the boundaries of the textile industry and of the geographic area in which that industry is predominant. It does not appear to have been shown, and we do not believe it can be shown that there is now either any compelling necessity or an appreciable demand in all America for such legislation as this, and we respectfully submit that it is neither correct in its premises nor logical in its conclusions. It is our profound conviction, after the most careful study and consideration, that such a law would not accomplish one single purpose set forth in the caption of the bill. On the contrary, we sincerely believe that the results of a measure of this sort would be almost exactly contrary to those which appear to be sought and anticipated In the bill.
Referring now in numerical order to the “Findings of fact” upon which the bill Is based, we agree that the production, sale, transportation, and distribution of textile products throughout the United States and foreign countries “are affected with the national public interest.” But, the same thing may be as truly said of a dozen or more other industries, and the proof is impressively lacking that such a bill can be more justified for the textile industry than for a multitude of others which also affect the national public interest.
In no. 2 of the findings we fail to see anything to which reasonable objection can be made. Finding no. 3 points out that “conditions in the textile industry have been and are being greatly affected, and its operation restricted, by the extensive use of unfair, wasteful, and destructive trade practices and by chaotic labor conditions.” That there have been some unfair, wasteful, and destructive trade practices, no one can deny. There probably always will be some. Furthermore, such practices may easily be found in varying degrees in other industries and even within the realm of government itself, which has presumed to set standards for its citizens. But their existence anywhere cannot be justified in a progressive society. We. believe, however, that a more rational correction of these faults can be found than the one proposed in this bill. We are in favor of getting rid of “rats” wherever they are found, but we would not be in favor of burning down the barn as the proper method of extermination of such pests. As to the “chaotic labor conditions, we know of no such situation in the whole Nation except such conditions as have been superimposed in some places by forces outside circumference of those employed in the industries themselves.
In this connection, may we observe that for the most part of such chaotic labor conditions are to be found in those industries and places where labor is enjoying its highest wages, and where the conditions are the best. Statistics will be submitted in connection with this presentation which will show that at this very hour not only the textile industry but many others are operating at the highest point of employment and production since 1929. and that since 1934 there has been no major strike in the textile industry and relatively few elsewhere. We believe, therefore, that legislation which would effectually control and regulate the practices of exploiting forces outside the textile industry, which forces almost invariably produce the chaotic labor conditions complained of. would be both more proper and more helpful to the ends sought in this bill.
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We now come to findings nos. 4, 5, 6, and 7, which we will undertake to treat as a group. When it is stated in the first of these that “production greatly in excess of consumptive demand has resulted in cutthroat competition, the lowering of prices, and the consequent lowering of wages”, one wonders just what period In our history is specifically referred to. Certainly, it cannot be the present period when mills are operating at capacity on orders, when prices have been steadily going up and have reached a point that is already exciting public complaint, and when employment has been increasing and wages advancing for many months. Then, it is pointed out that these conditions during an undesignated period “were resisted by organized labor and resulted in strikes, lockouts, and other labor troubles.” However justifiable may have been the resistance, it should be considered in this connection that organized labor constitutes only a very small minority of all the labor in this Nation, and that the strikes, lockouts, and other labor troubles referred to occurred in only a relatively few places.
The next statements in finding no. 4 regarding the necessity to meet competition by the employment of cheap labor and the moving of industries from one section to another “where lower standards of living and lower wage scale prevailed and where labor was unorganized” appear to show the major purpose of this bill. Of course, industries in this country have been expanding for many years into other less occupied sections, and there has been some shifting from one locality to another and from one section to another. But no impartial and competent investigation of the causes behind these expansions and shifting will disclose as having been their chief cause, in the securing of “cheap labor" so as to meet competition. Sometimes it has occurred for climatic reasons, sometimes to get nearer raw material markets, sometimes to take advantage of governmental concessions, and sometimes to get away from the high cost of production in congested areas where labor is unmercifully exploited at the expense of industry by outside forces. At any rate, Mr. Chairman, it would seem to be unbecoming in the Federal Government, through enactment of law. to single out any class or section for special privilege or special penalty. We are not denying at all that “unreasonably low wages” are paid in some places in all sections and in all States and industries, but we are denying quite emphatically that there is a sufficiency of such instances in this country to justify a law to correct such a condition at the expense of and to the detriment of the vast majority of employers in textile and other industries who are paying the highest wages they reasonably can, and who are on the best of terms with those who are drawing these wages. And there appears to be no better place at which to repudiate the suggestion that wage rates determine standards of living, and that there is no difference between nominal and real wages. It is by the ignoring of this difference between wage rates and the purchasing value of wages that certain elements have endeavored to justify a contention that differentials in wage rates should be abolished.
That, of course, would amount to a disastrously futile attempt to repeal natural law, by the operations of which through the years, many economic factors have been regulated. Through the operation of this law, not only an- wage rates lower in some places than others, but interest rates, rent rates, production rates, and others, are relatively lower. It seems to us unreasonable to suppose that any one of these rates can be legislatively treated without reference to the others, or that there can lie in our very large and tremendously diversified American society fixed uniform rates of wages, or of anything else. But there is nothing, Mr. Chairman, which I wish to repudiate more emphatically for the section of the country from which I come, than the constantly recurring suggestion that the South is a land of lower standards, as a section, than any other part of the country, or that its people are peculiarly attached to low living standards. There was never a more unjust or a more false charge with which to try to justify a legislative or governmental procedure. That wage rates in that area are, on the whole, and for sound reasons that ought to be obvious to everybody, lower than in some other older and more highly industrial sections, is a fact that no one has ever tried to deny. It is also a fact that neither the Southern States Industrial Council nor any other organization of employers in the South with which we are acquainted, has ever “fought for low wages” as is often charged, nor apologized for wages lower anywhere than they ought to be.
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But, what we have insisted on, by the very necessity of natural circumstances, Is that there must be provided in any law which undertakes to regulate the conditions of labor, differentials in wage rates sufficient to equalize competitive opportunity. For the most part, the industrial employers of the South are as desirous of paying high wages as employers anywhere else, or as those who expect to profit from such higher wages without earning them. These employers of the South Insist only that whatever the wage standards may be throughout the country, there must be relative differentials in rates to harmonize with all of the other factors that enter Into the costs of production. No one has to go any farther back than the ill-fated N. R. A. to know that neither the South nor the Middle West, nor any other Industrially undeveloped section or locality in this country can or should pay as high wage rates as were paid in those areas that are more highly developed, where labor is more plentiful and more efficient because of longer experience and more training, and where other conditions of life are more conducive to high production efficiency. From these observations it should be manifest that there Is nothing in this bill to which the industry of the South objects so strongly as to the provision for uniform minimum wage rates throughout the country.
In this connection, I wish to point out the following very significant fact; that in the early part of 1934 a thorough survey made by our council disclosed that the average differential in wage rates between the South and the northern part of our country was 33.6 percent. A survey made within recent weeks discloses that the average differential now between the two sections is 21.9 percent. This it will be seen that In this period of four years the differential has declined approximately 12 percent, and it should be noted particularly that since the demise of N. R. A. and the codes, the wages in the southern industry have increased more proportionately than in any other part of the country. For the most part, the minimum wages prescribed by most of the codes have been generally adhered to, and in some cases have been increased. This has occurred through natural processes, and it is a rational hope and expectation that the wage level in that section will mount higher by the same natural processes, as industry develops and prospers. There are infinitely more good employers in all sections, Mr. Chairman, who want to pay their labor as much as possible, and who are heartily against unfair trade practices, than there are bad employers who have relatively little conscience about wages, hours, or trade practices.
Now, Mr. Chairman and gentlemen of the committee, aside from all these considerations, may I point out that for other additional reasons, there is no real necessity for such a law as the one under consideration. The Walsh- Healey Public Contracts Act was designed to establish governmental control of wages, hours, and other conditions in those plants operating on Government contracts. The Government is the largest customer that American industry has, and there are not many industrial units in the Nation now which do not, in the course of the year, do some business with the Government. The volume of that business is constantly increasing, and more plants will be participating in it. That means, therefore, that an increasingly large part of American Industry is already regulated as to hours, wages, and working conditions. And this is a good place to say, too, that the Walsh-Healey bill first failed of passage because it undertook also, contrary to natural law, to establish uniform wage rates throughout the country. The bill became law only after there was Included a provision that minimum wage rates should be determined by the Secretary of Labor after full investigation of conditions in the various localities and on the basis of the prevailing minimum wage rates in those localities. The fact that the Secretary of Labor, in one instance, disregarded this provision of the law, was no fault of the law Itself.
Then, we have the Wagner Labor Relations Act already in effect. Under that act the right of all labor to organize and its right to bargain collectively through its own representatives, are written into the law. It seems to us, therefore, that It may be reasonably assumed that with these rights, labor is now in a position to regulate to a satisfying extent its own wages, hours, and working conditions. Would it not be, therefore, an injustice to labor itself, through the passage of such a law as this, to question either its right or intelligence to look out for its own interests? We have the faith that the labor in our section has the intelligence, and now has the lawful right to take care of its own interests in the matter of wages, hours, and working conditions,
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without further fixations by the Government or the presuming aid of volunteers from other areas.
Mr. Chairman and gentlemen of the committee, the facts tendered In the following pages of this presentation, and which in our view establish beyond any question the sound basis for differentials in wage rates, were compiled and supplied to me by our research bureau. Much of the language which follows is that of the director of this bureau.
Referring again to section 5 of the findings in which low wages are related to strikes, labor difficulties, sales costs, and prices, as cause and effect. It is surprising indeed to find that the number of textile workers involved in strikes decreased considerably in the years 1935 and 1936. In 1934, the year in which the Nation-wide textile strike occurred, 481,000 workers were Involved. In 1935 only 200,000 workers were on strike, and in 1936 this number had been reduced to 124,000; table I. During this period in which strikes and other labor difficulties in the textile industry have shown a steady decline, the wage rate per hour and per week had increased appreciably, and this is especially true of the South. We find that the average hourly rate in cotton textiles in the South in 1933 was 25.3 cents. It is extremely interesting to note in this connection that the wage rate did not increase as greatly in the North as it did in the South, for the average wage in the North was 35.8 cents in 1933. and 48.3 cents in February of this year, representing an increase of only 34.9 percent as compared with an increase of 47.8 in the South.
Section 5 indicates that differentials in the industry have been the cause of the lowering of prices, overproduction, and sales below cost, presumably to have occurred in the past few years. As is quite generally known, there has always been a difference between wages in the North and South, and between rural and highly industrialized centers anywhere in the country. But isn’t it significant that the textile industry has continued to grow in the South despite the fact that the differential has been appreciably decreased? In 1933, wages in the cotton-textile industry in the South were 29.3 percent less than in the North, but in February of this year that differential has been reduced to 22.6 percent. Incidentally, these are actual average figures and do not take into consideration the difference in the quality of the products manufactured. If this factor could be measured accurately, the difference probably would be even less. In 1933, the South had 66.8 percent of the active spindles in the United States. In 1935, it had increased to 68.2 percent, and in 1936, it was 72.3 percent. These increases occurred during a period when wages were increasing more rapidly in the South than in any other sections and the differential was being constantly reduced, tables II and III.
While we are on the subject of changes in wage rates, we might also point out that since February 1935, which was before the invalidation of the N. R. A., and which represented a period in which N. R. A. was in full swing, wages in the textile industry in. the South have not decreased as was the dire prediction from many quarters. Instead, the average wage per hour for the whole textile industry in the South has increased by 3 percent, and in the cotton textile alone, the increase has been 4.2 percent, table IV. The pay envelope of the average textile worker has increased nearly 12 percent since February 1935, and the average hours per week are still below 40, table V.
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![Table III - value of cotton manufacturers, 1900-35 [in thousands]](D:/USAHistory/0773_Table_III.jpg)
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![Table III - value of cotton manufacturers, 1900-35 [in thousands]](D:/USAHistory/0774_Table_IV.jpg)
![Table III - value of cotton manufacturers, 1900-35 [in thousands]](D:/USAHistory/0774_Table_V.jpg)
Section 5 also indicates that a lowering of prices has resulted in sales below cost. Certainly this is a phenomenon, when, according to the figures of the Federal Trade Commission, the rate of return on the average textile investment in the first 6 months of 1936, which are the latest figures available, the whole industry showed greater profits than have been forthcoming for several years; table VI. Certainly, this does not indicate sales below cost, and neither do the wholesale prices on textile products show an appreciable decline. In February 1937 the index numbers for wholesale prices published by the Bureau of Labor Statistics, stood at 77.5, compared with 71 in February 1936. and 70.1 in 1935. Fluctuation in the wholesale prices of textile products also compares very favorably with the fluctuations in wholesale prices of all commodities, so that what happened in the textile industry was not unusual, but was in line with the trend for all commodities; table VII.
CHARACTERISTICS PECULIAR TO SOUTHERN INDUSTRY
Because of the type of Industry that predominates in the South the average wage probably always will be less than In other sections. This would be true even though exactly the same wage rate were paid to workers of similar occupations and skills. The reason for this is that in the South a larger percentage of workers are employed in industries that require proportionately fewer skilled workers than is true in most Industries in other sections. For example, such industries as the automobile industry, manufacturers of machinery, precision tools, watches, medical equipment, airplanes, and many
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similar industries which require a large proportion of highly skilled workers are not prevalent In the South. Instead, the bulk of southern manufactured products comes from the manufacture of lumber, iron and steel, fertilizer, chemicals, tobacco, stone and clay products, textiles, and similar Industries primarily preparing the abundant raw materials of this section for use in the manufacture of finer products in other sections.
Relatively, the same thing holds true in the textile industry. The North produces a higher class of merchandise for which more skilled operators are necessary. This is well illustrated by census figures which indicate that the value of textile products per wage earner is $3,596 for the North and other sections, and only $2,649 for the South. Also, we find that in the value added by the manufacture, excluding wages, the increase in value is only
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13.5 percent for the South as compared with 19.7 percent lor the rest of the country; table VIII.
It is important that these characteristics of Southern industry be carefully considered. For it is all too easy to say that a worker in the South doing the same type of work as one in the North should receive the same rate of pay, and such a statement sounds very logical, and has much appeal to those who look simply on the surface and do not analyze the causes contributing to that apparent difference. A worker sewing seams is listed as a "seamer’ in both the North and South, just as one who uses the typewriter is listed as a typist in both North and South; but, if one sews seams on a high-class garment requiring greater skill, more complicated machinery, and other more exactly qualifications, he should in all justice receive more than a seamer on a relatively cheaper product, in which no great amount of skill or attention to detail is required.
OTHER FACTOBS CONTRIBUTING TO DIFFERENCES IN WAGES
If variation in skill were to be disregarded entirely, there are still an abundance of other factors which affect the money wage of workers in one section as compared with those in other sections. Such factors affect not only southern workers, but those in the Middle West, West, and North, as well, and depend upon the extent to which the section may be classed as rural, urban, or metropolitan. Workers in metropolitan areas and the congested industrial centers of the East are grossly discriminated against when one minimum wage is set for the country as a whole. The value of their dollar is not nearly as great as that of the worker in the more rural communities, for they pay more for nearly everything they buy. And manufacturers in such areas get a better price for their products than do those who must ship similar products long distances in order to reach the population centers and still compete with metropolitan manufacturers.
Thus, employees in highly industrialized metropolitan areas are simply contributing toward a greater profit for their employers, and are forced to accept a lower standard of living as a consequence.
It is indeed difficult for competing members of an industry, or for labor groups seeking ever to increase the earnings of workers, to discuss dispassionately and without prejudice the matter of wage differentials. Manufacturers in one section, though many times selfishly and out of all proportion to its importance to them, seek to do everything within their power to deprive other sections of their right to a natural economic advantage, though still guarding zealously their own economic advantages: and, labor groups, without regard for the ultimate effect of their insistence upon uniform wage rates throughout the country, which might well mean the complete drying up of Industry in some sections, insist upon a dogmatic policy of uniformity.
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Therefore, in discussing wage differentials, it is perhaps best to point to the recognition that there are sound reasons for a difference in wage rates by such agencies as could have no self interest in whatever the rates may be. It is interesting to note that in developing a wage-rate policy for the W. P, A. a thorough study was made pertaining to wage rates in the various sections of the country and the reasons for such differences were developed. Quoting from a statement given by Mr. Harry L. Hopkins, Administrator, Works Progress Administration, to the Subcommittee of the Committee on Appropriations, House of Representatives, page 107:
“This order established schedules of monthly earnings for four different regions of the country with earnings varying within each region according to the degree of urbanization of each county and according to the degree of skill required for various kinds of work. The several States were grouped under four regions on the basis of general wage levels and cost of living. The degree of urbanization of each county was to be determined by the 1930 population of the largest municipality within the county."
Quoting again from page 108 of the same source:
“These variations were due not only to the different levels of wage rates specified in the established schedule for these regions, but also to the varying importance of the other components of the wage-rate differentials. Outstanding among the latter is the variation in wage rate provided for workers assigned to work requiring different degrees of skill and experience.”
The following table shows the average monthly wage rates of the workers on W. P. A. projects:
The cumulated average hourly earnings in W. P. A. through November 1936 averaged 26.1 cents for the South, which is designated as regions III and IV, as compared with 46.0 cents for the rest of the country.
Certainly it is not the policy of the Federal Government to show partiality to any section, or to depress the standard of living in one section for the benefit of others. Presumably a decent standard of living, and a uniform standard of living throughout the country is accorded under the W. P. A. To provide such a uniform standard it is extremely interesting to note that in the State of Minnesota, which has approximately the same population as the State of Tennessee, and the degree of urbanization is much the same, the W. P. A. through June 1936 spent $29,652,625, as compared with $12,345,029 in Tennessee. The cumulative average wage rate through November 1936 was 48.2 cents in Minnesota, as compared with 23.4 cents in Tennessee.
From yet another source there is evidence that there do exist differences in wage rates and that the prevailing wage rates are not the same throughout the country. The Bureau of Agricultural Economics’ quarterly report on farm wage rates for April 1, 1937, reports the following geographic differences in farm wage rates:
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Because of the decentralization of the textile Industry in the smaller rural communities, the cost-of-living factor enters into the matter of wage differentials, much more than any other single economic factor. But due to the fact that the cost-of-living figures compiled by either the Bureau of Labor Statistics or the National Industrial Conference Board are confined to the large metropolitan centers, it is extremely difficult to secure statistics that reflect true conditions as regards the cost of living in rural communities. The South is predominantly rural with attendant lower living costs. Yet, it is possible to take individual figures on cost of living for large southern cities and. presumably show that it costs more to live in the South than in similar metropolitan areas in the North. However, the Bureau of Labor Statistics for the past few years has been revising its cost-of-living figures and, in a special study of small towns in New Hampshire, it was found that the cost of living increased almost directly in proportion to the population of the community.
The average annual expenditures for all of these cities amounted to $1,261, as compared with the following expenditures for a number of eastern metropolitan centers:
Boston---------------------------------------------------------------------------------------- $1.553
Springfield----------------------------------------------------------------------------------- 1,518
New York City------------------------------------------------------------------------------1,794
The average for these three eastern metropolitan centers is $1,621, as compared with the average of $1,261 for the small eastern communities. In the South, New Orleans, Birmingham, and Richmond were studied, and the average expenditure in those three cities was $1,434, with the amount for each city being as follows:
New Orleans----------------------------------------------------------------------------- $1,299
Birmingham-------------------------------------------------------------------------------- 1,461
Richmond------------------------------------------------------------------------------------1,542
Assuming that there is the same percentage of difference between rural and metropolitan communities in the South as there is In the North, the average expenditure for a small southern city would be $1,173, as compared with $1,261 for a small eastern community. It will be noted that a difference of 7 percent exists in the average expenditure of workers in a small southern community, assuming the same standard of living. These figures are for the period between December 1933 and November 1934.
The report from which these figures are taken indicates that “families studied In three large cities of southeastern United States (Richmond, Va.; Birmingham, Ala.; and New Orleans, La.) show a distribution of family expenditures in many ways very similar to those for the 11 New Hampshire communities.” In comparison with this is a statement appearing in the Monthly Labor Review for January 1937, in an article on cost of living In New York, which states “the distribution of expenditures by the families of employed wage earners and clerical workers In New York City reflects the high cost of food, housing, and parking space for automobiles and the traffic problems of our largest metropolitan area.”
Despite the fact that average family incomes were greater in New York City, the average family spent or made commitments for $96 a year more than it received, while in both Richmond and New Orleans, the average Income exceeded expenditures, and in Birmingham, there was on the average only a small deficit.
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Through the reports of the W. P. A., we note that the Government, too, recognizes differences in cost of living in various sections of the country, for in November 1936 the average monthly amount of relief per family in five Southern States was $7.89 as compared with $22.49 for 20 Northern States. In Georgia the average was $7.45 as compared with $41,33 for New York.
PROXIMITY TO RAW MATERIALS
Much is said about the advantage to southern manufacturers of proximity to raw materials. In some industries, this may be an advantage, and one to which any manufacturer is justly entitled without offsetting it by favoring manufacturers not as fortunately located; but, unfortunately any southern manufacturer dependent upon cotton no longer has this advantage over northern competitors. Quoting from a publication of the American Cotton Manufacturers Association, we find that—
‘The textile industry begun its southern development when the center of cotton production was in the Southeastern States. However, the cotton-producing area has been shifting constantly westward. In 1933 the amount of cotton produced in the States west of the Mississippi River and in the State of Mississippi, adjacent to the water transportation available for movement to mills in foreign countries and along the Atlantic seaboard, was 8,550,510 bales. This was more than twice the production of 3,926,284 bales in the combined States of Alabama, Georgia, Tennessee, North Carolina, South Carolina, and Virginia.
“The westward shift of the cotton-producing area and the development of motortruck transportation from the producing fields to the ports and reduced rates of the steamer lines operating from the Gulf ports to the eastern mill territory along the Atlantic seaboard, and to the competitive foreign mills, have combined to destroy any opportunity, which the southern textile mills may have formerly had, to be on a competitive basis by reason of proximity to the source of raw material.
“The southern cotton mills do not have the benefit of low water rates from the southwestern cotton-producing area to the same extent as do their northern competitors because the southern mills are generally located from 200 to 300 miles inland from the ports while practically all of the northern mills are within a short distance of the ports and many important competitors of southern mills are located at the port cities such as Fall River, New Bedford, Providence, Boston, etc.”
Compressed cotton from Waco or Dallas moves to a Birmingham mill at 58 cents per 100 pounds, and cotton piece goods move from Birmingham to New York at 79½ cents per 100 pounds, which is a total transportation cost of $1.37½. The same cotton moves from Waco to New Bedford, Mass., at 46 cents, and piece goods from New Bedford to New York at 24 cents, or a total of 70 cents as compared with $1.37½ from Birmingham.
The rate on cotton from Dallas to Boston via Galveston, Tex., is 53 cents, which is composed of the rate by rail from Dallas to Galveston, and the water rate from Galveston to Boston. The all-rail rate from Dallas to Columbia, S. C., is 71 cents, with a rail-and-water rate of 68 cents to the same point. There are many other similar situations; as, for instance, the all-rail rate from Dallas to Atlanta, Ga., is 63 cents as compared to 53 cents from Dallas to Boston via Galveston. Whatever of advantage there is left to the southern manufacturer in his nearness to the supply of raw materials is also offset to a great extent by the water rate from many eastern points via the Great Lakes to such large consuming centers as Chicago, Detroit, and Cleveland.
We now beg you, gentlemen of the committee, to accept our assurance of appreciation of the privilege of appearing before you, and of our hope that what we have tried to say in the best of good spirit will be considered by you in your deliberations.
Very truly yours,
John E. Edgerton, President.
Representative Wood. Mr. Edgerton, how many mill owners are in the Southern States Industrial Council which you represent? How many members are there in your association?
Mr. Edgerton. We have about 10,000.
Representative Wood. And how many workers do they employ?
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Mr. Edgerton. I cannot tell you that.
Representative Wood. Can you tell me, approximately?
Mr. Edgerton. I doubt it.
Representative Wood. You are president of the association, are you not?
Mr. Edgerton. Oh, yes; but there are a lot of things I don't know.
Representative Wood. Well, you certainly know approximately the number of employees.
Mr. Edgerton. If I did, I would tell you. I just don’t know. We may have it in the office somewhere, but it is just one of those details that I don’t know.
Representative Wood. What is the largest mill that you represent?
Representative Thomas. Perhaps some of them are not paying members.
Representative Wood. Well, how many paying members have you?
Mr. Edgerton. I think about 4,000.
Representative Wood. How many workers do they employ?
Mr. Edgerton. I don’t know.
Representative Wood. What is the largest mill owner in your association? Do you know that?
Mr. Edgerton. No, sir; but I have no doubt I could find out. 1 have never tried to ascertain that.
Representative Wood. Do you know about the approximate number of workers employed by the largest mill owner?
Mr. Edgerton. No, sir.
Representative Wood. Somewhere within 500 or more?
Mr. Edgerton. No, sir; I do not. I think of them in a mass. I have, never picked them to pieces.
Representative Wood. Do you recall any mill in the South that employs 2,000 people?
Mr. Edgerton. Oh, yes.
Representative Wood. Can you call to mind any that employ 3,000 people?
Mr. Edgerton. I think so.
Representative Wood. That belong to your association?
Mr. Edgerton. I think so; Mr. Comer, I think, has testified before this committee here. He is in the South, and he has employed. I think, in all of the mills of that corporation, he employs more than two or three thousand. My estimate is it might be 10,000. I don’t know.
Representative Wood. I understood him to say 10,000. Were you ever connected with a national manufacturers’ association?
Mr. Edgerton. Oh, yes; with many other associations and organizations.
Representative Wood. Did you ever hold office in the National Manufacturers’ Association?
Mr. Edgerton. Yes, sir.
Representative Wood. What office was it?
Mr. Edgerton. I was president of that, and president also----
Representative Wood (interposing). When were you president?
Mr. Edgerton. I was president from 1920 to 1931.
Representative Wood. Are you a mill owner?
Mr. Edgerton. No; I am a mill operator, but not an owner.
Representative Wood. How many mills do you operate?
Mr. Edgerton. One.
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Representative Wood. How many employees are employed in that mill?
Mr. Edgerton. Approximately 200.
Representative Wood. Two hundred?
Mr. Edgerton. Yes, sir.
Representative Wood. What is the minimum wage there?
Mr. Edgerton. $13 per week. That was our code minimum that we have adhered to. We have not receded from it.
Representative Wood. What is the workweek? The hourly workweek?
Mr. Edgerton. Forty hours.
Representative Wood. Is that the maximum or the average week?
Mr. Edgerton. We operate on a 40-hour basis. Of course, there is overtime. We have on Saturdays groups of our workers who have to work overtime, the more skilled elements, of which there is a small number, grinding cards and doing other jobs that cannot be done through the week, and it gives us an overtime, but we operate on a 40-hour-week basis, and have been doing that since before the code, by the way.
Representative Wood. Can you tell the committee how many of your employees work over 40 hours?
Mr. Edgerton. No; I cannot.
Representative Wood. Have you anyone in your employ that works for less than $13 a week?
Mr. Edgerton. Not in our regular employ; no, sir; except learners, of course.
Representative Wood. What do you mean by your regular employ?
Mr. Edgerton. I mean that they are employed there continuously. They come in for jobs that have got to be done—maybe we have to have a car of coal unloaded or a car loaded, or something of that sort; not regular employees that come in. They get, as a rule, 25 cents an hour, and they work on an hourly basis, but we do not pay even that kind of labor less than 25 cents per hour.
Representative Wood. How many employees did you employ in 1932 in that mill?
Mr. Edgerton. I don’t know exactly.
Representative Wood. Did you employ 200?
Mr. Edgerton. It was fewer. We put on two shifts since 1932.
Representative Wood. Two extra shifts?
Mr. Edgerton. Yes. We were operating in 1932 on a one-shift basis. When our code went into effect, to balance our mill, we put on this second shift, and then later in an attempt to get our costs down, we put on a third shift, so we operate three shifts of 8 hours each.
Representative Wood. How many were employed in that one shift before the N. R. A.?
Mr. Edgerton. I think not more than a hundred.
Representative Wood. That is about the number of employees you had then?
Mr. Edgerton. Yes, sir.
Representative Wood. In 1932 or 1933?
Mr. Edgerton. Yes, sir.
Representative Wood. And there is now 200?
Mr. Edgerton. Not 200. It may run a little over that, or a little under.
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Representative Wood. And you run three 8-hour shifts, do you?
Mr. Edgerton. Yes, sir.
Representative Wood. What was the wage you paid, the minimum wage, in 1932?
Mr. Edgerton. Well? we had two classes of employees, I should say. We had a group m our mill of old women, grandmothers most of them, who could not do much work. We had a certain job. For instance, we reserved for those old women, usually the mothers and the grandmothers of employees, who wanted to make some contribution to the family pot, we had a certain job that was easy that they could do, but they could not do very much and they got very low wages.
Representative Wood. These old women you talk about? I suppose they just came down there to keep themselves occupied, did they?
Mr. Edgerton. No; I tried to explain to you just before why they came to work. There were jobs-reserved for them. They were easy and comfortable jobs that they could do and make some contribution to the family expense.
Representative Wood. What minimum wages did you pay those old women?
Mr. Edgerton. $6 a week.
Representative Wood. How many hours did they work a week?
Mr. Edgerton. 40 hours a week.
Representative Wood. 40 hours a week?
Mr. Edgerton. Yes, sir.
Representative Wood. Any of those old women work longer than 40 hours?
Mr. Edgerton. I don’t recall that any of them ever did.
Representative Wood. What was the minimum wage of your plant in 1932 aside from these old women that you employed in a philanthropic basis?
Mr. Edgerton. There was not any such stuff as that. We had no established minimum wage. Our wages vary from that point up. Usually according to the efficiency. It is largely a piece-work basis.
Representative Wood. You were manager of the plant, were you not?
Mr. Edgerton. I was president of it.
Representative Wood. Have you any idea what you paid these employees that were not philanthropically employed, or, I mean the younger employees? Have you any idea what minimum was paid in the plant then?
Mr. Edgerton. I said from $6 up. It was mostly piece work and it was according to what they earned, and they earned from $6 up to I think our weavers, some of them went as high as $20 per week, according to what they produced.
Representative Wood. What was your workweek in 1932?
Mr. Edgerton. Forty hours, and we operated under that basis.
Representative Wood. Was that an average of 40 hours, or did you work over 40 hours
Mr. Edgerton. Our workweek averaged 40 hours. There were times when one department would have to run—if you know anything about textile mills—there are very few of them that are thoroughly balanced.
Representative Wood. Were you employing your workers at full time in 1932?
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Mr. Edgerton. Full time?
Representative Wood. Or did you have any slack time or lay-off in 1932?
Mr. Edgerton. Yes.
Representative Wood. Did you have steady employment in 1932?
Mr. Edgerton. I don’t think so; I don’t think so. 1 think we were shut down. We very frequently are in the first months of the year, certain seasons.
Representative Wood. I don’t mean the seasons. As compared with now, did you work what is termed a full-time year in 1932?
Mr. Edgerton. An average full-time year for us; yes.
Representative Wood. You had no shut-down due to the depression or slackened business or anything like that?
Mr. Edgerton. We had a shut-down. It was caused by lack of business. We never shut down for any other reason.
Representative Wood. But you had more shut-downs in 1932 than you had last year?
Mr. Edgerton. I don’t know.
Representative Wood. Did you have any shut-downs last year as the result of the lack of business?
Mr. Edgerton. Oh, yes; we certainly did.
Representative Wood. How many did you have as compared with 1932?
Mr. Edgerton. How many what?
Representative Wood. Shut-downs.
Mr. Edgerton. We did not have but one shut-down, and that was for a large part of the year. We did not need but one.
Representative Wood. That was in 1936?
Mr. Edgerton. Yes, sir.
Representative Wood. The continuity of employment in 1936 was a great deal better than it was in 1932, wasn’t it?
Mr. Edgerton. Not for us. I want to emphasize there, however, that our experience was rather unique in that respect. In 1930, 1931, 1932, 1933, 1934, and 1935, that 6 years as reflected in our profits, or what we were able to make, were the most prosperous years in a block of years in our entire history. That was not true of the industry in general. I know that. 1936 was the most disastrous year for us. When our competitors and others were making money last year, we were not. I don’t know just why that is, ana especially since before that we were making it when they were not.
Representative Wood. Do you attribute that to management, or what would you attribute that to? Although you had more employees?
Mr. Edgerton. I don’t know. I am just stating a fact that I cannot account for. I would not attempt to try to account for it.
Representative Wood. You said, “The devastating result of the N. R. A.” Do you think it was the N. R. A. that caused your plant to double its capacity and the number of employees, or what do you attribute that vast increase in business to in your plant? You had a hundred people in your employment in 1932 and you have 200 employed now. You are producing more per man with three shifts than you had with one, aren’t you?
Mr. Edgerton. Yes; of course.
Representative Wood. So you are producing more than a hundred percent more than you did in 1932?
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Mr. Edgerton. Yes.
Representative Wood. And per man?
Mr. Edgerton. No. We have no such tremendous increase in individual productivity.
Representative Wood. Not per man?
Mr. Edgerton. No.
Representative Wood. Well, but you are producing more than you did in 1932?
Mr. Edgerton. In volume; yes.
Representative Wood. What do you attribute that gain, to?
Mr. Edgerton. I attribute it to our increased operations.
Representative Wood. What caused the increased operations? You say you have increased operations, therefore you had to sell more goods, didn’t you?
Mr. Edgerton. Oh, yes.
Representative Wood. What caused the market to be better?
Mr. Edgerton. The main reason was that we are operating on a larger basis and because of the pressures for decreasing costs which have been constantly growing greater all the time, because the elements that enter into the costs, taxes, and things of that sort, hare been going up, and it has been absolutely necessary for manufacturers to devise every reasonable means they could to get their costs down, cut their costs. And where machinery was utilized only a part of the time, one of the most common ways of doing that is to make that machinery serve a longer time. We would have done that, very naturally. And we were anxious, too, although we are not supposed to have philanthropic motives, but at the same time in our community, which is a rural community, there were many people out of employment, and we have always tried to contribute to the solution of that problem as far as we could, and we were perfectly willing to experiment by taking on more and making it pay, and it has paid part of the time, and part of the time it has not paid.
Representative Wood. Have you installed any new machinery since 1932?
Mr. Edgerton. Not on any large scale. We have put in new machines here, there and yonder, machines that were worn out.
Representative Wood. What kind of machines did you get to replace the old machines? The same kind, or was it a more highly developed machine?
Mr. Edgerton. No; we tried to replace it with the most highly developed machine on the market.
Representative Wood. A machine that will produce more than the one that wore out?
Mr. Edgerton. Yes.
Representative Wood. How many of those machines did you install since 1932? What percentage of your factory?
Mr. Edgerton. I am afraid I cannot tell you that. The only replacements of any importance have been made in our weave rooms, where we have put in new looms, a modern type of loom, but I cannot tell you how many.
Representative Wood. Well, you have put in a more modern type of loom, you have increased the productive capacity of your employees per man-hour, you have reduced your workweek and you have increased wages, and you have 100 percent more employees than
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you had in 1932, and they produce more per man-hour than they did in 1932 by the application of these new machines, and now, how do you harmonize that with your statement that the N. R. A. was devastating?
Mr. Edgerton. I don’t know. I have not tried to anticipate such a thing, except----
Representative Wood (interposing). In what was the N. R. A. devastating to your business?
Mr. Edgebton. I stated in the very beginning that I was speaking as the president of the Southern States Industrial Council, and I was thinking about the association as a whole and not my business.
Representative Wood. It did not affect you that way?
Mr. Edgerton. Yes; it affected us adversely for a while, and that is why we made some of these changes, trying to overcome the adverse effects. When our code, or the code of my particular industry, went into effect, it shut us down right quick.
Representative Wood. Do you employ any of these old women now that you did in 1932 at $6 a week?
Mr. Edgerton. No, sir.
Representative Wood. You employ none of these in this $13 minimum?
Mr. Edgerton. No. We have about 4 younger people now doing the work of 12, or about 12.
Representative Wood. Have you any employees now in your plant that you are paying a substandard wage?
Mr. Edgerton. You will have to define “substandard wage.” I don’t know what you mean by that.
Representative Wood. Well, due to a physical defect, that they are not able to produce as much as the average.
Mr. Edgerton. No.
Representative Wood. You have none of those?
Mr. Edgerton. I don’t think so.
Representative Wood. Why haven’t you those people employed now?
Mr. Edgerton. Well, they just cannot justify the compensation that we would pay under our standards.
Representative Wood. What is the minimum wage paid by the association that you represent; do you know?
Mr. Edgerton. No ; I do not.
Representative Wood. Do you know the maximum workweek?
Mr. Edgerton. No. It varies in the different States.
Representative Wood. Do you know the average?
Mr. Edgerton. No; I do not.
Representative Wood. Do you know the average maximum wage or the minimum, either, paid by any of those people that you represent?
Mr. Edgerton. No. I can give you the average wage. It is right in here in these tables. And in the textile industry, the average wage in 1935 in the South was $13.05.
Representative Wood. Is that the people you represent?
Mr. Edgerton. Yes; that is the textile products.
Representative Wood. Do you represent all of those people?
Mr. Edgerton. Not specifically; no.
Representative Wood. I am talking about the people you represent You don’t know about the minimum wage they pay at all?
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Mr. Edgerton. I don’t know. Most of our figures, of course, are gotten from those that constitute our organization.
Representative Wood. And you don’t know the maximum hours they work?
Mr. Edgerton. No; that varies. The States all have laws, and. they vary from one State to another. There are State laws governing it.
Representative Wood. Would you say that they work an average of a 40-hour week?
Mr. Edgerton. I would say it would be right around a 40-hour week throughout the South. That would be my estimate of my own, my own guess.
Representative Wood. Your objection is not that the bill is based on minimum wages or maximum hours?
Mr. Edgerton. Not the idea that it is based on that. The minimum wages, as I understand, are not set in this bill.
Representative Wood. Say, 40 cents an hour. The bill provides for a 40-cent minimum. Would you object to that?
Mr. Edgerton. Yes, sir.
Representative Wood. And you objected to the 40-hour week?
Mr. Edgerton. No; I don’t know as I object to that specifically.
Representative Wood. Thank you.
The Chairman. Mr. Smith?
Representative Smith. As I understood you to say, the South has never made any bid for northern business other than by the way of its natural normal resources?
Mr. Edgerton. The South as a section, that is right.
Representative Smith. That is right, is it?
Mr. Edgerton. Yes.
Representative Smith. You are not mindful of the fact that the South, meaning the boards of trade and chambers of commerce and many others, have advertised the South and made the inducement to get northern manufacturers because of longer workweeks, lower wages, and less child labor restriction?
Mr. Edgerton. I have heard of one chamber of commerce that did that a few years ago and, of course, I have heard it repeated a million times since then, that one chamber of commerce erred, I think, very seriously, did make a statement of that sort.
Representative Smith. You never have heard of but one?
Mr. Edgerton. I have never heard of but one making that particular bid of cheap and docile labor, or anything of that sort.
Representative Smith. It is true that manufacturing has migrated from the North to the South quite materially, has it not?
Mr. Edgerton. Well, I don’t know whether it is a migration or an expansion. I think that many of those who have come down there, have gone out West to the Pacific coast. They expanded their business into other regions of the country. It does not mean that they have bodily taken their plant from New England or somewhere else, and transported it to the South or to the Pacific coast. There may be some instances of that, but I think they are relatively few. And then, of course, we are constantly advertising the advantages that we have down there in the way of climate, longer working hours, and the rural areas where they can put their plants, and where their employees can have their gardens and where living costs are less,
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and so forth. We advertise, of course, to attract investment, not to persuade some fellow that is doing well somewhere else to come into our territory, but to attract investment.
Representative Smith. Would it not be natural for a manufacturing establishment to enlarge its business within its own regions, if they could do so advantageously ? What would tempt them to go miles away if there was not some advantage in so doing?
Mr. Edgerton. Well, because they have not got the money to do it; yes, sir.
Representative Smith. How do they get extra money by going into the South?
Mr. Edgerton. What is that?
Representative Smith. How do they obtain extra money, additional finances, by going to the South ? Perhaps you misunderstood my question.
Mr. Edgerton. I think I did.
Representative Smith. We will assume that our factories in the North have been going to the South, and you offer as the reason, because they wanted to expand. Would it not be natural and normal for them to expand within their own territory if there were not unusual advantages to entice them elsewhere?
Mr. Edgerton. Well, they might have disadvantages in their own territory. A man may be driven by disadvantages as much as attracted by advantages.
Representative Smith. But you have referred to a serious disadvantage in the South by reason of the freight rates.
Mr. Edgerton. That is one.
Representative Smith. Do you have any figures to substantiate that, or have you ever had any?
Mr. Edgerton. Oh, yes.
Representative Smith. Have you some at present?
Mr. Edgerton. I have got them right here in my table.
Representative Smith. Have you presented them in your statement?
Mr. Edgerton. Yes, sir.
Representative Smith. I was not here, so I did not hear that.
Mr. Edgerton. It is in my attached statement there on the Ellenbogen bill. I do not repeat those figures; I just attached that to my statement.
Representative Smith. Do you object to a minimum wage of $16 per week?
Mr. Edgerton. You mean a universal $16 minimum?
Representative Smith. Yes.
Mr. Edgerton. Oh, certainly.
Representative Smith. Can you conceive how a man with a family and three or four children can be comfortable and have a little savings and educate this boys and girls for less than $16 a week?
Mr. Edgerton. Well, I have never studied, except in my church connections, those social problems. It depends altogether on how many members of the family there are and how many are afflicted and where he lives, and a thousand things as to what lie can do with $16. There are a thousand things.
Representative Smith. You spoke of helping the old ladies.
Mr. Edgerton. Yes.
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Representative Smith. Have yon ever given any thought to a man and wife with only two children-----
Mr. Edgebton (interposing). Oh, yes; considerable thought.
Representative Smith (continuing). That do not work full time? They do not work full time as a rule, do they? There are shut-downs and lay-offs, and they do not average, as I understand it, more than 42 weeks a year. That would give a family with $16 about $620 a year to live on. Would you feel that that was adequate?
Mr. Edgerton. It would depend altogether on—how many members of the family?
Representative Smith. Two. Less than the average.
Mr. Edgerton. What is the physical condition? One of them may be sickly and may require a doctor a lot.
Representative Smith. Have you given any thought to that when you object to $16 a week?
Mr. Edgerton. I have given thought to all of that.
Representative Smith. And you still do not approve of it?
Mr. Edgerton. I would not approve of it for my plant, and I would not assume that those that I am attempting to represent----
Representative Smith (interposing). Should all of the other employees suffer because of your plants
Mr. Edgerton. What is that?
Representative Smith. Should all other employees in other plants suffer because of the conditions in your plant?
Mr. Edgerton. Certainly not. There is no implication of that sort.
Representative Wood. Would you think that $16 a week would be enough for a man and a wife and two children, if they were all healthy?
Mr. Edgerton. I have never analyzed that. It has never been my business in any connection except a church connection or a philanthropic connection to make those investigations of what families need.
Representative Wood. What is your opinion about it? Do you think $16 a week is enough for a wage earner with a wife and two children, all of them healthy? Do you think that is sufficient to rear that family in the ordinary comforts of life and educate the children?
Mr. Edgerton. I would have to know all of the conditions on each individual case.
Representative Wood. What is your opinion about that?
Mr. Edgerton. Well, I say, before even I could form an intelligent opinion, I would have to know the circumstances as to whether $16 will provide him with what he calls a living standard. He may be a fellow that cannot think of a living standard unless he has four glasses of beer a day or some wine, and another fellow does not have to have that.
Representative Wood. We will just leave out all of the luxuries, the beer and the wine and champagne.
Mr. Edgerton. Some people regard those as necessities.
Representative Wood. Well, some of these $16-a-week workers might drink champagne on that fabulous wage. I am just talking about a man and a wife and two healthy children, a healthy wife, healthy himself, and satisfied with a minimum of comfort. Do you think $16 a week is sufficient for him to rear that family in the
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ordinary comforts of life ? That does not mean beer and wine and champagne, but the ordinary comforts of life, and give those children proper clothing and food and give them an education.
Mr. Edgerton. Well, it depends altogether on where he lives and what he has to pay for his rent.
Representative Wood. The most advantageous territory—do you think $16 a week is enough in the most advantageous territory?
Mr. Edgerton. Sixteen dollars a week is enough, now, for what?
Representative Wood. To rear that family in the ordinary comforts of life and educate the children. Do you really believe that $16 a week is sufficient?
Mr. Edgerton. I am not going to answer such a question as that.
Representative Wood. You have not any idea?
Mr. Edgerton. Because it is wholly contrary—I don’t think it is relevant to this proposition at all.
Representative Wood. That is all.
Representative Schneider. Mr. Edgerton, I think you will agree that the paper and pulp industry is one of the expanding industries in the South, is it not?
Mr. Edgerton. How is that?
Representative Schneider. I think you will agree that the paper and pulp industry is one of the expanding industries in the South.
Mr. 1 Edgerton. Yes, sir.
Representative Schneider. Is any part of that industry a part of your association that you represent?
Mr. Edgerton. I don’t know. I think so.
Representative Schneider. You ought to know.
Mr. Edgerton. The newest part of it is. I don’t know that they think we are in existence perhaps, some of them.
Representative Schneider. How many of these paper and pulp businesses are members of your association?
Mr. Edgerton. I don’t know.
Representative Schneider. You don’t mean to tell this committee that any of them belong to your association, do you?
Mr. Edgerton. In paper mills?
Representative Schneider. Paper or pulp mills.
Mr. Edgerton. Certainly I do.
Representative Schneider. Which one?
Mr. Edgerton. One in Tuscaloosa, Ala., I don’t know the name of it. I just happen to recall that.
Representative Schneider. Do you remember any others?
Mr. Edgerton. No.
Representative Schneider. Do you know anything about the wages and conditions in that plant?
Mr. Edgerton. No.
Representative Schneider. Or of that industry?
Mr. Edgerton. No.
Representative Schneider. Do you favor the limitation of machine- hours of operation of an industry, machine-hours of operation within a 24-hour day or week?
Mr. Edgerton. Do I personally favor what?
Representative Schneider. The limitation of machine hours of operation.
Mr. Edgerton. Yes; I think the limitation, if properly applied, equitably applied. is all right.
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Representative Schneider. Just give us an idea, if you will, how it should be applied.
Mr. Edgerton. If it is applied with fairness—I have not tried to work out that problem at all; but as I say in my statement, that we would work and welcome any scheme of minimum wages and maximum hours.
Representative Schneider. I am not speaking about the hours of labor; I am speaking of the machine-hours of operation within the 24, of the use of machines.
Representative Ramspeck. As you had under the Textile Code, where you were limited to operations of 8 hours.
Mr. Edgerton. Oh, I see; you ask me if I favor that?
Representative Schneider. Yes.
Mr. Edgerton. I don’t know; I would have to think about it.
Representative Schneider. Do you think that two industries of equal capital investment and efficiency of operation, with one operating 8 hours in the 24, and the other operating 16, and even 24 in that day, can compete in a competitive market?
Mr. Edgerton. Not without something to equalize the advantages on the one side with the disadvantages on the other.
Representative Schneider. I am speaking of their being equal, so far as the plant is concerned.
Mr. Edgerton. There would be a good many factors enter into that. Efficiency of management and efficiency of the people employed, and many things, would enter into that.
Representative Schneider. You mentioned that your plant was operating three tours, or three shifts?
Mr. Edgerton. Yes, sir.
Representative Schneider. Just what would happen, in your estimation, at the present time, if all of the textile industry in America proceeded to operate 24 hours a day the same as you are operating?
Mr. Edgerton. I think they would absorb a whole lot of these unemployed. I don’t know what the exact effect would be. It would probably result ultimately in an overproduced market.
Representative Schneider. It certainly would prove to be an overproduced market at present. Now, since you operate 24 hours per day because of a lower overhead in order to obtain a lower overhead for yourself, what would you do if all of them operated 24 hours a day? You would lose that advantage that you now have, wouldn’t you?
Mr. Edgerton. Many of them are doing that. I don’t know whether I would or not. That is something I could not say.
Representative Schneider. You don’t know anything about it?
Mr. Edgerton. I don’t think much about it.
Representative Schneider. You made the statement that you put on the third shift in order to receive the advantages of a lower overhead expense.
Mr. Edgerton. Or to avoid the disadvantages of a higher expense. That is rather it.
Representative Schneider. Well, did you have disadvantages over your competitors operating on one shift, the same as you were?
Mr. Edgerton. No; not at that point.
Representative Schneider. But you did go on three shifts in order to get a greater economy?
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Mr. Edgerton. Yes.
Representative Schneider. As a result of it, you got some of the business of your competitors, didn’t you?
Mr. Edgerton. Well, I don’t know that I did. I got business, and I don’t know who it was from.
Representative Schneider. You got business enough to operate 24 hours a day?
Mr. Edgerton. For part time; yes, sir.
Representative Schneider. And the chances are that somebody else lost as a result of your gaining; and if all the industry operated under the 24-hour day at lower overhead expense, you would be relatively in the same position you were in before, wouldn’t you?
Mr. Edgerton. Well, I might.
The Chairman. Do you want to ask any questions, Mr. Welch?
Representative Welch. I think not at this time. The witness has stated, that he did not know of the thousand things that a man could do on a salary of $16 a week, and I do not think that I have any, questions to ask in view of that.
Mr. Edgerton. May I say this in that connection, sir? I have never thought of paying a man on the basis of what they need; that is, in a business. I therefore do not inquire particularly into what they need and what their idea of a standard or living is or what not. I pay them the best wage I can for the business that we have. Now, if that wage, whatever it is, whether it is $16 or $48—and I have no doubt that $48 per week would be insufficient to provide some families with even the ordinary things of life as they term ordinary things—we could not enter into a consideration of that sort. It is what a man can do, what he can produce, his efficiency, his physical condition, and so forth. When it comes to the consideration of what he will do personally or individually, I attend to those things in my church connections and in my philanthropic connections. That is an entirely different thing. That, of course, is something that some people don’t know anything about; but that has to do with the feeling side of the case, the emotional side of what men need. When I am employing a man, if I were considering that and trying to hire him on the basis or what he needs, I would not have anybody in my employment except a single man if I could possibly get one.
Representative Welch. Would a church contribution be included in the thousand things that you refer to that a man could do on $16 a week?
Mr. Edgerton. Would do? I did not get that.
Representative Welch. I asked you if a church contribution would be included in the thousand things that you refer to that a man could do on $16 a week.
Mr. Edgerton. Well, he might do that under certain circumstances. He could not be very generous on the basis of some standards on a wage of that sort. There is a considerable variation in the generosity of people in that thing.
Representative Welch. That, of course, would be only one-thousandth part of the many things that he could do on $16. In other words, he would have 999 other sources in which to distribute his $16.
Mr. Edgerton. Oh, no. I have not entered into those things.
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Representative Welch. But you stated, and the record will show, that you had not given consideration to the thousand things that a man could do on a salary of $16 per week.
Mr. Edgerton. It depends altogether on what the things were. I can think of his being able to do a thousand things on $16 a week.
Representative Welch. That is all.
Representative Thomas. Mr. Edgerton, you spoke of the differential between the North and the South. I am tremendously interested in that subject, but I believe you have some very positive ideas on it. In your own business, for instance, what was the differential between the North and the South, say, last year? Do you have any figures? I believe your statement started to give a figure awhile ago of $13.05, either in 1935 or 1936, for the South.
Mr. Edgerton. That was for the textile industry as a whole.
Representative Thomas. That was $13.05 for when?
Mr. Edgerton. Beginning in February of 1935.
Representative Thomas. $13.05 in 1935 for the South?
Mr. Edgerton. Yes.
Representative Thomas. What was it for the North, for the same period?
Mr. Edgerton. I would say, in general, that the differential that existed prior to 1933 has been narrowing all the time since 1933.
Representative Thomas. And do you have it for the same year of 1935?
Mr. Edgerton. In the South, in February of 1933----
Representative Thomas (interposing). Give it to me for 1935.
Mr. Edgerton. All the textile products in the South—the average weekly wage in February 1935 was $13.05.
Representative Thomas. That is for the South. Now, what was it in the North for 1935?
Mr. Edgerton. I haven’t it for the North for 1935. The comparison there is between 1933 and 1937.
Representative Thomas. Do you have it for 1937 in the North and the South?
Mr. Edgerton. Yes.
Representative Thomas. Give it to me.
Mr. Edgerton. In 1937 the average hourly wage rate in textiles was 37.4 percent in the South. In the North, 48.3.
Representative Thomas. That is for this year?
Mr. Edgerton. That was for 1937. That had risen from 1933, when it was 25.3 in the South and 35.8 in the North.
Representative Thomas. Approximately, then, there is a 10-percent differential; is that, roughly, correct?
Mr. Edgerton. In general, we have these figures in 1933----
Representative Thomas (interposing). Let us stay on these figures. There is approximately a 10-percent differential there?
Mr. Edgerton. Yes.
Representative Thomas. And I believe you back up your contention that there should be, according to your contention, a differential there, and that differential should be preserved in this bill if it is enacted?
Mr. Edgerton. Yes.
Representative Thomas. And to show that there is a differential, the Government, through its various agencies, namely, the P. W. A., and others, have recognized that differential, is that correct?
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Mr. Edgerton. Yes, sir.
Representative Thomas. Just what elements make up that differential? Let us see what those elements are. This is a matter that the committee is interested in.
Mr. Edgerton. I don’t know of any considerations that the Government—
Representative Thomas (interposing). No; I am talking about your ideas of the elements that go to make up this differential. Why should a differential exist? You say a 10-percent differential does exist. Why does it exist?
Mr. Edgerton. A geographic differential. I would say the basic reason for that-----
Representative Thomas (interposing). I am talking about pay. What has geography got to do with pay? That is one element.
Mr. Edgerton. You are talking about differentials.
Representative Thomas. Differentials in pay.
Mr. Edgerton. Between what?
Representative Thomas. Between the North and the South.
Mr. Edgerton. That is geography.
Representative Thomas. Let us get our hypothesis correct here now. You are telling me that in the year 1937—and I presume that is down to date—that the differential in pay between the North and the South is approximately 10 percent in your industry, in the cottontextile industry. All right. What elements go to make up that differential in the cost or in pay, however ? What are they?
Mr. Edegerton. The South is relatively undeveloped.
Representative Thomas. Why should that make for a differential in pay ? Why should they have a differential in pay? Explain that to me; what has that got to do with it?
Mr. Edgerton. That is what I was trying to get at.
Representative Thomas. All right; go ahead.
Mr. Edgerton. The labor, for the most part untrained, is less efficient.
Representative Thomas. Wait a minute. Then the first is untrained labor and less efficient?
Mr. Edgerton. Yes.
Representative Thomas. What do you mean by that? Do you mean to say that it cannot produce as much as the trained labor?
Mr. Edgerton. Well, that would be one of the effects of being trained.
Representative Thomas. You say that the southern labor is not as efficient as the northern labor?
Mr. Edgerton. I would not make that blanket statement. I would qualify it to this extent: I believe potentially it is the best labor in the world, but from the standpoint of its----
Representative Thomas (interposing). We will not get anywhere if you get off on tangents. You say there is a 10-percent differential in pay, and a part of that differential is arrived at by the difference in skill of the southern worker as against the northern worker; is that correct?
Mr. Edgerton. That is generally true.
Representative Thomas. How much difference is there between them? Get it down to figures.
Mr. Edgerton. I don’t know.
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Representative Thomas. Five percent?
Mr. Edgerton. I don’t know.
Representative Thomas. Two percent?
Mr. Edgerton. I would not attempt to say; I would not estimate that.
Representative Thomas. Do you really know, then, that there is any difference?
Mr. Edgerton. I have only known this—that through the years there has been established by the natural operation of natural laws these differentials.
Representative Thomas. Never mind what was done in the past. Let us try to think this thing out for ourselves. I am beginning to doubt that there is any differential. Let us see if we can figure it out for ourselves. Let us come back to this difference between the skill in the North and the South. How much difference is there?
Mr. Edgerton. I don’t know.
Representative Thomas. Five percent or ten percent?
Mr. Edgerton. I would not attempt to say.
Representative Thomas. As a matter of fact, you would not attempt to say that there would be one degree difference in skill?
Mr. Edgerton. I would not care to be specific there.
Representative Thomas. What is the next differential? Name it.
Mr. Edgerton. You are speaking of just one industry, or the whole thing? My thinking has been in terms of all rather than in terms of any one industry.
Representative Thomas. If you don’t want to stay with textiles just cover the while field, and I will do my best to stay with you. What is the other differential?
Mr. Edgerton. There are four bases, I think, that we cited as causes for this differential, that have been established.
Representative Thomas. We have already had one. What is the second one?
Mr. Edgerton. The distance from consuming markets.
Representative Thomas. In other words, that is the freight rates you are talking about now?
Mr. Edgerton. Yes.
Representative Thomas. All right. What is the difference in the freight rates?
Mr. Edgerton. I cannot give you those specifically. That is in this document here in my further statement.
Representative Thomas. Can you estimate, or do you know?
Mr. Edgerton. No; I don’t. I have not seen anybody else that does know exactly.
Representative Thomas. All right. We will assume, then, that there is some difference, unknown. That is about the same quantity as on the skill of labor. Now, what is the third differential?
Mr. Edgerton. Well, taking it as a whole throughout all industries, the difference in the degree of mechanization.
Representative Thomas. What do you mean by that with reference to a man’s pay?
Mr. Edgerton. In many of these smaller plants, which make up the bulk. 85 percent of all of the industry in the South, they are comprised of plants which employ fewer than 50 persons each. That
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means that they are small units, and in a vast number of those, they are operating with machinery that is out of date, that requires more labor, and they are just not as highly mechanized. They may take 2 or 3 or 4 people to produce the same amount of goods as would be produced----
Representative Thomas (interposing). A southern manufacturer buys the same machinery as the eastern manufacturer does, doesn’t he?
Mr. Edgerton. Well—[pause].
Representative Thomas. How much would you say that increased the cost in that 10-percent differential?
Mr. Edgerton. I have not analyzed it that low.
Representative Thomas. And is that merely an assumption or hypothesis or a guess, or is it something that you have figured out?
Mr. Edgerton. I know that a man that is manufacturing stuff in Texas and selling it at New York is at a disadvantage to the fellow that is producing it in New York or 50 miles near New York. I know that even if the freight rates are absolutely just, that there is that difference.
Representative Thomas. Give me a definite reason why that is so. I don’t want your conclusion; I want your reason.
Mr. Edgerton. Why that is so?
Representative Thomas. Yes.
Mr. Edgerton. Well, he has to pay a big freight bill on his stuff up there.
Representative Thomas. That is one good reason. What is the other?
Mr. Edgerton. Are we still talking about transportation?
Representative Thomas. Well, I thought that we had finished about transportation and we were on equipment a little while ago, but you jumped back to freight rates. I am just trying to follow you.
Mt. Edgerton. I went back to freight. The distance from the consuming market, which is a physical difference?
Representative Thomas. What about that difference in machinery between the North and the South as you started to tell about a while ago and did not finish?
Mr. Edgerton. I say, in a vast number of those smaller plants, that they are not as a rule as highly mechanized as they are in portions of the country?
Representative Thomas (interposing). Can you give me any good reason why it is not as highly mechanized?
Mr. Edgerton. Yes, sir; for the same reason that a child 10 years old does not know as much as one that has been to college at 28.
Representative Thomas. In other words, we in the South do not have the capital that they have in the North to buy machinery?
Mr. Edgerton. That is true.
Representative Thomas. What is the fourth one, the fourth differential?
Mr. Edgerton. The fourth cause?
Representative Thomas. The fourth element of differential. You are not going to overlook living expenses, are you?
Mr. Edgerton. No.
Representative Thomas. That is the main thing, isn’t it?
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Mr. Edgeron. That is one of the main things.
Representative Thomas. All right. Now, let us figure out the difference there between the North and the South in living expenses. A pair of shoes costs just as much in Houston, Tex., as it does in New York City, does it not
Mr. Edoerton. Well, I don’t know.
Representative Thomas. Just about?
Mr. Edgerton. I guess maybe so.
Representative Thomas. And you pay just as much for that collar you have on in New York as you do in Houston, don’t you?
Mr. Edgerton. I would certainly pay as much, I guess.
Representative Thomas. About the same for a pound of sugar, don’t you?
Mr. Edgerton. Yes.
Representative Thomas. Where is that differential you are talking about?
Mr. Edgerton. Well, in the first place a great many things are required, and that varies even in the South, a great many things are required for living comfortably in the North that would not be required in the South.
Representative Thomas. You are not going to be concerned with a man’s comfort when you pay him $15 or $16 a week, are you! There is a little difference in the temperature, and it would take a little more heat, would it not?
Mr. Edgerton. That is right.
Representative Thomas. Some gentlemen have advanced the theory of housing conditions. Suppose you pay a man $15 over in your town and $16 in Massachusetts; what will it cost him to rent a house in Massachusetts on his $16, and what will it cast him to rent a house in the South on his $15?
Mr. Edgerton. There would be a great big difference.
Representative Thomas. It cannot be very big, because $15 is not a whole lot of numbers anyway, is it?
Mr. Edgerton. No.
Representative Thomas. And that is all you are giving him to live on, so it cannot be a whole lot of difference.
Mr. Edgerton. No.
Representative Thomas. I don’t see where that differential is. When you say, when you mean a differential in living costs, don’t you mean this, that a man in the South because of the warm climate and cheap land, can starve to death cheaper down there than he can starve to death in the North; isn’t that what you mean?
Mr. Edgerton. Well, that may be true. There is a very much better----
Representative Thomas (interposing). This is a very serious subject with me. I want to find out something about this differential. I have heard folks talking about it for the last week.
Mr. Edgerton. Well, I know for some reason or other that on the whole, rents are considerably lower in the South.
Representative Thomas. Let us not use oonclusions. You say “considerably lower.” Can you give us any figures?
Mr. Edgerton. I know in one instance----
Representative Thomas (interposing). How can they be considerably lower when you pay a man $16 in Massachusetts and $15 in
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the South? It cannot be considerably lower, can it, because there is only $1 difference between them to live on.
Mr. Edgerton. There are other things than rent, you know, that enter into it.
Representative Thomas. The rides on a streetcar; the streetcar fares are just about as high in Massachusetts as they are in Houston, because I have lived in both places.
Mr. Edgerton. Will you let me give you just a specific illustration of the things I know best? Those which 1 have seen with my own eyes and at my own plants. I have had employees from time to time attracted by the advertisements of the higher wage rates, that have resigned their positions with us and gone north to Indiana and Illinois and other places where their wages sometimes are almost double what we were paying them. In every instance I have said, “I don’t blame you, go on up there. I would go, too. If you get dissatisfied, however, I will be glad to make a place for you back down here when you come back.” Well, in general, I have never had one to leave yet that has not come back.
Representative Thomas. You are about to give me the conclusion that he told you that he could live cheaper down there than he could live up in the East.
Mr. Edgerton. I was giving you this specific instance because it seemed to be more or less typical. I sent for one who came back. He was getting with us, I think $14 or $15 per week. He went to Gary or somewhere else up there, and he got $25 per week, and I was surprised when he wired me for a ticket to come back, and when he came back I called him in to inquire why he abandoned a wage like that to come back when he knew he could not get more than this at our place. He said well “there were several things. In the first place, I have a house here that you rent me for $1.50 a week, $6 a month. For the same sort of accommodations up there, I paid $20 per month for the same number of rooms. It was located about 3 miles from the plant in which I worked, and I could not get a place nearer. I had to pay streetcar fare back arid forth, and that was 14 cents a day, 5 days or 6 days in the week.” And he said “the week after I got there, my wife got sick and I sent for a doctor to come to see my wife, and he would not come unless I sent him $5 and I had no $5. I went to my employer to ask him to lend me $5 to send for the doctor, and they said they did not lend money, that they were not in the banking business.” And he said “So my wife had to suffer, and I made up my mind that as soon as she got well enough I was coming back. Not only wasn’t I saving anything on that wage but I was very unhappy.”
And he came back: and he said, “Now, I send for a doctor and I know that he is coming and I know that I don’t have to pay him but $2 when I get it down here in this place.”
That is just one of those things, but at any rate he came back and told me that he was very much better off, able to save more and live happily on the nominal wage that he was getting there than he was on the wage that he was getting elsewhere.
That is just about as good an illustration of the fact that there are many things that enter into the determination of what a man can do with a dollar.
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Representative Thomas. You don’t mean to tell this committee that a man with a wife can live and save money on $14 or $15 a week, do you?
Mr. Edgerton. He did.
Representative Thomas. You are talking about houses that you furnish at $6 a month. Are they what we call down South a typical shotgun house
Mr. Edgerton. No ; our houses, those that are owned by the mill, are duplex houses. There are three rooms to each side, and for a small family----
Representative Thomas (interposing). It is adequate?
Mr. Edgerton. Yes.
Representative Thomas. When it is all said and done, you don’t know about this alleged differential between the North and the South. You know it exists, but you are just not able to put your finger on those elements that make up that difference, however.
Mr. Edgerton. I have never been able to figure out the degree of contribution of those various elements to the sum total. I have studied, naturally, to find out why it is that there is a differential established by some sort of natural law. Either we are a lot of savages down there or something. Either there is a difference in the degree in civilization, and I have figured out what I think to be the causes for it in a general way.
Representative Thomas. That is all.
Representative Dixon. I want to ask you just two quick questions. The first 5 months of this year,, have you had any increase in business?
Mr. Edgerton. I think so; yes, sir.
Representative Dixon. In those 5 months what percentage would you say that you had increased?
Mr. Edgerton. Over what? Representative Dixon. In those 5 months what percentage would you say that you had increased?
Mr. Edgerton. Over what?
Representative Dixon. Over last year? Over the same 5 months.
Mr. Edgerton. Over the same 5 months of last year?
Representative Dixon. Yes.
Mr. Edgerton. The increase in volume is very, very small. There is some increase, but it is very small. I cannot tell you.
Representative Dixon. Now, let me ask you this. If there is a small increase, have you increased the employment and put more people to work with that increase in business.
Mr. Edgerton. No, sir.
Representative Lambertson. You are from Tennessee?
Mr. Edgerton. Yes.
Representative Lambertson. My colleagues have been asking you about this $16 minimum. A man down there might have his own garden, and he can have some chickens, and in that way reduce the cost of living?
Mr. Edgerton. Yes; he does that.
Representative Lambertson. What about this kind of story of hitching a woman to a plow? Is that a fairy tale, or is it true about a man hitching his wife to a plow?
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Mr. Edgerton. I don’t know. I tried to get up some statistics on that. [Laughter.]
Representative Lambertson. This marrying of a girl of 11 or 12, is that common down there?
Mr. Edgerton. I don’t think it is quite as common as it is in New York. I have heard of only one instance down there and I have read about three or four that was reported in the New York Times in New York that they were able to stir up up there. I don’t know. I have not gone into those statistics.
Representative Lambertson. One really serious question now. Under this proposition, it is intimated and has been talked about here a good deal, that there would not be any intrastate business left, practically, in competition with interstate operations. It sounds to me like probably one of the greatest objections to this bill. Would the South be jealous to maintain their State rights on intrastate operations as they have done in the past? Do you think they will be?
Mr. Edgerton. They are always jealous as a rule of retaining any State rights that they have. I would think so.
Representative Lambertson. That is under the new bill.
Mr. Edgerton. They have always been, more or less.
Representative Lambertson. That is one of the serious things that I think for the South that should be a factor in this bill. It appears to me that there would not be any State lines left in the operation of this act, practically, on minimum wage and maximum hours.
Mr. Edgerton. That is right.
Representative Ramspeck. Mr. Edgerton, just two questions. Discussing this differential in wages which you discussed with Mr. Thomas, in the cost of living—where is your plant located?
Mr. Edgerton. Located at Lebanon, Tenn.
Representative Ramspeck. How far is that from Nashville or Memphis?
Mr. Edgerton. Thirty miles from Nashville.
Representative Ramspeck. What size community is it?
Mr. Edgerton. The population is 5,000, the last census.
Representative Ramspeck. Is it a textile mill you are operating?
Mr. Edgerton. A woolen textile mill.
Representative Ramspeck. Do you furnish houses for your employees?
Mr. Edgerton. For some of them; only a few.
Representative Ramspeck. Well, there is a difference in living costs in Lebanon as compared with Nashville, isn’t there?
Mr. Edgerton. Yes, sir; there is.
Representative Ramspeck. Don’t you think as a matter of fact that what the Board ought to take into consideration if this bill is passed, is not geography but the actual conditions in any given industry when it comes to fixing a minimum wage?
Mr. Edgerton. That is true. I don’t think geography particularly, because I tried to state there that sometimes a differential in costs between plants located in urban communities and those in rural communities, there is a considerable variation there on account of living conditions and so forth.
Representative Ramspeck. You know, of course, that it costs more to live in the same strata of society in Nashville as it does in your city?
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Mr. Edgerton. Absolutely. Because I live in both of them. I work in one, largely.
Representative Ramspeck. And you know also, and I presume you would, that it costs more to ship textile products out of the South than it does to ship them in New England and the Northeast to the consuming market?
Mr. Edgerton. That is right.
Representative Ramspeck. And that it is a practical matter that we have got to consider until we get those freight rates adjusted.
Mr. Edgerton. Yes.
Representative Ramspeck. Just one other question. In your prepared statement, you said once that this bill would eliminate the small manufacturer in the South, in your judgment.
Mr. Edgerton. Yes, sir.
Representative Ramspeck. And in another place, because the worker would get more in real wages in the South than his brother worker in the North, the skilled workers in the North would move South.
Mr. Edgerton. As fast as they found the opportunity.
Representative Ramspeck. Did I understand you correctly in that?
Mr. Egerton. As fast as they found the opportunity.
Representative Ramspeck. How do you reconcile those two statements?
Mr. Edgerton. Because when he discovers that his dollar will purchase relatively more than his same dollar will up there, he is pretty apt, if he can, to go to that place. We have very little skilled labor in the South now, relatively little.
Representative Kamspeck. The truth about it is that in the South we do not process a great deal of our raw materials, outside of cotton.
Mr. Edgerton. That is true.
Representative Ramspeck. What we do is to take the first step in getting out the raw materials, and the final processing goes on in other sections of the country, particularly in the Northeast and the Middle West.
Mr. Edgerton. That is true; yes sir.
Representative Ramspeck. That is all.
The Chairman. We have another witness and I am not going to ask you many questions. Did you say you did not own your mills?
Mr. Edgerton. I am a stockholder, a small stockholder.
The Chairman. Who are the main stockholders?
Mr. Edgerton. Well, we have, I think, about 40 stockholders altogether. The members of my family, various members of the family, relatives and kin, have about 57 percent of the stock. The rest of it we have farmers and wool merchants, and other people in the community.
The Chairman. That is one of the industries that is located in the South that is southern owned?
Mr. Edgerton. Yes. sir. It was built with the money right there in that community. Every dollar that went into that investment.
The Chairman. Then you know, of course, that a very large amount of the industry in the South is owned by people living in other parts of the country?
Mr. Edgerton. Well, there is a considerable amount. I don’t know how much.
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The Chairman. And that many have gone along with the idea that the thing to do was to have big dividends and low wages and that that would develop the South? There has been quite a propaganda along that line from time to time, hasn’t there?
Mr. Edgerton. Well-----
The Chairman. That we ought to have low wages for the South to prosper?
Mr. Edgerton. There are perhaps some people who think that.
The Chairman. You don’t think that, do you?
Mr. Edgerton. I don’t think so at all. If I did I would not have been for the past 25 years constantly urging every manufacturer that I came in contact with, that I have been in organization work, and for 25 years I have constantly urged the manufacturers in the entire country to pay their labor just as much as they possibly could and cut their hours to the last point.
The Chairman. I assume, also, that you have been very active in the States in attempting to have the States pass laws which would shorten the hours?
Mr. Edgerton. No: it has not been necessary. There have been enough others to do that.
The Chairman. Didn’t you help to do that? I thought you said you had been very active.
Mr. Edgerton. Well, I have. I say I have been very active in urging it.
The Chairman. Have you ever appeared before the State Legislature of Tennessee favoring the regulation of hours and working to make them shorter in the State of Tennessee?
Mr. Edgerton. I think so.
The Chairman. When?
Mr. Edgerton. I don’t know; many years ago, our hours were 60 per week, and a bill was introduced making it 57. I was very much in favor of that, and would have been glad to have seen it made smaller.
The Chairman. Did you appear and testify in favor of it?
Mr. Edgerton. I don’t know whether I did or not-. I cannot appear on all occasions.
The Chairman. Have you ever appeared before the State Legislature of Tennessee to ask them to pass a law providing a minimum wage in the State of Tennessee?
Mr. Edgerton. No; I never have done that.
The Chairman. Have you appeared against any legislation for the regulation of hours in the State of Tennessee?
Mr. Edgerton. I don’t recall that I have.
The Chairman. Has your association taken any part against such laws in the State of Tennessee?
Mr. Edgerton. They may have a great many years ago; not within recent years; not within reach of my memory.
The Chairman. What is the law now in the State of Tennessee with reference to the length of hours to be worked in factories?
Mr. Edgerton. I think the maximum hours is 54 per week.
The Chairman. Do you think that is too long, 54 hours?
Mr. Edgerton. In some places I think it is very much too long.
The Chairman. Have you ever joined in any movement to have that number reduced?
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Mr. Edgerton. Not in any specific movement.
The Chairman. Have you in any general movement ?
Mr. Edgerton. Well, no; I don’t Know that there has been any.
The Chairman. Have you ever made any speech in favor of reducing that 54-hour week?
Mr. Edgerton. Not by legislative process.
The Chairman. Do you know what are the hours laws in other States?
Mr. Edgerton. No; I do not.
The Chairman. You know that they vary in the Southern States, do you not?
Mr. Edgerton. Yes, sir.
The Chairman. And your association has constantly taken the position, has it not, for the last 5 years, that neither the State nor the Federal Government should pass laws providing a minimum wage, and that it was autocratic to attempt to do so?
Mr. Edgerton. What association are you talking about?
The Chairman. Any State or Federal legislation to provide minimum wages? And the association that you said you were the president of.
Mr. Edgerton. I was president of the Tennessee Manufacturers’ Association and the Southern States Industrial Council. I think the Southern States Industrial Council has never gone on specific record on that.
The Chairman. Has the Tennessee Manufacturers’ Association?
Mr. Edgerton. I think so.
The Chairman. It has. Have you not constantly in public addresses in your association opposed any law, State or national, that would establish or provide a minimum wage or maximum hours of employment in industry?
Mr. Edgerton. A fixed minimum wage and fixed maximum hours; yes, sir.
The Chairman. Has it not constantly opposed any type of legislation that would provide State or national regulation to reduce hours and to provide a minimum wage of any kind or type?
Mr. Edgerton. Well, in general I will say that the organization has consistently stood against federalization of our industrial processes at any point.
The Chairman. I am not asking you that with any idea of criticising such a position. A man has a right to honestly entertain any position that he chooses, but is it not true, Mr. Edgerton, that you have been one of the leaders in the South speaking against any and all State or national laws that would provide a minimum wage or maximum hours in industry?
Mr. Edgerton. I think in general that is true; yes.
The Chairman. That is true?
Mr. Edgerton. Yes, sir.
The Chairman. Of course, you do not pretend today to speak for the members of the organization that you represent in your views expressed, do you?
Mr. Edgerton. In that statement there, I say that my position is somewhat like that of a Congressman. He is elected to represent a constituency. If he is a smart man, he knows pretty well what his
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constituency believes, and if he is conscientious, he will try to represent that belief. My position is largely the same thing.
The Chairman. You mentioned Mr. Comer as one of the members of your organization?
Mr. Edoerton. Yes, sir.
The Chairman. Have you read the evidence given before this committee by him?
Mr. Edgerton. No; I have not.
The Chairman. He stated that he favored a Federal law firing maximum hours in industry in interstate commerce. You are not in accord with that viewpoint, are you?
Mr. Edgerton. I will say that as far as this bill is concerned, the administration of it is the most objectionable part of it.
The Chairman. I will get to that in just a moment.
Mr. Edgerton. Yes.
The Chairman. And I will be delighted then to ask your suggestions for improvement, but at the present time do you agree with Mr. Comer’s views when he said that he favored Federal maximum hours in industry as to goods moving in interstate commerce, and a minimum wage tor the production of such goods?
Mr. Edgerton. I think I should have to see Mr. Comer’s statement in full before I could give a blanket approval.
The Chairman. The question I ask you is, do you or do you not favor a Federal law which will provide that goods moving in interstate commerce must be produced under conditions of certain maximum hours?
Mr. Edgerton. If a law of that sort could be administered so that it will be just and applicable to every section and to every industry and to all elements of the employed population alike, with equal justice, I would say yes.
The Chairman. Do you believe it can?
Mr. Edgerton. Well, I don’t know. I have never seen one yet.
The Chairman. You do not believe it can, and you are opposed to it, are you not?
Mr. Edgerton. I am opposed to the bill in its present form.
The Chairman. Are you opposed to a law which will fix maximum hours by the Federal Government in the production of goods moving in interstate commerce?
Mr. Edgerton. No; I would not say that I was opposed, that I would oppose that at all; no.
The Chairman. All right. Then if you are not opposed to it, what hours would you say that should be fixed?
Mr. Edgerton. I would not attempt to say that.
The Chairman. You would not say?
Mr. Edgerton. No.
The Chairman. Would you be opposed to a 40-hour week?
Mr. Edgerton. I would be disposed to that myself, that would suit me.
The Chairman. Well then, would you be in favor of a Federal law which provides the 40-hour week in the production of goods moving in interstate commerce?
Mr. Edgerton. If that minimum wage were a reasonable minimum wage from my standpoint of what constitutes reason, I think I would be in favor of that.
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The Chairman. What would in your judgment be a reasonable minimum wage?
Mr. Edgerton. A reasonable minimum or fair wage, I should think, would be at that point sufficiently below the prevailing wage rate in the high-wage rate sections and the wage rate in the lower wage rate sections to account for the differential that naturally exists between them.
The Chairman. What would, in your judgment, that be from your experience as a manufacturer?
Mr. Edgerton. I could not say exactly; $11 or $12, perhaps.
The Chairman. $11 or $12; all right. Would you favor, if such a law were enacted, writing that into the bill; or would you favor leaving to some agency the power to provide a flexibility in that wage?
Mr. Edgerton. I would favor writing that into the bill if the wage were about what I stated.
The Chairman. You would favor writing a $11 or $12 minimum in the bill?
Mr. Edgerton. Yes.
The Chairman. Now, if Congress would not write a $11 or $12 minimum wage in the bill, and Congress were going to pass a bill for a minimum wage which would be substantially above that as a man in business would you prefer that the amount of the minimum wage should be left to an agency, or that Congress enact a minimum wage of $16 or more?
Mr. Edgerton. That is a pretty hard question.
The Chairman. I am asking you for this reason. You are perfectly familiar with the fact that we had a campaign last year.
Mr. Edgerton. Yes.
The Chairman. And you are very familiar, I know, with the fact that the Democratic platform contained a provision for minimum wages and maximum hours?
Mr. Edgerton. Yes.
The Chairman. You are familiar with the argument that has been going on the country because you had a meeting up here with a large number of people present when you discussed and opposed certain things that had been done?
Mr. Edgerton. Yes.
The Chairman. That having been .pledged in the platform and the people having voted overwhelmingly for the Democratic Party under the platform, every indication seems to be that a law is going to be enacted. Now, as a Southerner and a man who is in business, would you prefer to have the Congress write a minimum wage such as has been mentioned here, for instance, of $16, or would you prefer to have that power delegated to some agency with flexible powers to determine what the minimum wage should be.
Mr. Edgerton. If it were made mandatory in the act as it is in the Walsh-Healey Act, that that agency fix wages on the basis of the prevailing minimum wage in the location involved. I would rather leave it to have the flexibility feature in a board. If it were made mandatory that before it fixes minimum wages that it will determine, that it will know the conditions of the community affected, and that it will fix that minimum wage and those maximum hours in accordance with the prevailing minimum wages and the
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maximum hours in that community, if that were made mandatory I would very much rather for it to be left to an administrative board.
The Chairman. Now, if an agency is selected, would you prefer to have the power turned over, for instance, to an existing agency like the Department of Labor?
Mr. Edgerton. Like the Department of Labor?
The Chairman. Would you prefer to have it written into the bill that it would be turned over to the Department of Labor rather than the creation of a new board?
Mr. Edgerton. No, sir.
The Chairman. Would you prefer the creation of a new board to be appointed by the President rather than to turn it over to the Department of Labor or to the National Labor Relations Board?
Mr. Edgerton. Yes, sir.
The Chairman. You would?
Mr. Edgerton. That would be my choice between them.
The Chairman. Is there any other Government agency, outside of the creation of a new board, to which you would prefer to turn these powers over rather than to a new board?
Mr. Edgerton. I do not know that there is.
The Chairman. Then if the law is to be enacted to provide a minimum wage and maximum hours it would be your judgment that it would be wise on the part of Congress to create a new agency rather than to turn it over to one of the existing agencies?
Mr. Edgerton. Yes.
The Chairman. You would?
Mr. Edgerton. Yes.
The Chairman. All right. Now, the bill provides for five members of the board.
Mr. Edgerton. Yes.
The Chairman. Is that too many or too few?
Mr. Edgerton. I do not know.
The Chairman. What is your best judgment?
Mr. Edgerton. I do not think it is too many, certainly.
The Chairman. You do not think it is too many?
Mr. Edgerton. No.
The Chairman. Do you think it is too few?
Mr. Edgerton. No; I would not say that.
The Chairman. The bill provides that the selections shall be made from a standpoint of regional and industrial conditions.
Mr. Edgerton. Yes.
The Chairman. Do you believe that that is a proper method of selection of the board, or would you make some other suggestions?
Mr. Edgerton. No; I haven’t studied that. I think I would specify some qualifications in that connection.
The Chairman. What qualifications?
Mr. Edgerton. I do not know.
The Chairman. Can you think of any that we should have in mind in the selection of a board?
Mr. Edgerton. No. If you would like to have my opinion on that, and give me time to think about it, I would be very glad to offer a suggestion.
The Chairman. I think probably a bill will be reported, therefore what we are interested in is suggestions from those who are in
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business, representatives of the men who work and the public generally, for actual improvement of the bill. We have gotten down to the point now where you would prefer a new agency. Can you think of any better method of doing it than the creation of a board in a certain number of matters?
Mr. Edgerton. I do not think so.
The Chairman. You do not think so?
Mr. Edgerton. No, sir.
The Chairman. Are you in favor of giving sufficient flexibility to consider the conditions of industries in different localities?
Mr. Edgerton. I think that ought to be mandatory, yes, sir, that conditions ought to be investigated.
The Chairman. They ought to be investigated?
Mr. Edgerton. Yes.
The Chairman. Well, the bill does have those provisions in it. So your judgment is that it would not be wise or proper to attempt to do this matter without a full and fair consideration by some agency, taking into consideration the different localities, the different conditions, and the different industries on which it is to operate?
Mr. Edgerton. That is true.
The Chairman. That would necessarily require, would it not? Mr. Edgerton, the transfer of some power to the board? There is no way to escape that if they are to nave those responsibilities, is there?
Mr. Edgerton. Well, that is true.
The Chairman. And therefore it is folly to talk about being in favor of flexibility and at the same time oppose giving the power to the board to exercise flexibility, is it not?
Mr. Edgerton. In the same act; yes.
The Chairman. It could not be done?
Mr. Edgerton. No.
The Chairman. You have got to give them the power if you have flexibility?
Mr. Edgerton. Yes.
The Chairman. Do you think industry would favor, as a whole— you have been president of the National Manufacturers Association— the operation of a law without flexibility?
Mr. Edgerton. I would be willing to attempt to answer that question. It has been a number of years since I was president.
The Chairman. You said you would not?
Mr. Edgerton. No.
The Chairman. Of course not.
Mr. Edgerton. No.
The Chairman. Therefore, since this bill does provide for the creation of minimum wages, maximum hours, and for the creation of a new board, it does not turn it over to any other board, and gives the board flexibility and power to take into consideration the different localities and the different conditions in the different industries and crafts, then if it is written in that way it is about the only way that you could think of to write one, if we are to pass a law of that type, is it not?
Mr. Edgerton. Well, I would rather make those statements after a study.
The Chairman. Can you think of any other method? Can you suggest any other method?
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Mr. Edgebton. No ; not at the moment I cannot.
The Chairman. That is all. Thank you very much.
Representative Lambertson. Mr. Edgerton, the chairman of the committee, emphasized the fact that it was a promise in the Democratic platform—and the Democrats won by a big majority—to be carried out. The Republican platform was just as strong on the minimum wage and the maximum hours as the Democratic platform, was it not?
Mr. Edgerton. I could not answer that question.
Representative Lambertson. My recollection is that Bill Lemke talked about it, and also Father Coughlin.
Mr. Edgerton. I also remember some promises about cutting taxes, reducing bureaus, boards, commissions, and things like that. I am not sufficiently acquainted with it to say.
Representative Lambertson. If that was the mandate of the administration after the election would not it be possible to reach this in January instead of waiting until June?
Mr. Edgerton. I do not know.
The Chairman. I fully agree with my good friend that the Republicans are in favor of this, and I think he would be; I think all of them would be. The country is for it. The country is for minimum wages and maximum hours. Thank you very much, Mr. Edgerton.
Mr. Edgerton. Thank you, gentlemen.
The Chairman. Mr. Murchison.
The Chairman. Mr. Murchison, you are with the Textile Institute?
Mr. Murchison. The Cotton Textile Institute.
The Chairman. And you hold what position?
Mr. Murchison. I am president of the institute.
The Chairman. We would be very glad to have you make a statement.
Mr. Murchison. Mr. Chairman and members of the joint committee, in behalf of the members of the Cotton Textile Institute I wish to thank you for the privilege of discussing the bill before us. I do not come as an individual but as the spokesman of an industry. The Cotton Textile Institute embraces in its membership over 70 percent of the active spindles in the cotton-textile industry, and their distribution extends throughout all of the cotton-textile States.
To the present bill the industry has devoted its most earnest and careful attention. Lengthy and intensive discussions have been engaged in by a number of the State associations, by the board of governors of the American Cotton Manufacturers Association, by the members of the National Association of Cotton Manufacturers, and by the members of the executive committee of the Cotton Textile Institute. I am prepared therefore to present to you what may fairly be termed the sentiment, of an overwhelming majority of the industry. The industry is in substantial agreement on all important points of the present measure with the exception of one, which I shall, in due course, indicate.
The thoughts of the industry with respect to the essentials of a sound program of social and economic stability have been crystalized
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for a considerable period, and to the Nation at large they are as an open book. These thoughts may be appropriately designated as a creed which became universally applicable with the adoption of code no. 1. But with the invalidation of the code the creed was not relinquished. On the contrary, the consciousness that its continued existence was dependent upon voluntary action only served to redouble the zeal and the determination to justify by sustained second effort the hopes and the expectations of the first effort.
To you, therefore, it is no news that the cotton-textile industry endorses and advocates without qualification the desirability of a standard workweek of 40 hours for manufacturing industries. It is an old story that we favor without equivocation the complete elimination by legislative methods or otherwise of the employment of all persons in manufacturing industry under the age of 16. It is simply a reiteration that we likewise regard it as highly desirable to have a minimum-wage floor below which no wage payment should go with the exception of wages paid to learners or to substandard workers. In our creed we go even further and take a step beyond what is contemplated in the present bill by recognizing the advisability of discouraging the undue use of the third shift in the manufacture of textiles.
These are objectives which I am proud to reiterate before this committee. They are objectives which I know this committee approves. With a common ground so great as this to work upon, truly it should not be difficult to unite in cooperative effort for the establishment of industrial standards in which we can take equal pride.
With respect to the bill which is before us, I prefer to think of it only as a means for bringing together yourselves and many others for a serious and constructive injury into the needs of industry and labor and the soundest procedure for the satisfaction of those needs. I confess in all sincerity that with respect to my legislative hopes I have never experienced so great a disappointment as was inflicted upon me by the appearance of the present measure. This disappointment has no relation whatever to the technicalities of the bill. It springs from no question of language or mechanics and serves as no cloak for change of opinion or of purpose. The objectives which are described in the beginning as the industry’s objectives are still my objectives. Whatever prejudices I may have had were on the side of tolerance and not or reaction. And if I erred in my sympathies it was on the side of social progress and the interests of the greatest number. It is difficult for me to believe that the present bill is indigenous to America. It does not accord with our theory of government. It is not in harmony with our philosophy of industrial enterprise. It does not match our traditional concept of the dignity and the rights of labor. It is not couched in the language of, or conceived in the spirit of, a free people. It has not even been contemplated, much less demanded, by the public conscience. If we go so far as to admit its rightness of motive and its soundness of purpose, it still remains administratively impossible to the point of grotesqueness.
This bill presumes to do everything, but in fact does nothing which may be definitely anticipated and measured in advance. In part I it presumes to establish a standard workweek for all American industry and a standard wage rate for all American industry. But in subsequent sections these standards are rendered meaningless
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because their application is left to a board which may in its discretion vary them upward or downward, industry by industry, occupation by occupation, region by region, with no governing criteria sufficiently exact to produce any foreordained results. Despite the $1,200 maximum limit beyond which the Board’s powers do not extend, the functions of the Board are so broadly defined as to bring within its jurisdiction, either directly or indirectly, virtually the entire working population of the United States. Through the enactment of this bill Congress would delegate to a board the determination of the value of labor for almost all of the wage earners of America. Section 12, paragraph 6, states that an order of the Board relating to wages—
may contain such terms and conditions as the Board may consider necessary or appropriate to prevent the established minimum wage becoming the maximum wage and to prevent the discharge or reduction in wages of employees receiving more than the established minimum wage.
If this paragraph is enacted the establishment of a minimum wage for any occupation or industry would automatically bring within the jurisdiction of the Board all wage schedules in excess of the minimum.
Should this astounding delegation of power be taken seriously by the Board and acted upon, the implications are manifold. There is, first, the colossal assumption that the Board has the wisdom to determine the proper value of the labor of all employees. Secondly, it carries the assumption that the aggregate result of such wage determination would be beneficial. It requires no expert in economics to realize that a manipulation of labor costs on so grand a scale is but the manipulation of manufacturing costs. Manufacturing costs, in their turn, determine the level of prices. If the one is raised, the other must be raised correspondingly. If benefits are realized, it must be at the expense of those whose incomes are outside the range of this arbitrary control. The greatest sufferers would be the agricultural workers and those who labor in occupations which are purely intrastate in character.
We live in a democratic state. We profess an economic philosophy which accepts the presence of all functional groups in our economic system as essential to the welfare of the whole. In such a society it is customary that the language of legislation dealing with the interrelationships of these various essential groups assume that each group is law-abiding and entitled to equal rights unless the evidence in particular cases is to the contrary. We are proud of the dignity, the ethics, and the justice which are embraced in this principle. Yet, throughout this bill, there runs the tacit assumption of conflict between capital and labor and the expressed declaration that the present law is for labor. Section 5 of this bill more nearly than any other is the very heart and substance, since it contains the more important enabling clauses. Paragraph A of this section provides the authority, the procedure, and the criteria for the determination of the minimum-wage rate. Paragraph B is analogous but applicable to the determination of the maximum workweek. In each instance the topical sentence reads in part as follows:
Whenever the Board shall have reason to believe that, owing to the inadequacy or ineffectiveness of the facilities for collective bargaining.
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My objection is to the incorporation of the phrase “owing to the inadequacy or ineffectiveness of the facilities for collective bargaining.” In any particular instance the presence or absence of any need for higher wages or shorter hours may have no relationship whatever to the matter of collective bargaining. For the purposes of remedial action under this bill it is sufficient merely to know that substandard wage conditions exist or substandard hour conditions exist. The formal legislative presumption that causation must lie in the inadequacy or ineffectiveness of collective bargaining may therefore, and m most cases would be, a presumption contrary to fact. The phrase is in no sense pertinent to the purposes or the theories or the effectiveness of the act, and its net result is nothing more than left-handed gratuitous legislative support for the cause of unionization.
Section 23 of the act states:
The Act shall be construed and applied to encourage and protect self-organization of employees for the purpose of collective bargaining and mutual aid.
Thus we have, on the one hand, the factor of collective bargaining as a criterion for the exercise of wage-fixing powers; and on the other, the express declaration just quoted specifically directing the Board so to exercise its power. However, the ultimate outcome of the exercise of these legislative instructions to the Board will not be welcome either to labor or to capital. As the governmentally determined wage and hour program is applied to occupation after occupation, industry after industry, and region after region, the incentives and the goals of collective bargaining will be correspondingly reduced and the death knell of freedom in industrial enterprise. I am not one who wishes this outcome for either of the two groups.
Another feature of the bill is its naive and ill-considered erection of barriers to the flow of trade in interstate commerce.
In section 7, paragraph (b), and in section 22, paragraph (b), it is declared that “any goods produced in any State by employees under the age of 18 years” shall be subject to certain interstate-commerce prohibitions. The present bill establishes no age standard beyond the 16-year limit. To administer this will be responsibility enough without gratuitously lodging with the Board the virtually impossible task of regulating commerce between the States in terms of local age restrictions which do not concern Federal policy. A provision such as this would carry us back to the intolerable condition existing under the Articles of Confederation. In his last message to Congress, the President said:
One of the primary purposes of the formation of our Federal Union was to do away with the trade barriers between the States.
It is inappropriate at this time to begin the reerection of these trade barriers by divergent age restrictions or otherwise.
I believe that the committee will agree with me that in pointing out. these objections to the present bill I have not resorted to technicalities or to subterfuge. It is not my purpose to spend more time in adverse criticism. There is greater pleasure and greater profit in giving expression to the constructive views of the industry.
If it is the desire of Congress to eliminate by legislative enactment the employment of minors under 16 years of age in American industry, that wish has the wholehearted support of the cotton-textile
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industry. In this desire I am confident that we are joined by every other industry in America. In fact, the cotton-textile industry has a childish impetuosity in its desire for immediate passage of a bill prohibiting child labor. The industry has instructed me to say to this committee that it desires the incorporation of such a prohibition in a separate measure in order that its passage through Congress may be expedited. Such a bill would receive the approval of 100 percent of our industry, would, no doubt, pass the House of Representatives unanimously, would receive a 100-percent vote in the affirmative in the Senate of the United States, and the approving signature of the President of the United States. The industry which has for years been charged with guilt in the matter of child labor would in all seriousness and sincerity like to know why such an act is not being passed by the present Congress. If this Congress adjourns without enacting such legislation, the cotton-textile industry will insist upon knowing the reason why. It is my privilege to extend this message to you as a request and a challenge.
Representative Thomas. Mr. Murchison, may I interrupt you there?
Mr. Murchison. Yes.
Representative Thomas. You are familiar with the Dagenhart case, are you not?
Mr. Murchison. Yes, I am. It is a matter about which I talk to a great many people.
Representative Thomas. Is not that answer to your own question as to why the Congress does not pass such a law?
Mr. Murchison. I would love to see the matter once more submitted to the Court.
Senator Thomas. You state, then, it should be made by the Supreme Court rather than the Congress?
Mr. Murchison. I think we should give the Court a chance once more as speedily as possible.
The Chairman. We propose to give it to them in a bill that would have a better chance of passing than it would in a separate bill.
Mr. Murchison. Our feeling was that if various objections to this bill caused its passage to be delayed that it would be highly desirable to incorporate the child-labor measure in a separate bill which would be sure to pass.
One surmises from a reading of the bill under consideration that a standard workweek is desired. The cotton-textile industry also wishes a standard workweek. On the basis of the experience undergone since the inauguration of the code and in the light of the productive capacity of the industry in its relationship to the demand for textile products, the industry is agreed that social and economic requirements can be met by a standard workweek of 40 hours. It recognizes that in such industries, including itself, special circumstances may, from time to time, demand departures from this standard within certain reasonable limits. Such exceptions are, however, relatively unimportant as compared with the imperious necessity of the establishment of a standard workweek. The cotton-textile industry, therefore, to this committee and to this Congress states without equivocation its desire for such a standard workweek. I present this to the gentlemen of the committee as a request and a
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challenge. Perhaps this too should he incorporated in a separate bill in order to expedite its passage through Congress. If the objective is held more important than the procedure with its collateral considerations, it is our wish that this matter, too, may be embraced in a separate bill. I make this suggestion only on the assumption that difficulty may be experienced in combining satisfactorily these various objectives in the present measure, if, by so doing, it can be expedited. That is the only reason for making that suggestion. If your desire is for accomplishment, it lies within the power of the present Congress to enact without serious opposition, but, on the other hand with virtually unanimous approbation a 40-hour standard national workweek.
The cotton-textile industry has long recognized what it hopes the country and the Congress recognizes which is the social and the economic undesirability of the factory employment of women and minors between the hours of midnight and 6 a. m. There is no evidence that the social and economic welfare of the Nation is served by such factory employment. There is no major manufacturing industry whose equipment is so limited that its products cannot be supplied in adequate amount without the employment of women and minors during the hours mentioned.
If the present bill is sincere in its desire to be comprehensive in its dealings with the major problems of American industry, why does it overlook an evil which is so manifest and against which the outcry of the public conscience is so unanimous from coast to coast and from Canada to Mexico? The industry would like to know whether the difficulty is real or whether it consists of the opposition of the National League of Women Voters.
The Chairman. May I ask are they against that?
Mr. Murchison. I have so been told,
Senator. Representative Ramspeck. You are mixed up about the organization. You are thinking about the National Association of Women’s Clubs.
Mr. Murchison. I am very glad to have you make that suggestion.
Representative Wood. Or the American Liberty League.
Representative Ramspeck. He is talking about women in industry.
Mr. Murchison. The industry recognizes fully the inexpediency of a direct prohibition of the third shift, but would regard as a constructive step the prohibition of the employment of women and minors in such operations. If this proposal were put in the form of a separate bill it would, indeed, be interesting to ascertain the character of the opposition. It is even more interesting to wonder why this particular problem does not appear to lie within the range of probable legislative action.
The standards to which I have so far referred are easily amenable to legislative enactment. The elimination of child labor, the establishment of the 40-hour week, and the discouragement of the general use of the third shift are not difficult of attainment. But more controversial and complicated is the problem of the minimum wage. The present bill would endeavor to meet the problem by associating with the minimum wage a control of all wages and by allocation of a separate minimum wage therefore, in effect, serves merely as a beginning and an excuse for the control of all wages. Since this is manifestly undesirable for many reasons, it is the desire of the
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majority of the cotton-textile industry that a single blanket minimum wage be stipulated in the law as applicable to all industries and occupations alike, with allowance only for regional differentials as they may seem wise in particular cases. It is the thought of the industry that the primary purpose of the minimum wage is to assure a decent living standard for all workers in American industry. To go further than this is thought to be undesirable both economically and administratively. The present bill contemplates occupational minima. In the city of New Bedford alone there are 73 recognized occupational classifications within the cotton-textile industry. Taking into account all divisions of the industry, it is more than likely that the occupational classifications would exceed 100 in number.
If other industries are equally prolific in occupational classifications, it is easy to conclude that American industry as a whole would supply occupational classifications running into many thousands. One who is disposed to be realistic will therefore question the advisability of any type of minimum wage other than a basic minimum applicable alike to all industries.
I do not feel qualified to say what the national basic minimum rate should be or what differentials should be made applicable to various economic regions of the country. I can speak only for the cotton-textile industry and for the particular problems of wage differentials that this industry presents. Upon the inauguration of code no. 1, which was the Cotton Textile Code, it was agreed between the southern and eastern divisions of the industry that the southern minimum hourly wage rate should be 30 cents and the eastern minimum should be 32½ cents per hour. After the invalidation of the code the voluntary efforts of the industry toward the maintenance of its standards regarded these two wage rates as of undiminished importance from the standpoint of regional reference points. The cotton-textile wage data, as compiled and made available by the Bureau of Labor Statistics of the Department of Labor, indicate the continuance of a regional wage differential between the southern and eastern division of the industry.
The majority of the industry believes that legislative action should take due cognizance of what it regards as a normal economic differential and take no steps which would serve artificially to eliminate this differential. The majority of the industry does not advocate a legislative differential to the full extent of the existing differential, but does urge a difference of as much as $1 per week of 40 hours. Their belief in the soundness of this differential which was the code differential, is based not only upon historical experience but upon consideration of economic factories impossible here to enumerate.
In this connection, however, I wish to state that there is important minority dissent within the industry. The Cotton-Textile Institute is appearing for the industry as a whole and, as I previously pointed out, the industry is in virtually unanimous agreement on all points with the exception of the one matter having to do with the basic minimum rate. The northern division of the industry is definitely opposed to the establishment by legislation of a regional differential. This section of the industry does not believe that any existing nonlegislative differential will, of necessity, be continued indefinitely. Accordingly, they do not wish for a legislative differential which will serve to crystallize a distinction between northern and southern
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wage rates and do not admit in principle the justice of such a distinction. The Cotton Textile Institute representing both sections of the cotton-textile industry does not hesitate to present to the committee these divergent points of view. But regardless of this difference of view with respect to a basic minimum wage in its relation to regional differentials both divisions of the industry are alike in their thought that legislation should not go so far as to stimulate separate minimum wages for each occupation whether determined by the proposed Labor Standards Board or otherwise.
It the industry’s well-tested and carefully considered program of economic and social reform can be accepted as the foundation for legislation by this committee there will be no need for a Labor Standards Board. The elimination of child labor, the prohibition of the employment of women and minors between the hours of midnight and 6 a. m., the establishment of the 40-hour workweek with certain tolerances to meet particular situations, the adoption of a basic minimum wage rate for all industry with no deviation other than those justifying a broad regional differential would not require for their adjudication and enforcement any agencies other than those already in existence, such as the Federal Trade Commission, and the courts. The achievement I visualize, although it may fall short of the scope of the present bill, in one respect is far greater than the ambition of the present bill in that it would accomplish fundamental objectives relative to which management and labor are in accord without jeopardizing the freedom and enterprise of the one or the rights of the other.
In your consideration of this proposed program of internal economic reform you will not wish to neglect consideration of our external relationships. This bill, as at present framed, threatens to destroy utterly the present foreign-trade policy of the United States. Gratifying progress made by the Department of State in its program of reciprocal trade treaties cannot be continued if the purposes of this bill are effectuated. If the labor costs of American industry are increased to the extreme lengths contemplated in this bill, there will of necessity be an abrupt cessation of our efforts to tear down international trade barriers and open the channels of commerce between nations. On the contrary, our international commercial policy will have to be reversed. Instead of preaching the doctrine of trade liberalization we shall have to revert to the old policy of rigid protectionism and national self-sufficiency. The present bill, if enacted, will need an amendment similar to that famous 3-E of the National Industrial Recovery Act providing for additional protection to every American industry in proportion to such increases in its cost of operation as may be imposed by governmental regulation. The present bill does not stand the test of internal economic requirements. It fails equally in meeting the dictates of our external economic relationships. To my mind it is the epitome of legislative tragedy. It is a disillusionment for those whose hopes were high. It is sheer fantasy for those who would be realistic, and yet, within its broad, monstrous, lugubrious form it holds the germ of economic sanity and progress. It is my hope and prayer that this germ may be segregated from its cancerous surroundings by this committee, which is devoted to the national interest, and given an opportunity to develop into an organism which will give new strength and
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dignity to the laws governing the relationship of industry and labor in America.
Thank you, Mr. Chairman.
Representative Wood. Mr. Murchison, you say your organization represents 70 percent of the cotton textile industry?
Mr. Murchison. Seventy percent of the productive capacity as measured by the spindles, active spindles.
Representative Wood. Now, your organization is in favor of the elimination of child labor?
Mr. Murchison. Most assuredly.
Representative Wood. And in favor of the establishment of the 40-hour week?
Mr. Murchison. Yes, sir.
Representative Wood. The elimination of the third shift?
Mr. Murchison. Or at least its restriction. It is possible that there might be emergency circumstances in particular cases.
Representative Wood. Then you are also in favor of the establishment of the minimum-wage in the enactment of the law?
Mr. Murchison. Yes, sir.
Representative Wood. There is some disagreement among the North and South members of the organization.
Mr. Murchison. With respect to the regional differentials?
Representative Wood. With respect to the regional differentials,
Mr. Murchison. That is right.
Representative Wood. The southern manufacturers are in favor of a 30-cents-an-hour wage, which comes to $12 a week.
Mr. Mubchison. I did not say that, Congressman.
Representative Wood. Yes; 30 cents an hour, and 32.5 in the North, which makes a $13 minimum.
Mr. Murchison. I was referring to those figures only in speaking of the code.
Representative Wood. What minimum are they favorable to?
Mr. Murchison. At the present time the wage scales in the industry are substantially about that.
Representative Wood. Well, would you figure a higher minimum?
Mr. Murchison. We would be perfectly willing to go with you on a higher minimum than the $12 per week.
Representative Wood. Well, it seems we are pretty near together on the bill, the elimination of child labor, the 40-hour week, the elimination of the third shift, the minimum wage. Now, what other serious differences are there between your association and the bill? Is it the administration of it?
Mr. Murchison. Yes; and the great breadth or scope. It puts into the hands of the proposed board powers which are so extensive as to include wage control over all classifications and all wages under the $1,200 maximum, and of course there is the administrative difficulty there. When we begin to look into the facts and realize the hundreds of thousands of different occupational classifications, and the hundreds of communities which vary with respect to each other in regard not only to the cost of living but many other things, it seems to me administratively impossible for any board to carry out the instructions of this act.
Representative Wood. We are not far apart then on the provisions of the maximum hours of 40 hours a week.
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Mr. Murchison. That is right.
Representative Wood. The abolition of child labor.
Mr. Murchison. Precisely.
Representative Wood. And you indicated you might agree to the $16 minimum.
Mr. Murchison. No; not if there is to be a single blanket minimum for all industries; $16 would be too high.
Representative Wood. What is your reason for a blanket minimum for all industries?
Mr. Murchison. The reason is purely an economic one. It is not because we would not like to see a much higher wage paid, but the $16 minimum would increase labor costs for at least 80 percent of the industry by as much as 20 percent, I would say, assuming a rise in their classifications along with the minimum, and that would throw the price level of cotton, textile goods out of line with competing materials and fabrics; and I am afraid that that would result not only in the closing down of many textile mills, but would result also in a greatly diminished consumption of cotton in the United States and so serve to depress the price of cotton and the production of cotton.
Representative Wood. You would not want a blanket minimum wage for all industry, would you? You would not want to pull down some other industry to a $14, $15, or $16 minimum?
Mr. Murchison. Oh, we would not wish to pull down wages in any industry; no, no.
Representative Wood. There are some industries in which the minimum is higher than $16 a week.
Mr. Murchison. That is quite true. There are many industries that would not be at all concerned with the $16 minimum.
Representative Wood. They would not be affected. Why would you want a blanket minimum for those industries that are now paying a higher minimum than in this law?
Mr. Murchison. That is proceeding on the theory that our minimum wage is a matter of subsistence. In other words, we are guaranteeing the great mass of unskilled workers in industry a certain reasonable subsistence. Now, if it is the desire of Congress to go further than that, to proceed with the idea of what might be called fair minima as distinct from the oppressive rate, why, then obviously you have got to have differentials between the different industries; and I think with respect to each industry, the minimum wage should be determined in accordance with the prevailing wage paid by the better element in the industry.
Representative Wood. Well, then you would not want to have a blanket minimum-wage law passed, say, 30 cents an hour minimum, for all industry? That is your statement.
Mr. Murchison. The industry prefers to have the single blanket minimum, provided that minimum is established with due regard for the subsistence level of the population. Now, if there is another purpose involved, such as the prevention of subnormal wage payment in any industry regardless of the size of those payments, then the problem becomes a different one, as I can see, where in the iron and steel industry the payment of $20 a week wage might be regarded as subnormal, and there might be economic reasons why that should be prevented. In the textile industry the payment of $20 per week
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would be slightly above the average and, therefore, could not be regarded as subnormal with respect to that industry. I think that there are two totally different purposes and two totally different theories involved there.
Representative Wood. Your prepared statement is for a blanket minimum, but your explanation is very different.
Mr. Murchison. No ; I did not so intend it, Congressman. I merely intended to say that if the industry is given a preference it would at this time prefer that the Congress be content merely with a single minimum wage, with due allowances for regional differences. That is merely the preference of the industry. Now, if the Congress, in its own wisdom, wishes to go further than that and establish what might be regarded as fair minima for all industry, then the problem becomes a different one, and then our position would be that the minimum for each industry should be determined by the prevailing wage in that industry.
Representative Wood. You say it is the desire of the majority of the cotton-textile industry that a single blanket minimum wage be stipulated in the law as applicable to all industries and occupations alike?
Mr. Mubchison. Yes, sir.
Representative Wood. With an allowance only for a regional differential, as they may deem wise in particular cases. Well, the 40- cent minimum in this bill is a rather blanket minimum; is it not?
Mr. Murchison. In theory, but not in practice, because its application in a particular case depends upon the discretion of the Board.
Representative Wood. Well, the bill makes the same expression of objective as your statement does here, a 40-cent minimum. Is not that a blanket minimum? We are just about together, even on the minimum.
Mr. Murchison. There is no pressure upon the Board to apply the standards arrived at in part I of this bill.
Representative Wood. Well, that would be the law. If this law were passed, 40 cents an hour would be the minimum, except with respect to substandard employees, as you call them.
Mr. Murchison. I should much prefer to see the stipulation in the law actually made applicable in industry.
Representative Wood. In what way would you reduce the power of this Board? What authorities and power would you take away from them?
Mr. Murchison. Of course, our preference is to have no board.
Representative Wood. No board?
Mr. Murchison. No board at all, because we believe the fundamental objectives which we desire can be established and enforced with the existing agencies of government.
Representative Wood. How would you suggest that the law be administered then, if you are opposed to it being administered by a board?
Mr. Murchison. I would say that certain appropriate responsibilities could be allocated to the Federal Trade Commission, others to the Department of Labor, possibly, or to the Department of Commerce; and there is always present, of course, the Department of Justice and the courts.
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Representative Wood. With the three departments administering the law there would be a good deal of conflict there, would not there? Would not that create considerable confusion if the Department of Labor and these other agencies all had a hand in the administration of the law?
Mr. Murchison. I hardly think so, if the law is made very definite in its description of the various standards. For example, if the law specifies there shall be no employment in industry of persons under the age of 16, then there can be no conflict of jurisdiction. If the law says there shall be no employment of women and minors between the hours of midnight and 6 a. m., there is no conflict of jurisdiction.
Representative Wood. What about the employment of men?
Mr. Murchison. We do not recommend that prohibition, because in so many industries there is necessary a continuous process.
Representative Wood. What authorities would you. delegate to the Federal Trade Commission?
Mr. Murchison. By what authority?
Representative Wood. I say, what authority would you delegate to them in administering the law—enforcing the law?
Mr. Murchison. Well, I think that would be for Congress-----
Representative Wood (interposing). You mentioned the Department of Labor and the Federal courts.
Mr. Murchison. That would be for the Congress to determine. I think it would be easy for the Federal Trade Commission to be the enforcement agency with respect to the employment of women and minors between midnight and 6 a. m., or with respect to the enforcement of the minimum wage, for that matter, if it is a single blanket minimum.
Representative Wood. Did you say the Federal Trade Commission? Do you mean the Federal Trade Commission or the Department of Labor?
Mr. Murchison. It might be the Department of Labor—more logically, probably, would be the Department of Labor, but I would not profess to have any particular judgment on those particular points.
Representative Lambertson. I think the witness, this gentleman, has agreed on the 40-hour maximum. That seems to be pretty well agreed on.
Mr. Murchison. Yes.
Representative Lambertson. Does he agree also to the minimum wage and the Board? It is difficult to talk about the dead, and it is difficult to talk about the living, so you are in a hole; but, after all. this bill that is being proposed, as it is thought—the President of the United States will appoint the Board and start the administration of the law. I am wondering if the former President of the United States were to do it, or if the Vice President of the United States contemplated doing it, or somebody else, whether it would be just the same or not? Would it make a lot of difference about who initiates this Board if the law is passed? In other words, would there not be a lot of difference, in a general way, if Jack Garner was to appoint this Board, after the law was passed, than if Franklin Roosevelt was going to do it? He is from Texas, and the other man is from New York.
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Mr. Murchison. No; I think not.
Representative Lambertson. One man is progressive; and the other was, naturally, always conservative.
Mr. Murchison. No; I had not thought of that in that connection at all.
Representative Lambertson. If one heart stops to beat between the passage of this act and the appointment of this Board, what will happen?
Mr. Murchison. I thought of this Board as a continuing body having the power to control the amount of money in the pay envelopes of millions of people, and all you have to do is just choose them, and nothing more. You can appreciate the importance of criteria which will make sure as to what the policies of the Board will be.
Senator Pepper. Mr. Murchison, I am interested in what the Textile Institute experienced under the N. R. A. Generally speaking, how much were the wages of labor raised in the textile industry under the N. R. A.?
Mr. Murchison. Oh, very sharply. In the southern division of the industry, as compared to the wages prevailing in 1932, when they struck bottom, why, the increase was almost double. Of course, the increase was much less than that in New England, for the industries as a whole. I should say that labor costs per hour must have gone up around 60 or 70 percent as compared with 1932.
Senator Pepper. Hourly reductions are comparable to that?
Mr. Murchison. The hourly reductions were from an average of around 55 in the southern division of the industry to 40. Of course, in New England the hourly reductions were less, from 48 to 40.
Senator Pepper. Now, there is no doubt but what the textile industry has been conspicuous among the industries of the Nation in the last few years, in the matter of improvement in its wages and hours condition. What has been the general effect of this improvement on the industry? Has it been less profitable?
Mr. Murchison. No; the effect, with respect to the fundamentals, has been good. The industry felt that N. R. A. went too far in its system of administrative controls, but it is important to note that the fundamentals of the N. R. A. were retained, and the industry has struggled, using all of the resources within its power to keep those standards maintained, and as regards wages, we are higher now than we were at the end of the code period.
Senator Pepper. What effect will these changes, or these improvements, made in the industry with respect to efficiency of output have?
Mr. Murchison. I would say these changes have stimulated technological improvement in the industry.
Senator Pepper. That indefinable quality called “morale” has been affected, the morale of labor. Has that been affected favorably or unfavorably?
Mr. Murchison. I think favorably, without a doubt.
Senator Pepper. So that you are not one who comes as an opponent of social improvement or the betterment of the conditions of the employees?
Mr. Murchison. No, sir; far from it.
Senator Pepper. You have objections to the practical operation of this plan. Now, of course, you recognize that the Board has no jurisdiction at all in the wages of labor
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Mr. Murchison. Yes.
Senator Pepper So the power of the Board is entirely below that criteria.
Mr. Murchison. Yes.
Senator Pepper. Now, would you suggest the improvement of the bill by diminishing the power of the Board, by reducing the scope of its activities, so instead of paying $25 a week, over which it might have jurisdiction, say, it comes down to $20 a week, so its range will be only between $16, which would be the minimum, and $20 a week, which would be the maximum?
Mr. Murchison. I think that would be a very great improvement, because it would reduce the administrative difficulties tremendously and would not sacrifice what you would get in the way of economic benefit, because as the Board, in the exercise of its powers, puts up the wage scale; the upward movement, as it progresses, does not reduce the administrative difficulties but does not suffer a reduction of benefit.
Senator Pepper. Your point is that by the language of the bill there will be an “X” limit fixed below which there will be an oppressive door, then there will be a trap door in that floor where exceptional circumstances might be met by the Board’s discretion, then above that there will be a further range in there, up to $100 a month, or $1,200 a year, and all of that permits too much discretion in the Board ?
Mr. Murchison. I feel that way,
Senator. Senator Pepper. You feel that the language of the statute should be exact and definitive?
Mr. Murchison. Very exact, and I think it can be.
Senator Pepper. I was wondering whether you impounded some of the objections that someone offered on the theory of your discussion with Mr. Wood. He said that your prepared statement said there should be a fixed minimum. A little later you said there should be a minimum fixed on the proper basis for various industries. How would you suggest a paragraph might be worded so as to lay down a fair absolute criterion?
Mr. Murchison. Now, I do not want to be misunderstood as to my former statement. If I may repeat, for the purpose of avoiding misunderstanding, allow me to say that the industry prefers a single blanket minimum wage, the main purpose of which shall be to assure subsistence to the great body of unskilled workers. That is the arrangement they would at this time prefer, to see wage legislation stop there.
All right. Now, my next statement begins with a “but.” But if Congress is not willing to stop there and wishes to go further, then it will be necessary to have industrial differentials, and in that case the criteria for the establishment of those differentials should be very exact, and can be made exact, because we are proud of our achievements in the field of statistics.
I think our governmental agencies, such as the Bureau of Labor Statistics, the Department of Commerce, Department of Agriculture, have done truly phenomenal things, and if we have statistical data available as a yardstick, then, why not make use of them in framing our legislation, instead of setting up criteria in terms of what is reasonable in somebody’s mind? Instead of saying what constitutes fair value in somebody’s mind, why not say, with respect
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to a particular industry, that the minimum wage established shall be the prevailing minimum in 75 percent of that industry; that is, in the upper wage-paying brackets?
Senator Pepper. Now, as I understand you, instead of there being a flat minimum for the whole industry of the United States, we will say, $16 a week, you say there should be a minimum wage appropriate to the industry based upon the peculiarities of each industry. Now, I was wondering about framing that criteria. How many industries do you suppose there are in the United States?
Mr. Murchison. Oh, it would depend entirely on how you classify them.
Senator Pepper. Well, are there a dozen, or a hundred, or a thousand?
Mr. Murchison. Well, taking the textile industry alone, some people would call it one industry and include cotton, wool, silk, and rayon, but it can be either one or four, just the same as in the iron industry. You have those different classifications.
Senator Pepper. Would it be an exaggeration to say that there are more than 500 different industries in the United States?
Mr. Murchison. If you take the code classification there can be more.
Senator Pepper. Of course, the legislative branch could not, with fair certainty, write out a law that would be applicable—that is, that would lay down the principle which could be arbitrarily applied to 500 different industries, could it?
Mr. Murchison. No; it could not.
Senator Pepper. It would have to vest in somebody a discretion to apply principles, would it not?
Mr. Murchison. I think it would be better to specify a lower limit on a number of industries. I think it would be difficult to treat 500 industries in any reasonable program.
Senator Pepper. I just wondered whether you would not get between the horns of the dilemma. You either have to make it so rigid that you have to make a different principle for each industry, or else you have to make it general and give somebody the authority to make the application of the general principle to the particular case. Now, when you do that, don’t you invoke the discretion of some tribunal, whether you call it a board, or any comparable way in which it is done here?
Mr. Murchison. No; I think the same criterion can be applied to every industry. To be sure, industries differ from each other in many respects, but those differences have already been effective in determining the existing wage scales. That is our beginning point, and I think we can assume, insofar as the minimum wage is concerned, that we are doing well enough if we base that minimum wage on the wage scales already in existence and I do not mean the lowest either. I do not mean that, because there are a half dozen ways of getting at it.
Senator Pepper. Would you say that it would have the effect of leaving it entirely to the industry itself to determine which pay is equitable?
Mr. Murchison. Yes; I think that is essential. I do not think they would hope, in a system of capitalistic enterprise, to have anything else.
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Senator Pepper. You mean to say that industry should be left to its own initiative to improve working conditions?
Mr. Murchison. Well, industry along with the social pressure that is always being exercised and collective bargaining, all of those things have an influence on it.
Senator Pepper. If that other principle that you speak of had been applied to the textile industry you would not have gotten those tremendous improvements that you have actually obtained in the last few years under the impulse of law, would you?
Mr. Murchison. That is quite true.
Senator Pepper. It was the impulse of the legal N. R. A. that brought about the opportunities for the social pressure which generally manifested itself through legislation. Now, if you fix legislation so it will not have any effect upon the industry itself I am wondering whether you are not eliminating social pressure.
Mr. Murchison. Senator, future improvement is upward and the establishment of a minimum wage is simply a floor, so the industry is still free to go ahead without the minimum serving in any way as a restrictive influence.
Senator Pepper. Mr. Murchison, the experience of your industries would indicate that it is desirable to protect the industry that desires to accommodate itself to social progress against that which does not desire to do so, that is the so-called chiseler class, would it not?
Mr. Murchison. Yes.
Senator Pepper. Somebody to protect yourself against unjustified and unfair competition?
Mr. Murchison. That is the group that we are concerned with.
Representative Ramspeck. Doctor, I am just wondering whether this statement that you delivered here this afternoon was your own preparation or whether some committee of the organization prepared it?
Mr. Murchison. I wrote every word of it myself within the last 24 hours.
Representative Ramspeck. The reason I made that statement, it is a little bit harsh, it is not in line with your testimony which I have heard at previous hearings.
Mr. Murchison. Well, that harshness sprang from a feeling of real concern, because I had been looking forward to real constructive accomplishment, and where you have opportunity for it and that opportunity is jeopardized by over-reaching so completely as this bill does, then that is the only explanation I can give of my attitude.
Representative Ramsfeck. You appeared before the House committee last year and again this year, on the Ellenbogen bill, did you not?
Mr. Murchison. Yes; I did.
Representative Ramspeck. I have before me a print of the hearings before the Ellenbogen subcommittee of May 20 of this year, where you were discussing the question of the minimum wages, and you said this, speaking of minimum wages:
I should like to see it done for all industry, and if all industry can be brought into the picture, we will be justified in having a minimum-wage commission for the United States and in having that commission function under definite legislative criteria. It should not have unlimited powers. The criteria may be made simple. It is this: Direct that commission to ascertain as a finding
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of fact what the minimum rate is in each particular industry as practiced by the better units. If you want to be very specific, you can say 51 percent of the industry, or 40 percent of the industry if you want that figure, which is in the best bracket. Direct that commission to set that minimum wage, whatever it happens to be, as the standard.
Yet today you believe we should fix a flat minimum wage. How do you reconcile the two statements?
Mr. Murchison. Today I added to that. That was my second proposition. I say the industry’s first preference is for the blanket minimum, to which I am sure none of us object. Now, if Congress wishes to go further, then that statement of mine, as you read it, stands. I will stick by it.
Representative Ramspeck. Then you advocate no commission?
Mr. Murchison. Of course, that would necessitate a commission, I grant that.
Representative Ramspeck. Then, in another place, you said to the committee:
Mr. Chairman, I think the minimum ought to be determined by a board after careful study of existing pay rolls so as to get the type of minimum I have described. It should be made to fit a particular situation.
Mr. Murchison. Yes.
Representative Ramspeck. That is contrary to your testimony here today, is it not?
Mr. Murchison. I do not think so. I have tried to say that same thing.
Representative Ramspeck. Then you say:
I think it should be done by a special commission. I think it should not be confined to one industry, as I have already indicated.
Mr. Murchison. If the desire of Congress is to go beyond that single blanket minimum then it is obvious that differentials will be necessary for the different industries, and obviously a board will be necessary.
Representative Ramspeck. Then, that same day I believe it was, you came back before the committee to answer direct questions propounded to you by Mr. Culler, in which he wanted to know if this matter applied to all industiy, as to what your position would be, and in answer to those questions you said:
If the minimum is put on another industry raising its wages of course we have no objection.
In answer to a question by Mr. Keller you said:
Then your minimum wage for each industry has got to be determined by an examination of the existing scale.
So, I am wondering how you can justify any recommendation here today for a flat minimum wage when you testified less than a month ago that it ought to be done by fitting the particular conditions existing in the particular industry.
Mr. Murchison. Well, I am afraid that your feeling there arises from my own failure to make myself clear today.
Representative Ramspeck. Well, you say you nave not made yourself clear. Do you mean to indicate there was a failure to make it extend over the whole United States in every industry?
Mr. Murchison. I have stated that the reference of the industry is the blanket minimum, because by the use of such a minimum it would not be necessary to have a board, and along with that, of course,
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we would want the elimination of child labor and the 40-hour week, and so on.
Now, with respect to the other point to which you referred, if Congress does not go with us in our desire to stop with the blanket minimum then the procedure which I have outlined in the answers that you read I still adhere to. You see, my desire here is not simply to come up with a program and say, “This is this”, and we stop absolutely on that. My purpose in being here is to try to cooperate and talk in terms of first choice and second choice.
Representative Ramspeck. Mr. Murshison, you were in the Department of Commerce once; I do not know what your other experience has been but you must realize, of course, that a flat minimum would work untold hardships in numerous cases unless it was fixed so low that it would have practically no effect?
Mr. Murchison. I think a minimum of $16 a week would work a hardship in our industry, if it were a single minimum, because it would leave other industries untouched.
Representative Ramspeck. Would not it create a hardship in other industries?
Mr. Murchison. It would destroy the customary price ratios and, of course, that is an important thing to guard, and it is another reason why the Board should not have discretionary powers, because they are dealing with a tremendous thing; they are dealing with the stability of the economic system.
Representative Ramspeck. Why do you recommend the Federal Trade Commission in preference to a new Board?
Mr. Murchison. Well, we have all become acquainted with the Federal Trade Commission. It has had an honorable career, and when you know an agency then your feelings about it, as a rule, are more satisfactory.
Representative Ramspeck. The personnel of that agency changes from time to time, just as this Board does?
Mr. Murchison. Yes; but it has a tradition, just as the Interstate Commerce Commission has.
Representative Ramspeck. Just one other question, Doctor. Did you attend a meeting of the Cotton Manufacturers’ Association of Georgia?
Mr. Murchison. Yes; I was there.
Representative Ramspeck. Were you there when they passed this resolution about this bill?
Mr. Murchison. No; I was not there, because I had to leave at the end of the first day to go to another meeting.
Representative Ramspeck. You are familiar with the discussion that took place there about this bill?
Mr. Murchison. I was there while the discussion was taking place, and I participated in the discussion. The resolutions were passed on the following day and I do not know what that resolution is.
Representative Ramspeck. That is all. I want to put this resolution in the record when his testimony is over.
The Chairman. Mr. Murchison, I want to ask two or three questions first. I appreciate your statement very much; I think it is constructive, but I do not agree with you on many of the implications that you have made, that you have drawn. I think you have made a really constructive statement, but, as I understand, you say that
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we can establish a minimum wage which is based on subsistence anywhere, in the country, and make that a basic minimum, or if we want to go beyond the bare subsistence that it would be necessary to give a board, or a commission, power to fix fair wages in particular industries, your theory being that it is going to require the same thing for the man to live who is merely going to get sufficient whether he works for one industry or another.
Mr. Murchison. Yes.
The Chairman. I understand that you draw a distinction between the minimum wage fixed for subsistence purposes and a fair wage in an industry according to the standards of that industry, or the best elements of that industry.
Mr. Murchison. There is a very, very real and important distinction.
The Chairman. And your idea is, or the recommendation of your industry is that what we do is to legislate or declare a subsistence minimum which applies over the entire country and below which no industry can go.
Mr. Murchison. Yes.
The Chairman. That, of course, would affect a great many people in parts of the country where wages are lowered, or in the communities where wages are lowered, because it goes by communities sometimes rather than by parts of the country.
Mr. Murchison. Yes, sir.
The Chairman. And it is the belief of your industry that if we would fix, by legislation, a minimum subsistence wage we should not go any further at this time on minimum wages.
Mr. Murchison. Yes; that is the feeling.
The Chairman. Now, if Congress, however; should determine to go further than that mere subsistence minimum, you concede, of course, that it would be necessary to entrust that power to some agency with discretionary authority?
Mr. Murchison. But not too much discretion, Senator.
The Chairman. Yes; I understand. Now, if they are given the discretion to fix the minimum wage, industry by industry, or a fair minimum, as we will call it, is it your idea that the sale criterion fixed in the law should be the prevailing rate in the industry, paid by the majority of the industry, or the best paying part of the industry?
Mr. Murchison. Yes; exactly.
The Chairman. Would it be your idea that it would be necessary, under those circumstances, for the Board to have further power to discriminate or to distinguish between wages in one locality where they were prevailing at a higher rate than another?
Mr. Murchison. Only under broad, regional considerations. I think if they were given discretion to discriminate by communities we are at once faced with an impossible administrative task, because there are thousands and thousands of such communities, each one of which would be striving for a favorable differential, and I think it would be an intolerable situation and impossible to administrate it.
The Chairman. There are other difficulties in connection with it.
Mr. Murchison. That would be true of the occupational minimum. I think the minimum should be regarded as a basic floor for the industry as a whole.
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The Chairman. Suppose, Doctor, that we did fix by legislation, and it could be sustained, a basic minimum for the entire country which, as you would say, should be under $16; would that be of any advantage to workers who lived in cities, say. like New York, or large places where living expenses are very high, where rent is very high—housing, of course, is one of the chief considerations—do you believe that that would tend to elevate the wage standards in. the larger places in the lower bracket?
Mr. Murchison. I think it would, and I think insofar as it elevated living standards throughout the country, generally it would remove the pressure from the cities so that probably the conditions in the cities would be greatly improved.
The Chairman. Would you be willing to express any opinion yourself self as to what should be and could be the minimum wage established by Congress, the minimum subsistence wage for the entire country?
Mr. Murchison. No; I could not do that, Senator. I could speak only for our industry.
The Chairman. What would you say it should be for your industry?
Mr. Murchison. I would say that our industry would be willing to do better than the code prescribed.
The Chairman. What was the lowest?
Mr. Murchison. The lowest was $12 a week, but I think the industry would not object to a basic minimum of $13 a week.
The Chairman. Now, with reference to hours, I am very much interested in your suggestion with reference to that, because I have struggled with the question of providing tolerances in the passage of a bill throught the Senate which would have provided a 30-hour week and, I understood you to say that your industry preferred a straight 40-hour week for the Nation—that is, for the industry of the Nation?
Mr. Murchison. Yes.
The Chairman. With certain tolerances. What tolerances, and how shall they be determined?
Mr. Murchison. Well, for example, in certain periods of the year the food industries are loaded up with fresh food that must be taken care of, must be processed. There you have an emergency situation that cannot be escaped, and in certain other industries seasonal peaks for different reasons are inevitable, they cannot be avoided. That is the type of tolerance that I had in mind, but I think even that tolerance should be limited. I think probably a 10-percent tolerance should be the maximum.
The Chairman. We had a gentleman testify here today about an industry where he said, from his business experience, that conditions sometimes required the working of longer hours than in other industries.
Mr. Murchison. Yes.
The Chairman. We had another man who testified that he arranged to give his men pay for a 40-hour week throughout the year, although sometimes they worked far more than 40 hours and sometimes they worked far less. For instance, I think he said at one time they worked as low as 20 hours a week, but he did provide for a yearly wage. How would you suggest that we write a definite
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40-hour-week law if we decided to write a 40-hour-week law ? What authority should we give to a board ? How could we do it to provide for the tolerances and necessary changes and alterations?
Mr. Murchison. Well, of course, in this bill that has been done, but it has been done under very general criteria.
The Chairman. What I am getting at, how could we do it with any less generality? I have always believed that so far as possible Congress should legislate itself, and when it did pass any power to a board or agency that it should do so with the best established criteria, without unduly restricting the agency. Now, how could we restrict, how could we alter those criteria in such a way as to provide for a definite workweek?
Mr. Murchison. That particular question was gone over by every industry upon the inauguration of the codes. I think a committee of experts, by going back to that testimony and studying the problem of each industry and how it was met, would be able to compile criteria from that experience, and it would be very definite.
The Chairman. It would still be necessary, if we are going to have any exceptions and not make it a blanket order, arbitrarily saying so many hours a week, it would still be necessary to give pretty general powers to a board, because we could not possibly anticipate all the contingencies that might arise; is that not true?
Mr. Murchison. That may be true. Senator.
The Chairman. I have tried myself, on a number of occasions, to narrow it down as much as possible, and it was exceedingly difficult.
Mr. Murchison. Of course, I think there is one possibility which I often thought of: If the enforcement agency of the Government would let that work be done for it by the industry, so that each industry, say, is called upon to present its own code in that respect for the approval of the enforcement agency, with the understanding that the tolerance which is arrived at would have to have the approval of 75 percent of the industry, or of an association representing 5 percent of the industry, I think each industry could contribute tremendously to the solution of that problem.
The Chairman. Of course, that would be transferring the original code-making authorities to the industry.
Mr. Murchison. But only for a very limited purpose.
The Chairman. That was one of the reasons that I originally voted against the N. R. A. I did not believe in it. I believe that the Government agencies should be responsible only to the Government in connection with law and rules governing other people. I would appreciate your suggestion, because you have given a great deal of study to this, if you would assume that you were writing a bill for certain hours per week and you would put in there the power that you would find it necessary to give a board in order to provide these tolerances, and to meet the different contingencies, if you would give it to us I would greatly appreciate it.
I would further appreciate it on the minimum wage, assuming that we were going to provide not merely a subsistence wage but a wage industry by industry, if you would give us the benefit of attempting to draft something along that line yourself which would aid us when we finally pass on this bill, so that we will have a good bill.
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Mr. Murchison. We will be very, very happy to make an attempt to do that, Senator.
The Chairman. There is another objection to the provision which attempts to prevent the minimum wage from becoming the maximum. I think one of your hardest criticisms goes to that particular clause which provides that employees shall not be discharged in the upper brackets when the minimum wage is fixed. Of course, you know the objective desired there, you are familiar with the fact that charges have been made in certain instances where wages were fixed by the N. R. A. that the employer would discharge some of the higher-paid employees or would reduce their wages, and it is desirable, and I know you would agree with that, from your statement, that no such thing occur.
I would also appreciate it if you would suggest some method other than that which has been written into this bill, which would aid in preventing the minimum wage from becoming the maximum on the part of those who want to use it for that purpose.
Mr. Murchison. I feel that that tendency has been greatly exaggerated, Senator, and I believe that the law should not, either directly or indirectly, attempt to touch wage scales over and above the minimum which has been established. 1 think the rest of it should be left to bargaining.
The Chairman. There is only one other thing I want to ask you. You have recommended very strongly that we separate the child-labor features of this bill, assuming, I suppose, that we may have a hard time in passing the whole bill, but we will have an easy time in passing the child-labor provision of the bill.
Mr. Murchison. You can understand that, Senator, because our industry has been harassed so much with respect to that particular thing. We just want to eliminate the argument.
The Chairman. I think it is wise for you to also take into consideration that there might be somebody who would still be glad to have that type of law held unconstitutional. Mr. Jackson, in testifying before our committee, testified that in his judgment it greatly strengthened the probability of having the child-labor feature sustained by the Supreme Court to have it passed in connection with other labor legislation, for the same reason which was argued in the Dagenhart the 30 hours a week, many years ago, they held that the Congress only had power to regulate interstate commerce, that the goods manufactured by child labor constituted a very small part of all the goods which entered into that stream and that, therefore, they held that this was merely a police regulation which would not substantially affect interstate commerce.
Recently the Court has held, as you know, in several striking cases, that if the bare subsistence affects interstate commerce that it is sufficient to give Congress power, and you can readily see how much more all of these practices would affect interstate commerce than one. The cumulative effect of all might meet the standards set by the Court, when the child-labor feature alone would not. If that is true, do you not think it would be wiser for us to present this to the Supreme Court in the manner which gives it the greatest legal and constitutional strength?
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Mr. Murchison. Possibly so, as a matter of expediency, Senator
The Chairman. Not a matter of expediency, but to get a law passed that will stand up in any court.
Mr. Murchison. It is very unfortunate that the test of economic social legislation has to be arrived at in that way.
The Chairman. I fully agree with you, and I have expressed myself many times. I am wholly out of accord with many of those things, of course. I think the minority in the Dagenhart case was sound and the majority unsound, but we have to face realities. What we are endeavoring to do is to pass a bill on child labor that will stand the test of both schools of legal philosophy and constitutional philosophy in the courts. If it is true, as stated by Mr. Jackson, that it strengthens the constitutional features of the child-labor legislation to pass it in connection with others, do you not think it would be wrong for those who actually want child-labor legislation not merely to be passed but to go into effect, would it not be foolish on their part to abandon the best chance in favor of the one that might have the least chance?
Mr. Murchison. That might very well be true, Senator.
Representative Lambertson. Going back to the question of Mr. Ramspeck, as to the possibility of a prospective board, referring to the Federal Trade Commission, I think we would all rather not have a new board if we could find another board to be satisfactory. The Federal Trade Commission, in years before this administration, was considered a good commission and progressive, even before this administration.
Mr. Murchison. Yes; I have always thought so, Congressman.
Representative Lambertson. You cannot infer, Mr. Ramspeck, that it deteriorated, certainly, under this administration.
Representative Rambpeck. I do not think you can infer that it ever had been bad.
Representative Lambertson. Twelve years before this administration the Federal Trade Commission was called a good commission. It would be a good place to put this, I think. If this is passed as contemplated do you think it would result in a rise of the price of products in the country generally?
Mr. Murchison. It might. Of course, it- depends upon how the powers of the board are used. If the board proceeds on the theory that it has got to elevate wage levels throughout the country that necessarily is going to affect our price level and affect our trade relationships -with the rest of the world.
Representative Lambertson. It may be desirable that they should be raised, but it is going to be important, I think, whether or not they are going to be raised with the passage of this law.
Mr. Murchtson. Absolutely.
Representative Lambertson. Another thing, don’t you think it will eliminate the intrastate business, just as it was eliminated completely in connection with the railroads? When I went to the legislature 30 years ago the railroad was the big thing that we regulated in the State.
Mr. Murchison. Yes.
Representative Lambertson. The Interstate Commerce Commission took over and we have no regulation of railroad rates any more, do we, in the States?
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Mr. Murchison. That is right.
Representative Lambertson. None at all?
Mr. Murchison. No.
Representative Lambertson. Will not that be true with this?
Mr. Murchison. That is. why I was so sorry to see in this bill that provision having to do with 18-year-old persons employed in the various States. That is why I objected so strongly to that. There you have got in this bill a very effective barrier to interstate commerce.
The Chairman. Thank you very much, Mr. Murchison.
Representative Ramspeck. I would like to have this resolution inserted in the record at this point.
(The resolution referred to is as follows:)
Whereas the members of the Cotton Manufacturers’ Association of Georgia have long striven to improve the working conditions and earning capacity of their employees and are, in common with all right-thinking people, heartily in favor of any plan that tends to accomplish this end, and feel that any such plan must be one that will not keep Industry in a constant state of uncertainty and anxiety and will recognize that prices of merchandise can be increased to a point that will seriously retard buying and defeat the purpose of such a plan; and
Whereas the so-called Black-Connery bill purports to fix a standard maximum workweek and prescribe standard minimum wages but in reality vests this power in a board of five members, to be exercised in the almost uncontrolled discretion of the Board; denies to any court the right to review the facts on which any order of the Board is predicated; impose severe criminal penalties for any violation of a board order; and makes unlawful the shipment in interstate commerce of any goods produced in violation of a board order; and
Whereas this association believes that the placing of such power in the hands of any board will make it the virtual dictator of American business, will keep industry in a constant state of uncertainty and anxiety, and will thereby retard industrial progress and fail to accomplish the end sought; and
Whereas the fact that present wages, the prices of raw materials, supplies and findings used in the operation of a textile plant have forced the prices of finished textiles to extremely high levels with the result that buying of such textiles has greatly decreased in recent weeks slowing down production and causing lay-offs of employees, conclusively demonstrates the necessity of consideration of this factor in any wage-and-hour plan; and
Whereas this Association believes that the objects sought can best be accomplished by a bill that permits each individual industry to initiate and regulate a wage-and-hour plan adapted to its particular problems, thus giving, to its employees the benefits desired but retaining for industry some control of its own destiny: Now, therefore, be it
Resolved, By this association in convention assembled:
(a) That it is heartily in favor of any plan that will insure to employees a proper return for their labor and that will protect employers from the competition of underpaid labor
(b) That it believes that this can be accomplished without imposing on Industry the heavy burdens sought to be Imposed by the Black-Connery bill and by permitting industry to retain a larger voice in its own affairs;
(c) That it favors legislation designed to permit each individual Industry to initiate and execute plans to increase and stabilize the earning power of employees
(d) That the Senators and Representatives in Congress from Georgia be requested to oppose the enactment of the Black-Connery bill, and the creation of a wage and hour-fixing board;
(c) That a committee be appointed to confer with our Senators and Representatives with a view to securing legislation such as is favored by this association.
The Chairman. We wish to place in the record at this point, at the request of Congressman Healey, of Massachusetts, a statement of his favoring the passage of this bill. He found it impossible to be
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here Monday. Congressman Healey is one of the joint authors of the Walsh-Healey Act.
(The statement referred to is as follows:)
June 10, 1937
Mr. Chairman and Gentlemen: I desire to record myself in favor of the objectives of the so-called Black-Connery bill now before the joint committee. I trust that the purposes and principles contained in these bills will be enacted into effective and enforceable legislation at this present session of Congress.
According to one economist who has testified at this hearing, the lives of 10,000,000 American workers and their families and dependents will be affected by the passage of this act. Mr. Leon Henderson testified that there are about 3,000,000 workers engaged in industry of an interstate character who receive less than 40 cents an hour and over 6,000,000 who work more than 40 hours a week. Business and Industry will benefit in the long run by the increased purchasing power created by the act, and our whole social and economic order will be adjusted to cope with present-day labor problems.
The adoption of a maximum 40-hour week has become an economic necessity.
The persistence of widespread unemployment in spite of near-normal business recovery, tremendous governmental cost for the support of the idle on relief rolls, high-speed machinery, quantity production, the necessity for the creation of mass purchasing power to consume increased production, have, from the standpoint of sheer economic necessity, justified the shortening of hours and the raising of wages as a solution for unemployment and underconsumption.
The worker is unable to stand up to the grueling pace of high-speed machinery for long hours without injury to his health and efficiency. Our modern concept of social justice recognizes that time for recreation and healthful and educational pursuits are due the worker and his family.
A world conference of textile interests was held recently in Washington. The principal subject on the agenda of that conference was the adoption of a 40-hour workweek for textile workers throughout the world. Great progress was made for the eventual adoption of this reform at this conference.
After protracted debates, the House of Representatives has just passed the appropriations for relief for the next fiscal year. The amount of that appropriation is $1,500,000,000. Although efforts were made to earmark large amounts of the appropriation for other public projects, the bill as finally passed devotes all of this huge sum for sheer relief purposes—and even with this tremendous sum available for relief, thousands will be cut from the Works Progress Administration rolls because of its inadequacy—add to those who will be cared for by this appropriation the thousands being taken care of on the welfare rolls of the States and their subdivisions.
Surely in the long run the burden will be less difficult for industry and the taxpayers to bear if jobs are created for the idle rather than pay the bills to support them on relief rolls.
The drafts of these bills under consideration by the committees have not definitely fixed maximum hours. I trust, however, that you will fix the 40-hour week as the ceiling. Many industries may operate economically on a week of lesser hours. However, the bill may be made flexible enough to provide for overtime work when required by seasonal and emergency demands, providing that an overtime rate of at least time and half is fixed.
The matter of a basic minimum wage has not been definitely fixed in the bills under consideration. Provision is made for investigations and hearings by the Board, under standards contained in the bill for the fixing of minimum wages for various industries. In my opinion, the committees should fix a definite basic wage of not less than 40 cents an hour. If the worker works a 40-hour week, this will give him a wage of $16 per week. Surely, it will not be contended that this is an excessive wage in any section of the country—if the worker and his family are to be assured of a standard of living commensurate with health and efficiency. However, according to the figures of Mr. Henderson, there are 3,000,000 workers in this country receiving less.
Great strides for the complete elimination of child labor may be made by this vehicle. Personally, I would rather fix the age at 18 rather than 16. It would mean thousands of jobs for persons over 18 and would insure 2 more years at school and 2 more years to prepare and develop for the battle of life for our youth.
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I think that a provision should be written in this bill barring the products of homework from interstate commerce. This vicious system has been effectively employed by exploiters of labor to defeat State laws and has resulted in turning homes into sweatshops.
Here whole families, Including children of tender years, work into the long hours of the night on tasks beyond their physical stamina, which undermine and endanger health, for pitifully meager wages.
The general labor provisions of these bills follow the Walsh-Healey Government Contracts Act.
That legislation resulted from an investigation conducted by a subcommittee of the House Judiciary Committee, over which I had the honor to preside. The investigation and subsequent hearings were conducted by the committee to determine the extent of departure from N. R. A. code standards of concerns performing Government contracts.
Investigation revealed that within a few weeks after the demise of N. R. A, industry having Government contracts had speedily lengthened hours and decreased pay. Particularly was this true in certain sweated industries which were taking advantage of substandard and antisocial practices in order to submit low bids on contracts of the Government.
The so-called Walsh-Healey bill, providing for a ban of child and convict labor, 8-hour day, 40-hour week, and decent prevailing minimum wages, was enacted by the Congress in the last session to combat these conditions. The legislation was predicated on the philosophy that the Government should not be placed in the paradoxial position of urging the adoption of fair and just standards, on the one hand; and on the other, encouraging antisocial practices through the bounty of its contracts; and further, that the Government should set the example to industry by insisting on fair standards being maintained by its contractors. This legislation has been in effect about 8 months now, and for the first few months its administration was handicapped because of a lack of appropriations. Many industries that at first resented the idea of any governmental regulation endeavored to defeat its purposes by combining to refrain from submitting bids for Government contracts. The most dramatic of the strikes against the fundamental policy of the Government was the obstinate refusal of the steel industry to adopt a 40-hour week so that it might bid under the Walsh-Healey Act. This situation was carried to the extent of threatening to hold up the naval armament program and caused a request from the Navy Department that an exemption may be made for the steel industry. The Secretary of Labor, however, refused to grant this request, when Congress had set as a basic standard for industries designing to supply the Government, the 8-hour day and 40-hour week.
The refusal of the Secretary of Labor to grant this request for exemption was doubtless an important factor in the decision of the steel industry to adopt the labor provisions of the Walsh-Healey Act. The direct effect of this reduction in weekly hours of some million steel employees from a 44-hour, and in some cases a 48-hour week, to a 40-hour week, with overtime payment of time and a half for all hours in excess of 40, cannot be even approximately estimated.
However, I quote from a clipping which followed the increased wages received by the thousands of employees of a certain steel industry, an Associated Press dispatch from Pittsburgh, printed in the Star-Tribune, Providence, R. I., April 10, 1937:
“Pittsburgh, April 10 (A. P.).—A wave of buying swept steel towns of western Pennsylvania today as the mills distributed the first of the bigger pay rolls under the industry’s new wage scale.
“In the Pittsburgh area the Jones and Laughlin Corporation led off yesterday with fatter pay envelopes; and ‘Big Steel’ followed today at the Homestead plant of the Carnegie-Illinois Steel Corporation.
“In the Shenango Valley, to the north, industrial workers drew their first $1,000,000 pay since 1929. Six big companies paid workers there this week end.
“The Jones and Laughlin Corporation employs 25,000 men. More than 50,000 workers in the industry shared in the $100,000,000-a-year increase granted a month ago.
“One worker estimated the individual increases ranged from $10 to $15 a week. The workweek was reduced from 48 to 40 hours, and the men were paid time and a half for overtime.
“Cash registers in the south side of Pittsburgh, where the Jones and Laughlin plant is located, clicked busily as workers crowded into stores.
“House furnishing and clothing attracted the most buyers, but one woman jubilantly spent part of her husband's pay increase in a beauty shop. ‘This’,
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she said, as she sat in the enameled chair, ‘is the first permanent wave I’ve had in a year. I’m putting some of the extra dough into keeping my looks.’ ”
Other industries, such as copper and oil and many smaller industries, first were inclined to strike against bidding under the Walsh-Healey terms for Government contracts; but after the example set by steel, they soon came in line, and at the present time the Government is finding no difficulty in making purchases under the labor conditions set by this act Thus the example set by the Government of decent and fair labor standards has already carried into Industry generally and has added many thousands of dollars to the purchasing power of the workers. Over 2,500 contracts amounting to $142,603,456 have been awarded in 8 months, subject to the Walsh-Healey Act These contracts have been performed in 2,199 different establishments.
At the present time, industry and Government contracts furnishing supplies to the Government are not finding fault with compliance with this act, and I know that many of them are, in fact, happy that there is such an act on the statute books to protect them against the chiselers, sweatshops, and unfair competition.
However, this act has but laid the foundation for all-embrasic legislation such as this proposed legislation. It has been amply demonstrated since N. R. A. that while many, many businesses have hoped that some rules of fair competition and universal wage and hour regulations might be adopted by industry, yet the evidence that they departed too quickly from those set by N. R. A. codes, proves conclusively that industry cannot or will not regulate itself and that regulation by the Government for the general welfare of all concerned is absolutely necessary to preserve any rules at all in this direction. A board such as is set up here, charged with the responsibility for the determination of fair and adequate wages and hours and the administration and enforcement of this act, is the only way that such legislation can possibly be effective.
I believe under the recent decisions of the Supreme Court, in the group of decisions testing the Wagner-Connery Labor Relations Act, that this legislation will find a constitutional foundation.
1. There is the power directly to regulate or prohibit the movement of goods across State lines. That is an inherent and constitutional right contained in the interstate-commerce clause.
2. The Congress has the power to regulate competition in interstate commerce. There you have something a little more vague but nevertheless backed by a series of laws, including the antitrust laws and the Federal Trade Commission laws.
3. The power to regulate commerce includes the power to eliminate labor conditions which lead to labor disputes. That was the basis, you will remember, of the National Labor Relations Act; the theory that the Federal Government has the power to stop unfavorable labor conditions because these unfavorable labor conditions may lead to disputes which will interfere with interstate commerce. That is the third constitutional approach.
4. The power to regulate commerce is held to include the power to prohibit transportation of goods into States in violation of the laws of such States. I think perhaps that needs a word more of explanation. Back in 1929 Congress enacted a prison-goods law, which was rather original. Congress said: “We hereby give up the right to control Interstate commerce in these goods, and we will now let the States put up barriers against prison-made goods.” That was the Hawes-Cooper Act. Four years later Congress passed another law saying: “It is not enough to let the States prohibit these goods from coming in. We will now pass another law helping the States to keep these goods from coming in.” Both these laws were upheld by the Supreme Court, one in the Whitfield v. Ohio case and the other the Kentucky Collar case, both last year. In other words, these bills said: “You, Congress, divest yourselves of the right to regulate Interstate commerce and give the States the power to stop goods coming in that they don’t want, and we will help you.” That is thrown in there, too. That is another constitutional approach.
5. The power to regulate commerce has been held to include power to eliminate a condition which affects the movement of goods, the price of goods for which causes undue price fluctuations in interstate commerce. That was upheld in the Stock Yards case. This law contains no trade practices as we knew them under the retail code. Nevertheless, they are using the technic of the trade practices in this connection to apply to labor practices.
This is the sixth and last constitutional approach. They have six barriers. If the Supreme Court knocks one down they fall back on the second line of
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defense. Knock them down, and you have got another barrier to meet—six constitutional approaches.
6. The power to regulate Interstate commerce has been held to include the power to regulate conduct intended to divert or substantially affect the movement of goods in interstate commerce. That could be explained to a much greater extent; but those, briefly, are the six constitutional approaches of the bill.
Gentlemen, the enactment of this legislation will protect millions of underpaid, underprivileged workers who do not have the facilities for collective bargaining.
It will also raise standards in all sections of our country and effectively put an end to the practices of industries migrating from section to section ever in search of cheap labor and thus causing serious economic dislocations.
It will banish low-wage areas in any part of our country by equalizing standards in all sections.
These and countless other benefits will flow from the enactment of this legislation.
The Chairman. I wish also to state that we have requested a gentleman to come tomorrow who had been asked by several members of this committee to come, and several others who are not connected with the committee, Professor Hastings. I believe it is, of Yale University. We wired him and asked him ir he would come to let us know. We have not heard from him. Therefore I assume we will have no meeting tomorrow. With the consent of the committee, if he comes I will take the liberty of placing any statement he has in the record. If he is coming we have not received any notice of it, and I would not want to ask the committee to come back Saturday when we do not know that we will have a witness, so the committee will recess until Monday morning at 10 o’clock.
(Whereupon, at the hour of 5:07 p. m., the committee recessed until 10 a. m. Monday, June 14,1937.)
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MONDAY, JUNE 14, 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, Jr., Robert Ramspeck, Matthew A. Dunn, Reuben T. Wood, Jennings Randolph, Richard J. Welch, Fred A. Hartley, Jr.} William P. Lambertson, Albert Thomas, Joseph A. Dixon, William F. Allen, and Santiago Iglesias.
The Chairman. The committee will be in order. Congressman Boren.
Representative Boren. I come before this committee to offer a proposed amendment or suggestion on pending legislation as affecting the oil industry. It will make a provision for the 36-hour workweek.
Recently, when the Connally oil bill and other legislation was before my own committee, I offered there an amendment that—
No person, firm, or corporation engaged in the drilling for, production of, or transportation of crude petroleum in interstate commerce shall employ or cause to be employed any worker for more than 40 hours in 1 week nor more than 72 hours in any 2 consecutive weeks, nor more than 10 hours in any 2 consecutive days.
Now, as you will readily see from that amendment, the intention was to establish a 36-hour week, but making a provision for 40 hours in any 1 single week, in order to make it possible to meet emergencies that would require overtime. Also the 16 hours in any 2 consecutive days is an attempt to establish the 6-hour working day but to make reasonable provision for emergencies that might arise because of necessities for overtime.
I present this amendment, gentlemen of the committee, because we have already established in the oil business, since code days, the 36-hour week. I do not mean to indicate that all oil companies abide by that program, but I think it is safe to say that 60 or 70 percent
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of the companies do abide by a program calling for the 36-hour workweek.
The oil industry is a special problem, and I am very anxious that we be allowed to maintain the standards in the industry that have already been tried and found to be what we want.
I represent one of the greatest oil-producing districts in America and am acquainted first-hand with the situation that has existed in that industry during the last 10 years, as affects the labor, marketing, oil consumption, and production control. I have been a laborer m the oil field and have engaged, to some extent, in the other end of the business, that of drilling for oil, and I know that the 36-hour week has been the answer to the labor problem in my district, and I feel certain, should there be a general provision for a 40-hour week without excepting this great industry, that this industry, which is the third largest industry from the standpoint of the amount of money invested and people concerned in its production, the third in the Nation. This industry needs the 36-hour workweek.
I want to point out again that there are certain companies—and I believe that would include some 60 or 70 percent of them—that are on a 36-hour workweek at the present time, and that they have a reasonable minimum rate of pay.
In offering the above amendment I added thereto before my committee, the Committee on Interstate and Foreign Commerce, that—
No person, firm, or corporation engaged in the drilling for, production of, or transportation of crude petroleum in interstate commerce shall pay less than $5 per 6 hours for daily employment.
This amendment for a 36-hour workweek or $5 a day, would not change the situation in the oil industry, except to bring the chiseler or scalper, or whatever you wish to call him, into line. It is important because competitive features will force the companies now operating on a 36-hour workweek to go to a 40-hour week, or a week of greater hours, if there is no provision made for a 36-hour workweek.
A large percentage of operators who have already gone back to long hours since the code days have been drawing their closer competitors into line with them, so the long-hour workweek is gradually coming back in the oil industry. I have seen it when there was a 12-hour workday, I have seen it when there was a 6-hour workday, and it is very important, in my industry—I mean I represent a district which is largely an oil industry—this great industry that we have in America, that we have some provision to maintain what might be termed the “status quo” in the oil industry, and if I may have permission, I would like to just take from the record in the hearings before the Interstate and Foreign Commerce Committee on the so-called Connally hot-oil bill, the statement that I made to that committee supporting the amendment that I offered, and also the statement of Mr. Harvey C. Fremming, president of the International Association of Oilfield, Gas Well, and Refinery Workers of America, who spoke subsequent to me introducing this amendment and utilizing most of his time in discussing the amendment that I proposed there.
I do not care, Senator, to make a lengthy statement. I think I have made it clear. What I want is a provision in this bill that will permit us in the oil industry to maintain what might be called the
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status quo that we have found to be the solution of our labor problem. I say that in realization that there are a few instances such as the man who is employed as a pumper taking care of one well, perhaps that is his sole job, that could be said that he works 24 hours a day because if the pump quits working at midnight, he probably lives close by and is accustomed to hearing that pump going, and if it fails to work—any of you who live in the oil fields know that when the pump stops working in the middle of the night it insufficient to awaken you—and the man would go out and look after the well. As a matter of fact, there are few of the individual instances where a man might look after one or two wells as a pumper or roustabout maintaining a lease that they could be said to be working on a 24-hour schedule, but who actually perhaps are not working more than 3 or 4 hours a day.
I offer this amendment realizing that there must be some exception made, and I presume that this committee will, in this legislation, make some special provision, or at least some provision for the type of exception which will occur in all industries. I know my own correspondence on this amendment brought from the hospitals letters saying that if a similar provision were instituted in the hospitals that the smaller hospitals that had nurses on call would not be able to function properly because of the emergencies that might arise there.
I feel that the adoption of this amendment will be the real answer to the labor problem in the oil industry, and if I am permitted to put in the record the two statements that I indicated you will see that the president of the International Oil Field Workers Union expresses the same opinion as the sentiment of all workers in the entire oil industry.
They had a convention just the other day in Kansas City of all the oil workers in America, and the record of that convention will show that the oil labor realizes that they need to maintain what I call the status quo, the 36-hour workweek.
That concludes my statement.
The Chairman. Thank you very much, Congressman.
Representative Boren. If there are any questions I will be glad to answer them. May I be allowed to enter into the record these two statements?
The Chairman. Is there any objection? All right.
(The statements referred to are as follows:)
Mr. Boren. Mr. Chairman and gentlemen of the committee, I want to offer for the record later a prepared statement, substantiating my proposal here, but I would like to propose to this committee that it add to H. R. 5366, at the conclusion thereof, after the word “repealed”, these words: “And following section 2 of said act add:
“ ‘No person, firm, or corporation engaged in the drilling for, production of, or transportation of crude petroleum in interstate commerce shall employ or cause to be employed any worker for more than 40 hours in 1 week nor more than 72 hours in any 2 consecutive weeks nor more than 16 hours in any 2 consecutive days: Provided further. That no person, firm, or corporation engaged in the drilling for, production of, or transportation of crude petroleum in interstate commerce shall pay less than $5 per 6 hours for daily employment.’ ”
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In substantiating this amendment, Mr. Chairman, I would like to offer later for the record a prepared statement, and due to the fact that the committee has other witnesses here who desire to be heard this morning I will not take up more of your time.
Mr. Cole. Might I suggest, that in order to have the hearing printed, and I assume you would want your statement to follow what you have said here this morning—--
Mr. Boren. Yes.
Mr. Cole. That you submit it to us as early as possible.
Mr. Boren. I will do that. That is all I have this morning, Mr. Chairman.
Mr. Boren. Mr. Chairman, I would like to offer for the consideration of this committee, an amendment to H. R. 5366:
“No person, firm, or corporation engaged in the drilling for, production of, or transportation of crude petroleum in interstate commerce shall employ or cause to be employed any worker for more than 40 hours in 1 week, nor more than 72 hours in any 2 consecutive weeks, nor more than 16 hours in any 2 consecutive days: Provided further, That no person, firm, or corporation engaged in the drilling for, production of, or transportation of crude petroleum in interstate commerce shall pay less than $5 per 6 hours for dally employment.”
In offering this amendment to H. R. 5366, I am doing so in the belief that stability in the oil industry should provide stability in labor conditions in that industry, and that legislation aimed to aid the producers of oil should take into account the workmen engaged in that production.
I represent one of the greatest oil-producing districts In America. I am acquainted first-hand with the situation that has existed in that industry during the last 10 years as affecting labor, oil production, oil marketing, and to some degree oil consumption and production control.
I have seen crude oil sell as low as 10 cents per barrel in my home county. I think I have some first-hand knowledge of the chaotic conditions that have existed in the marketing fields, both in the crude marketing and retail marketing of the finished products. But, also, I am keenly aware of the labor conditions that have existed in the oil fields for the past 10 years. I have seen the 12-hour day as a common practice; then, under the N. R. A. code, as low as 6-hour day. I have witnessed the effect of unemployment and observed the general condition of the country where oil Is produced, both under the long-hour and the short-hour day system. I want to point out to this committee that permanent legislation for the oil industry should take into account the laborer in that industry.
The necessity for this amendment is clearly pointed out by the fact that oil has gone up from 10 cents to $1.27 a barrel in my district That is to say, that the price of oil has increased more than 1,000 percent but the pay of the workmen has increased far less than 10 percent on an average.
The evidence in my home county would indicate that employment has not increased at all with the increase in the market price of oil. Of course, I cannot point out specific figures, but I could give you numerous examples from my general acquaintance with the personnel engaged in the production of oil in my district. Labor Department figures indicate that there has been an 8-percent reduction in employment concurrent with a 900,000-barrel daily increase in crude production.
I want to point out that there are certain integrated companies maintaining operation on a 36-hour workweek and at reasonable minimum rate of pay. I think it is safe to say there is a fair percentage of the companies engaged tn oil production that are operating now on the basis that would be set up under the terms of my proposed amendment. Their experience under the N. R. A. brought them to the conclusion that this operation was the wisest policy.
However, there is a large percentage of the operators who have already gone back to long hours, which in turn means less men on the pay roll and workmen engaged for longer hours without proportional increase In compensation.
This means that the 12-hour day in crude production is finding its way back into the producing fields. This condition, while not common, is of sufficient strength to act as an example frequently pointed to by those in the industry who are attempting to be reasonably fair.
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It is evident that operators working under the code provisions, while facing the competitive factors relating to hours and rates of pay, must see stability and uniformity in hours of labor and rates of pay or natural economic laws will cause them to lengthen hours and bring their rates of pay down to a figure comparable to this type of competitive operations.
My understanding of H. R. 5366 or S. 790, making permanent the Connally hot oil bill, is that in the name of conservation it seeks to establish, among other things, a uniform price. The bill has as its purpose, economic value to the operators involved with, of course, an element consistent with the general welfare Involved in the economy affecting this great natural resource. Since this legislation is in fact an economic stabilizing measure, it is important that we should establish economic stabilization for the workers Involved. It is upon this principle that I have submitted for your consideration the proposed amendment.
Mr. Cole. Thank you.
Colonel Thompson was to go on next, but if you are willing to give way to Mr. Fremmlng, who has to leave this afternoon for Chicago, Mr. Thompson, we will hear him.
Mr. Thompson. I will be glad to give way.
Mr. Cole. He has a statement which he does not think will take more than about 5 minutes.
Mr. Thompson. I will give way with pleasure.
Mr. Cole. Before we hear him, the committee has considered whether it will meet this afternoon or tomorrow morning. Mr. Mapes is on another committee which requires his appearance this afternoon.
Mr. Thompson. That will suit me much better.
Mr. Cole. And after Mr. Fremmings’ statement we will adjourn until 10 o’clock tomorrow.
Mr. Thompson. Ten o’clock tomorrow morning.
Mr. Cole. Yes; we may go on tomorrow afternoon and Thursday afternoon if we find it suits the convenience of the committee.
Mr. Fremming, we will hear you now.
Mr. Cole. Give your full name for the record.
Mr. Fremming. My name is Harvey C. Fremming. I am president of the International Association of Oil Field, Gas Well, and Refinery Workers of America, and I appear here on behalf of that association. The theory of the association has from the inception of the recovery in the industry attempted to contribute to certain defined economic standards in the petroleum industry through its organization and its relationship to the industry and through its association with the industry.
My appearance, Mr. Chairman, has no immediate bearing on the 'bill, although I am not unmindful of the tremendous value of conservation, but may I be pardoned for saying that I do not look upon this as solely a conservation measure. I cannot bring myself to think of this as a conservation measure. It is purely an economic measure, and the use of the term “conservation’, here to my mind is in fact a misnomer. We are not unmindful of the purpose of the bill and the desire to have it continued for the economic reasons involved, but at the same time we appreciate the efforts being made to maintain the price structure through this instrumentality, and we offer the suggestion that there is another factor involved and that is the human factor in the industry itself. And that is the reason, the only purpose of appearing here, not to oppose the purpose of this bill itself but to call attention to the fact that there are some
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85,000 workers in the petroleum industry, some of whom, by reason of unfair practices, are not going to benefit in the price-structure value of this bill because some have failed to maintain reasonable competitive conditions in the production of oil. So that we have here the cost problem; we have the uneconomic situation of crude production, and it is our purpose, gentlemen, to ask for an amendment to the bill which will provide for maximum hours, regulation of maximum hours, and minimum rates of pay as just previously introduced by Congressman Boren, of Oklahoma. We support this amendment and we support it for many reasons. I am not going into a lengthy discussion because of the courtesy of this committee in extending time to permit me to be heard this morning. There are many reasons why this can be appreciated, not only in this one branch of the industry, but because of the human factor as well: this, Mr. Chairman, is not merely a question of regulating the shipment of contraband oil—that is, oil produced in excess of State allowables. It goes much beyond that, as very aptly appeared from the inquiries here this morning by members of the committee.
The right to regulate maximum hours of employment and minimum rates of pay is no longer a fancy or a theory advanced by theorists that appear before committees of Congress, but the fixing of minimum rates of pay and maximum hours of employment are now regarded within the rights of Congress in regulating interstate commerce. And certainly commerce is affected materially where human conditions obtained within the industry itself, and that leads us to the labor factor, the human factor in the industry. It is upon that principle and that principle alone that we appear here this morning and urge that this committee amend the present bill to establish maximum hours and minimum rates of pay as provided in the amendment introduced by Congressman Boren this morning, and I am going to limit my statement this morning to the suggestion contained in that amendment, although I think some day this committee could give consideration to the study of whether or not the subterranean movement of oil from day to day, although it may not reach the top of the crown, has some value in a consideration of what interstate commerce is, although our understanding of it today is largely due to the fact that the movement in interstate commerce, for he purpose of regulation, must be of articles on top of the ground. It is our theory that some day we may develop the proposition that subterranean movement of certain commodities up to the point of the law of capture affects interstate commerce.
Mr. Chairman, I think there are plenty of reasons, plenty of reasons, and certainly economic reasons for this committee to consider favorably the amendment presented by Mr. Boren to this measure, to this bill, if it is to be a stabilizing factor in the field of economics. We are, of course, interested in that, but we are equally interested in the human equation of reducing that competitive factor in the production of petroleum. That is the principle underlying our support, and that is the main principle upon which I wanted to discuss this with you this morning. That is all I have to say. We could enter into a lengthy discussion of this principle, but the facts are known to you, and I think we all understand that the purpose today is one of stabilization in the industry, with all due respect to the statement made by the distinguished
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Secretary this morning, but the human equation is there and we must give consideration to that in maintaining the proper economic relation today.
I am somewhat discouraged by the conduct of the industry itself. When we met here in Washington in the bleak stormy days in July 1933, the industry itself lay prostrate; in fact, the industry was so concerned w'ith price and was concerned with consumer requirements because of the competitive picture within the industry, that at that time it agreed upon a code of fair competition which had for its purpose regulation of labor relations within the industry as applied to maximum hours and minimum rates of pay. Most of the substantial organizations in the industry have maintained that interest, but we still have our chiselers, if I may use the common expression, Mr. Chairman, among them, men, or corporations, who benefit not only from the economic factor, but from all other stabilizing factors that have come as a result of that original code. The Morgans and the du Ponts—if I may be permitted to refer to them—the Morgans, the du Ponts and the Mellons are outstanding in that particular situation as regards long hours and low rates of pay, and who in fact, within the internal operation of the industry itself, are imposing hazards and hardships against maintaining stabilized conditions of employment and rates of pay which in turn reflect themselves in consumer purchasing power that maintain our national economy.
That is all I have to say this morning, Mr. Chairman. We hope you will see fit to accept the amendment presented by Mr. Boren.
Mr. Cole. Thank you. May I ask if this amendment you approve, as suggested by Mr. Boren, is in any legislation now pending before the Labor Committee?
Mr. Fremming. No ; and it is not contemplated. Incidentally there is in the general legislation provision for 40 hours a week, and we have a different situation in this industry which has given every evidence of its willingness----
Mr. Cole (interposing). I mean generally.
Mr. Fremming. The general legislation is for 40 hours.
Mr. Cole. Is that included here?
Mr. Fremming. That is not included in this. I understand your point. But the general bill will provide for 40 hours, and that bill is to come from the executive brand, as I understand it. But it does not provide for 36 hours which this amendment would.
Mr. Cole. The general bill, you understand, will come from the executive branch?
Mr. Fremming. Yes.
Mr. Cole. Would that be satisfactory to you?
Mr. Fremming. No; it just means 4 hours more per day, which in turn means a reduction in employee load in the industry.
Mr. Cole. All right.
Mr. Pettengill. As I understand you, you said that a great many of the companies had maintained the labor standards of the N. R. A.
Mr. Fremming. Yes, Mr. Pettengill. in the petroleum code.
Mr. Pettengill. Yes; the petroleum code. What were the hours provided in that code?
Mr. Fremming. 36 hours per week.
Mr. Pettengill. Thirty-six?
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Mr. Fremming. Yes. I should repeat there, Mr. Pettengill, the manner in which Congressman Boren presented his amendment to the committee. The 40 hours he gave means not more than 40 hours in any one week, and not more than 72 hours in any 2 weeks, and not more than 16 hours in 2 consecutive days.
Mr. Pettengill. Was that taken from the N. B. A. code?
Mr. Fremming. That is verbatim, almost verbatim from the code itself, and for 2 years we operated splendidly under that code.
Mr. Pettengill. Had the rates of increase in pay to labor been in proportion to the benefit of this increase of about 27 percent on crude oil at the well head?
Mr. Fremming. I would not say that they would equal 27 percent The wages were increased, for the most part, in the industry, and for the most part we still nave the benefit of some increase by reason of this legislation. But they all did not go along. We still have, in some sections 12 hours a day. That was eliminated in 1933 by the code. When you speak of benefits, you mean in dollars and cents?
Mr. Pettengill. Total dollars per person.
Mr. Fremming. Yes, sir; they have benefited. I do not say to the extent of 27 percent, but I do not think 27 percent is the whole store, Mr. Pettengill, ii it be remembered how they were up here asking for relief from this 10-cent oil, and 20-cent oil throughout the industry. I think it must be remembered that the 27 percent does not represent the benefit received by this industry; it merely means that on the average, but that does not represent the whole truth, and we should not be confused by it at all.
Mr. Pettengill. The 85,000 workers you represent, the greatest bulk of them, have had wage increases, have they?
Mr. Fremming. Yes.
Mr. Pettengill. Commensurate with the increase in price of crude?
Mr. Fremming. Not necessarily commensurate with that, but they have had increases, substantial increases.
Mr. Pettengill. Some of them have not been increased as much as 27 percent, but they have had increases?
Mr. Fremming. Yes; I would say most of them, except in the chiseler group.
Mr. Pettengill. Out of the 85,000 total number represented by you, how many thousands do you think, to use your expression, are at the mercy of the chiseler?
Mr. Fremming. Oh, I would say not to exceed 25 percent, not in excess of that. It is just about the same percentage that runs throughout the whole industry.
Mr. Pettengill. Yes.
Mr. Fremming. About the same group that runs the hot oil, the chiselers who will not pay their workers.
Mr. Pettengill. Thank you.
Mr. Wolverton. Mr. Chairman.
Mr. Cole. Mr. Wolverton.
Mr. Wolverton. Does the proposed amendment of Mr. Boren relate only to the production, or does it include refining and marketing employees?
Mr. Fremming. Onlu the producing end. We have no special difficulty in refining, and never have had; it is only in the producing
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and transportation end, but so far as the refining branch of the industry is concerned, we have never had any quarrel on that question; 36 hours is maintained in that industry and there is no charge of chiseling with respect to the refining end.
As to the marketing end today, it is the most chaotic that we have ever had. For your information, we are now working on that branch of the industry and are very earnestly trying to be helpful insofar as the worker problem is concerned. The regulation of hours of employment, fixed at 40 hours a week, obtained in the code.
Mr. Wolverton. I was unfortunately engaged otherwise and did not hear the amendment.
Mr. Fremming. Yes.
Mr. Wolverton. Is it different from the one which was presented to the Senate?
Mr. Fremming. It is the same; it is the same.
Mr. Wolverton. If I remember correctly, in your amendment you ask for the base of 36 hours a week and the rate of pay to be fixed at $5 as a minimum rate.
Mr. Fremming. That is right; yes; that is correct.
Mr. Wolverton. And that relates only to those engaged in the production end?
Mr. Fremming. Yes; drilling, production, and transportation.
Mr. Wolverton. Is that limited only to States that have the benefit of the Connally Act?
Mr. Fremming. No.
Mr. Wolverton. Has employment increased over the period of 3 years?
Mr. Fremming. To the contrary, it has decreased.
Mr. Wolverton. The figures presented to us would indicate that 900,000 more barrels per day are being produced, and yet I understand you to say that at this time it is a fact that the number of employees has actually decreased?
Mr. Fremming. That is correct, in the last 3 years.
Mr. Wolverton. How do you account for that fact?
Mr. Fremming. One of the special factors is the improved method of petroleum recovery, today, through technical development making it possible to bring a well to production at a much shorter period or time than it took in the past. For example, for the East Texas field, to which reference has been made on several occasions, the sum total of drilling time to 3,500 feet, usually 3,500 feet being the average, runs around 15 days. Seven or eight years ago that was an unheard-of thing.
Mr. Pettengill. How many days?
Mr. Fremming. Fifteen days, full time, full drilling, including cementing time and everything, the construction of the derrick, spudding, and bringing the well to production, in 15 days.
Mr. Pettengill. That means drilling more than 200 feet a day?
Mr. Fremming. Oh, yes. It is proper to say in that connection there are certain drilling hazards elsewhere that do not obtain in east Texas. For instance, in the Kettleman Hills field, for example, to bring in a well to production would take approximately 6 months; they may be able to drill in less time than 6 months, but if they can bring in a well in 90 days it is a happy condition.
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Mr. Wolverton. What has been the percentage of decrease in employment?
Mr. Fremming. It will be—the Bureau of Labor Statistics indicates that the reduction has been running about 8 percent since the code became effective. Of course, there was a tremendous increase in the employee roll when the code became effective in September 1933, but since that time there has been about an 8-percent reduction in the crude production, in the drilling end. Not the refining end of the industry.
Mr. Wolverton. I understand. What accounts for this decrease in the production end?
Mr. Fremming. That is chiefly based upon improved methods of production, based principally upon the technical development in drilling equipment, primarily.
Mr. Pettengill. What about the refining branch?
Mr. Fremmino. They have increased employment in that end, due to the requirements to take care of this 900,000 barrels of crude, and the consumer demand has increased proportionately, as we understand it. There was about a 22-percent increase in consumer demand last year.
Mr. Cole. Is that all?
Mr. Pettengill. I have nothing further.
Mr. Fremming. Thank you, Mr. Chairman.
The Chairman. Congressman Luce.
Representative Luce. Mr. Chairman, I have asked to come before you this morning in the hope that I might be able to serve you; to put at your command a half century of experience in the employment of women—chiefly young women. I may qualify as a witness by saying that 49 years ago, with a brother, I started a business which still continues, and during 30 years of that time, until I came to Washington, I was thoroughly familiar with all its details. It is not one of the big businesses.
The public and lawmakers are apt to consider, in matters of legislation, only the conspicuous interests of the country. There are little fellows, of whom I am one, that are often overlooked. I am speaking, perhaps, for about 200,000 little fellows, some of them incorporated, but in fact not much more than partnerships. In my own case there are now on my pay roll 101 persons who come under the Social Security Act, and about three-fourths of them are women. With this background I will comment on what I have learned as to their employment.
The Chairman. Would you mind stating for the record, Congressman Luce, what the business is?
Representative Luce. My business is the reading of newspapers and the sale of newspaper information, chiefly for commercial purposes. We created the name Press Clipping Bureau, a name that as been copied by other concerns since then. The business imposes little physical strain. It is largely a matter of the use of brains. We early discovered that virtually none of
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the young women we employed intended to make it their life’s work. 1 have never known—out of perhaps a thousand who have comet through our offices in these years—I have never known one who entered with the intention of making it a life work. For all of them it is a temporary occupation, as is true in the case of most women, to be terminated, naturally and wisely, for the public good, by marriage. While I was familiar with the details of the work, for some 30 years, until I came to Washington, I never knew a girl to leave us to get more pay elsewhere. Very likely there have been some of whom I was not informed. From this I conclude that the hours of labor and pay were not unsatisfactory, and that the conditions of the work also were not unsatisfactory.
They stay with us on an average of 4 years. That is the turnover. About one-fourth of them stay less than a year. We do better than some concerns. I was told years ago, and I will not vouch for the truth or accuracy of this statement, but it was an employee, of the telephone company who told me years ago that their turnover was 2 years and 9 months. That is to say, the average stay of the girls in their employ was 2% years. I presume their faster turnover is due to the tact that the telephone operatives come more in contact with opportunities to make the acquaintance of men and therefore marry earlier.
I will read to you, if you will pardon me, figures from the census of 1930, which are better to use than those would be if we had them today, because then the depression had hardly started. I want to read those figures in order to point out to you this essential difference between the employment of women and of men.
I find in that year of the females in the United States 16 years old, 17 percent were gainfully employed; of those 17 years old, 27.5 percent, and that is the top figure. It is the young women of 17 who lead in employment. For those of 18 and 19 the average was 20.2 percent, and then I want you to notice the drop. From ages 20 to 24, 8.1 percent; from 25 to 29, 6.2 percent; from 30 to 34, 4.9 percent; from 40 to 44, 4.4 percent; and from 45 to 50 only 4.2 percent.
Senator Walsh. Do these figures embrace all industries?
Representative Luce. Yes; they are all persons gainfully employed. They cover 10,752,116 women who were employed in 1930. Now, I would have you notice the economic effect of that, which is that inasmuch as women generally do not stay long in employment, therefore all employers of women lose quickly the investment they have made in training these women.. Every time one of my girls went out of the door she took $250 of my money, as near as I can estimate, that I had put into her training.
In the employment of men you can pay a wage based on the expectation that the man that the employer has trained will stay with him indefinitely. The employment of women, on the contrary, is based on the certainty that a large part of the cost of training will disappear.
In our employment we would like to get chiefly girls just from the high school. They graduate from such school at an average age of 18 years. You see, we have the prospect of taking the girl at 18 years of age, and on the average she will leave us when she is 22 years of age.
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We do not employ anybody under 16. I cannot recall that we ever did, except possibly an office boy or two, but we employ them fresh from the high school, wherever we can.
Mark you this difference between the employment of women and the employment of men, as illustrated by training for professional life. Nowadays a man who is going to become a physician rarely is able to support himself until he is 27 years old. If he is going to be a lawyer it is anywhere from 25 to 27, or even later, before he can make his way in the world. He must go through a long period of training. That factor should be borne in mind in all your considerations.
By reason of this situation I suggest it might be well for you to consider the possibility of excepting from your minimum-wage provision all young persons, making the limit 21.
Our fathers, through centuries, had come to the belief that a 7 years’ apprenticeship was the wise, right, and just thing, and that was the rule throughout the Anglo-Saxon world, until the coming of the machine age. Of course, the machine has made it possible to employ young persons with little training to do the simpler work of the present-day factory, and no longer would, one suggest a 7-year apprenticeship, but formal and universal recognition of an essential apprenticeship period, learning period, ought to be made by any law dealing with this subject.
There is a further consideration that should be brought to your attention in the matter of both young women and young men. I could not take a girl 16 years old, or 17 years old, probably not 18 years old, and make her profitable to me for many months. She costs me money. That is, I lose money in the early part of her employment and I make money in the latter part of her employment. That is not due to lack of brains, it is not due to small volume of product, it is due to the mistakes that are made by the beginner. That is the most difficult thing in all employment, to get young people to do a simple thing exactly right every time. They have to be broken in, they have to be scolded, they have to be taught, persuaded to be accurate, and the result is that if you should place your minimum wage at 40 cents an hour I would be unable to hire profitably girls 16,17, and perhaps 18 years old.
It is the same way with young men and I would say just a word about them. The young man has the same defects, lack of experience and training, with a lack of accuracy, and he too must be taught. If you place your minimum wage where employers cannot make money by employing those people, you shut the door of opportunity to the youth of the land, and that is a serious thing. The C. C. C- points out the gravity of the situation. In my personal range of experience among my own acquaintances I find most deplorable results coming from the inability to employ youths during this depression. So if you make your minimum wage too high you will have a great, an immeasurable injury to the welfare of the country, because you will have condemned the boy fresh from high school to idleness.
You say the remedy should be to give those boys training. Well and good. I approve that heartily. We have commercial and manual training departments in the high school near my home. What is the situation in the city of Waltham at the present moment? We
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have there a great watch factory, which can be left out of consideration. !We have 40 or 50 small industries requiring high-grade labor, and those who are conducting these industries are having great difficulty in finding enough workers. The schools do not yet meet the need.
It might be, I grant you, that the remedy for all this situation is to keep the boys and girls in school longer, but that imposes burdens on families, which is also of serious nature, as well as loss of production to the injury of the general welfare.
In speaking of the family let me point out to you the change that has come about since I entered in business. When we first employed girls there was not one of them who thought, hoped, or expected to be self-supporting. It is the argument of the well-meaning people who are advocating before you the minimum wage that there is a pitiful situation existing in the matter of the young woman who must support herself. I recognize that it is pitiful, and I wish something could be done about it, but should you allow the situation of a comparatively minute number of women workers to impose a hardship on all the rest?
These young people that I early employed contributed to the family income. Many of them desired to get some pin money, others desired to prepare for the trousseau to accompany a wedding. There has been some change since then, but, nevertheless, it is still the fact that the great number of women wage earners are members of families and contribute to the family income. Therefore, there is no great hardship in permitting them to work for a time for less than a wage that would be self-supporting.
I hope you will not infer that in my own affairs I desire to grind down the poor or to pay an unfair wage. I think we have paid from the start the going wage in the community. We have in this half century doubled it, as far as the average rate is concerned. We have raised our wages since the low point of the depression and, if necessary, we shall continue to do that, but every time we raise the wage we must either cut our profits or must compel the consumer to pay more. That probably does not concern you much, but in my own instance I shall look forward to great difficulty in passing my extra costs on to the consumer.
I am not here to talk about my self-interest. At my time of life money does not matter much one way or the other. I am concerned chiefly with the interest that I have come to take in those young people starting in life who desire to engage for a time in a gainful occupation and whose labors are of value to the community.
In closing let me speak of one other feature of the situation. If you raise your minimum wage to a point where employers cannot afford to give employment to the least efficient members of the community you will have not only deprived them of a chance of making some, sort of a livelihood, but you will have added to the burdens of the community in the matter of the dole and all the other products of unemployment. This seems to me would be a social loss. In my judgment, every human being capable of work should work, and legislation that will deprive the less efficient members of the community of the opportunity to work strikes me as a public misfortune.
Thank you.
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Senator Walsh. Mr. Luce, have you figured out in what percentage there would be an increased cost to your consumers if a minimum wage fixed at $16 per week, at the age limit of the children fixed as provided by this law, 16 years of age?
Representative Luce. The age limit would not affect us the slightest. All of our people are over 16 years old. I have made no exact calculation in the matter. I would not want even to conjecture as to what it is.
Senator Walsh. All right.
Representative Luce. I would point out this fact, that it would, temporarily at least, prevent me from recovering from the situation in 1933 when the net profits of my business for a year were $42.89, although I gave employment to about 100 people.
The Chairman. Thank you very much.
Is Mr. J. D. Battle here?
Mr. Battle. Mr. Chairman, my name is John D. Battle. I am the executive secretary of the National Coal Association.
I appear on behalf of the National Coal Association, representing producers of bituminous coal throughout the United States. Our industry recognizes the principle of collective bargaining. It practices collective bargaining. It believes that this proposed legislation will interfere with its orderly processes. Our industry has accepted and adopted and has had in operation the 7-hour day and 35-hour week for some time without any law requiring that it be done. It has established wage rates far in excess of anything mentioned here as a minimum. On April 1 of this year a contract with our employees was renewed for a period of 2 years in which wages were materially increased throughout the entire country affecting some half million workers. Wages have been increased about 100 percent since 1932.
Child labor is prohibited. This required no law but by mutual agreement the contract provides that no person under 16 years of age can be employed in a coal mine and where State laws provide a higher minimum the State laws govern. Even before this agreement was entered into and for some time child labor has not been a problem in our industry. We respectfully suggest that, the child labor problem should be removed from this proposed legislation and treated separately by the Congress, as it will doubtless confuse the issue here. A law enacted during the present session of Congress and signed by the President April 26, 1937, is designed to regulate the sale and distribution of bituminous coal in interstate commerce. A Coal Commission has been created under this act. It is now beginning to organize and will within the next few months be in full operation. All concerned are disposed to give this law a fair trial in the hope that it will be helpful to those engaged in this industry both as employers and employees.
Thus with this record we suggest that this proposed bill be amended so as to eliminate the bituminous coal industry from its provisions. We prefer to work out with our employees all problems of labor relationships. The employees’ representative agrees with this suggestion, according to our understanding.
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The fixing of wages by the Government will, in our opinion, weaken and eventually destroy collective bargaining. If there be industries that pay abnormally low wages or work abnormally long hours, it is respectfully suggested that those industries be made the subject of special consideration and in cooperation with the States some means be found to correct abuses that may be found to exist. We do not believe that the power rests in the Federal Government to regulate hours and wages in an industry whose production is wholly local in character, such as producing coal.
Our industry feels that it has earned its exemption from this proposed legislation by the facts previously submitted.
We rather question the wisdom of a minimum wage and we question the ability of any five men to intelligently administer any such law as here proposed. To use our own industry as an example, it is highly seasonal in character, but restricted by its own collective agreement to 35 hours per week. The time has not come when men may be prohibited from entering into legitimate business, therefore we have a great many more coal mines than are necessary to produce the coal actually required by the consumers of the country. During peak seasons thousands of small mines open up for short .periods and then close down until there is some unusual demand. Mining communities are generally located where the employees can fill out their earnings from other sources and many miners run farms and carry on other jobs when not employed in the mine.
We must keep in mind the many ramifications of our industrial set-up throughout the Nation and not act so as to destroy the small businesses that are so essential to many communities. We feel that enlightened public opinion will go far to correct any abuses in industry and that collective bargaining by responsible labor organizations will do more to serve a useful purpose in working out problems mutually than a law which requires the Federal Government to fix wages. We plead for that liberty and freedom of action on the part of the employer and employee that is so essential to a complete understanding. We do not believe that any labor board, regardless less of how honest or sincere it may be, can arrive at a solution of wage matters with the same degree of satisfaction as can be reached by mutual agreement between the parties directly concerned.
Arbitrary action is bound to cause conflict and confusion. The laws on the books now require that employers recognize the accredited representatives of labor who truly represent the employees for the purpose of collective bargaining. We suggest that before embarking on the kind of legislation proposed here, the laws as now finally upheld by the courts should be given a fair chance to operate. Progress toward a higher standard of living is being made generally. We are afraid that this proposed legislation will slow that progress rather than speed it up.
While the bill is ordinarily referred to as a minimum wage and maximum hour bill, it is in reality and is so designated in its official title “The Fair Labor Standards Act of 1937.” Public sympathy is aroused by the general assumption that the purpose of the bill is to secure reasonable living conditions for employees in the very low wage group. While that result may be accomplished it is only an incidental feature. Its real purpose as we see it is the establishment of a “fair wage” and a “reasonable workweek” in all
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industries, subject only to the qualification that no minimum fair wage shall be established which will yield “an annual wage income in excess of $1,200 or an hourly wage in excess of 80 cents, except for overtime, night, or extra-shift work.” It is of the utmost importance to recognize this fundamental distinction between the establishment of minimum wages, which should serve as a protection for employees in low-wage groups, and the establishment of fair wages in all industries, occupations, and employments in which the current wage is less than $1,200 a year. The mere setting forth of this distinction indicates the confusion between the two classes of wages.
The task of determining fair wages and reasonable workweeks is assigned to the Labor Standards Board, created by the act. What test of fair wages and reasonable workweek does the act set. up for the guidance of the Board? In section 2 (a) (14) of the act we find this definition:
A fair wage means a wage fairly and reasonably commensurate with the value of the service or class of service rendered.
Obviously this definition amounts to no more than saying that a fair wage is a fair wage and leaves the Board without guidance in its attempt to determine fair wages in any particular instance. In* section 5 (a) the Board is instructed to take into consideration the following factors in arriving at its determination:
(1) The cost of living and all other relevant circumstances affecting the value of the service or class of service rendered. The framers of the bill, apparently having In mind the decision of the Supreme Court in the New York minimum wage law case, have been particular to emphasize as the standard of fairness the value of the service rendered. In this instruction they are trying to bring in through the back door the cost of living factor by characterizing it as a relevant circumstance affecting the value of the service.
(2) Such conditions as would guide a court in a suit for wages.
(3) The wages established for work of like or comparable character by collective labor agreements.
(4) Wages paid for work of like or comparable character by employers who voluntarily maintain fair wage standards.
Obviously the last factor gets you no further. "Until the fair wage has been determined it is difficult to see how employers who voluntarily pay fair wages can be identified. The one definite, outstanding consideration has to do with collective-wage agreement, The practical effect of following instructions contained in this section of the bill would be that employers not participating in wage conferences and signing wage agreements would be compelled to pay the wages agreed upon in such wage conferences in which they took no part. Under all other circumstances the Board is left without definite instructions as to what shall be regarded as a fair wage. This definition of a fair wage carries over into the other definitions relating to wages. A substandard wage is a wage less than the fair wage established by the Board, and an oppressive wage is similarly defined as a wage lower than the standard established by the Board.
The test laid down in the act with respect to what constitutes a reasonable workweek is even more indefinite. The Board is instructed to take Into account:
(1) The relation of the work to the physical and economic health, efficiency, and well-being of the employees (which at the most only indirectly affects the value of the service rendered).
(2) The number of persons available for employment.
(3) The hours of work set up in collective-labor agreements already in effect.
(4) The hours of employment maintained by employers who voluntarily maintain a reasonable workweek.
Here again the last condition means nothing, since the reasonable workweek must first be established; and here again the only definite, concrete yardstick
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is found in the item relating to hours of work established under collective labor agreements.
A fair wage is one of those indefinite and undefined expressions, the interpretation of which must depend upon the personal opinions of those determining it. A fair wage based on the cost of living is capable of some sort of measurement, but a fair wage based on the value of the service rendered Is ambiguous enough. The value of the service to the employer is what he can afford to pay, and that is determined in the last analysis by the price he can obtain for the commodity or service in the production of which the labor is employed. Obviously, it is not a fair wage in that sense that the framers of this bill apparently had in mind. While it may be true that in some industries and occupations employers during a period of expanded earnings, like the present, could afford to pay higher wages than they are actually paying, that is not true of the great mass of the industries of the country, and especially of those industries in which a low scale of wages prevails. A fair wage in such an industry, as determined by the value of the service, may be far below a fair wage as determined by the cost of living of the employees, and it is on the value of the service that the Board is supposed to base its determination of fair wages. In other words, while the bill Is held out to the public as one intending to put a bottom to wage-and-hour provisions in so-called underpaid Industries, in practice, if applied according to the principles laid down In the bill itself, the measure will be chiefly useful in imposing upon the unorganized the wage scale set up in collective labor agreements in which an individual employer may not have participated.
While the definition set forth in the bill relates to a fair wage, the expression “minimum fair wage” is constantly employed. It is not easy to understand how there can be two fair wages for the same occupation In the same industry in any sense that gives any meaning to the term “fair wage.” If it is determined that $5 a day is a fair wage In a certain occupation, then $4 a day will be what the bill calls an oppressive wage, but by the same token $6 a day will be an unfairly high wage, if the $4 wage is unfair to the employee, then the $6 wage is unfair to the employer. It is not. without reason that the representatives of the American Federation of Labor expressed the fear that what is set up as a minimum fair wage may finally become the maximum wage. By the very definition of a fair wage it is just as truly a maximum wage as a minimum wage, and the trend of events will undoubtedly bring about the gradual adoption of that point of view by the Board and by industry in general.
DELEGATION OF POWERS
It is safe to say that no past act of Congress has gone so far in delegating powers to a Federal agency with so little definite limitation in the bill upon the use of powers, as is found in the Fair Labor Standards Act of 1987. A mere enumeration of the powers of the Board will be sufficient to establish that fact. The more important ones are as follows:
(1) The Board decides what industries, establishments, occupations, and employments shall come under the jurisdiction of the act No group is affected until the Board, by definite declaration, has made the provisions of the act applicable to such groups.
(2) The Board has full power to determine what shall constitute a fair wage in any such group which it has brought under the act. The bill specifies — cents per hour as a sort of desirable minimum wage, but. in section 4 (c) specifically empowers the Board to vary such standard upward or downward as to all employees or as to any class or classes of employees according to their judgment of what is necessary. This authority is again conveyed under section 5 (a).
(3) The Board has full power to establish reasonable workweeks. The bill specifies as a desirable reasonable workweek — hours per week, but in section 4 (d) the Board is authorized to vary such standards upward or downward as to all employees or as to any class or classes of employees as it thinks advisable, and this power is again conveyed under section 5 (b).
(4) The bill specifies that employers employing less than — employees shall be exempt from the provisions of the act. but proceeds to authorize the Board to determine whether such employees shall be exempt or not.
(5) The Board has full power to determine how much overtime may be worked in any industry or occupation, the conditions under which such work shall be performed, and the wage rates to be paid for overtime work.
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(6) The Board has power to authorize and fix wages lower than the minimum fair wage for learners and apprentices.
(7) The Board has similar power with respect to the employment of persons whose earning capacity has been impaired.
(8) The Board has power to authorize deductions for board, lodging, and similar facilities furnished by the employer.
(9) The Board has power to determine the amount of overtime employment in periods of seasonal or peak activity, and in maintenance, repair, or other emergency work and the wage rates to be paid for such employment.
(10) The Board is given similar authority over any case where the nature of the employment justifies special treatment.
(11) The Board has power to determine when intrastate industries or occupations so affect labor standards in competing interstate industries or occupations as to justify bringing the intrastate industries or occupations under the provisions of the bill.
(12) The Board has power to impose the “appropriate fair-labor standard" upon any occupation not otherwise subject to the act under any one of three conditions: If the maintenance of substandard labor conditions by any employer leads or tends to lead to labor dispute; if it affects the movement of goods or the performance of services in interstate commerce or the price of goods or services in interstate commerce, or causes undue price fluctuations or indirectly threatens or interferes with the stability of prices of goods or services; if the substandard labor condition is maintained by any employer with the intention to substantially affect the movement of goods or the performance of services in interstate commerce, or to control or directly affect the price of goods or services in interstate commerce. The Board itself is the judge of the standards and it may fix any standards it chooses.
With the Board exercising all these powers conferred upon it by the bill, there will be little left for the independent determination of employers, employees, or the two combined. The effective administration of all these powers would call for nothing less than superhuman wisdom on the part of any group of five men, however eminently qualified for their positions. Unless we are prepared to abandon all rights of self-determination in the matter of labor relationships, either on the part of the employers or on the part of the employees, the fair labor standards act under consideration deserves scant consideration. Such a change in our industrial organization would be neither reform nor evolution but outright revolution. The indirect effects of any such change would be of momentous importance and should receive most careful consideration.
The net result of this proposal is that men would no longer be free agents to negotiate concerning a matter that is of the utmost importance to both employee and employer. It may be asked what responsibility does the Government accept when it attempts to prescribe wages that may not be at all consistent with economic conditions? If the Government has the power to prescribe wages in an industry as proposed, and as it has been pointed out this power is flexible, then it may well legislate or regulate out of business any group or industrial activity by the simple process of prescribing what it may choose to call a fair wage.
Power feeds on power. Once the power over millions of workers and the billions of dollars invested in property and business is assumed, no labor board will ever voluntarily relinquish it, and industrial America will become regimented as no nation of people ever before in history. If the Government can assume this power over employers, it must assume power over employees, and require the same measure of control over both.
Why place the hardships and burdens proposed by this bill on industry that recognizes collective bargaining, practices it in all of its phases, meets its workers around the council table and works out its problems? This measure will do more to destroy collective bargaining and unionism than any bill that could be brought before Congress. Of even more importance than the absence from the bill of definite standards for the guidance of the Board and the unprecedentedly broad delegation of regulatory powers to the Board is the fact that even if all points of doubtful constitutionality are settled affirmatively, and even if the act could be administered with reasonable efficiency, its enforcement would create more problems than it would solve. It is another example of a measure devised for a definite purpose, and possibly well adapted for that purpose, but enacted without due consideration of the indirect consequences of its enforcement. A typical
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illustration of an earlier measure of a similar character was the attempt to improve the economic condition of cotton farmers by the adoption of devices for the reduction of supply and enhancement of price of cotton without due consideration of the fact that such increase in price would stimulate the production of cotton in foreign countries and cause the permanent loss of a substantial part of the market for American cotton. Sympathy for the economic condition of overworked and underpaid employees does not dispense with the necessity for the use of intelligence in devising methods for their relief. Zeal without knowledge is as dangerous today as it was in Biblical times.
Advocates of measures to raise the wages and shorten the hours of the underpaid and overworked groups in American industry, following the example set by the President, express great sympathy for the millions of workers whose earnings are insufficient to enable them to secure adequate food, clothing, and shelter. This bill is advocated as a measure of relief for this unfortunate group. According to the report published by the Brookings Institution, complete utilization of the existing industrial equipment of the country would not produce commodities and services enough fully to meet these needs. The only rational method of attacking the problem is through the adoption of measures that will lead to a greater production of the desired commodities and services. The bill under consideration, on the other hand, will have the opposite effect. Under the provisions of that bill the time of operation of the mechanical equipment of society will be shortened, the number of laborers employed will decline, and the total output of commodities and services will be reduced.
This decline in production will be brought about in one way by the arbitrary increase in wages per hour contemplated in the bill, and in a different way by the proposed shortening of the workweek. Increased wages per hour mean increased cost per unit of product; and in all industries except the relatively few in which prices are by some form of monopoly control maintained at a higher level than costs justify, an increase in cost must be offset by a proportionate increase in selling price. Labor may not be a commodity but the cost of labor is a factor, and in many industries the largest single factor, in the total cost of production. Through his selling price the employer must recover his labor cost, as well as all other costs. If he cannot do that he will go out of business and his employees will be added to the army of the unemployed. Almost the only two important powers not conferred upon the Labor Standards Board by this bill are the power to compel an employer to continue to operate and the power to dictate the number of people he shall employ.
There is no break in the chain of cause and effect; increased hourly wages, increased cost per unit of product, a higher selling price, a falling off in demand, decreased production, and decreased employment It is no reply to this argument to assert that it has been heard many times before; its soundness cannot be questioned. But nothing in the Fair Labor Standards Act furnishes any evidence that its authors gave consideration to this indirect consequence of the measure advocated by them—certainly the bill makes no provision for the care of those thus deprived of work.
The arbitrary shortening of the workweek would have the same indirect effect upon costs, prices, and consumption as would result from arbitrary increases in wages; and it would have an even more serious direct effect upon the quantity of goods and services available for the satisfaction of human wants—and that In the face of the fact that the inability of millions of Americans to secure the necessities of life is advanced as a reason for the enactment of this measure. The decline in production would be proportionate to the shortening of the workweek, except as hourly output per man might be increased by the much-maligned “speeding-up” process. There are undoubtedly occupations of such an exhausting character that the preservation of the physical well-being of those employed in them demands a sharp limitation of hours of work. Such cases should be handled frankly as problems of public health. In modern machine production it is not the time but the pace that kills: and the arbitrary shortening of the workweek would create a situation in which the incentive to increase the pace would be very strong. The choice lies between more leisure and more commodity, and the former can hardly be regarded as the greater boon, so long as millions of our people are unable to satisfy the elementary needs of decent food, clothing, and shelter.
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Moreover, shortening the hours of work of employees entails a shortening of the hours of utilization of the capital equipment of Industry. Billions of dollars worth of equipment in the form of plant and machinery have been created for industrial purposes. Society would be best served if this equipment could be kept In continuous use. Long hours of operation of machinery do not exhaust its vitality or shorten its useful life. On the other hand, shortening hours of operation reduces output and ends proportionately to the carrying charge and so to the selling price per unit of output. The increase in output of commodities and reduction in cost and price that the complete utilization of the capital equipment of society would bring in its train Is almost beyond computation. The present bill instead of increasing, would, so far as it reduced hours, decrease the contribution of capital to the economic well-being of society.
There is another aspect of this proposed legislation that is worthy of consideration. The charge is frequently made, and has been expressed by numerous advocates of this measure, that unregulated competition has brought about an inequitable distribution of the products of industry—that the owners of capital secure too large a share, and those who work too small a share of the total net product. What will the enforcement of the provisions of this bill accomplish in the way of remedying this situation?
By exercising the powers conferred upon it the Board can undoubtedly increase the earnings of the employees in any individual low-paid occupation. But it is important to note that the gain of the employees does not come out of the employer’s share of the product.. He must raise his selling price enough to recover this additional labor cost or soon go out of business. The increased cost is added to the price of the product and passed along from one middleman to another until it finally falls upon those who buy the product for use. All the gains of employees are made at the expense of consumers. Employers are affected only in so far as they are consumers. If, for example, the Board should increase the earnings of cotton-mill employees, every consumer of cotton cloth would have to pay a part of the increased cost—and the employer-consumer would pay no more per yard than would the employee-consumer. The number of employees and the aggregate consumption of employees far exceed the number and aggregate consumption of employers. This bill may fairly be described as a measure for the enhancement of the economic well-being of employees in selected occupations at the expense of employees in other occupations. Measured in terms of effective demand for commodities and services the additional spending power on the part of employees whose incomes are increased, which is supposed to accelerate the wheels of industry, will be more than offset by the decrease of such spending power on the part of other groups in the community. It does absolutely nothing to abate the alleged injustice in the existing terms of division between capitalists and laborers.
No attempt has been made in this brief to criticise the minor details of the Fair Labor Standards Act. Certain sections of the bill are of distinctly doubtful constitutionality. Even if the constitutionality should be upheld its enactment is undesirable for the following reasons:
(1) It sets up no standards for the guidance of the Labor Standards Board in its determination of fair wages and reasonable workweek.
(2) It confers upon the Board revolutionary powers over labor relations in industry.
(3) The enforcement of higher wage rates in any industry would result in higher costs, higher prices, decreased demand, and increased unemployment.
(4) The reduction in hours of work per week would not only lead to higher costs and reduced production but it would lessen the time of operation of the capital equipment of society and contribution to the production of goods and services, except so far as this natural tendency could be offset by speeding up the pace of machinery and machine labor.
(5) Finally, even the efficient administration of the act would do nothing to alter the terms of distribution of the products of industry as between capitalists and laborers and would detract from instead of add to, the effective demand of society for goods and services. Whatever gain in purchasing power might be realized by certain groups of laborers would be more than offset by the loss of purchasing power by other consumers.
We respectfully petition your committee to reject this measure because it establishes a revolutionary system of bureaucratic control of industry and because its final effect will be not to add to but to detract from the economic well-being of society.
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DISCUSSION OF THE CONSTITUTIONAL QUESTIONS PRESENTED UNDER H. B. 7200
The Black-Connery proposed legislation presents interesting questions of constitutional law. It is sought thereby to prevent substandard labor conditions as defined in section 2 (a), subsection 18, respecting wages, hours of employment, child labor, and oppressive labor practices In respect of strikebreakers and espionage over employees and their immediate families. It seeks to directly affect production of goods for interstate commerce and the production of goods affecting interstate commerce by prohibiting the shipment in interstate commerce of goods produced in violation of the terms and provisions thereof. By its express terms production includes mining though excepting agriculture.
Concededly the legislation seeks to place local production under Federal control. Heretofore this has consistently and uniformly been held to be a matter within the exclusive sovereignty of the respective States of the Union. Justification for the proposed departure is predicated upon some recent pronouncements of the Supreme Court of the United States which will be hereinafter discussed and briefly analyzed.
The first witness to testify before the committee was the Honorable Robert Jackson, Assistant Attorney General of the United States, whose testimony was designed to enlighten the committee upon the constitutionality of the proposed legislation. Mr. Jackson frankly admitted that to justify this legislation the Supreme Court must reverse its decision in Hammer v. Dagenhart (247 U. S. 251). He prophesied that the Court would so reverse its decision as it had in West Coast Hotel Company v. Parrish (Washington Minimum Wage case, 81 L. Ed., p. 455), reversed its prior ruling in Adkins v. Children’s Hospital. He fortified this prophecy by directing attention to the divided Court which rendered the opinion in Hammer v. Dagenhart, supra, and to the recent decisions of the Supreme Court of the United States, particularly, in Kentucky Whip and Collar Company v. Illinois Central R. R. (299 U. S. 334), the decisions under the Wagner Act, namely National Labor Relations Board v. Jones and Laughlin, decided April 12, 1937, and the Washington Minimum Wage case, supra. He further frankly asserted that, to sustain the constitutionality of this legislation, a departure must be made by the Supreme Court from its decision in the famous Schechter Poultry Company v. United States (295 U. S. 495).
It is respectfully submitted that Hammer v. Dagenhart, supra, still is the law of the land, fortified by numerous decisions thereafter in said Court reaffirming its principles; that the cases relied upon in support of the pending legislation are not in conflict with Schechter Poultry Company v. United States, supra, and Carter v. Carter Coal Company (298 U. S. 238) : that said cases relied upon to support the constitutionality of the proposed legislation are readily distinguishable on their facts from the long line of decisions in said Court forbidding the placing of local production under Federal control and do not constitute a proper basis for justifying the constitutionality of the proposed legislation, and that if this proposed legislation is presented to the Supreme Court of the United States in its present form It will, in all probability, be declared unconstitutional for the reasons hereinafter set forth.
Hammer v. Dagenhart, supra, stated the power of the Congress under the commerce clause of the Constitution. It reaffirmed the exclusion cases relied upon by the proponents of this legislation. It held that the making of goods and the mining of coal are not commerce, nor does the fact that these things are to be afterward shipped, or used in interstate commerce, make their production a part thereof, citing D. L. and IF. R. R. v. Yurkonis (238 U. S. 439). It used this language:
“Over interstate transportation, or its incidents, the regulatory power of Congress is ample, but the production of articles intended for interstate commerce is a matter of local regulation.”
If it were otherwise Federal control would result in the practical exclusion of the authority of the States over local matters within their exclusive jurisdiction not contemplated by the Constitution and contrary to the tenth amendment thereof.
This legislation is predicated upon the dissenting opinion of Mr. Justice Holmes in the above case. Sight has been lost, however, of the basis of Justice Holmes’ dissent when he said:
“The objection urged against the power [of Congress] is that the States have exclusive control over their methods of production and that Congress
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cannot meddle with them; and taking the proposition in the sense of direct intermeddling I agree to it and suppose that no one denies it.”
The legislation here under consideration is obviously a direct meddling that far transcends the scope and purpose of the act involved in the above case (39 Stat. L. 675. ch. 432).
Thereafter on May 15, 1922, the Supreme Court decided Bailey v. Drexel Furniture Co. (250 U. S. 203), which is known as the Child Labor Tax case. Although Justices Clarke, Brandeis, and McKenna concurred in Justice Holmes’ dissent in Hammer v. Dagenhart, supra, a few years later, in the Child Labor Tax case, supra, Justice Clarke alone dissented without opinion. Through Mr. Chief Justice Taft the Court said:
“The case before us cannot be distinguished from that of Hammer v. Dagenhart (247 U. S. 251).
“This Court held the law in that case to be void. It said, “In our view the necessary effect of this act is, by means of a prohibition against the movement in interstate commerce of ordinary commercial commodities, to regulate the hours of labor of children in factories and mines within the States—a purely State authority’ * * *.
“The analogy of the Dagenhart case is clear.”
An exhaustive search of the decisions of the Supreme Court of the United States discloses that Hammer v. Dagenhart, supra; Bailev v. Drexel Furniture Co., supra; and D. L. and W. H. R. v. Yuhkonis, supra, have never been expressly overruled, but, on the contrary, have been cited with approval in dozens of eases and the principles therein announced have been uniformly applied by said Court.
In fact, Hammer v. Dagenhart, supra, was affirmed and approved by said Court as recently as January 4, 1937, in the Kentucky Whip and Collar Co. v. Illinois Central R. R., supra, upon which the proponents rely. There, Chief Justice Hughes, in said opinion to which no dissent was recorded, held that Hammer v. Dagenhart in no way contravened or limited the principles of that decision or the ones therein cited, stating:
“In the Hammer case the Court concluded that the act of Congress there under consideration had as its aim the placing of local production under Federal control.”
Both the Child Labor Tax case and Hammer v. Dagenhart, supra, were affirmed in the recent decision of said Court, announced May 18, 1936, in Carter v. Carter Coal Co.
Schechter Poultry Co. v. United States, supra, has not been overruled by the Supreme Court. To it no dissent was recorded. Mr. Justice Cardozo and Mr. Justice Stone concurred in a separate opinion. It exhaustively reviewed the prior decisions of the Court and limited congressional control, stating:
“If the commerce clause were construed to reach all enterprises and transactions which could be said to have an indirect effect upon interstate commerce, the Federal authority would embrace practically all of the activities of the people, and the authority of the State over its domestic concerns would exist only by sufferance of the Federal Government. Indeed, on such a theory even the development of the State’s commercial facilities would be subject to Federal control.”
It was further stated:
“The distinction between direct and indirect effects of Intrastate transactions upon interstate commerce must be recognized as a fundamental one, essential to the maintenance of our constitutional system.”
In said case the Court further, at page 547 of its opinion, definitely announced that mining was a purely local enterprise and as such the production thereof was not subject to Federal regulation under the interstate commerce clause of the Constitution.
Thereafter the said Court announced its decision in Carter V. Carter Coal Co. (298 U. S. 238). The Bituminous Coal Conservation Act of 1935, as the proposed legislation here, set forth a detailed assertion of circumstances thought to justify it, alleging, among other things, the production and distribution by producers of coal bear upon and directly affect interstate commerce, and render regulation of production and distribution imperative for the production of such commerce. It sought to sustain the stabilization of wages, working condition, and maximum hours of labor. The enumerations of the aims and purposes of said act are practically the counterpart of the instant legislation. It was held that they were objects of great worth but beneficent aims, however great or well-directed, could never serve in lieu of constitutional
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power. The Court exhaustively reviewed the regulatory power of Congress upon interstate commerce and the well-recognized distinction between manufacture and commerce, citing and analyzing a number of decisions in support thereof, using this pertinent language:
"We have seen that the word ‘commerce’ is the equivalent of the phrase ‘intercourse for the purposes of trade.’ Plainly the incidents leading up to and culminating in the mining of coal do not constitute such intercourse. The employment of men, the fixing of their wages, hours of labor, and working conditions, the bargaining in respect of these things—whether carried on separately or collective—each and all constitute intercourse for the purposes of production, not of trade. The latter is a thing apart from the relation of employer and employee, which in all producing occupations is purely local in character. Extraction of coal from the mine is the aim and the completed result of local activities. Commerce in the coal mined is not brought into being by force of these activities, but by negotiations, agreements, and circumstances entirely apart from production. Mining brings the subject matter of commerce into existence. Commerce disposes of it”
This case then reaffirmed the doctrine of the Schechter case, supra, holding that—
“There the commodity in question, although shipped from another State, had come to rest in the State of its destination, and, as the Court pointed out, was no longer in a current or flow of interstate commerce. In the Schechter case the flow had ceased. Here it had not begun. The difference is not one of substance. The applicable principle is the same. * * *
“The Federal regulatory power ceases when interstate commercial intercourse ends and, correlatively, the power does not attach until interstate commercial intercourse begins.”
Mr. Justice Cardozo dissented by primarily upon the conclusion of the majority opinion that the various provisions of the act in question were inseparable. He reaffirmed his concurring opinion in the Schechter case, supra. Mr. Justice Brandeis and Mr. Justice Stone concurred in his opinion.
In his separate opinion Mr. Chief Justice Hughes agreed:
“That production—in this case, mining—which precedes commerce, is not itself commerce; and that the power to regulate commerce among the several States is not a power to regulate Industry within the State.”
After reiterating that the power to regulate commerce embraces the power to protect that commerce from injury he significantly added:
“But Congress may not use this protective authority as a pretext for the exertion of power to regulate activities and relations within the States which affect Interstate commerce only indirectly. Otherwise, in view of the multitude of indirect effects, Congress in its discretion could assume control of virtually all the activities of the people to the subversion of the fundamental principle of the Constitution. If the people desire to give Congress the power to regulate industries within the State, and the relations of employers and employees In those industries, they are at liberty to declare their will in the appropriate manner, but it is not for the Court to amend the Constitution by judicial decision.”
Although the aforesaid Bituminous Coal Act recited and was expressly predicated upon the theory that the ills of the coal Industry directly affected interstate commerce, it was held, in the above decision, that the effect was Indirect and remote which, therefore, precluded the power of Congress to legislate thereupon under the authority of the commerce clause of the Constitution. Obviously, the proposed legislation, in its present draft, embraces industries and occupations which have but an indirect and remote effect upon interstate commerce and consequently falls within the condemnation of the above decisions.
It is respectfully submitted that the decisions of the Supreme Court of the United States under the Wagner Act are readily distinguishable, on their facts, from the foregoing decisions and do not constitute precedence for the constitutionality of the proposed legislation.
In Virginian Railway v. System Federation, decided March 29, 1937, it was said, without dissent, that the activities of the back-shop employees of the railway have such a relation to other confessedly interstate activities of the railway that they are to be regarded as a part of them. The mining of coal is not “a confessedly interstate activity.”
The Associated Press v. National Labor Relations Board was decided April 12, 1937, upon the authority of Virginian Railway v. System Federation, supra, the Court holding that the activity of the employee of the Associated Press, which concededly was engaged in interstate commerce was similar to that of I the back-shop employee of a railroad. Justices Sutherland, Van Devanter,
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Reynolds, and Butler dissented primarily upon the question of the abridgment of the freedom of the press, not thereby recording their assent to all that was said in regard to the other questions in the case.
Washington, Virginia and Maryland Coach Co. v. National Labor Relation Board, decided on the same date, involved a concededly interstate carrier of passengers for hire. Little question could be therein raised respecting the right of Congress to legislate over this interstate carrier.
The cases of National Labor Relations Board v. Jones and Laughlin, Fruehauf Trailer Co., and Friedman-Harry Marks Clothing Co. were rendered upon the affirmance that the business of the respondents was interstate in character. Dissents thereto were recorded by Justice McReynolds, Van Decanter, Sutherland, and Butler. The decisions were predicated upon the peculiar facts in each case wherein, by reason of the nature of respondent’s business in its Nation-wide and in some instances foreign commerce, its methods of sale and distribution through its own agencies and stores located in States other than the State of production, its ownership of utilities, Nationwide in extent and character, in the form of subsidiaries owned by it and other pertinent facts respecting the nature of respondent’s business in each case showed that each respondent was truly engaged in an interstate commerce business thereby extending over it Federal control under the commerce clause of the Constitution.
These Labor Relations Board cases are not in conflict with the decisions of the Court in Hammer v. Dagenhart, Bailey v. Drexel Furniture Co., D. L. and W. R. R. v. Yurkonis, Schechter Poultry Co. v. United States, and Carter v. Carter Coal Co. The Labor Relations Board cases, supra, did not overrule the Schechter case, supra, and the Carter case, supra, but on the contrary, expressly affirmed them. They distinguished the aforesaid Schechter and Carter cases upon the ground that the facts in the Labor Relations cases showed that the respondents’ various enterprises were interdependent and of an interstate scope and character.
The Court therein held that the effect upon interstate commerce, due to the facts in particular respondent’s cases was immediate and direct and not indirect and remote, and for this reason held that the facts in those cases did not bring them within the principles announced in the Schechter and Carter cases, starting:
“In view of respondent's far-flung activities, it is idle to say that the effect would be indirect or remote. It is obvious that it would be immediate and might be catastrophic.”
The Kentucky Whip and Collar Co. v. Illinois Central R. R. (229 U. S. 334), relied upon by the proponents of this legislation, is not authority for the constitutionality of the proposed legislation. In Its opinion therein, the Court held that unquestionably interstate commerce was involved. The railway had refused to accept for shipment over its lines horse collars manufactured by the plaintiff with the aid of convict labor. These were destined into States wherein such goods were not permitted to be sold. Plaintiff sought a mandatory injunction to compel the railroad to transport said goods into said States. Obviously and unquestionably the business of the carrier was interstate and the authority of Congress to legislate thereupon unquestioned. Moreover, in that very case, the principles announced by the Court in Hammer v. Dagenhart, supra, and consistently adhered to since the time of said decision were reiterated and reaffirmed.
I repeat, Mr. Chairman, our industry is highly seasonal. In all good faith we have adopted a short workweek. It is being given an honest trial. That has been in operation for over 2 years now and every effort possible is being made to work it out.
I also call your attention to the fact that 65 percent of every dollar paid out per coal mine goes direct to labor, and that, at the present time, in our industry there are no really serious difficulties m this respect.
Representative Thomas. Mr. Battle, does the Vincent-Guffey coal bill affect your business any?
Mr. Battle. Yes.
Representative Thomas. Do you favor that legislation?
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Mr. Battle. I favor giving it an honest, fair trial. To say I personally favor it means nothing, because that was .one of the difficulties we had in passing it.
Representative Thomas. Probably you did not quite get my question. My question was this: I notice in your statement you make the assertion that the coal industry is a purely local business and therefore should be left without the operation of this bill. The thought occurred to me, that in the light of the Guffey coal bill, it is not a local industry by any means but it is a national industry, it is an industry that very materially affects interstate commerce, and, therefore, that is the only basis for the National Congress taking jurisdiction of the subject.
Mr. Battle. I appreciate your question, however, that law applies to sale and distribution.
Representative Thomas. Yes.
Mr. Battle. Not to production. Indirectly, of course, it will have its effect on production, but there is a distinction there.
Representative Thomas. A distinction in words, that is all.
The Chairman. Any other questions? Thank you very much. Mr. Patterson.
Mr. Patterson. As executive secretary of the Federal Committee on Apprentice Training, I am appearing before you to express the views of the Committee on the Black-Connery Fair Labor Standards Act as it affects apprentices. Section 6, subsection (c), item (1) would authorize the Labor Standards Board to permit the employment of apprentices at wages lower than the established wage for the industry. Because of the broad experience we have had with apprenticeship, covering both the period when national minimum wages by industries were in effect and the time subsequent to that, I believe that our observations and suggestions may be helpful in connection with the section mentioned.
Under the N. R. A. no provision was made for the training of apprentices. It was found that employers who had been conducting apprenticeship programs were discontinuing putting on new apprentices because the beginning code rates were higher, than the recognized beginning apprentice rate.
While the code makers, through oversight, were not giving attention to the fundamental long-range problem of providing a system for the training of new skilled workers, curiously enough, they were giving serious thought to the immediate problem of providing for production needs by permitting the employment of certain classes of skilled workers for excessively long hours This is indicative of the Nation’s failure to consider apprenticeship one of its major problems and to devise a national system for its solution.
To make possible the continuance of apprentice training, the President issued an Executive order in June 1934 authorizing the establishment of minimum standards for the employment of apprentices at wages lower than the established wages. This order established the Federal Committee on Apprentice Training to formulate such
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standards and set up the machinery necessary to carry out its purposes. The Federal committee consists of a representative of labor, a representative of employers, and a representative of the United States Office of Education, the Department of Labor, and the National Youth Administration. Similarly representative cooperating States committees were set up in 45 of the States.
During the time the N. R. A. was in effect the Federal committee established minimum standards for the training of apprentices and through the cooperating State committees granted individual wage exemptions to employers for apprentices employed in accordance with the standards fixed by it.
The Federal committee functioned long enough in connection with established minimum wages to enable us to form some definite conclusions relating to the establishment of an adequate uniform apprenticeship system in the United States. We have found: (1) The promotional and clearing-house functions were more important in the development of apprenticeship than the granting of wage exemptions to employers for the employment of apprentices. How far we missed having an apprenticeship system is illustrated by the United States Census of Occupations for 1930, which showed that out of approximately 840,000 young people, 25 years old and under, employed in skilled trades, less than 90,000 were considered as apprentices and probably a very small proportion of this number were actually apprentices. (2) The value of thorough trade training is not always evident to employers. The benefits of sound apprenticeship must be pointed out to most of them. There has been a marked trend for many years for employers to feel that it is no longer necessary to give attention to apprenticeship. The great majority of employers have little knowledge of how to set up and operate a successful apprenticeship system. Our N. R. A. experience demonstrated that it was necessary to cooperate with employers in setting these up. In brief, we found that apprenticeship and its advantages must be sold. (3) The Executive order referred to above provided for an exemption system whereby individual employers were given exemptions of a specific character from the established minimum wage. A considerable number of the employers who asked for wage exemptions to employ apprentices were found to be in violation of the labor standards of their codes and were actually seeking cheap labor. In those cases it was possible to refuse the exemption and. therefore, prevent that type of unfair competition. Because of this experience it is our belief that it is inadvisable that any form of blanket exemption dealing with apprenticeship be considered in an act setting up fair labor standards. The primary consideration in apprenticeship is that it should be set up for the benefit of the young men and women concerned. We find that every problem that comes up is relatively simple if we apply that consideration as the main principle in seeking a solution. Apprenticeship is a device for providing thorough work training to those young people who can be absorbed into the skilled occupations. Every possible effort should be directed toward seeing to it that they are given real apprenticeship training and not diverted on to some machine-tending job. In view of the vast amount of publicity given to the question of shortages and impending shortages of skilled workers which has appeared in newspapers, magazines, and trade publications, it can be seen that
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had attention been given to the proper training of those 840,000 young people employed in skilled trades in 1930, there would not be the hue and cry now being heard.
There are certain standards which labor leaders, management officials, and others expert in the field have advised us to consider as essential to any sound and uniform apprenticeship system. These include the following: The apprentice should be given thorough training in all branches of the trade he elects to follow. He should be required to obtain related instruction in the theory of the work. There should be a written agreement between the employer and the apprentice embodying their respective duties and rights. This agreement should include, in addition to the provisions given above, statements as to the scale of wages to be paid, the length of the apprenticeship period, and the maximum horn’s to be worked. There should be a third-party agency to approve indentures and to which both principals to the agreement can go for adjustment of complaints. In addition, consideration must be given to adjusting the number entering the trades.
It would be difficult for us to say which of these standards is most essential in the advancement of apprenticeship. Certain it is, however, that they are all part of a whole.
Section 6, subsection (c), item (1) includes reference to several of those standards but does not include reference to the others. In a word, then, it is my belief that the regulations concerning apprenticeship should not be independent from the promotion of apprenticeship. The whole problem, and it is not an easy one to solve, would in my opinion be better approached by considering it as a whole.
this same connection I should like to point out that, as I understand it, the bill relates only to those apprentices whose employers are engaged in interstate commerce. There is a very large group, however, whose employers are in intrastate commerce, such as the building trades, or the service trades, and with whom the Federal committee is concerned. Again, may I suggest the advisability of dealing with this problem of attacking it as a whole?
In respect to the wages for apprentices, it is generally recognized that a relatively low beginning wage is desirable, since the apprentice is partly compensated through experience and instructions on the job in lieu of a full money wage. Of course, the apprentice is also paid in cash, but the amount should be progressively increased in keeping with his acquired skill. Employers will feel much more inclined to provide full work experience opportunities to apprentices if the wages are in keeping with the value of the work performed.
We heartily approve the principle incorporated into the section we are referring to, of encouraging employers who are willing to assume their share of industry’s responsibility for the adequate training of young men and women through apprenticeship. This encouragement will, I am sure, cause employers to be more receptive to the activities which our agency is carrying on.
It is significant that the Federal Committee on Apprentice Training is one of the few agencies established by N. R. A. which has survived. The importance of apprentice training, not only to industry but to the public welfare as well, made it imperative that the Government
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provide an agency to stimulate constructive action among employers and employees to put an end to the chaos which has existed heretofore in providing trade-acquiring opportunities for young men and women.
Since the invalidation of the N. R. A. our work has been carried on as a division of the National Youth Administration. Our efforts are directed toward bringing employers and employees into agreement with respect to the standards for the training of apprentices. Both groups are keenly aware of the necessity for a sound and uniform system for the training of apprentices. Both know that there must be an organization to act as the stimulator of activities and as a clearing house for information, and both have officially endorsed the broad aims and purposes of the Federal committee.
The construction industry in the 1920’s saw the need for apprenticeship standards and for an agency to act as a clearing house. I quote from a pamphlet issued by the American Construction Council of which the Honorable Franklin D. Roosevelt was president, on the needs for a central agency on apprenticeship [reading] :
National action is desirable, in addition to the activities being conducted in the various localities with respect to local needs for a number of reasons. First, it is necessary to promote in a broad and effective manner the Idea of apprenticeship among the elements affecting the industry, in order to secure the active and widespread support required to Insure permanent results. Second, it is essential to bring together the various activities already under way in order to develop materials, methods, and experience of common value and to make them readily available to all. Third, an adequate and efficient labor supply must be based upon needs and resources. Fourth, the relation of apprenticeship to unemployment and the need of assuring employment to apprentices on an all-year-around basis makes it necessary that apprenticeship needs and conditions for training be related to, and assist in, the stabilization of employment throughout the important construction centers of the country.
The Federal committee has been carrying out the recommendation of the construction industry in respect to national apprenticeship standards by industries, but we have not confined our aid and assistance to the construction field alone. Through our cooperation in providing the stimulus and negotiating agents the employer and employee organizations in the plumbing, painting, decorating, and paperhanging industries have formally adopted national standards for the training of apprentices. This development has been universally hailed as the most significant accomplishment ever made in the field of apprentice training. It seems probable that many of the trades in the construction field will not be generally affected by the provisions of the act before you. yet they are largely dependent on skilled workers and apprenticeship.
We are cooperating with a number of other industry groups in preparing similar apprenticeship standards, some of which will be subject, to the provisions of the bill and some will not. but we feel that all should participate in apprenticeship under sound standards.
The unanimity with which management and labor have endorsed the plan for a national apprenticeship system was illustrated by the evidence submitted to the subcommittee of the House Labor Committee on H. R. 7274, which would continue the activities of the Federal committee as a permanent function of the Federal Government. An examination of those hearings will show that outstanding national organizations of both employers and employees urgently recommended that the work of this committee be continued through
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the Labor Department with increasing vigor. Representatives of both groups were emphatic in urging that the promotion of national standards of apprenticeship be continued, as this is recognized as one of the soundest means of bringing about a uniform national system of apprenticeship.
In conclusion may I say that the Federal committee feels that section 6, subsection (c), item (1) will provide a powerful impetus toward our purpose of establishing a sound uniform system for the training of apprentices. Our experience shows that, in addition to wage exemptions, there must be a great amount of coordination and stimulation carried on by the agency dealing with apprenticeship. In addition, there will be need for the proper training of apprentices among employers who will not be affected by this act. We should like to direct your consideration to the importance of integrating all of those aspects of apprenticeship which deal primarily with labor standards and with clearing house functions into one administrative agency.
The Chairman. Thank you very much. Are there any questions?
Representative Fitzgerald. Of course, you are acquainted with the apprentice-training bill that is already before the Congress here?
Mr. Patterson. Yes, Congressman.
Representative Fitzgerald. Making it a permanent policy of the Government?
Mr. Patterson. Yes, sir.
Representative Fitzgerald. Do you believe that the passage of this bill would make this more necessary or less necessary, the passage of the apprenticeship-training bill? I mean the passage of this bill, the hours and wages bill, will it make the passage of the apprentice training more necessary or less necessary?
Mr. Patterson. The passage of the Black-Connery bill would, in my opinion, make the passage of H. R. 7274 a great deal more necessary.
Representative Fitzgerald. Why?
Mr. Patterson. A great area m which apprenticeship is necessary will not, presumably, be affected by the bill before you. As I understand it, some of the trades may not be affected at all. Some employers in some trades will be subject to the bill and some will not. The need for promotion of sound standards and a clearinghouse service is just as necessary for those employers not covered by this bill as for those covered.
Representative Fitzgerald. Do you believe, under the set-up of the Board of five, that they could handle this apprentice-training program as efficiently as another administrative board?
Mr. Patterson. As we see it, apprenticeship is a big problem, by itself. I believe that it requires the full time and attention of a special agency if we are ever to overcome the chaos we are now faced with in respect to apprenticeship. If the Board is to handle apprenticeship, it seems to me that it will need authority to act as a clearinghouse for the whole of the labor-standards side of apprenticeship, and not just that side affecting those employers subject to the bill. Presumably it would take the Board quite a time to set up its organization and even longer to establish wages for the various industries. Wage exemptions for apprentices, of course, would not be made until after the established wages were
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determined. Under the circumstances, I do not see how this important apprenticeship problem could get the immediate attention it requires.
Representative Fitzgerald. Do you believe, Mr. Patterson, that without the safeguards of a strong administrative board there might be a tendency to exploit the apprentices in regard to the hours and wages provisions in the bill?
Mr. Patterson. The section to which I am referring does not prevent the Board from making a blanket order exempting employers from paying the established wage for the employment of apprentices. If such were done, then I am convinced that certain types of employers would use the exemption as a blind to employ cheap labor. There is a considerable element of fair labor standards in respect to the employment of apprentices. Not only should the apprentices be protected from exploitation, but also the employers should have some assurance that other employers are carrying their proper share of the responsibility for the adequate preparation of industries’ most vital asset—skilled workers.
The Chairman. Any other questions? Thank you very much, Mr. Patterson. H. J. Ford.
Mr. Ford. My name is H. J. Ford. I am executive secretary of the National Constitution Defense League.
We believe that the sponsors of the wage-hour bill now under consideration were actuated by a desire to do the greatest good to the greatest number of persons, and not to willfully do harm to any class or group of American citizens. But in their zeal to do good they have overlooked a condition which will operate to the disadvantage of the minority group in our midst, the Negro worker. We are hopeful, however, that in calling your attention to the defects as we see them it will make possible such changes that will render the bill fair to the minority group without affecting its lofty purpose, if this is possible to do. It isn’t so much what the bill says, but the things the bill fails to say are the things that hurt. We are, therefore, registering our objection to the bill in its present form and suggesting several remedial changes for your consideration. Gen. Hugh S. Johnson in a recent article characterizes the bill as [reading] —
a mess of words obscuring the absence of any standard, any limit or any rule at all—and a complete passing of the buck to a board with plenary power.
With the purpose of so stabilizing the wage level that the living conditions of the working people or America will be improved, the bill should demand the general support of the masses, but the manner in which these ends are to be attained well earns the various criticisms directed against it by those who have taken time to study the provisions of the bill in its present form.
Custom, actuated by prejudice and race hatred, has decreed a low salary for the Negro worker. As a result, Negroes in large numbers inhabit tenement houses and alley dwellings. A proven economic theory is that slums, tenement houses, and alley dwellings are the result of low wages. Section V (a) of the proposed bill empowers
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a board in establishing a minimum wage to take into account the cost of living, which would lower the wage level of the above mentioned Negroes, whose living conditions are already low because of low wages. This provision should be stricken from the bill. The stabilization of wages should tend also to stabilize living conditions and not penalize the poor by keeping them poor. Every Negro who works will be affected unsatisfactorily, except in a few cases in the extreme North.
In the service trades exempted which number over one half million according to a Census Bureau compilation, hundreds of thousands of Negroes are employed and of course, received a low salary. The wage and hour stabilization of the proposed bill will naturally cause an increase in price of the every-day necessities of life. Workers in those exempted trades and millions in the agriculture group, will be hard hit by an increase in price and no increase in wage.
Section V (a) further states that in establishing a minimum fair wage the Board shall take into account “all other relevant circumstances affecting the value of service or class of service rendered.” This clause could be stretched to cover anything the regional advisory board might care to recommend, and our experience with some local advisory boards causes us to look forward with alarm to what might happen to Negroes in the South.
The same section empowers the Board to classify employees in establishing a fair minimum wage. This clause could be used to place Negroes and white men doing the same kind of work, in a different classification, with the Negro, of course, receiving a lower salary. Could the Negro enter a grocery store and state his classification and get a loaf of bread cheaper than his white coworker? We suggest that the bill so read that no classification be made because of race or color of the worker.
Concerning the Labor Standards Orders, section 12 (6) a labor order may contain such terms and conditions as the Board may consider necessary or appropriate to prevent the established minimum wage becoming the maximum wage and to prevent the discharge or reduction in wages of employees receiving more than the established minimum wage. We suggest an amendment to prevent the discharge of employees receiving less than the established minimum wage. The lack of such a ruling in N. R. A. caused many Negroes in the South to be discharged rather than pay them the established wage.
We suggest that there be no geographical or sectional wage differentials or no employee class differentials based on race or color.
A fair standard wage should not be based on hourly wages. The adoption of an hourly minimum wage will make it possible for employers to reduce the hours per week to fit any desired weekly or monthly salary. We suggest that as a substitute, there be a minimum annual pay rate.
The Chairman. Thank you. I understand Mr. Hillman is not here yet, so we will ask Mr. George B. Chandler to make a statement.
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Mr. Chandler. My name is George B. Chandler.
I appear in opposition to Senate bill 2475 and H. R. 7200, the Black-Connery fair-labor-standards bill. In so doing I represent the Ohio Chamber of Commerce which is the largest State-wide business association of Ohio and the oldest organization of its kind in the country.
You have already listened to able speakers who have discussed these measures from the national viewpoint. I shall endeavor to avoid repeating what they have so effectively said.
I wish to speak from the point of view of an invaded State. Ohio is the fourth State in the Union in population, wealth, and industrial production. It is the home of the rubber industry, of great steel interests, automotive parts, and wide diversity of manufacturing. We believe we have built up a high civilization in Ohio, with our 40 colleges and our distinguished political, judicial, and social traditions. We are proud of our accomplishments and jealous of our rights.
Gentlemen, I must be frank with you. Never before in my experience, not excepting even the recent threat to the independence of our Supreme Court—not even excepting that—can I recall any measure which has met with such widespread condemnation and resentment on the part of all substantial interests in our State as this so-called bill to establish “fair” standards.
Ohio makes no complaint about the wages proposed. We are already paying and will continue to pay higher wages than the Labor Standards Board—if and when set up—probably would order. Nor is Ohio particularly concerned over the possibility of decreased hours. Our industries have already installed short working hours and we can stand any additional decrease in the wage week that the rest of the country can face. Least of all do we complain about the child-labor provisions of these bills, which are much publicized for political purposes but really not germane to the real issue involved. We haven’t any child-labor problem in Ohio. What we resent is the brazen and, as we believe, illegal entry of the Federal Government within our borders to tell us how to run our own affairs.
South Carolina fired on Fort Sumter for a far less pretext than this bill affords.
We deny the moral right and question the legal right of the United States Government to regiment our business life, to prescribe our wages, designate our hours of work, refuse us the privilege of commerce with our sister States, and fine and imprison our citizens for exercising the rights permitted by our own laws and our own courts.
I have only time to cite a single example.
Two Ohio citizens, John Doe and Richard Doe, have saved their money and organized the corporation of Doe, Doe and Co. They sell some stock to their neighbors and start a little business. They are thrifty, shrewd, and honest. They work hard and have—largely from their own neighborhood—hired help they know and can trust. They pay fair wages and produce commodities which they are able to sell at a low price on the market. The business grows. Everybody
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is happy and satisfied. They restrict their market to Ohio customers. It is essentially an intrastate business.
But along comes the Amalgamated Production Co. of Chicago, who manufacture like commodities and find that they cannot compete locally with the prices offered and standard of goods produced by Doe, Doe and Co. in their own Ohio market. Forthwith they run to the omnipotent Labor Standards Board, invoke section 9 (b) of part IV, make a complaint and get an order jacking up the wages and cutting down the hours of this strictly Ohio concern. Smash goes its business.
Part IV, section 9 (b):
Whenever the Board shall determine that a substandard labor condition exists in the production of goods in one State and that such goods compete to a substantial extent in that State with other goods produced in another State and sold or transported in interstate commerce in the production of which such substandard labor condition does not exist, the Board shall make an order requiring the elimination of such substandard labor condition and the maintenance of the appropriate fair labor standard In the production of goods which so compete.
I submit this is a perversion of Federal authority and an inexcusable invasion of the rights of a State. As a distinguished speaker has said before this committee, this will “obliterate the last vestige of local self-government.”
Last week the Ohio Chamber of Commerce called a joint meeting of our committee on manufacturing and Federal affairs. It was well attended by representatives of large and important organizations and business concerns of our State. The views expressed ranged all the way from indignation to despair. I can’t recall ever attending a like meeting in my long experience in organization work. It would be as much as my job is worth to quote what they said, but one constructive vote was passed, as follows:
With the distinct understanding that the Ohio Chamber of Commerce doe not endorse the Black-Connery bill, either as it now stands or as amended, an effort should be made to secure amendment of the bill to prohibit importation of foreign-made goods unless they are under labor standards of hours, wages, and conditions similar to those imposed in this country through the enactment of a fair labor standards act.
May I suggest an amendment to the Connery bill, which I have before me?
Amend part III, section 7 (a), by adding—
or any goods produced in any foreign country under substandard conditions as they are defined in this act.
If you are going to place the citizens of Ohio in a Federal strait jacket, interfere with their operations and hike the cost of production, at least give us some protection from the inroads of foreign goods, particularly from Japan; over whose fair labor standards we have no control. Why handicap your own people in the international race?
May I suggest another amendment? This bill seems blandly to ignore the fact that there is more than one party to any contract of employment, or more than one party in interest to. the great issues here involved. In several places, for instance in paragraph (b) section 4, part II, there appears the language:
Without unreasonably curtailing the earning power of the employees in such establishment.
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That, of course,, is praiseworthy and a bit unctious; but really is there not another party in this issue? Has the Congress of the United States no interest whatever in the financial solvency and business success of the employer? I would suggest that wherever this language occurs, it be amended so as to read as follows:
Without unreasonably curtailing the earning power of the employer or employees in such establishments.
Inserting the word “employer” would at least make the bill look better. A few days ago we sent to the members of the Ohio Chamber of Commerce a communication asking them for their critical and confidential comments on this bill. We had to use the word “confidential”—and live up to it—because, rightly or wrongly, there is a wide-spread conviction on the part of the manufacturers that something approximating a Soviet system of espionage, with subsequent reprisals, is either now in actual operation in this country, or is in store tor the near future.
I am quoting from a few replies, out of the many received. If I were a member of either of these committees, I would be intensely interested in what these men say. They represent the backbone of American civilization. They are “Main Street” at its best. Indeed, after the vast cauldron of froth and foam which has been stirred up in the United States in recent years has subsided, and the flotsam and jetsam shall have cleared away—if indeed it ever does—men of this type will rise to the surface and come to the front as leaders in tens of thousands of American communities. They are not orators, intelligentsia, or literati. They are quiet, modest, efficient men. For this reason, their opinions are worth something.
From a prominent paper manufacturer [reading]:
We do not wish to develop a detailed analysis of the Black-Connery bill, but we wish to state that we consider it a very vicious thing. If it is passed, its immediate effect will be to crucify industry and to assure that business management throughout the country will hate the unions and the men who support them. Its secondary effect will be a wave of anti-labor-union feeling among the workmen themselves, and general confusion and strife will result.
From an attorney for a great railroad system [reading]:
To me this is just one of those things which is being put forward by the group now in power in Washington with the idea of making the possession of this power permanent * * *. It seems to me that labor and industry would both profit if we could unshackle them from the chains which are gradually being built by the politicians now in charge of things at Washington, so that instead of making labor and capital antagonistic enemies at all times, we can return to the era when cooperation between the two was the order of the day.
From a large manufacturer of automotive parts [reading]:
We, as you know, have always consistently paid high wages and supported the maintenance of fair hours of work both before, during, and subsequent to the N. R. A. Consequently, we endorse any measure that prevents oppressive hours and wages. The present, bill, however, goes substantially beyond that and places in the hands of-a five-man board complete power over hours and wages, and it would seem to us to be as objectionable to organized and unorganized labor as it is to management. In other words, if the Board is unfair, the wages might be abnormally low or abnormally high. We do not believe that there is anything in the present situation which requires such drastic and far- reaching action. The present wage and hour levels are more favorable to labor than those prevailing in 1929, and generally it is my understanding that employment is practically equal to that year. Why there should be drastic and hurried action at this time is hard to conceive.
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From an officer of a large steel-manufacturing company [reading]:
I have a copy of this bill and have endeavored to read the bill with an open mind. However, I have been unable to find anything in this bill that would be favorable or fair in any way to the employers engaged in any line of business * * *. It would seem to me that it is entirely unnecessary to associate so many problems with respect to labor in order to eliminate child labor. With my limited knowledge of State laws, I believe that most States have laws governing the age at which minors can be employed, and it would be unnecessary for our National Government to take over this problem. It leads me to believe that the real purpose of this bill is to set up a dictatorship for industry.
There is only one side to this bill, the same as the Wagner labor bill, which is causing the labor unrest we are having in this country at the present time. Where there is only one side to a problem and that is left to the judgment of a commission appointed by the Chief Executive, the rulings, in my opinion, would be the same as the National Labor Relations Board has made in the past, all in favor of the employee; and if a few workmen in the plant decide to ask for some ridiculous concession and they were refused, according to this bill it would be taken up with the Board, and they would determine that we were unfair and our goods would be banned from shipment; and if we did not comply and continue to operate our plants, then I believe that the Board would appoint a commission to operate for us. It seems to me that this is the most far-reaching piece of legislation that has ever been proposed.
From a chamber of commerce executive [reading]:
The majority of our people, I am sure, do not realize the tremendous import of this particular piece of legislation, nor do they understand that its far- reaching provisions may completely transform by degrees our present economic system * * *.
First, the proposal is only a subterfuge to exercise control over the industries of the country. The proposed Federal Board has sufficient latitude under the bill to chastise and punish any given industry in the country whose action or behavior is distasteful to the administration. Every industry in the land would ultimately perform according to the dictates of the Chief Executive and the politicians through the leverage of wages, hours, and restrictions.
Second, where in all this land are we to secure five men to act as a control board who would have the superintelligence to interpret or pass upon, fairly, the conglomerated provisions of the proposal?
Third, ♦ ♦ ♦ one of the purposes of the law is to protect the workers from long hours where such hours are oppressive or injurious to health. At the same time, however, the Board is permitted to extend these hours if the employer is willing to pay time and one-half for overtime and for this consideration the number of hours worked cease to be a menace to health.
Fourth, who will be mentally deficient under the proposal; who will be classified inefficient; and who will decide whether or not an employee is an apprentice? Will these things and many others be judged and decided upon in Washington by remote control? Obviously, they will be. and it will necessitate one of the greatest hordes of inspectors, snoopers, etc., this country has ever witnessed.
Fifth and last, there are not many interstate industries in —- — but of the number we do have several are of such character and particular type that 40 hours a week is hardly sufficient for continuous uninterrupted operation. These plants have operated from 42 to 44 hours a week. Our workers make good wages, probably a little less than in the larger cities, but this is as it should be for general living expenses are lower and accessibility to employment is better in the smaller cities. Our labor has apparently been contented with their working conditions over a long period of years and the great majority of them own their own homes. We have advertised this fact, in selling--------and we believe that the city, including its workers, has benefited from such publicity. However, under the present proposed bill as drawn, we have no way of knowing what our exact status will be in the future, only that in all probability we will have a long siege of industrial disruption and chaotic conditions which is bound to react unfavorably to one industrial advantages.
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From a successful industrial plant in one of the smaller cities of Ohio [reading]:
It has always been the policy of our company to pay good wages and even under the N. R. A. we were way above the requirements.
Because of conditions in our own business, we cannot look upon the establishment of maximum hours with enthusiasm. Many of our products are of a seasonal nature and during the peaks of production we would be very badly handicapped if we were limited as to hours, especially as the work is of a very specialized nature and it requires considerable time to break in new men. In point of fact, the season would be over by the time this could be done. Moreover, the skilled labor which we require for certain production is not always available. Our people are accustomed to the seasonal production peaks and welcome the opportunity of working a few hours extra in order to compensate for the shorter hours during the dull periods. Then, again, if we were obliged to pay extra for overtime, should we be limited for example to a 40-hour week. It would seriously affect our costs and selling prices.
From the president of a large foundry supply company [reading]:
In our opinion, it’s an invasion of State, individual, and corporate rights. It’s the most radical thing that we have ever heard of.
The country certainly is in a mess today. The businessman or manufacturer does not know where he is at—don’t know what to do—-not investing any money in improvements unless he is absolutely compelled to for he never knows what is coming up from day to day.
The Government certainly seems to be breaking down when they can’t control the mails, railroad, and personal rights. According to the newspapers the country is being operated by mob rule. A contract signed by a labor union does not stop strikes; they have no respect for any agreement they enter into.
You have tied the manufacturers hand and foot. He is at the mercy of the walking delegate for a few disgruntled employees.
From a general manufacturer of diversified interests [reading]:
It takes very little study of this bill to make a fair-minded person realize what an exceedingly one-sided and punitive piece of legislation this is.
The proposal is really more objectionable even than the N. R. A. and would create a bigger N. R. A. in the field of wage and hour control and would throw marginal industries and workers out of work, increasing the relief load and causing the next depression to be more severe.
It would disturb employment relations by conflicts between Federal and State wage and hour boards, adding greatly to the confusions already created by the Wagner Act.
One branch of our business at--------- consists of the manufacture of toys and playthings and our greatest competition now in that line is from Japan, and increasingly so from Germany. This proposed Black-Connery bill would permit the continued importation of competitive items that are constantly being made under conditions which are now forbidden in this country.
I am asking you if there is any sense in that sort of legislation?
From an oil company [reading]:
This bill should be opposed for the following reasons:
1. It sets up the machinery that can be used for a political-labor racket that would be destructive to the interest of labor as well as industry.
2. Fixed maximum hours and minimum wages would throw out of employment all those who are not sufficiently competent to earn their pay.
From a successful and nationally known rubber-tire manufacturer [reading]:
We find that a large number of our employees, who will not work over 6-hour shifts, are leaving our plant after they have worked their 6-hour shift, and working other places, accepting contract jobs for themselves, such as carpenters, plumbers, painters, etc., and we have no hesitancy in stating that we firmly believe it. is impossible to operate a factory upon an efficient basis or make any profit by operating under the 6-hour basis. * * * We take men off the streets here and in 6 weeks’ time they are making $1 or $1.04 an
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hour, and they have the audacity to sign with other employees for an advance in wages, and they still continue to soldier the usual length of time, even working 6-hour shifts.
Ohio resents being reduced, as is gradually being done, from the status of a sovereign State to that of a subject province.
To me this is an amazing phenomenon. “Gone with the wind” are all the ideals of State sovereignty and individual rights for which gallant Southern armies charged on a hundred battlefields, over mountain side and through swamps, for 4 long and desperate years. “Gone with the wind” are the ideals of personal freedom and local self-government, for which my New England ancestors fought at Bunker Hill, Bennington, and Saratoga. Gone, too, is the ideal of making a world “safe for democracy”, for which we were supposed to have entered the World War only to find dictatorships in Russia, Germany, and Italy; and in the United States—what?
The Chairman. Thank you very much. Mr. Donnelly, Illinois Manufacturers’ Association.
Mr. Harrington. My name is John Harrington, of the firm of Fyffe and Clarke, Chicago, general counsel of the Illinois Manufacturers’ Association. Mr. Donnelly has asked me to appear in his place. He was unable to be here today.
The Chairman. Your name is John Harrington?
Mr. Harrington. John Harrington, of the firm of Fyffe and Clarke, general counsel of the Illinois Manufacturers’ Association.
I am appearing on behalf of the Illinois Manufacturers’ Association in opposition to the proposed fair labor standards bills.
The Illinois Manufacturers’ Association is an organization composed of some 2,500 employers in the State of Illinois. It is obvious that among those 2,500 there are a great many more small ones than there are large ones.
There is too much tendency to regard all employers, all manufacturers, and all industry as consisting only of large business enterprises and to completely forget the smaller manufacturers—and by small manufacturers I mean those employing a few hundred employees or less. It is for them, as much as for the large manufacturers, that I am speaking.
It has been frequently stated before this committee that this bill is not a new N. R. A., that it is entirely different, that industry is not being given the right to draw its own standards but that they are going to be drawn by a Government board. As far as most of the small manufacturers are concerned, this is not a real difference. Such manufacturers did not have much to say about the N. R. A. codes to which they were subject. They did not come to the hearings. Often they could not come to the hearings because they could not afford it. Frequently they did not even know when they were violating various codes and when they were not. The disastrous effects of the N. R. A. were felt more by them than by the larger manufacturers.
Among the membership of the Illinois Manufacturers’ Association it was the small manufacturer who suffered most from the N. R. A.
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A substantial part of American industry does consist of just such small manufacturers. Their principal chance of success and survival is their flexibility. They have to compete with large manufacturers with national advertising, and must compete by price and extra service. This bill would place it in the power of a board to destroy that flexibility.
The uncertainty and the confusion which followed the N. R. A. would, in our opinion, follow the enactment of this bill. It is much simpler to classify industries and occupations on paper than it is in fact. Under the N. R. A. many small manufacturers found that they came under four, five, or six codes. They were expected to comply with all of the regulations under all of these codes. They did not know where they stood. They did not know how to operate. And they were in a chaotic condition.
The delegation of power to the board proposed by this act would lead to that same confusion among smaller manufacturers. They would not be able to attend public hearings. In many cases they would not even know what the regulations were. They do not see the Federal Register; lots of them have never heard of it.
As far as Illinois is concerned, we have no child-labor problems. We had a child-labor law for more than 25 years.
This committee has already been furnished with figures showing the gradual reduction in maximum hours and the gradual increase in minimum wages which has occurred in recent years—mostly through State action and natural evolutionary development. We believe that this process should continue, supplemented, if necessary, by protection from the Federal Government such as section 7 (b) of this bill—but we do not believe that full and complete regulation of wages and hours in practically all industry should be assumed by the Federal Government. It appears inevitable to us that further regulation of business and industry—such as prices and production—will necessarily follow, with eventually the complete disappearance of an independent American industry.
We submit that this bill constitutes as unprecedented delegation of power to the Board, which no board, however well intentioned, should have.
The fact that Congress in sections 2 (10) and (11) provides the minimum wages and maximum hours means very little in view of the power given the Board to vary such standards upward or downward. In fact, practically every standard provided by the act, including the employers who will be subject to it, can be varied by the Board. We submit that such standards are not really standards at all.
The provisions of sections 2 (12) and section 5 will inevitably create an overlapping with the National Labor Relations Board, which we submit is not desirable.
We further submit that this bill, if enacted, would not decrease unemployment. Any such measure is bound to increase costs and prices, and the natural effect of such an increase will be to decrease sales. It is impossible to say how much prices would be increased, because the amount of the cost of a product which is attributable to labor varies in various industries. But there would be an increase. There would also be a further uncertainty on the part of employers which would prevent them from undertaking necessary
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expansion and new activities. The potential expansion now existing would, we submit, be seriously curtailed.
The effect of the bill would be not to decrease unemployment, but to freeze employment.
We also submit there should be more time devoted to the consideration of any measure as sweeping and important as this is. There are a large number of manufacturers in the country who are not yet familiar with the bill or what its effects will be upon them.
I have not discussed the constitutionality of the bill. That has been presented to the committee on both sides at great length. We have, however, serious doubt whether there is anything in the recent National Labor Relations Act which overthrows and overrules the long line of decisions of the Supreme Court that wages and hours are local matters. The Schechter case and the Carter Coal Company cases are still the law—as was stated by the Supreme Court in the Jones and Laughlin case.
The Chairman. Any questions? All right. Thank you. Mr. Bernard Wittenauer, of the Youngstown Sheet and Tube Co.
Appearing in his own behalf.
Mr. Wittenaukk. Mr. Chairman, and members of the board: My brief today will not deal with hours and wages in particular, but it will deal with the conditions that we are facing in Mahoning Valley today.
The Chairman. Mr. Wittenauer, we had you as being connected with the Youngstown Sheet and Tube Co. Tire Chairman.
Mr. Wittenauer. I will give you an explanation, Mr. Chairman. I am not representing any company. I worked for the Youngstown Sheet and Tube Co., but I am not representing them. I am representing the conditions that apply to our citizens in this valley in particular today.
The Chairman. Are you employed by them now?
Mr. Wittenauer. No, sir; I am out of work.
The Chairman. Out of work?
Mr. Wittenauer. Yes, sir. We are thrown out of work on account of the strike. I am not on strike, but I was thrown out on account of the strike.
The Chairman. All right.
Mr. Wittenauer (reading):
Hubbard, June 14, 1937.
Hon. Hugo Black,
Chairman, Joint Committee on Wage and Hour Bill,
Senate Office Building, Washington, D. C.
Dear Sir : As a citizen born and reared in this community and for many years an active member of organized labor, at the present time an honorary member of organized labor, I wish to lay before your labor committee a description of what I regard as an illegal strike of workmen at the Youngstown Sheet and Tube plants employing some 15,000 men. This strike was voted on by less than 500 employees led by organizers from outside the State of Ohio.
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Now, gentlemen, just consider—less than 500 men voting to throw 15,000 men out of the line, with weeks facing them without anything to eat. [Continuing reading:]
Thousands of our employees never had a chance to express their wishes. The method of coercion and intimidation being used by the Committee for Industrial Organization organizers here before and since the strike was called are the most brutal and revolutionary I have ever heard of. Hundreds of our citizens living in fear of their lives and safety of their families; homes have been stoned at night while citizens are at rest; men stopped on the highways and ordered to sign up. I myself have been threatened and on Friday, June 4. I was ordered by Organizer John Stephenson to Join their organization. Standing upon my constitutional rights as an American citizen and taxpayer, I am asking the protection of the Federal Government for the liberty-loving citizens of the Mahoning Valley.
I remain,
Bernard Wittenauer,
Hubbard, Ohio.
I am not going to take up much time, but there is one tiling that I have in mind in particular. If as late as 5 weeks ago we should have had a law into effect compelling a strike vote by every man employed in an industrial plant, this whole strike would have been avoided. If this should have come to a strike vote in Youngstown. I am here to tell you that it would have been voted down about 7 to 3.
Now, the conditions existing there—for 18 years this company had gone along, and their men worked in peace since the strike of 1919 under Foster. They had gone along on a plan among themselves by each department—it was known at that time for years as a representative plan.
Following the decision of the Supreme Court on the Wagner labor relations law there come into their midst these organizers. Men were signed up right and left. Men were stopped in front of the gate and ordered to sign up. Men were stopped at the highways and ordered to sign up, and the conditions are bordering on terrorism in that district today. Many of our men down there are arming for protection. I know this to be a fact, because just about every 3 days I got a notice to sign up. That is the condition.
Now, if we had a law providing that strike votes must be taken by every man employed in an industrial plant, then if the majority votes for a strike you would be O. K., but m this case the majority of the men did not want to strike, and the gates of this company’s plant is chained by these men representing this outside organization, and these men are hopelessly outvoted.
I thank you, Mr. Chairman, and that is all I have to say.
Representative Schneider. Were you in the 1919 steel strike?
Mr. Wittenauer. No, sir. In 1919 I was working as an iron molder.
Representative Schneider. Did you ever belong to the Steel Workers’ Union?
Mr. Wittenauer. No, sir; I never have.
Representative Schneider. What union did you belong to?
Mr. Wittenauer. I have been a member of the Iron Molders Union since about the year 1903. Up until this present time, of which I am a member today, an honorary member since 1923.
Representative Schneider. What did you do in the steel mill?
Mr. Wittenauer. In the steel mill, I am straightening machine operator.
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Representative Schneider. Does that come under the classification of a molder?
Mr. Wittenauer. No, sir; it does not.
Representative Schneider. Did you ever belong to the C. I. O.?
Mr. Wittenauer. No, sir; I have not.
Representative Schneider. You have had an opportunity to belong to it, didn’t you?
Mr. Wittenauer. Many of them.
Representative Schneider. And you did not see fit to join it?
Mr. Wittenauer. No, sir; and I don’t yet.
Representative Schneider. Do you recall that in those former strikes in 1919 and on other occasions the steel companies were employing spies for the purpose of ferreting out members who did belong to the union?
Mr. Wittenauer, At the time of the 1919 strike, of course, I was working in a different line of employment. I can explain if you will let me. The foundries in our district up to 1921 had worked pretty fair, but along in about the Harding administration they merged under the United Engineering Co., and they moved the shop that I was working in; they closed the shop down and took it into the Pittsburgh district and throwed myself and the rest of the men employed in that shop out of work. That was the situation. I had to get some employment, I had to go into an independent plant. I had a home almost paid for, and I had to get employment. I went into the independent plant of the Youngstown Sheet and Tube Co.
Representative Schneider. How long have you worked there now?
Mr. Wittenauer. Well, I have been there this last time about 7 years. Since 1930.
Representative Schneider. Just why are not the men of the steel corporation organized as you think they should be?
Mr. Wittenauer. Well, I will say this: This plan that the company had in effect, they had done a great deal for their men. Many of these men have been employed by the company around 30 years, and some of them better than that. Now, they had a system or relief; they had a system with regard to loaning money without interest paying back on the 2 percent method; they had a system that the employees could get their groceries in between pay days, if they ran out of money, and they handled it very well; they had an insurance system; they had an athletic activity that took in all athletics, and so on, a program covering the winter and the summer; and I would say in general that they had a very good system there as far as the representation was concerned.
Representative Schneider. Have the wages been increased much during the past 6 months or year?
Mr. Wittenauer. Well, sir, when I went down to this mill in 1933, to be exact, on June the 8th, labor was 33 cents an hour. It had taken two drops previous to that, from 1930 on down, it had taken two drops, bringing it down to 33 cents. It had been down—as late as 1930, laboring wages in the steel plant had been up to 50 cents an hour for an 8-hour day and 44 cents an hour for a 10- hour day.
Now, following the beginning of the depression, labor wages fell until it was down to 33 cents, and that was the low peak in the
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summer of 1933. Then it gradually rose again until it came up at different stages to where it is today.
Representative Schneider. Last year it raised very substantially, didn’t it?
Mr. Wittenauer. Last year it did.
Representative Schneider. During the last year?
Mr. Wittenauer. Very substantially.
Representative Schneider. To what do you attribute that?
Mr. Wittenauer. Well, I would say a great deal of it was due to the rise in the cost of living, and I will make this statement, that the last 10-cent raise on the hour cost these workers more than what that 10 cents will equal.
Representative Schneider. You mean to tell the committee that all of these increases came out of the largeness of heart of the employer; is that it?
Mr. Wittenauer. Well, I cannot say that, but they had to go back, because they had fallen from the 50-cent rate in 1929 or early 1930, they had fallen down to 1933 on account of slack operations. Well, naturally, when business picked up wages had to come up in business, naturally.
Representative Schneider. Do you mean to say now that the company is in favor of their men being members of any union independent of the company union?
Mr. Wittenauer. The companies, as I see it, are in favor of a man belonging to whatever he wants to do.
Representative Schneider. Was there any opposition to your belonging to the American Federation of Labor or the C. I. O.?
Mr. Wittenauer. I have never heard a man say a word about it.
Representative Schneider. Do you mean to say that the company did not employ spies for the purpose of discouraging men from joining or staying with those unions?
Mr. Wittenauer. On that point I know nothing whatever, because I have never been in around the company’s activities on such work as that. I can cay that I don’t know of their activities or what they have done in that direction.
Representative Schneider. All you know is that the company was a good company-----
Mr. Wittenauer (interrupting). All I know is that our men are pretty well satisfied. That is all that I can say.
Representative Schneider. How much were you getting per day when you left your employment?
Mr. Wittenauer. When I left my employment, I was getting $6.56—I think is correct. Eighty-two cents an hour, I think will bring it up to that.
Representative Schneider. Did anyone discuss the question, or have you discussed the question with anyone of your coming here before this committee?
Mr. Wittenauer. I came on my own hook.
Representative Schneider. You did not discuss it with any of your fellow’ workers or any of the people you are working with?
Mr. Wittenauer. My wife knows that I am in Washington.
Representative Schneider. You are just here on a visit?
Mr. Wittenauer. I am just here to explain the conditions in this valley.
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Representative Schneider. Did you come here for that specific purpose?
Mr. Wittenauer. Exactly.
Representative Schneider. Did you pay your own way?
Mr. Wittenauer. I paid my own way; took the last dollar out of the house.
Representative Wood. You said something about outside unions that came in and organized. What do you mean by “outside unions.”
Mr. Wittenauer. I mean in plain English, the C. I. O.
Representative Wood. Do you call the American Federation of Labor an outside union?
Mr. Wittenauer. Well, I should in this case where they had never been organized except perhaps in the sheet and tube; I think there were some machinists that belonged to the American Federation of Labor.
Representative Wood. What is your definition of an outside union?
Mr. Wittenauer. Well, an outside union is one that I would say that operates on a yearly basis or a yearly set-up on wages and hours from year to year.
Representative Wood. Do you consider the Moulders’ Union an outside union?
Mr. Wittenauer. The Molders Union, I would say, is an outside union.
Representative Wood. What have you against an outside union?
Mr. Wittenauer. I never have a thing in the world. And the only thing in the world—there is but one thing----
Representative Wood (interposing). You said that the outside union came in and created the trouble.
Mr. Wittenauer. Well, in this case, I am just explaining the conditions that have forced men into this thing that I personally know of. I am just explaining the conditions and what I am facing myself.
Representative Wood. You just made the statement that 500 men voted this strike.
Mr. Wittenauer. Less than 500 men.
Representative Wood. And put 15,000 out of employment.
Mr. Wittenauer. Less than 500 men.
Representative Wood. What was the matter with these 15,000 men? Were they just mediocre and so timid that they just took the command of these 500 men and just quit their work and were afraid?
Mr. Wittenauer. You see, at the Briar Hill Mill of the Youngstown—
Representative Wood (interposing). That is 30 to 1. Do you mean to tell the committee that one man can tell 30 men to stop work?
Mr. Wittenauer. I mean to tell you that less than 500 men voted that strike.
Representative Wood. Why did those other men go out?
Mr. Wittenauer. Because the gates were locked with chains on them, and they did not have a chance to go in there.
Representative Wood. Who locked the gates?
Mr. Wittenauer. The strikers or the pickets.
Representative Wood. Where was the company guard that they pay so much attention to? Where were they at that time?
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Mr. Wittenauer. The company guards did not interfere.
Representative Wood. Why didn’t they?
Mr. Wittenauer. Well, indeed I could not tell you that.
Representative Wood. What did these 15,000 men do? Did they make an effort to go into the plant?
Mr. Wittenauer. I have never heard of but about possibly one man that tried to make an effort. I heard of one man trying to make an effort to get over the fence and get in the plant.
Representative Wood. Why didn’t they, if they want to go to work?
Mr. Wittenauer. Well, I will tell you. I feel that the men did not want to take a chance to get injured or causing any bloodshed. That is the way I would feel, and that is the way that I see the situation.
Representative Wood. Their wives and children depend upon their jobs and they were thrown out of employment, and rather than to get into any little difficulty, they would rather see their wives and children starve, would they? What kind of American citizens are they, if they would let one or two men to every 30 keep them out of the plant and keep them from working?
Mr. Wittenauer. I have not said that one man did that. It was a line of pickets in front of each one of those entrances.
Representative Wood. Five hundred men is just one man in 30 compared to 15,000.
Mr. Wittenauer. Well, remember that these men don’t believe in making any trouble. I, for one, don’t. I for one want to live in peace. I have lived in peace now better than 50 years.
Representative Wood. In other words, they just walked away from their jobs?
Mr. Wittenauer. They did not have a chance to get back, because they did not want to see any bloodshed.
Representative Wood. They would not fight for their rights, would they?
Mr. Wittenauer. Well, I will tell you. Lots of men will suffer before they will take a chance on getting hurt.
Representative Wood. Do you believe in a man fighting for his country in time of war?
Mr. Wittenauer. In time of war, I believe in a man fighting if he is called to fight
Representative Wood. If some foreign country would invade our shores and attempt to enslave our women and children and deprive us of employment, do you think that we should just walk away and say, “We don’t want any trouble?”
Mr. Wittenauer. No, sir; we would always fight for our country. There is no nation can invade our shores.
Representative Wood. They are mighty peaceful men, those 15,000, aren’t they?
Mr. Wittenauer. Well, you don’t have to wait so long the way the things look today. I could not tell you exactly.
Representative Wood. Are you one of the men that has been deprived of employment?
Mr. Wittenauer. Yes; I am one of the men that has been deprived of my employment.
Representative Wood. And you spend yojur last dime to come down here?
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Mr. Wittenauer. I took the -last dollar out of the house.
Representative Wood. What position is that going to put you in?
Mr. Wittenauer. Well, I have lived there for coining close to 54 years, and I want to tell you and the committee that I have a little credit yet.
Representative Wood. If you have spent all of your income and your family will suffer, and you made this long trip down here, don’t you think that you could nave done better by staying there and asserting your rights as an American citizen to work?
Mr. Wittenauer. I think it should be proper to lay before you gentlemen-----
Representative Wood (interposing). We are not operating a steel plant.
Mr. Wittenauer. I realize that.
Representative Wood. This law is not going to govern that, because it will provide—well, in any event it will probably be a month before this law is passed.
Mr. Wittenauer. But, as I see it, the constructive thing to do with this situation is what I had particularly in mind, to avoid any such as is going on. If this continues, we are going to be in an awful position before long.
Representative Wood. How did you come to sever your membership in the molders’ union?
Mr. Wittenauer. Well, I believe I explained to you, Senator. I believe I said that in the year 1921, that our shop closed—they merged. They all came under the United Engineering Co., and they had plants in Pittsburgh, and a plant in Vandergrift and two plants in Youngstown. They merged and went under the United Engineering and Foundry Co. They took the work from our plant at Oak Street in Youngstown and moved it over to one of their Pittsburgh plants and closed the Youngstown shop down. That was the exact status on February 12, 1921, which was the last day that we worked.
Representative Wood. How far is that from where you worked?
Mr. Wittenauer. Do you mean from where I live?
Representative Wood. When they moved the work away, how far was that from where you lived?
Mr. Wittenauer. Well, I would say roughly—I could not say the exact distance to Pittsburgh, but it is probably 75 or 78 miles.
Representative Wood. They did not move you over there, did they?
Mr. Wittenauer. Well, as I explained before, I had my home almost paid for. Now, you know, a man just cannot pick up and leave things in a condition like that. You know, I couldn’t.
Representative Wood. . They were not deeply interested in your home, were they?
Mr. Wittenauer. Well, perhaps they was not at that time. I will agree with you on that.
Representative Wood. Now, the Youngstown Sheet and Tube Co., I saw in the press here in Washington some 3 or 4 months ago, they remodeled their plant in Youngstown where they were then employing some seven or eight hundred men, and the executive official of that company made the statement that after they got their plant thoroughly remodeled, that 90 or 100 men could do the work that was formerly done by 700. Is that true?
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Mr. Wittenauer. Well, Senator----
Representative Wood (interposing). What happened to those men?
Mr. Wittenauer. Did you say the Pressed Steel?
Representative Wood. The Youngstown Sheet and Tube Co., I say, had a plant in Youngstown from where they employed 700 or 800 men, and the executive official of that company made the statement that when the plant was entirely remodeled, that they could probably turn out as much by the employment of 90 or 100 men as they were then turning out with 700 men. What was the outcome of that?
Mr. Wittenauer. I could not say as to that, because they have a great number of plants in the valley, and which one that would be. 1 could not tell you.
Representative Wood. You knew something about that, didn’t you?
Mr. Wittenauer. I cannot say that I do, because my work does not take me in to know everything about what each and every one of these officials says.
Representative Wood. Do you read the papers?
Mr. Wittenauer. I read the papers quite a bit, but I cannot recall that I saw that in the paper. I read a daily paper in Youngstown published there.
Representative Wood. It was in the Washington papers, and they made a big headline of it, and the statement or the executive official of the company was as I have stated. I was just wondering what happened to that plant if they did save that manpower.
Mr. Wittenauer. Well, indeed, I don’t know. They built a new strip mill, I know that.
Representative Lambertson. I think it would be interesting if my friendly colleague would tell you what he would have done down there in your place, whether he would have taken a gun and gone with the 29 against 1, or left, or whether he would have asked or the militia.
Representative Wood. Did you say if I would have taken a gun?
Representative Lambertson. Yes.
Representative Wood. Did I say that?
Representative Lambertson. No.
Representative Wood. What is it that you asked?
Representative Lambertson. I asked him—I said that it would be interesting to ask what you would have done under the circumstances as he stated them.
Representative Wood. You ask me about that and I will tell you. If you want the information you ask me about it.
Representative Lambertson. Well, you are not on the witness stand.
Representative Wood. You are wondering what I would have done?
Representative Lambertson. Yes; I am wondering what you would have done.
Representative Wood. I certainly would not let 500 men vote me out of a job, if there were 15,000 of them, and you would not either, I suppose, if you have any red blood, in your veins and I assume you have, and I know you have.
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Representative Lambebtson. How far would you go? What would you do?
Representative Wood. I would use every means in my power to hold my job if there were 15,000 of us. I certainly would not walk away and let 500 men command us.
Representative Lambebtson. If these 500 sealed the gates----
Representative Wood (interposing). What would you do?
Representative Lambebtson. I would ask for the State militia.
Representative Wood. You would?
Representative Lambertson. I would ask the Governor to send the militia.
Representative Fitzgerald. You say that the rate down there for 8 hours is 50 cents an hour?
Mr. Wittenauer. I said tlmt the rate up until the year beginning 1930, that is—well, when the depression came on early in 1930, the rate at that time was 50 cents an hour or $4 for an 8-hour turn or 44 cents an hour or $4.40 for a 10-hour turn.
Representative Fitzgerald. What is it now? Is that the official scale there now?
Mr. Wittenauer. No, sir; today the labor is 62½ cents an hour or $5 a day.
Representative Fitzgerald. An 8-hour day?
Mr. Wittenauer. Eight hours; that is correct.
Representative Fitzgerald. It is not reduced if the hours are increased.
Mr. Wittenauer. Well, no, sir; but if there is any overtime work after 40 hours, they pay time and a half for that, but they have to work—if there is hours worked on Sunday, they have to work for straight time on Sunday; that is, there isn’t any compensation for working an 8-hour turn on Sunday; you don’t get 16 hours for 8 hours on Sunday, like under the old labor law. Under the old setups of the American Federation as I knew them, Sunday paid double time, and holidays paid double time; and time and a half for overtime.
Representative Fitzgerald. But you work on straight time if you work on Sunday?
Mr. Wittenauer. If you work on Sundays, under the set-up that we have been going along on, and under the set-up that I see the contract with the Steel Corporation was, it is straight time for Sunday work.
Representative Fitzgerald. You say that the company loans money at a small rate to their employees?
Mr. Wittenauer. The company has had an emergency loan program.
Representative Fitzgerald. And they sell them groceries and other articles if they want to buy?
Mr. Wittenauer. They can buy groceries. When a man runs short of money between pays, he can go to the paymaster or the timekeeper and get an order for $3 worth or whatever he wants—$5 worth.
Representative Fitzgerald. Do they run their own stores—the company?
Mr. Wittenauer. The company employees have supervision of the stores. Company employees. That is the way they have been running.
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Representative Fitzgerald. They are run by whom? The employees or the company?
Mr. Wittenauer. Well, the men run them—I mean the employees have a supervision over them through a committee, through what we call a housing committee. That was under the old plan, of course. The old plan now has changed and made to conform to the Wagner Act under the new set-up of the new constitution.
Representative Fitzgerald. Were there any organizations at all in that plant outside of the machinists?
Mr. Wittenauer. The only organization—not what I would call a strict out-and-out union organization. I have always regarded what they call a company union as more or less just a representative plan of electing so many men from each department, bringing them together, fighting out their wages or hours, and so on. That is the only thing they had in there, was the company representation plan.
Representative Fitzgerald. That was, in other words, a company union.
Mr. Wittenauer. That was a company union.
Representative Fitzgerald. As a member of the moulders’ union for so many years, you got a pretty good training in that organization, didn’t you?
Mr. Wittenauer. To a pretty good extent.
Representative Fitzgerald. Did you ever make any effort to join any bona-fide labor organization while you were employed in that plant?
Mr. Wittenauer. You mean at the Sheet and Tube Co.?
Representative Fitzgerald. Yes.
Mr. Wittenauer. No, sir; I never did.
Representative Fitzgerald. Did you ever hold any office in the company union?
Mr. Wittenauer. I was representative for 3 years; yes, sir.
Representative Fitzgerald. Was that an appointive office or an elective office?
Mr. Wittenauer. An elective office.
Representative Fitzgerald. Isn’t it a fact that these 500 men as you say, took out these 15,000 men, because they were not satisfied with their conditions, and they were satisfied to quit their jobs? Isn’t that the fact? You don’t mean to tell this committee the 500 men down there compelled 15,000 men to go out, and that was the situation and that these men were perfectly satisfied?
Mr. Wittenauer. I am not mentioning the words “perfectly satisfied.” That is out with me, but I will explain to you how the thing could be done. At the Brier Hill plant of the Sheet and Tube Co., they had a lodge of the C. I. O. there at Brier Hill. At the Camel plant they had another lodge, with officers elected in each lodge. Now, on the night of May 25, so many men met at each lodge, and with them met the organizers from the outside. The vote taken was the two combined, or less than 500 votes to vote that strike, and that is exactly what I mean.
Representative Wood. How did you find that out?
Mr. Wittenauer. It has been brought to me through a friend that there were less than 500 men.
Representative Wood. What friend? A member of the organization?
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[PAGE 883]
Mr. Wittenauer. No, sir. A friend there that I knew in the mill.
Representative Wood. What were they; were they employees or officers?
Mr. Wittenauer. Employees. Word was brought to me that there was less than 500.
Representative Wood. They did not attend the meeting, but they just told you that less than 500 appeared and voted?
Mr. Wittenauer. That is the word that was brought to me by this man.
Representative Wood. That is just hearsay with you.
Mr. Wittenauer. Well, I was not there, as I say, myself.
Representative Fitzgerald. Isn’t it a fact that this is the first opportunity that the employees of this plant have had a chance of joining a labor organization which was not dominated by a company union?
Mr. Wittenauer. These men----
Representative Fitzgerald (interposing). Answer that question “yes” or “no.”
Mr. Wittenauer. No; that is not a fact.
Representative Fitzgerald. Did they have an opportunity of belonging to a bona-fide organization before?
Mr. Wittenauer. There is nothing in the way of being held against any man in this company—that was the bylaws there of the representative plan, that a man was free to join any organization that he wished to.
Representative Fitzgerald. Why didn’t you join?
Mr. Wittenauer. Why should I?
Representative Fitzgerald. You are a member, of organized labor.
Mr. Wittenaues. I was already a member of organized labor.
Representative Fitzgerald. And had been for 23 years ?
Mr. Wittenauer. Yes, sir; I had been for 28 years.
Representative Fitzgerald. You were only a member of one craft, and that craft was not identified in that plant?
Mr.’Wittenauer. That is true, but if I chose to go into any plant, into any shop in the United States if it is an organized shop, under the old set-up, I can pull out my card and it becomes active.
Representative Fitzgerald. But you are not satisfied that this union was not a company union that was in this plant? You are satisfied that it was a company union?
Mr. Wittenauer. I am not dwelling on that fact. What concerns me most is the condition of our men being thrown out of employment without a right to vote. I believe that if there is a hundred men in the plant, that every man should have a right to cast a ballot before a strike is called. That is my belief. Then you will avoid a lot of this hardship.
Representative Fitzgerald. Have you ever appealed to the National Labor Relations Board to go down there and hold an election?
Mr. Wittenauer. I have not.
Representative Fitzgerald. Why don’t you? The men down there can vote whether they want to be represented or not.
Mr. Wittenauer. I don’t feel that it is my place to do that.
Representative Fitzgerald. You felt it it was your place to come to Washington and spend your last dime.
Mr. Wittenauer. Well, I wanted to go before your committee.
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Representative Fitzgerald. If you rat to do something-for those 15,000 men down there, you know that you could have petitioned the National Labor Relations Board to hold an election.
Mr. Wittenauer. That is not my job.
Representative Fitzgerald. Are you in favor of a minimum wage and of maximum hours?
Mr. Wittenauer. You mean concerning the base rate for labor?
Representative Fitzgerald. A minimum wage.
Mr. Wittenauer. A minimum wage?
Representative Fitzgerald. Yes; and maximum hours. Are you in favor of that?
Mr. Wittenauer. You mean trades and all?
Representative Fitzgerald. The lower brackets; a minimum wage to start at a point for all labor.
Mr. Wittenauer. Yes; I would be.
Representative Fitzgerald. And you would be in favor of maximum hours and the regulation of hours?
Mr. Wittenauer. Yes; I would, provided----
Representative Fitzgerald (interposing). And you are in favor of eliminating child labor?
Mr. Wittenauer. Absolutely.
Representative Fitzgerald. You are in favor of eliminating homework, as is contained in this bill?
Mr. Wittenauer. Well, really I have not had----
Representative Fitzgerald (interposing). The manufacture of goods in the homes.
Mr. Wittenauer. I would not say I was.
Representative Fitzgerald. You believe that this work should be taken into the homes at starvation wages? You are not in favor of controlling that?
Mr. Wittenauer. I am not in favor of taking starvation wages or anything of that kind.
Representative Fitzgerald. You know that that is the history of homework, when homework is put into the homes, it is put in’ there at starvation wages.
Mr. Wittenauer. Well, as I tell you, I am not in favor of taking work into the homes.
Representative Fitzgerald. Then you would be in favor of controlling it ? You are in favor of controlling apprentices, aren’t you?
Mr. Wittenauer. Apprentices?
Representative Fitzgerald. Which comes under this bill also.
Mr. Wittenauer. I would say that along with the old lines, that it was always the custom to allow so many apprentices.
Representative Fitzgerald. That is what this bill will do, and set a standard of control.
Mr. Wittenauer. I think that would be proper.
Representative Fitzgerald. Now, are you in favor of this bill as it is written in here?
Mr. Wittenauer. Well, really I haven’t had the chance, I haven’t seen the bill myself, only the questions you asked me.
Representative Fitzgerald. All of those are contained in the bill.
Mr. Wittenauer. In fact, I didn’t come here—I had not read over this bill or anything of that sort. I am just taking up the points that you have questioned me on.
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[PAGE 885]
Representative Wood. Would you be in favor of the provisions of this bill that the Congressman has just asked you about?
Mr. Wittenauer. That is the way I answered is the way that I would favor them.
Representative Wood. You would be in favor of the provisions that have been mentioned here of maximum hours, minimum wages, and the abolition of child labor? That is what the bill provides.
Mr. Wittenauer. I think on those points, I think you are very good, but I think and I hope that you will all understand what the points are that I am trying to get at. It is to avoid in the future the conditions that I see coming on, to avoid these things that we may work when we have work, because we have so much slack time, and so often it comes. It is to avoid it.
Representative Wood. Do you think that you could better protect the employees in that plant by the American Federation of Labor or the C. I. 0. or the company union?
Mr. Wittenauer. I would not want to express my opinion on that. There is a question. There is a great many men reel that the local control of industry, that they have more say in their own right----
Representative Wood (interposing). What do you believe?
Mr. Wittenauer. Well, I have been a hard fighter for labor. I fought every penny of the way for each and every one of my men.
Representative Wood. Do you think that you can better protect the condition of the employees in that plant by the company union that you have or which you have spoken of, or the Federation of Labor, or the C. I. O.?
Mr. Wittenauer. Well, really, I believe that with a proper set-up; that is, completely divorced from the company, and the men control it themselves free from the company that they could, perhaps, gain more in many ways with regard to many activities, especially with regard to adjustments of wages from time to time and in grouping increased wages. Do you see what I mean?
Representative Wood. Is your organization controlled by the company?
Mr. Wittenauer. No, sir. The organization that they have set up at the present time is----
Representative Wood (interposing). Do you call that a good set-up?
Mr. Wittenauer. Well, I would say that it has got to be, because it has got to be held off of the company property, and----
Representative Wood (interposing). Do you think you get better conditions under that organization than you would under the American Federation of Labor organization?
Mr. Wittenauer. It seems as though we could get along more peaceably.
Representative Fitzgerald. Your complaint is that 500 men have thrown 15,000 out of employment. That is your message here today. Let me ask you sir—have you appealed to the Governor of the State for any protection in this matter at all?
Mr. Wittenauer. I have not.
Representative Fitzgerald. Have you petitioned to anybody in authority to protect you?
Mr. Wittenauer. Yes; I did.
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Representative Fhjnosraid. You have not gone to the mayor of your city?
Mr. Wittenauer. When I asked the mayor would it be possible for met to get a permit to protect my home, and he said there was no chance, that the sheriff would not issue no permit to carry an arm with me or anything of that kind.
Representative Wood. You wanted a commission as a deputy?
Mr. Wittenauer. No, sir; I do not.
Representative Wood. What commission did you want?
Mr. Wittenauer. Well, just simply a permit like has been done in years gone by.
Representative Wood. To carry a gun?
Mr. Wittenauer. If a man is in danger, that he may carry a pistol with him in his car. That is the only thing.
Representative Wood. You are a peaceful man, but you wanted a permit to carry a gun in your car and on your person?
Mr. Wittenauer. Just while I am driving in my own car.
Representative Wood. You believe in walking away from the plant when these men tell you not to go in there, but you want to carry a gun to protect you in your car. Why did you want a gun in your car?
Mr. Wittenauer. Never in my life have I been in a mill or a shop during a strike in my 54 years, and I have stood in the picket line time after time in the city of Youngstown. In every emergency strike that took place, I think, between 1899 and 1921,1 did that.
Representative Wood. What did you expect to do with this gun that you wanted to carry?
Mr. Wittenauer. In case I should be attacked on the highway, I certainly think that I should have the right to protect myself as a citizen. Suppose three or four men come in from Pittsburgh or New York, don’t you think that a man that lives in this community has a right to protection, as well as the man that comes in from outside, who has the right to attack him?
Representative Wood. What reason would they have for attacking you on a highway if you were not working?
Mr. Wittenauer. Because they have ordered me to sign up with this organization and I have refused.
Representative Lambertson. Do these pickets carry guns?
Mr. Wittenauer. Those pickets carry clubs; I think they did a week ago, and now as I understand, they have disarmed in that respect. With regard to myself, I want to say that I don’t want to molest them myself. I didn’t go near them or bother them. I have said nothing to any of them. Indeed, I have let every man do what he thinks in his judgment is best. He is free to join whatever he chooses, and that has been my attitude.
Representative Lambertson. You think it is about time for the Federal Government of the United States to act on this thing?
Mr. Wittenauer. I really think, gentlemen—I am talking to your good sense—I think it is time something has got to be done, because the last thing of all that I want to see is the loss of life in that community. I personally know that the men are getting in a very bad state, that conditions are very bad, and I am pretty sure that it won’t last long as it is going today. That is why I am here. I am not so much interested but only in seeing peace and seeing
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the men going along and being satisfied. I have never been an agitator in labor.
Representative Ramspeck. I understood you to say that you consulted nobody but your wife about coming up here. That is correct, is it?
Mr. Wittenauer. Yes.
Representative Ramspeck. You have worked all your life in the steel mill?
Mr. Wittenauer. Sir?
Representative Ramspbck. I say, have you worked all of your life in a steel mill?
Mr. Wittenauer. I think I have explained, Senator-—am I right in addressing you as Senator?
Representative Ramspeck. No; I am a Congressman.
Mr. Wittenauer. Well, excuse me. Well, I would say that I have explained that up to the year 1921----
Representative Ramspeck (interposing). You need not go into that. I just want to know whether you nave been in any other sort of work.
Mr. Wittenauer. Well. I would say principally the work in the steel mill and in the foundry.
Representative Ramspeck. Have you ever done any office work?
Mr. Wittenauer. No, sir; not myself.
Representative Ramspeck. When did you learn how to write on the typewriter?
Mr. Wittenauer. On the typewriter?
Representative Ramspeck. Yes.
Mr. Wittenauer. Well, I got a boy, a very good boy, just graduated from school.
Representative Rambpeok. How old is this boy?
Mr. Wittenauer. He is 18 years old.
Representative Ramspeck. Has he got a typewriter?
Mr. Wittenauer. Well, I know well that he can get one always.
Representative Ramspeck. Where does he work?
?Mr. Wittenauer. That boy works in the mill.
Representative Ramspeck. In the office?
Mr. Wittenauer. No, sir; he works on a machine. He works on a machine at the mill.
Representative Ramspeck. He has not got a typewriter?
Mr. Wittenauer. No, sir.
Representative Ramspeck. Well, then, you evidently consulted him about this matter because your statement here was prepared on a typewriter.
Mr. Wittenauer. Well, that is right, it was, because I believe that is the proper method.
Representative Ramspeck. You were not correct then a while ago when you said that the only person you discussed it with was your wife?/
Mr. Wittenauer. Well, that is what I mean. I didn’t mean to say that. The boy did typewrite this for me. I hope you will excuse me in that case. I meant that my wife was the only one. Of course the boy typewrote this for me.
Representative Ramspeck. Did your son typewrite the letter you brought here?
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Mr. Wittenauer. Yes, sir; that is right.
Representative Wood. Have you got a contract with the company—your organization?
Mr. Wittenauer. What is that?
Representative Wood. Have you got a wage agreement with the company?
Mr. Wittenauer. No, sir; we have never had. a wage agreement. Our adjustments have been made from time to time as they came up. I think in about the last—as the cases come up they are taken to the management and they are fought out on the basis of getting whatever you can get out of it. The men ask for an increase in wages, the individuals, and they take it up as a group, that is the way it is worked out.
Representative Wood. Your answer then is that you do not believe in wage agreements? You believe in taking it up when the time comes?
Mr. Wittenauer. Well, in fact, they have never had any. That is true that they have never had no wage agreements.
Representative Wood. Have you ever asked for an agreement?
Mr. Wittenauer. Well, I have asked them to do this——
Representative Wood (interposing). Has the organization ever asked the company for a wage agreement?
Mr. Wittenauer. No; not for a signed contract. I have always insisted that they sit in; that the wage committee of the body of representative men sit in with the company management and settle their wages whenever there is any change in the rate. That was always my belief.
Representative Wood. Have you any wage scale at all agreed to at all, verbally or by contract?
Mr. Wittenauer. Nothing verbally or by contract
Representative Wood. Have you any contract, verbally or by written agreement, about your maximum hours?
Mr. Wittenauer. Nothing that I know of.
Representative Wood. What kind of agreements have you with the company?
Mr. Wittenauer. There is no written agreement to my knowledge.
Representative Wood. If you have no agreement then why have you the organization?
Mr. Wittenauer. Well, I might state that the new organization they formed has gone into existence-----
Representative Wood (interposing). I am talking about your organization that you were talking about.
Mr. Wittenauer. I say, it has gone in just practically since the decision on the Wagner labor law.
Representative Wood. You think it can better be done without any controversy or without any agreement as to wages, minimum wages or maximum hours? And if the company wanted to lower the wage, then you would hold a conference with them?
Mr. Wittenauer. That is right.
Representative Fitzgerald. Do you say that this organization was formed after the Wagner labor law was adjudicated?
Mr. Wittenauer. Yes, sir. The constitution was changed.
Representative Fitzgerald. You have a constitution?
Mr. Wittenauer. Yes; they had one under the old set-up.
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Representative Fitzgerald. Isn’t it a fact that this organization was organized to head off the organization of a bona-fide labor organization in that plant?
Mr. Wittenauer. No, sir; I would not say that.
Representative Fitzgerald. Then why should the company be the godmother of the organization? You have had enough training in organized labor to stand up and fight for your own.
Mr. Wittenauer. I have fought every inch of the way.
Representative Fitzgerald. You know that the organization that you belong to has carried on agreements with firms for the last 50 years.
Mr. Wittenauer. Well, I don’t know. It may have in some cases and may have been with the Amalgamated at one time in the sheet mills.
Representative Wood. Did the organization do anything when these 500 men went on strike? Did your organization of 15,000 take any action at all?
Mr. Wittenauer. I don’t think they did.
Representative Wood. They did not meet to decide that they would work?
Mr. Wittenauer. They have a meeting place, but they failed to take any action about this matter as to that.
Representative Fttzgerald. How many members are in that organization?
Mr. Wittenauer. I could not tell you that.
Representative Fitzgerald. Have you any idea at all?
Mr. Wittenauer. I have not.
The Chairman. Who composed this letter?
Mr. Wittenauer. I did myself.
The Chairman. Every word of it?
Mr. Wittenauer. Every word of it.
The Chairman. Where was this written?
Mr. Wittenauer. This was written on a typewriter by my own boy.
The Chairman. Where?
Mr. Wittenauer. At Hubbard, Ohio.
The Chairman. What place at Hubbard, Ohio?
Mr. Wittenauer. At a drug store.
The Chairman. What drug store?
Mr. Wittenauer. Hayman’s.
The Chairman. Who else was there with you when your boy wrote it?
Mr. Wittenauer. Well, nobody that I know of.
The Chairman. Well, you were there?
Mr. Wittenauer. Well, I was not there all the time that he wag writing it; no. Not at the time that he was writing it.
The Chairman. Were you there when he wrote any part of it?
Mr. Wittenauer. I had the draft made of it and I gave it to the boy to write.
The Chairman. Were you there when he wrote any part of it?
Mr. Wittenauer. Just the first.
The Chairman. And you wrote it how?
Mr. Wittenauer. I wrote it out in pencil.
The Chairman. In pencil?
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Mr. Wittenauer. Yes, air.
The Chairman. And you gave it to him written out in pencil?
Mr. Wittenauer. Yes, sir; I give it to him in pencil form.
The Chairman, How far is Hubbard from Youngstown?
Mr. Wittenauer. Eight miles. Approximately from Struthers Diamond, it is 8 miles to Hubbard Square. From Youngstown Diamond to Hubbard Square it is a little better than 7.
The Chairman. Have you the original draft, written with the pencil?
Mr. Wittenauer. No, sir; I don’t have it here with me.
The Chairman. Do you know where it is?
Mr. Wittenauer. It may be up home.
The Chairman. And this was written when?
Mr. Wittenauer. Well, it was written yesterday.
The Chairman. What time did you write it?
Mr. Wittenauer. I wrote it on Saturday night.
The Chairman. And he wrote it yesterday. I understood you to say that you were the representative of the company organization. What kind of a representative?
Mr. Wittenauer. Under the old plan, Mr. Black, they elected two men from each department, and those men took up whatever wage cases came up or conditions affecting employment, and so on.
The Chairman. Were you one of those representatives?
Mr. Wittenauer. I was a representative for 3 years.
The Chairman. How many representatives did they have?
Mr. Wittenauer. They had, I think, exactly this last year, 50 even.
The Chairman. How often did the representatives meet?
Mr. Wittenauer. They met once a month.
The Chairman. Where did they meet?
Mr. Wittenauer. They met in the company building, that is, in the company’s office, up until the 80th of April.
The Chairman. In the company’s office up to the 30th of April?
Mr. Wittenauer. Yes.
The Chairman. What floor?
Mr. Wittenauer. In the basement floor.
The Chairman. Of course, they never had any company officials or representatives there?
Mr. Wittenauer. Well, the managements contact man—what they call the management representative—he would come in. and he would read off the company report to the men on what he had.
The Chairman. Who was the contact man?
Mr. Wittenauer. The contact man was Mr. Lemon.
he Chairman. L-e-m-o-n?
Mr. Wittenauer. L-e-m-o-n.
The Chairman. Is he still their contact man?
Mr. Wittenauer. As far as I know he is on the same job; but he don’t have, of course, the kind of work to do as he did.
The Chairman. When did you see him last?
Mr. Wittenauer. Mr. Lemon?
The Chairman. Yes.
Mr. Wittenauer. Well, I have not seen the man up—I have not seen him for I think about 3 days.
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The Chairman. Where did you see him?
Mr. Wittenauer. I saw him in Youngstown.
The Chairman. Where in Youngstown? Where did you see him in Youngstown?
Mr. Wittenauer. Well, I think it was by the Dollar Bank Building.
The Chairman. You mean out on the street?
Mr. Wittenauer. Yes, sir.
The Chairman. Did you talk to him?
Mr. Wittenauer. I spoke to him.
The Chairman. How long were you there?
Mr. Wittenauer. Just a few minutes.
The Chairman. Then where did he go—-do you know?
Mr. Wittenauer. Where did I go?
The Chairman. Where did he go?
Mr. Wittenauer. Indeed, I don’t know.
The Chairman. And that was e days ago?
Mr. Wittenauer. Yes, sir.
The Chairman. Did you discuss the strike situation with him?
Mr. Wittenauer. No, sir; I did not discuss the strike situation with him.
The Chairman. You did not mention it at all?
Mr. Wittenauer. No, sir.
The Chairman. You did not mention conditions?
Mr. Wittenauer. No, sir.
The Chairman. You saw him the day before that too, didn’t you?
Mr. Wittenauer. No, sir; I don’t think so.
The Chairman. How long had it been before you saw him before?
Mr. Wittenauer. I couldn’t say.
The Chairman. What is your best recollection?
Mr. Wittenauer. I could not say, because I don’t always get to town. I’ve got lots of work to do, and I have to take care of my garden and stuff, and you don’t get a chance to see anybody very often.
The Chairman. You had already wired this committee that you wanted to appear?
Mr. Wittenauer. Yes, sir.
The Chairman. How did you sign the telegram?
Mr. Wittenauer. Did I sign it in my name?
The Chairman. How did you sign the telegram? Do you remember?
Mr. Wittenauer. Well, I don’t know exactly. I signed it, I believe, Bernard Wittenauer, merchant mill division, Youngstown Sheet and Tube. Is that right? And my street address.
The Chairman. Are you connected with the merchant mill division?
Mr. Wittenauer. That is the division I am employed in.
The Chairman. That is the division you are employed in?
Mr. Wittenauer. Yes, sir.
The Chairman. Did you send it from Hubbard?
Mr. Wittenauer. From Hubbard, I think, is correct.
The Chairman. Do you know
Mr. Wittenauer. Why, sure.
The Chairman. You did send it from Hubbard?
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Mr. Wittenauer. I did send it from Hubbard.
The Chairman. And who was with you when you sent it?
Mr. Wittenauer. When I sent the telegram?
The Chairman. Yes.
Mr. Wittenauer. Nobody was with me.
The Chairman. Where did you write it? At the office?
Mr. Wittenauer. Well, I wrote it on a piece of paper and handed it to the girl in the drug store and she sent it. She always sends them.
The Chairman. You sent it from the drug store?
Mr. Wittenauer. Sure.
The Chairman. The same drug store?
Mr. Wittenauer. The same drug store. There is only two there, but that is the only one that I ever deal with.
The Chairman. Did they write it out for you on a typewriter there?
Mr. Wittenauer. Well, I couldn’t say. I just handed a slip of paper to the girl and she sent it.
The Chairman. Did you pay the girl?
Mr. Wittenauer. I did.
The Chairman. How much?
Mr. Wittenauer. I believe I paid her $1.09. I think that is correct
The Chairman. Then you sent another telegram later?
Mr. Wittenauer. A night letter.
The Chairman. Where did you send the other telegram from?
Mr. Wittenauer. The night letter? From the same place.
The Chairman. From the drag store?
Mr. Wittenauer. From the drug store.
The Chairman. Was it written in the drug store?
Mr. Wittenauer. In the drag store; that is right.
The Chairman. Was that written on a typewriter?
Mr. Wittenauer. I couldn’t say as to that. I just handed it to the girl; I handed the girl this piece of paper and I did not stay, because she always takes care of anything that I have to send like that.
The Chairman. Telegrams?
Mr. Wittenauer. Yes, sir.
The Chairman. Then you sent the message telling you that you should come?
Mr. Wittenauer. Yes, sir; that is right.
The Chairman. And you sent that first message several days before you saw Mr. Lemon on the street?
Mr. Wittenauer. Well, I don’t know just what day I sent the first one. I don’t recall.
The Chairman. Do you recall sending it before you saw Mr. Lemon on the street?
Mr. Wittenauer. I can’t say that I did.
The Chairman. You said you saw him 3 days ago.
Mr. Wittenauer. I believe that is about the date.
The Chairman. Was it Saturday that you saw him on the street?
Mr. Wittenauer. I think it was around that time; I cannot say positive.
The Chairman. Your first telegram was sent on June the 8th?
Mr. Wittenauer. On the 8th of June?
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The Chairman. Yea.
Mr. Wittenauer. And this is about the 14th?
The Chairman. Yes. You had already sent it when you saw Mr. Lemon then?
Mr. Wittenauer. I believe so.
The Chairman. Did you hold any other position in the company organization aside from that that you have stated?
Mr. Wittenauer. Never.
The Chairman. And you met only once in the month?
Mr. Wittenauer. Once a month, and then whatever committee meetings there were. You see, there would be a committee like the wage committee, the committee on housing, and the committee on rules, and so on. I think a total of about six committees all told, and they met always once a month, and the regular body met again once a month. The total body of men.
The Chairman. I didn’t exactly understand why you said that you became an honorary member of the union in 1923.
Mr. Wittenauer. Of the molders?
The Chairman. Yes.
Mr. Wittenauer. I’ll explain that to you. You see, it is like this. Now, our work was taken away from there and I didn’t want to drop my card, because I had had it a good while, my active card. So I got to our secretary and I asked him to turn my active card in and give me a nonbeneficial honorary card. Do you understand? And that I keep, and some day if I go to work at the trade again, I turn that honorary card in and it becomes active. Do you understand me now, Mr. Black?
The Chairman. Yes. How long was it after you received the telegram until you sent a reply to the committee telling them that you would testify?
Mr. Wittenauer. Well, I have not kept track of all of this time. You know that I have sent it, don’t you?
The Chairman. Did you send it on Saturday night?
Mr. Wittenauer. I wouldn’t say for positive. You know when you received it here, but I don’t know exactly when it was sent out.
The Chairman. Do you remember when it was with reference to your conversation with Mr. Lemon? Was it before or after?
Mr. Wittenauer. Not exactly. I don’t remember the date.
The Chairman. Did you send it in the afternoon or the morning?
Mr. Wittenauer. I couldn’t say for sure.
The Chairman. You did not send it yesterday, of course?
Mr. Wittenauer. No; I don’t think so.
The Chairman. You don’t remember whether it was the day before or the day before that?
Mr. Wittenauer. No ; I couldn’t say exactly, because I have a lot of work to do, and a lot of digging around in my garden to do, and I don’t have the time.
The Chairman. You waited a little over a day before you sent the reply, did you not?
Mr. Wittenauer. I believe so. I wouldn’t say positive on that.
The Chairman. You had requested to appear before the committee and you received a reply, did you not?
Mr. Wittenauer. I received your reply.
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The Chairman. And then the next day after that, you sent an answer, did you not?
Mr. Wittenauer. I don’t know just what time it was, but I know I answered it.
The Chairman. You did not answer it immediately?
Mr. Wittenauer. Well, I don’t know for sure, but I don’t think it was very long.
The Chairman. Where were you when you got the telegram?
Mr. Wittenauer. I believe that I got a message at my house that there was a telephone call for me, I think at the neighbors, for me to go over there to get it. And I called the Western Union—no— I went to the blast furnace. And there I called from the Hubbard blast furnace, and they gave me that telephone, and I have taken it down on a pad.
The Chairman. And then you went up to town, didn’t you? To Youngstown?
Mr. Wittenauer. Well, I couldn’t say on that really about where I went to.
The Chairman. Do you know; do you not remember that you did go to Youngstown and that you saw Mr. Lemon that day?
Mr. Wittenauer. I don’t know all about where I went, because I have got work to do at the house——
The Chairman (interposing). I understand that you have a lot to do.
Mr. Wittenauer. I cannot remember for every hour where I went.
The Chairman. But you do remember, do you not, that you got the telegram in the morning?
Mr. Wittenauer. I think that is right.
The Chairman. What do you say?
Mr. Wittenauer. I think that is probably right.
The Chairman. Who is the chief counsel for the company down there; do you know?
Mr. Wittenauer. What do you say?
The Chairman. Who is the chief lawyer for the company down there?
Mr. Wittenauer. The chief lawyer for the company? The chief lawyer for the company, I believe, is Mr. Argetsinger.
The Chairman. You know it, don’t you?
Mr. Wittenauer. I believe that is right.
The Chairman. You have never seen him?
Mr. Wittenauer. I have seen the man; yes; I have seen him; but I have never had no dealings with him.
The Chairman. Never had any dealings with him?
Mr. Wittenauer. Never had any dealings with him to this day.
The Chairman. The thing I am interested in is this: Your wire to us is dated June 8, that you wanted to appear, and on June 9 the reply went out to you.
Mr. Wittenauer. Yes, sir.
The Chairman. And on June 11 you sent a reply back to the committee. Why did you wait so long?
Mr. Wittenauer. Well, I don’t know about that part of it, because I did not pay no attention. I sent it back in time so that you would be sure to have it before—as I remember, I did not send it
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[PAGE 895]
back right away, but I knew that it would come to you inside of at least 24 hours.
The Chairman. You didn’t talk to anybody about it in the meantime, of course?
Mr. Wittenauer. No. I can truthfully tell you that nobody composed this letter but myself.
The Chairman. I am not talking about composing the letter. You say you didn’t talk to anybody about whether you would came or not or when you would come?
Mr. Wittenauer. No, sir. That there is on my own individual self: my own individual self.
The Chairman. Was it Saturday that you talked to Mr. Lemon on the street?
Mr. Wittenauer. I couldn’t say for certain.
The Chairman. Was it Friday?
Mr. Wittenauer. I couldn’t answer for certain.
The Chairman. Was it Tuesday?
Mr. Wittenauer. And I couldn’t answer that for certain.
The Chairman. Was it Wednesday?
Mr. Wittenauer. I couldn’t answer for certain.
The Chairman. Was it Tuesday?
Mr. Wittenauer. I couldn’t answer that.
The Chairman. Has it been as much as 2 weeks?
Mr. Wittenauer. I couldn’t answer that.
The Chairman. Has it been as much as 3 weeks?
Mr. Wittenauer. I wouldn’t say it was that long.
The Chairman. You are sure it has not been as long as 3 weeks. How many times have you talked with him within that period of time?
Mr. Wittenauer. Well, I don’t think more than perhaps the once.
The Chairman. Do you know that it has not been more than once?
Mr. Wittenauer. I couldn’t say exactly.
The Chairman. Do you know whether you have seen him more than twice or four times?
Mr. Wittenauer. I know that I haven’t seen him over twice.
The Chairman. Not over twice?
Mr. Wittenauer. The most.
The Chairman. When was the last time that you did see him?
Mr. Wittenauer. I didn’t—well, you know I said that I was sure that I didn’t see him over twice, but I didn’t say that I was sure that I did see him twice.
The Chairman. Then you don’t know whether you saw him twice or not
Mr. Wittenauer. No, sir.
The Chairman. You don’t know where you saw him if you saw him?
Mr. Wittenauer. No, sir.
The Chairman. And you don’t know whether it has been 1 or 2 or 3 days since you saw him?
Mr. Wittenauer. I think it was 3 days.
The Chairman. Was anybody else with you when you saw him?
Mr. Wittenauer. No, sir.
The Chairman. You, of course, read about this committee holding hearings?
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[PAGE 896]
Mr. Wittenauer. No, sir.
The Chairman. You did not? Who told you about it?
Mr. Wittenauer. You mean on this wages and hours?
The Chairman. Yes.
Mr. Wittenauer. Yes; I heard of that.
The Chairman. You read it in the papers?
Mr. Wittenaeur. Yes, sir.
The Chairman. Did the papers say they were having hearings?
Mr. Wittenauer. The papers said that they were having a nharing; yes, sir.
The Chairman. Did it tell you whom to wire to about it?
Mr. Wittenauer. I knew from times gone by that Mr. Connery used to be the chairman of your labor board at one time; is that right?
The Chairman. That he used to be the Chairman of the Labor Board?
Mr. Wittenauer. I mean of the Labor Committee—about 2 years ago—and I thought that he was still chairman of the Labor Committee. That was my belief.
The Chairman. You saw in the paper that they were going to have hearings and you wired Mr. Connery?
Mr. Wittenauer. I have heard of Mr. Connery before; that’s right.
The Chairman. Because you knew that 2 years ago he was chairman of the committee?
Mr. Wittenauer. That is what I understood at the time, that he was chairman.
The Chairman. Of course, nobody told you that he was the proper man to wire?
Mr. Wittenauer. Just my own self.
The Chairman. Do you know where he was from? Of course, you knew which State he was from?
Mr. Wittenauer. I thought he was from Massachusetts. I couldn’t say, but I thought he was from Massachusetts.
The Chairman. And you thought he was the chairman of what?
Mr. Wittenauer. I thought that he was chairman of the Labor Committee. That is what I thought that Mr. Connery was.
The Chairman. What Labor Committee?
Mr. Wittenauer. Of the House. That is what I understood, that he. was chairman of the Labor Committee of the House.
The Chairman. You cannot give us any more definite information about how long it was after you received the statement about testifying until you sent us the message?
Mr. Wittenauer. No ; I couldn’t be definite on that.
The Chairman. You could not tell us whether you went to town around during that time?
Mr. Wittenauer. No, sir.
The Chairman. Did you go to the office of the company during that time?
Mr. Wittenauer. No, sir.
The Chairman. How long since you were there?
Mr. Wittenauer. Well, I’ll tell you. The last time I was at the office of the company was when I drew my last pay.
The Chairman. When was that?
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[PAGE 897]
Mr. Wittenauer. Well, I think it was a week ago last Friday, I believe.
The Chairman. Where is the chief counsel’s office?
Mr. Wittenauer. I don’t know whether it is in the City Building or not I imagine that it is in the City Building in Youngstown. I mean the city office.
The Chairman. And you cannot refresh your recollection in any way so as to tell us whether you talked to Mr. Lemon-----
Mr. Wittenauer (interrupting). No; I think not.
The Chairman (continuing). After you got the telegram?
Mr. Wittenauer. No, sir.
The Chairman. Or whether you talked to him twice after you got the telegram?
Mr. Wittenauer. I wouldn’t say that.
The Chairman. You may have?
Mr. Wittenauer. I couldn’t say.
The Chairman. You know him pretty well?
Mr. Wittenauer. In the way that I met him there, being that I worked during the time that I was engaged in that job on the labor representation.
Representative Keller. That is during a period of 3 years?
Mr. Wittenauer. Yes, sir.
Representative Keller. In other words, you have known Mr, Lemon about 3 years?
Mr. Wittenauer. That is about right; about 3 years.
Representative Keller. You get to know a man pretty well at the end of 3 years, don’t you?
Mr. Wittenauer. Well, you know him in a way, but in another way you don’t know much about him. You have to make contact in the different cases with the man, because everything that comes up on that goes through his hands. They take it in to Mr. Lemon as the manager on the industrial relations, and he takes the thing from there on and starts on a settlement. That is the condition as I knew Mr. Lemon.
Representative Keller. That is a very important thing, is it not? The man that takes the things and makes the settlement with the men, he is a very important man?
Mr. Wittenauer. Oh, yes. He is the man that brings the men together.
Representative Keller. And naturally your relations would become quite intimate in discussing those affairs?
Mr. Wittenauer. Oh, yes; they know one another. I have never been at the man’s home where he lives. I have been at the office where he comes to work, but that’s all.
Representative Keller. Where did you have your meetings? In the basement, as I understood it?
Mr. Wittenauer. Up to the 30th of April all these meetings were held in the basement floor of the office building.
The Chairman. You did not tell us where you have been holding- them since the 30th of April?
Mr. Wittenauer. If you ask me where they held the meetings I will tell you. There were rooms rented in the Bank Building in. Youngstown.
The Chairman. Which bank building?
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[PAGE 898]
Mr. Wittenauer. The Dollar Bank Building.
The Chairman. That is where you saw Mr. Lemon down at the foot of the steps?
Mr. WittEnaubb. I think that is the last time I saw him.
The Chairman. I suppose he never came up to your rooms?
Mr. Wittenauer. I have never seen Mr. Lemon up in the rooms of the Dollar Bank Building, because, in fact, I don’t get there often myself.
The Chairman. Did you go up there in the last 3 or 4 days?
Mr. Wittenauer. No, sir.
The Chairman. Were you there last week?
Mr. Wittenauer. I think once or twice last week.
The Chairman. How many times, exactly?
Mr. Wittenauer. Well, I could not tell you that.
The Chairman. Who was there?
Mr. Wittenauer. I couldn’t tell you that.
The Chairman. Do you remember anybody else that was there?
Mr. Wittenauer. Nobody in particular, only the secretary.
The Chairman. Who is the secretary?
Mr. Wittenauer. A man by the name of Gray is the secretary.
The Chairman. Does he belong to the union?
Mr. Wittenauer. He belongs to this new independent , organization—
The Chairman (interposing). You mean the company union?
Mr. Wittenauer. That is not what they call it.
The Chairman. Whatever it is, it is not the American Federation of Labor and it is not the C. I. O. ?
Mr. Wittenauer. That is right It is a new organization that goes under the name of the Independent Steel Workers’ Organization.
The Chairman. And you saw the secretary of that organization. Did you tell him about the telegram?
Mr. Wittenauer. The secretary or none of them has nothing to do with this telegram.
The Chairman. He is the only man that you remember that was there?
Mr. Wittenauer. The only man that I remember. There may be many .men going in and out, but I didn’t pay any particular attention.
The Chairman. How long did you stay there?
Mr. Wittenauer. I am never there any longer than about a half an hour or maybe 20 minutes.
The Chairman. How long were you there the last time that you were there?
Mr. Wittenauer. About 20 minutes.
The Chairman. Did you talk to anybody while you were there?
Mr. Wittenauer. Not on any matters relating to----
The Chairman (interposing). Did you talk to anybody on any matter?
Mr. Wittenauer. No; just to say “Hello” or “Good-bye.”
The Chairman. You were up there 20 minutes and all you said was “Hello”?
Mr. Wittenauer. Or “How are you.”
The Chairman. That is all you said, “Hello” and “How are you”?
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Mr. Wittenauer. I would say that to the secretary always. Wouldn’t you?
The Chairman. Well, you said that while you were up there all you said was “Hello” and “How are you.”
Mr. Wittenauer. That’s about all.
The Chairman. And nobody said anything else?
Mr. Wittenauer. No, sir.
The Chairman. You just walked up there and walked around?
Mr. Wittenauer. Sit down a bit and go home.
The Chairman. Did you read anything there?
Mr. Wittenauer. I don’t think so.
The Chairman. How about the last time you were there?
When were you there last?
Mr. Wittenauer. I couldn’t say exactly.
The Chairman. Do you remember whether you went up there after you saw Mr. Lemon?
Mr. Wittenauer. I don’t remember whether I went up there before or after.
The Chairman. You had just been up there and you went up there immediately after?
Mr. Wittenauer. I couldn’t say exactly.
The Chairman. What is your best recollection? Had you been there?
Mr. Wittenauer. I wouldn’t say positively, because I may be wrong.
The Chairman. You don’t know whether you went up there that day or not?
Mr. Wittenauer. I said I thought I was up there about 20 minutes.
The Chairman. The same day that you saw Mr. Lemon?
Mr. Wittenauer. I think so.
The Chairman. You don’t remember the name of any person that you saw up there except the secretary?
Mr. Wittenauer. No, sir; I don’t.
The Chairman. Can you remember anything you said to anybody or that anybody said to you except “Hello” and “How are you”?
Mr. Wittenauer. There wasn’t anything special. Maybe I spoke about baseball or something like that. I may have talked about the Pittsburgh Pirates.
The Chairman. Who did you talk to about the Pittsburgh Pirates?
Mr. Wittenauer. It may have been the secretary.
The Chairman. Anybody else?
Mr. Wittenauer. Really, I don’t think so.
The Chairman. Don’t you know that that is the afternoon that you sent the telegram to the committee?
Mr. Wittenauer. I don’t remember exactly. And I told you I didn’t know exactly when the telegram was sent back.
The Chairman. Didn’t you go from that place back to Hubbard?
Mr. Wittenauer. No, sir.
The Chairman. Where did you go from there?
Mr. Wittenauer. I couldn’t exactly remember.
The Chairman. Did you go on the street car?
Mr. Wittenauer. No, sir; I always drive my car.
The Chairman. Did you go to the drug store that night?
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[PAGE 900]
Mr. Wittenauer. I don't know exactly.
The Chairman. Do you remember what you did or did not do?
Mr. Wittenauer. I know that everything I done was legitimate.
The Chairman. I am sure about that; there is no question about that, but did you go to the drug store when you got back?
Mr. Wittenauer. I couldn't say exactly. All I can say is that everything I done was on the level.
The Chairman. Did you go to the drug store after you left there?
Mr. Wittenauer. I don't know.
The Chairman. Did you go home after you left there ?
Mr. Wittenauer. I couldn't say.
The Chairman. Did you go to some other place after you left there?
Mr. Wittenauer. I suppose, undoubtedly like everybody else, I went home.
The Chairman. Do you know what time you got home?
Mr. Wittenauer. I couldn't say to the minute.
The Chairman. How far do you live from the drug store?
Mr. Wittenauer. I live probably about 3 minutes or 4 minutes or 2 minutes.
The Chairman. What kind of paper did you write your original letter on?
Mr. Wittenauer. Well, I just think it was a piece of ordinary blank tablet.
The Chairman. And you carried it to the drug store with you?
Mr. Wittenauer. I think so.
The Chairman. Did you or did you not?
Mr. Wittenauer. Well, I would say I did.
The Chairman. Did your son go with you ?
Mr. Wittenauer. Yes, sir.
The Chairman. You and your son went down there?
Mr. Wittenauer. Yes, sir.
Representative Fitzgerald. What dues do you pay in that organization?
Mr. Wittenauer. In the old one there was no dues. In the new one they pay 25 cents a month.
Representative Fitzgerald. Is the secretary the financial secretary or recording secretary?
Mr. Wittenauer. Well, I think there is a financial and recording.
Representative Fitzgerald. Is the financial secretary on full time, or does he work in the plant also?
Mr. Wittenauer. Well, there is none of them working. They have no work.
Representative Fitzgerald. I mean when the plant was running.
Mr. Wittenauer. When the plant was running under the old plan, all the men worked on their respective jobs.
Representative Fitzgerald. Out of that 15,000 employees, can you give any idea at all to this committee how many belong to this company organization, whether it is 1,000, 5,000, or 10,000?
Mr. Wittenauer. On that, I could not give you nothing definite.
Representative Fitzgerald. No guess at all? Would you say it -was 5,000?
Mr. Wittenauer. I would not offer a guess on that.
Representative Fitzgerald. You don't know at all how many?
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[PAGE 901]
Mr. Wittenaueh. I don’t. If I know, I would be in a position to tell you, but I don’t know.
Representative Fitzgerald. You cannot say that these 15,000 employees that are out were all members of that organization?
Mr. Wittenauer. I cannot. I cannot say that they were members of any organization.
Representative Fitzgerald. And you don’t intend to tell this committee that these 15,000 men that are out of employment today in this plant were perfectly satisfied with the conditions at the plant?
Mr. Wittenauer. I have never said that any man was perfectly satisfied.
Representative Fitzgerald. Or satisfied at all with the conditions?
Mr. Wittenauer. But I said this: That our men were all at work before, and I did not mention anything about anybody being satisfied, did I?
Representative Fitzgerald. But you did criticize the 500 that were there to come down and take the 15,000 out.
Mr. Wittenauer. Well, I think I am correct.
Representative Fitzgerald. There must be something wrong with the 15,000, when they can be dominated by the 500, unless they are not satisfied with their conditions?
Mr. Wittenauer. Well, it is just a situation like this: Many men don’t want to get into any difficulties to try to go through to get work. The company realizes that they cannot operate the plant anyhow.
Representative Fitzgerald. There never has been any vote taken?
Mr. Wittenauer. Not to this day.
Representative Fitzgerald. And you have made no appeal to the State authorities?
Mr. Wittenauer. It is not my place to.
Representative Fitzgerald. For any protection at all?
Mr. Wittenauer. It is not my place to make any appeal.
Representative Fitzgerald. You deemed that it was necessary to come down before this committee and make a statement? You must have had the interests of the people at heart, when you paid your own fare to come down here.
Mr. Wittenauer. Well, I surely did.
Representative Lambertson. You were smart enough to know that that is the way that you could get more publicity than any other way?
Mr. Wittenauer. No, sir; I don’t figure on the publicity for labor or any of their problems.
Representative Lambertson. I mean publicity for the good of your 14,500 others.
Mr. Wittenauer. As I explained, to work out some plans that this may not occur in the future, that we may get together with a better plan. That is the way I would like to see it, and that is what I am working for.
Representative Lambertson. There isn’t anything that anybody could have thought of that would have been any smarter for you to do than what you did here?
Mr. Wittenauer. Well, my aim is, if you will allow me, it is to avoid all of this suffering of our people. . There isn’t no personal glory for me in this, because that is something that I don’t solicit. I can look every man in the face that knows me any length of time,
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and you will find that that man, that he can trust me to go any place with a dollar or a dime.
Representative Dixon. Did you testify that there were 5,000 that had joined up?
Mr. Wittenauer. No, sir; I didn’t say anything about how many joined. I could not give you any estimate as to any man that was signed up with the new independent set-up or with the Committee on Industrial Organization set-up. I don’t know.
Representative Dixon. You did say there were less than 500 that voted.
Mr. Wittenauer. I am just speaking of the number.
Representative Dixon. Less than 500?
Mr. Wittenauer. Yes.
The Chairman. Will you tell the committee just how many signed up after they stopped you on the road?
Mr. Wittenauer. I could not tell you on that, because I have no means of knowing. You see, I have no contacts with the books where they are signing up with the Industrial Organization or where they are signing up in the independent organization.
Representative Dixon. You were only interested in coming down here. You don’t know how many people were stopped and made to join or how many people signed up afterwards?
Mr. Wittenauer. Oh, no; I just know what anybody else told me, what the individuals told me on their own account.
Representative Wood. How much rent did you pay for that meeting hall on the company property for your old company union?
Mr. Wittenauer. Well, now, I could not say on that, because I have never had any dealings on that end.
Representative Wood. Did you pay any rent?
Mr. Wittenauer. I don’t know. 1 could not answer that question because I could not answer it truthfully.
Representative Wood. Is there any way you can find out how many members you had there?
Mr. Wittenauer. You mean in the old representation plan?
Representative Wood. Yes; you said you did not pay any dues. Is there any way of finding out how many members you had?
Mr. Wittenauer. At the present time?
Representative Wood. No; any time.
Mr. Wittenauer. Under the old plan, you know, there was really nobody belonged in the sense that they carried anything to show that they belonged to an organization.
Representative Wood. They just did not belong to anything?
Mr. Wittenauer. The fact is, of course, like you understand and like I do, that they met once a year and they elected men to represent them.
Representative Wood. How did they elect their officers? How were you elected?
Mr. Wittenauer. Well, in my case and in every man’s case in the division, he was nominated and then elected.
Representative Wood. Who nominated him?
Mr. Wittenauer. The men in his division.
Representative Wood. How did they vote on him?
Mr. Wittenauer. They voted by ballot, just the same as you would in a booth.
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Representative Wood. Everybody balloted, whether they belonged or not?
Mr. Wittenauer. Oh, sure. Everybody.
Representative Wood. You had to belong to this organization to work there?
Mr. Wittenauer. You did not have to vote under the old plan. You didn’t have to vote for a man running for representative of a division.
Representative Wood. You don’t know whether they paid any rent for a hall or not?
Mr. Wittenauer. No, sir; I couldn’t say about that.
Representative Wood. And you don’t know how many members you had?
Mr. Wittenauer. Well, I could not tell you about the members, because the members were elected by each division, and I couldn’t say that it was not run on a membership basis.
Representative Wood. No individual knew how many members they had?
Mr. Wittenauer. They would know how many voters there were.
Representative Wood. Did anybody know how many men of the 15,000 belonged?
Mr. Wittenauer. The only way they would know would be the number of men on the pay roll.
Representative Wood. Every man that was on the pay roll was a member?
Mr. Wittenauer. I wouldn’t say that every man was a member. I just said there were no membership cards attached to the organization. As I explained to you, these men were elected from each division, two to a division, and that they met and elected officers.
Representative Wood. Who elected them?
Mr. Wittenauer. They were elected by vote.
Representative Wood. Of the membership?
Mr. Wittenauer. After they had their membership together they sat together and they elected their officers and committees.
Representative Wood. You say they were elected by the membership. Do you know how big the membership was?
Mr. Wittenauer. I told you there was 50 representatives under the old plan. That is as near as I can tell you.
Representative Wood. You are not so sure, then, about anything?
Mr. Wittenauer. I certainly am about that. I told you there were 50 of them.
Representative Wood. How long were you elected for? What was the term of office?
Mr. Wittenauer. One year.
Representative Wood. What was your regular meeting date?
Mr. Wittenauer. The regular meeting used to be the first Monday of the month for the general body, and the committee meetings were at various dates.
Representative Welch. You said that you are a member of the Iron Moulders International Union?
Mr. Wittenauer. I believe I have a card here [producing].
Reresentative Welch. I will take your word for it. The Iron Moulders International Union has a large number of locals throughout the United States and Canada, has it not?
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[PAGE 904]
Mr. Wittenauer. That is correct.
Reresentative Welch. Has it a local in Youngstown, Ohio?
Mr. Wittenauer. No. 196.
Reresentative Welch. That is your local?
Mr. Wittenauer. That is my old local.
Reresentative Welch. Was it all right for the Iron Moulders International Union to go into Youngstown, Ohio, and organize a local of its international union?
Mr. Wittenauer. How do you say that?
Representative Welch. I asked if it was all right for the Iron Moulders International Union to go into Youngstown, Ohio, and organize a branch of its international union there.
Mr. Wittenauer. Well, I imagine that that has been organized there for many years.
Representative Welch. Was it all right at the time?
Mr. Wittenauer. It certainly must have been.
Representative Welch. Do you know the number of locals affiliated with the International Iron Moulders Union?
Mr. Wittenauer. No, sir; I could not say today.
Representative Welch. They have a large number of locals?
Mr. Wittenauer. There used to be a larger number before than today, because molding has gone out a lot on account of welding.
Representative Welch. During the years that you were active in the molder’s union, did you approve of the policy of the international union organizing locals in this country and in Canada?
Mr. Wittenauer. I have never disapproved it.
Representative Welch. How is it that you came all the way from Youngstown, Ohio, at your own expense to enter a protest before this committee against some other outside union organizing a local in Youngstown, Ohio?
Mr. Wittenauer. I have no complaint-----
Representative Welch (interposing). Oh, yes; the record will so show.
Mr. Wittenauer. If you will just excuse me, maybe I can explain it to you. Under the constitutional law where the thing is working in an orderly manner, where every man has the right and liberty of conscience to choose whichever he pleases, that’s all right and that’s my belief. I am satisfied under that condition.
Representative Welch. Yes; but if it was all right for the Iron Moulders International Union to go into Youngstown and other cities and towns of this country and Canada and organize locals, why was it not also right for some other national or international union to go into Youngstown and organize a branch?
Mr. Wittenauer. I have never said that it is not all right, but the thing that I object to is the means to accomplish the end.
Reresentative Welch. You comlained against outside unions invading Youngstown.
Mr. Wittenauer. I am not complaining bitterly about their invading Youngstown. It is the manner of invading Youngstown. If the work is done in a constitutional manner, which I believe in. and which I have always believed in as constitutional, and I have been in union organizations myself, but if it is conducted in an orderly and lawful manner. That is what I believe in; but the idea that I should go up and say to this man, “Go with me, because you
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have got to go with me”—that’s the thing. There I have ordered a man to do something whether it is his wish or not. That’s the thing that I believe in, is freedom of liberty to choose. It is all right to speak to a man and ask him to go along with you. If he can’t, leave him alone; then you have done your duty. But if a man comes to you and says, “You have got to go with us”, and insists on it, I don’t think that is right.
Representative Wood. If all of the men in your division wanted to organize, and you did not want to organize----
Representative Welch (interposing). Pardon me. You favored the International Moulders Union organizing in Youngstown and still you come here to protest against some other union doing the same thing.
Mr. Wittenauer. Maybe you don’t understand me.
Reresentative Welch. Perhaps.
Mr. Wittenauer. That’s probably right. I wouldn’t think of trying to intimidate Mr. Black or yourself if you didn’t want to join, but for myself, I feel that a man’s rights are his own in the way of going along, under his constitutional rights. If a man don’t want to belong to something and says, “No, sir; I don’t think I can go along with you”, then your labor act ought to protect him.
The Chairman. That is all you wanted to say?
Mr. Wittenauer. Yes. The Chairman. If you decide there is anything else you want to say, if you come back this afternon, you can do that. We will now recess for luncheon and will be back here at 2 o’clock this afternoon.
(Whereupon, at 12:55 p. m., a recess was taken until 2 p. m. of the same day.)
AFTER RECESS
(The hearing was resumed at 2 p. m., pursuant to recess.)
The Chairman. Mrs. Leila Blomfield.
The Chairman. Mrs. Blomfield, were you requested by the New York State Economic Council to appear here?
Mrs. Blomfield. Yes.
The Chairman. Are you with that agency?
Mrs. Blomfield. Yes; as staff speaker and research assistant, and perhaps, Mr. Chairman, it is necessary for me to add—because my remarks will be based on that fact—that I am a native-born New Zealander, but I have been an American citizen for 14 years. I mention that because the New York State Economic Council feels that the experience of the two countries—New Zealand and Australia—have had the most outstanding experience in the matters of State-operated collective bargaining on wages and hours, is of basic importance not only to labor and to industry but eventually of course to the entire community. I think, perhaps, if I might take the time, the best way in which to present the subject which the council wishes me to bring to you expressly is by describing as briefly as possible the operations of
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the law known as the New Zealand industrial conciliation and compulsory arbitration law, and its relation to the cost of living, price control, and their relation to the whole economic structure or the country.
Seeing that this law was created in New Zealand just prior to 1900 and was thoroughly tested and tried up to its overthrow in 1932, we feel that the outstanding factors of that experience are all- important.
New Zealand’s industrial conciliation and compulsory arbitration law established, as I said, just prior to 1900, operated through the medium of district conciliation committees and one central court of arbitration. These conciliation committees were composed of an equal number of members representing unions of employers and employees, elected by those unions for that purpose. The court of arbitration was composed in its earliest days of two members of each of the unions and a judge of the Supreme Court of the Dominion, appointed by the State as chairman of the court of arbitration.
The new law at once legalized collective bargaining, gave labor the 8-hour-day law—by the way, this was the first State-operated collective bargaining in the history of modern times—gave labor the 8-hour day and 44-hour week, outlawed strikes, regimented industry with an intricate maze of restrictions that made the whole industrial world hold its breath at that time. Industry at once become policed with a vast army of Government inspectors and the court of arbitration was flooded at once with labor’s demands.
The law was not directly mandatory. Registration under its jurisdiction was supposedly voluntary, hut actually its operations brought nearly all trade and industrial unions under its control. An award to an industrial union automatically covered the employers’ union. Awards made for one district applied to that trade in other districts where competitive advantages might obtain. Decisions of the arbitration court were final and subject to no appeal and were enforceable by law. The penalties were fine and imprisonment, or both, for associations or individuals guilty of contempt.
Though the court of arbitration made prosperity the basis for its awards, actually it determined its award rate on the cost-of-living terms. The court had the power to adjust wages according to the fluctuations in the cost of living.
Under the rapidly appearing awards of the new labor court wages increased steadily and the cost of living, of course, climbed merrily alongside. But because the first few years of its operations was a period of increasing prosperity, the high cost of living was not minded. Labor conditions and living standards improved quite considerably, while sweating was very largely abolished. But real wages did little more than keep pace with the rapidly rising cost of living.
This, of course, was definite gain for labor, but observers noted frequently that there was nothing there that they might not have gained in this new prosperity of the country without State interference.
By 1906 the arbitration court had become an instrument for standardizing in minute details the wages and working conditions of the manufactured and commercial commodities of the Dominion. No one except certain labor leaders—I venture the facts will bear out
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that statement—seemed to realize that they were laying the foundations of the drastic and socialistic labor dictatorship under which New Zealand today struggles.
The prosperity stopped and by 1910 the wage awards were being limited to maintaining the existing standards. Then labor discovered that legal minimum wages could become a maximum wage, and then labor learned, too, the meaning of the warning that had been given a little earlier by former Prime Minister Sir Robert Stout, who said the State arbitration system would become for labor a reversion from contract to status.
Labor commenced attacks upon the court, but the court refused to allow its awards to approach the profiteering status. The court went on record repeatedly as saying, “This arbitration court cannot be made an instrument for a better distribution of wealth, for the act assumed a continuation of the wages system. The court could do more than establish a minimum-wage level.” I still quote: “Any attempt to bring about a better distribution of wealth must be made outside of the sphere of the arbitration court by such means as profiteering and socialism.”
Prosperity declined. Soon the alarmed economists were offering facts and figures on the relation between money wages and real wage costs and production under the restrictions, rigid, fixed charges, and their effect on economic progress generally.
As early as 1908, when collective bargaining was still young, the Attorney General Findlay reported to the Government:
Wages have been increased until the margin of profit is so small that if the total were divided among the workers the results would be negligible. To lay violent hands on those profits that remain would be to destroy the very source from which wages are drawn.
In 1910 a royal commission report showed that for the first 10 years of arbitration real wages had increased only 3 percent, during the whole period of 10 years, and that for a period of 15 years wages and prices had pursued almost parallel courses.
Manufacturers, their backs against the wall, raised prices, dismissed workers, took advantage of the apprentice amendment which enabled them to use less expensive labor, and checked expansions. In self-defense they demanded, and got, more and more tariffs which gave New Zealand one of the highest tariffs in the world, and of course added at once to the cost of living for all groups in the country.
When the arbitration court, through sheer economic necessity, refused some of the demands of the unions or made amendments in favor of industry, strikes broke out despite their illegality. When penalties of fine and imprisonment were imposed by the arbitration court in the name of the State the resentment of the workers turned upon the Government institution that had nurtured them.
At times, to exact penalties and to uphold the honor of the law. the State court was compelled to even confiscate and sell the personal possessions of the workers at auction. Then was witnessed an unprecedented scene in that law-abiding country—for the first time in New Zealand’s history, the citizens jeering at the law of their land, for they knew that their law could not collect. It was soon only too evident that in making itself the high arbiter of the
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Nation’s industrial life, the Government had become responsible for the arousing of a bitter class consciousness in the land.
This inserting of the State as a living wedge between classes in a democracy breeds potential forces not readily foreseen, not easily, if ever, controlled. By far the most outstanding of these was the steady gaining of the new Labor Party in political power.
From 1910 to 1925 the industrial charts showed a steady decline in productivity. Unemployment attended this condition. While industry and labor alternated in attacking the arbitration court’s ruling; this was not true of the smaller unions that were satisfied with State support and assistance.
The farmer was, of course, more seriously hit than all the rest The fact that the arbitration court had refused their requests for awards was significant in itself, but it was really the disparities in the farmer’s purchasing power that at last smashed the whole vicious circle of the uneconomic procedure.
By 1925 the question of the use and desirability of retaining the system had been a heated one for years. Unemployment was becoming a serious problem. In 1928 the Government called a national industrial conference, bringing together for the first time representatives of all classes of industry, commerce, agriculture, and labor. Much research was done in preparation. It was at this time that the president of the Employers' Federation said to the speaker, “Something will have to be done or we are headed for Australia”, Australia, for the same reasons, being at the time even to a New Zealander an example of economic perdition.
The results of that conference are available in Government documents, in a special report, which is recommended to this committee. The report includes the complaints of labor against the standardization of wages and values and the refusal of the larger unions to accept the court’s rulings. But most important of all to labor were the index figures on the slight increase in real wages; figures that a little later snowed that even when at their highest peak in 1930, real wages were only 6 percent higher than in 1914.
Significant also were the figures that showed the static condition of registration of industrial unions over a period of years. Roughly, in 1915, 24 percent of the unions were registered under the jurisdiction of the court, although, of course, a much larger number were affected indirectly and came under its rulings.
In 1925, 24 percent also was the number of registrations.
Employers at the conference showed the costly proceedings in time and money of state arbitration, many insisting that they were as costly as strikes. The fact that the law denied the right of private contract, either oral, written, or otherwise, was denounced as decidedly un-British. The uneconomic effect of rigid wages and restrictions when other economic conditions were varying was also emphasized.
It was shown that production costs and decline were reflected in the national debt (a national debt that had reached the amazing figure of $1,135 per capita and was taking nearly half the annual budget for interest charges before those who were bent upon distributing the national income discovered what a thorough job they were making of it).
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It should, however, be stated here, because it is basically related, that the strongest factor in that terrific national debt, which finally overwhelmed industry, was the heavy burden of social services, pensions, Government aids, and grants, and other labor legislation which I am not discussing, coupled with the trend of Government-operated industries which returned neither full-maintenance revenues nor taxes and which were part of the new economic order that was launched upon the Nation a little earlier when the Liberal Premier side-stepped the Constitution and packed the upper council with 11 political appointees who would support the costly program that was to transform the Republic into the socialistic State of today.
This conference revealed some of the unforseen evils that I will simply list under the heading, perhaps, of: “Effect of standardization on unit productivity.” It was shown beyond question that the attitude of the workers because of the standardization of wages and values had become one of nonambition, a sort of “Jobs are necessary evils and the public be damned” attitude. It was this attitude that very early in its operations produced the unique institution known in New Zealand as the Government stroke.
There is the significance of the signs hung in the factories and workshops by these protected workers, reading “Slow work, more jobs”; another one reading “Don’t scab on the unemployed.”
There is food for serious thought there, gentlemen, not only because of the fallacy of such stupid philosophy, that the slowing up of production would react to the benefit of the workers, but that such despicable conduct could be induced in once ambitious individualists through the deadening effects of State control over their lives. Those things are seemingly unimportant at first, but at last they transcend all others in importance.
By 1930 industry was stagnant, the farmer desperate, and unemployment a grave problem. Government revenues collapsed and the towering national debt, the only thing that had gone on advancing, hung high and dry over a depleted treasury. The official indices continued to show a decline in industry over increase in taxation. Roughly from 1900 to 1927. The figures were: Production increase, 55 to 202, taxation increase 49 to 297.
There was little future for labor there. The system was closing in on itself. Appeals were made to the Government.
In October 1931 the Minister of Finance in his report said:
The operations of compulsory arbitration definitely act against employment.
Later, in October 1931, the Government appointed a royal commission and an economic committee to investigate conditions of the country. The report shocked the Government into immediate action, although we now know it was really too late.
In February 1932 at a special session of Parliament, Prime Minister Forbes, quoting from the urging report of the economic committee, said:
Industry is faced with the imperative need of reducing costs. * * * The rigid conditions attaching to industry must be relaxed to enable employers to keep men employed * * * and bring down costs to meet the purchasing power of the people. * * * The development of our industries has been hampered to a large extent by the operations of the arbitration court. * * * High wages and restrictions have kept the profit margin small, with the resultant discouragement of new industries—both domestic and from abroad. * * * Manufacturers came, looked, and departed. * * Compulsory
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arbitration awards have reduced men to a dead level (of productivity). * * * It has kept workers and employers in two hostile camps. * * * The maintenance of wages at uneconomic levels has increased unemployment. * * * The objection that a reduction in wages decreases the spending power of the people * * * has been shown by the economic commission’s close analysis to be a fallacy. The spending power of the people as a whole depends upon the money value of the national income. * * * If a reduction in wages helps to restore the national income, it must ultimately increase all spending power. * * * The necessity of bringing wages down to conform to the loss in real Income is not only inevitable but urgent. * * * The Government would fail in its duty If, because the arbitration act benefits a few, it did not amend the act in the interests of the many and the community as a whole. * * * The Government has done its duty.
Thus, after more than 30 years, the long built-up structure of awards and regimentation, often named the most significant experiment in industrial history, with its bearings on not only industrial problems and living costs but their closely related questions of tariffs, taxes, revenues, and the national economy in general, was with one grave but desperate gesture removed from the scene of its depredations. The amendment also made provisions for revision of the existing awards for the purpose of more quickly lifting the load from the shoulders of the industry.
The sum total of this experience, gentlemen, was for labor. That for its 3-percent to 6-percent wage increase and some improvement in hours and working conditions—all of which it might have obtained under its own powers—labor got a general leveling of wages and values, unemployment, a newly learned contempt for law, the feeling that both the State and society were its enemies, and vindictive political ambitions. There was their proof, too, of Economist Condliffe’s statement, after close analysis, “One thing was proved beyond all doubt—that the strongly organized industrial unions can get better bargains for themselves than through State arbitration.” The sum total of what both industry and the public got was recorded in the collapse of 1932.
There is just a word more. There is, of course, the aftermath, and it is vitally important. It brings this report to the questions of price fixing and price control under the hand of labor itself, and that, of course, is the acid test of State-controlled wages and hours.
It was hoped by many that the grave crisis of 1932 from the causes officially recorded, which I have but sketched, that labor would realize that its own best progress lay in the economic freedom for industry. But it was too late. Already its hand was on the plow.
In 1935 a bewildered mandate of trained leaners-on-the-Government put a strong and vindictive Labor Party in control of the Government. Within a year, before the end of 1936, it had completed a large part of its long threat to “revolutionize the whole industrial system or the country.” They are busy at that now, and are doing a thorough job on the remains of the Republic.
What a liberal government could not do in 30 years’ hard trying the labor government promises to show the world now to do, despite bitter experience to the contrary.
Its first action was the restoration of the arbitration system in a bigger and better way. All of the old weak and impractical provisions were restored, plus a minimum wage and a 40-nour week. All of the old act’s exactions had been revived and more drastic provisions added. The details are very important but require time, which I cannot take today. The new law, however, requires registration of
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all Dominion unions of employers and employees under its jurisdiction. The law emphasizes compulsory preference to unionists, with penalties for evasions of that provision by employers. It prohibits dismissal of workers because of the reduction of hours from the 44- hour week to the 40-hour week.
The old clause restricting dues—and of course the question of dues is also under the jurisdiction of the State arbitration court—was repealed and power provided to levy larger dues on the vote of members. This fact, and the preference to unionists—compulsory arbitration it really amounts to—caused former Prime Minister Forbes to say in Parliament recently:
Every man In the country has got to line up and join a union and that union can be called upon to subscribe unlimited funds to the Labor Party—half a million pounds for a campaign.
At the same time Parliamentarian Broadfoot said:
With the new bill the control of industry will pass from industrial leaders to the union bosses who have never shown themselves capable of running businesses.
Member of Parliament Bodkin said:
Some of the largest unions are definitely opposed to compulsory arbitration and have served notice that they will not be bound by any award—either directly or indirectly ruled by the arbitration court.
Almost coupled with the bill came announcements of blanket legislation to prevent a rise in the cost of living. It came quickly. These distributors of the national income were keenly mindful of the recent statements of Australian Economist Victor Childe who had just said:
One of the first and inevitable results of industrial legislation and fixed wages is fixed prices. In the decade following the establishment of State arbitration in Australia the industries showed that the price numbers rose from 880 to 1,000. In many instances real wages never advanced.
So by the time the New Zealand Labor Government had completed the socialization of banking, credits, and currency—compel- the sale of all privately owned shares—and taken over control marketing of farm production, the inevitable effects of the drastic industrial legislation had become visible. Prices were going up. Unemployment was rapidly increasing.
In September 1936 the Canterbury Chamber of Commerce Gazette said:
Recent labor legislation and restrictions on industry have imposed higher costs on prices and production. The burden Is unequally distributed. By impairing the balance of production its expansion is retarded.
Then came the first price-fixing act. In October 1936 the Industrial Efficiency Act was passed, which, under the hand of the Minister of Industry, may license industry according to his own dictates. He may control the prices of any industry, whether licensed or not. The act to license and control is already operating. Bread and many other commodities are now fixed “by order in council”, simply by order of the Minister of Industries.
Another act was the Prevention of Profiteering Act—all these have gone in with the new labor legislation during 1936. It provides the Government with a unique method of defining fair prices, under which the Government is now undertaking the operation of “one-of- a-kind” industries to determine fair prices, to determine what the prices should be. There appears to be no limit, under these interlocked
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locked acts, to the dogged-though-blind determination to regiment and strangle industry.
Up to within 2 or 3 months of its advent only about 45 separate industries have been accused of advancing prices. They are on trial. When guilt is proved it is a case for the mercy of a magistrate of justice. But first the Minister of Industry must have his little hour. He has a name for his particular sport. He puts the onus on them.
Some of these ambitious labor ministers are very naive and some not very bright and have little real understanding of the basic factors involved in fair prices. So the new game of putting the onus promises some rare comedy.
It is no comedy, however, but very significant, that in spite of the large number of workers recently absorbed by lavish public works, unemployment increased in 1935 by 14½ percent, 7,000; that in 1936 capital was leaving the country; that in 1936, for the first time, New Zealand’s bonds remained unsold.
It is enough to know that today, in 1937, under its own labor government, with all its industrial legislation in action, New Zealand’s labor is still devastated with strikes; still defying the law of the land; still commanding the Government to “get a new judge of the arbitration court”; still crying out for its rights; still hearing the old promises of its politicians, who, once its servants are now its tyrants.
In closing, gentlemen, let me quote a recent pronouncement of Chief Judge Dethridge, of the Federal Arbitration Court of Australia, in reference to fixed wages and hours, and unemployment, his pronouncement of January 1937, in which he said:
This court has never attempted to meet the evil of unemployment by increasing wage rates. There is a popular fallacy that the way to meet unemployment is to shorten hours and increase wages, the idea being that you thereby increase the purchasing power of the people and thereby increase employment. This is quite wrong. Purchasing power is created not by increasing wages, but by the creation of commodities and services for which there is a sale. The mere payment of wages does not increase articles or services for which there is a sale. The payment of more wages and the shortening of hours of labor, unless accompanied by an Increase in the sale of services and articles, will increase unemployment, not lessen it, * * * The only validity in this popular document that shortening hours and increasing wages will Increase purchasing power is this: That the payment of more wages may reduce the amount of purchasing power of those who are better off financially in the community, and may reduce the amount hoarded by the classes who have more than the workers. If that amount hoarded by those better off is diverted into the possession of the workers so as to be spent instead of hoarded that will tend to increase the amount of commodities and services that are created. * * * You have to be very careful when you reduce that way. not to diminish that amount that will be produced by those who carry on the country’s enterprises. It is a very delicate balance even when dealing with that small portion of this doctrine that may be valid.
The pronouncement closes by saying:
The great risk of reducing hours and increasing wages is that you reduce the amount which will be spent by those who give employment. Those are not the ones who are hoarding. It is the people, and not always only the wealthy people who are hoarding instead of spending the purchasing power of which they have become possessed.
To this must be added the brief words of Economist Condliffe:
Both in Australia and New Zealand there has been a marked decline iu productivity since 1910; both absolutely and relatively to the statistical measurements in other countries.
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These, gentlemen, are some of the factors surrounding the question of fixed wages and hours. To depend upon higher wages and shorter hours alone for prosperity is but taking economic chloroform and eventually economic suicide. It will not only fail to bring labor its immediate needs, but in the end will frustrate its hopes and defeat its rights. I thank you.
Representative Wood. Mrs. Blomfield, who are the members of your New York Council, Economic Council? Whom do they represent?
Mrs. Blomfield. I understand it has quite a number of members. It is a membership corporation, incorporated, of course, under the State laws.
Representative Wood. Are they businessmen?
Mrs. Blomfield. It is made up of all kinds of people, I understand. There are, I think, perhaps 16,000 or 17,000. There are businessmen, educators, and all classes and kinds of people.
Representative Wood. What classes? Business and professional men, or are they wage earners?
Mrs. Blomfield. Well, I should say that business and professional men and women, family people, to the best of my knowledge, compose that organization. I am not a member. I am employed by the council.
Representative Wood. You are employed by the council?
Mrs. Blomfield. I am employed by the council. I am staff speaker and research assistant to the president, Mr. Melvin R. Hart.
Representative Wood. You spoke of employers leaving the country.
Mrs. Blomfield. Capital leaving the country, Congressman.
Representative Wood. Where did it go?
Mrs. Blomfield. I did not say capitalists; I said capital.
Representative Wood. Where did it go?
Mrs. Blomfield. Some went to England, some to Australia. Australia went more rapidly through its program and got more deeply into socialism.
Representative Wood. You said capital left Canada.
Mrs. Blomfield. No; left the country, left New Zealand. I did not mention Canada, Senator.
Representative Wood. I thought you were talking about Canada. When did New Zealand enact the law providing for the regulation of wages in New Zealand?
Mrs. Blomfield. It first went into operation in 1896. It got under way just prior to 1900. Incidentally, it was followed almost immediately by the same provision as Australia.
Representative Wood. Did it include also the minimum-wage law?
Mrs. Blomfield. Yes; it included the minimum wage through the medium of awards fixed by the arbitration court.
Representative Wood. Was the minimum wage the fixed wage above the minimum?
Mrs. Blomfield. It was a court-fixed wage. There was not a national minimum wage at that time. There is now.
Representative Wood. They regulate all wages?
Mrs. Blomfield. They do now.
Representative Wood. A fixed wage?
Mrs. Blomfield. Yes.
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Representative Wood. They haven’t any minimum, but they fix all wages?
Mrs. Blomfield. They fix wages through the medium of the arbitration court awards and a national minimum.
Representative Wood. How do you reconcile that law with the Black-Connery bill?
Mrs. Blomfield. It has the same effect.
Representative Wood. This bill provides for a minimum wage and maximum hours, not for the fixing of wages. This bill seeks to establish a floor or a minimum below which no employer is allowed to pay his employees.
Mrs. Blomfield. Well, that is the provision.
Representative Wood. It leaves to the machinery of collective bargaining to raise wages above the standard.
Mrs. Blomfield. That is the provision.
Representative Wood. Without any governmental interference.
Mrs. Blomfield. That is also the provision of the new arbitration system in New Zealand, introduced last year, the minimum wage and 40-hour week; and, of course, the arbitration court is expected to adjust the wage and fix rates above the minimum.
Representative Wood. When they made this survey of the wages and hours law in New Zealand from 1900 to 1910, and you said repeatedly that wages only were increased during that period 3 percent.
Mrs. Blomfield. Yes.
Representative Wood. What was the increase in the cost of commodities, the market prices?
Mrs. Blomfield. I said the real wages were increased only 3 percent. Though I haven’t the figures, we have the comparative basis there by the fact that the report also said that prices and real wages had pursued parallel courses over a period of 15 years, and that real wages had increased only 3 percent in the first 10 years of its operation.
Representative Wood. What happened since 1910?
Mrs. Blomfield. I follow that right up in this report and show the periodic reports of the Government Royal Commission and the committee, to show that that condition was increasing steadily and becoming more difficult.
Representative Wood. Had the wages and cost of living increased since 1910 in New Zealand?
Mrs. Blomfield. My figures show that real wages have increased only 6 percent between 1914 and 1930, when they were at their highest peak, and that would indicate that prices had kept a parallel line.
Representative Wood. Have you got any figures on prices?
Mrs. Blomfield. No. I haven’t them with me. I did not expect to have time to go into such details.
Representative Wood. What is your idea about prices since 1914 in New Zealand?
Do you think the prices kept pace with the rates of wages?
Mrs. Blomfield. Knowing the New Zealand people as I do, I think I am justified in saying that whatever rise in prices occurred was absolutely necessary to a maintenance of industry. That was shown by the report. Not only that, but I know of the sincerity of the
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employers, who contributed to their utmost to make a success of it. They are law-abiding people. Politics was not involved in the situation at all. They felt, as that type of people do, that the law was theirs and they had to accept it — even as the farmers today say in a recent objection to the confiscatory control of products and prices, “It is against our wishes but we have to bow to it, and let us have the best prices that you can give us.”
I do know the attitude that the employers and industrial leaders adopted. The records will show that they cooperated to the extent that was economically possible, and that there were no politics involved. In fact, the liberal government had had everything their own way for over 30 years, with a resultant drilling of the people to refrain from making any objection to the State. The people were becoming subservient to this radical type of government.
Representative Wood. Do you think that type of management had a good effect on prices?
Mrs. Blomfield. New Zealand offers an example as to that, because the industries would be comparatively small. They are called secondary industries—because agriculture is the primary industry—and they offered an opportunity to make a sort of a laboratory experiment, as it has been considered by economists; I think that New Zealand’s industrial leaders were the people to allow the law to carry on if it could—in fact they did not nave anything to do with its overthrow—- it was the whole economic structure that collapsed. If they were not able to endure economically, familiar as they were with their own industries, and those industries being almost a one-man type of industry, I think it could not endure at all.
I think that is the value of this whole report, because they were not great corporations largely, they were industries over which a small group of men, sometimes one or two men, had full managereal control. Those men were endeavoring to their utmost to work in cooperation with this arbitration system, and they just took what they had handed to them and made the best of it, and if they could not show better profits than they did, I think those profits were not forthcoming without price increases based on sheer economic necessity.
Representative Wood. Mrs. Blomfield, is it your contention that if this bill is passed and minimum wages and maximum hours established, and by that regulation the wages generally will be increased, do you think that will cause a corresponding increase in prices? Is it your contention that a corresponding increase in prices will follow an increase in wages?
Mrs. Blomfield. From my experience certainly, yes. In many instances it would be unavoidable.
Representative Wood. Do not you think the institution of labor displacing machines in production, the application of science and invention to industry, has lowered the cost of producing the commodities of life appreciably since 1914?
Mr. Blomfield. Possibly. But wages have increased too.
Representative Wood. I mean to say the machines in production that nave been invented since 1914 have made it possible for the average man to produce several times more in a given period than he was able to produce in 1914?
Mrs. Blomfield. That would seem to be so, but it does not work out that way in the end, in terms of national income.
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Representative Wood. It does work out that way. Of course, it is generally agreed that the productivity per man-hour has highly increased since 1914 the world over, and especially in this country.
Mrs. Blomfield. The New Zealand farmers turned to importing machinery to do their work because they could not afford to hire the labor. This lessened consumers or markets.
Representative Wood. All right. The imposition of this labor-displacing machinery in New Zealand, agreeing and admitting that the machines that have been instituted since 1914 in industry, both in New Zealand and this country, has greatly increased the rapidity of the worker to produce, in some cases many times more in a given hour than he could in 1914, do you think then, in the face of that, that a reasonably slight advance in rates would naturally reflect an advance in prices?
Mrs. Blomfield. It seems according to the experience with which I am most familiar that the fact that machinery has displaced employment to such an extent has naturally lowered the purchasing power of the unemployed, which offsets the advantages of cheaper production. Some other medium must be found to increase commodities and sell these commodities rather than having higher wages. That is the whole point. It is a question of creating new commodities, new services, because the manufacturer, while he is gaining in lessened cost of production is losing in the lessened purchasing power of the unemployed created through that machinery.
Representative Wood. In the cigarette industry the labor cost is a little over 1 percent. Would you think a 10-percent increase in wages of cigarette makers would be reflected in the cost of cigarettes?
How- do you think that would reflect in the cost of cigarettes that cost a little more than 1 percent
Mrs. Blomfield. I would not want to give an opinion, Congressman.
Representative Wood. Twenty-five years ago the carton of cigarette was about 20 percent in labor cost and now it is about 1½ percent.
Mrs. Blomfield. It may be there that there are specific industries that could stand that.
Representative Wood. The employees, therefore, could produce 15 or 20 times more cigarettes now than they did 20 years ago, but the wages are very slightly higher.
Mrs. Blomfield. I cannot help, however, but endorse the report of Judge Dethridge that I quoted, that in spite of the fact that, as you say, management might have gained through lessened production costs with invention and machinery, after all its workers are also consumers. If those machines have lessened the consumptive power, then we must find some other way of creating new commodities and the sale for them, and the sale for the services that would handle them, rather than load industry with the double burden of maintaining the balance of an economic structure that becomes unbalanced if you try to get employment and prosperity through the application of higher wages and shorter hours only.
We must not forget that that is the basic point, that while production cost may be less, and is undoubtedly less through machinery and invention, there is a larger amount of nonproductivity at the same time. The great unemployment all over the world points to the fact that we have got to find better production for the unemployed
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rather than burden the wheels of industry with both higher wages and decreased markets.
Representative Wood. How are we going to do that? Have you. anything to suggest?
Mrs. Blomfield. I am sorry.
Representative Wood. That is all.
Representative Lambertson. You say in New Zealand the first law was a minimum wage law, in 1896?
Mrs. Blomfield. 1896 the Arbitration Act was established.
Representative Lambertson. Then a little later a law was passed to fix wages?
Mrs. Blomfield. No. Indirectly it did. Registration under that act at that time was voluntary.
Representative Lambertson. When did this fixing of all wages come about, then?
Mrs. Blomfield. It came about gradually through indirect effect of the rulings even at that time, and on from that time. Registration was not mandatory under that act, but it resulted in almost complete jurisdiction over all employers and employees for the reasons which I stated. An employers’ federation which had been given certain awards and certain restrictions could apply to a court and have those awards apply to the same trade all over the country, or in certain districts where competitive advantages would otherwise obtain.
Representative Lambertson. Do you think that in this country increasing the minimum wages would have the effect of increasing all wages?
Mrs. Blomfield. Certainly. I think it would create a precedent which would be taken advantage of by those who would not have had the power to take advantage of it otherwise and did not understand the economic suicide of it.
Representative Lamberton. Of course, under the power given to this Board they could do it, under this act?
Mrs. Blomfield. Certainly.
Representative Ramspeck. Mrs. Blomfield, how long have you lived in the United States?
Mrs. Blomfield. I have lived in the United States most of the time since 1906.
Representative Ramspeck. Are you an economist?
Mrs. Blomfield. I have been an American citizen for 14 years.
Representative Ramspeck. Are you an economist?
Mrs. Blomfield. No; not academically, except that my work has been always more or less industrial research, and in speaking on related subjects
.Representative Ramspeck. How long have you been engaged in that work?
Mrs. Blomfield. About 25 years.
Representative Ramspeck, you were here, then, in 1929?
Mrs. Blomfield. Yes.
Representative Ramspeck. And up to the present time?
Mrs. Blomfield. Yes. I was in New Zealand in 1930 and 1931.
Representative Ramspeck. You have told us about what caused the collapse in New Zealand. What caused it in this country in 1929? We had no Government regulation of wages or prices then.
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Mrs. Blomfield. I think that was entirely an international basis, Senator.
Representative Ramspeck. Do you think the panic here was caused by international depression?
Mrs. Blomfield. 1 do not think there was anything national about it at all. I did not know that anybody did think so. I think it was entirely a world condition.
Representative Ramspeck. Then the international situation had nothing to do with New Zealand?
Mrs. Blomfield. No ; not up to the time of the Royal Commission’s Report—period 1931. That is the important part of New Zealand’s story. That is why New Zealand’s story is important, because New Zealand is isolated, they are the best class of people in the world to make these experiments. Mr. Ziegfried wrote a book on that.
Representative Ramspeck. You said an increase in wages did not increase the purchasing power; is that right?
Mrs. Blomfield. Did not increase the purchasing power; that is right.
Representative Ramspeck. You said that?
Mrs. Blomfield. Yes.
Representative Ramspeck. Then I presume the contrary is true, that if you increase wages you increase purchasing power.
Mrs. Blomfield. That is what the analyses of the most authoritative reports of both New Zealand and Australia have shown.
Representative Ramspeck. In 1933, when the House Committee on Labor held hearings on the Black 30-hour bill, we happened to have 30 or 35 manufacturers who appeared before that committee and testified that due to the vicious downward cycle of prices and wages business was being destroyed, the purchasing power of the country was being destroyed, and because of cutthroat competition and sweatshop labor the decent and fair manufacturers were about to be driven out of business. You think they were all wrong, do you?
Mrs. Blomfield. My study of the situation which I have been stating today showed that it is a question of equality, the ratio of equality in national income; or the equal burden-sharing of losses in national income. The need for labor to take its share of loss as well as industry.
Representative Ramspeck. Of course, you know that prices and wages both were greatly reduced from 1929 to 1933?
Mrs. Blomfield. Yes.
Representative Ramspeck. Why did not that create a purchasing power and restore prosperity?
Mrs. Blomfield. I think that was an extreme condition, Senator, that you are speaking of. I am speaking of really normal conditions. I think a lot of things were involved in what we call our depression that were entirely uncontrollable.
Representative Ramspeck. You do not think, then, if we increase wages, we would increase the purchasing power and prosperity?
Mrs. Blomfield. No. I think a fixed minimum wage at uneconomic levels would operate, and has always inevitably operated, to produce inequalities in national income and in the burden of maintaining the national income, and as soon as any one inequality is introduced it acts like the wedge that undermines the whole structure.
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Representative Ramspeck. Do you know of any country in tlie world in any period of the world’s history where prosperity was brought about by a decrease in wages?
Mrs. Blomfield. That was the consensus of the report on the reason for reducing wages and throwing overboard this State industrial system that kept wages rigid. Because of the inequality in the losses in national income the charges of the manufacturers were fixed, their interests, their taxes, their tariffs, and the rate of wages were fixed by law, and labor was the only group in New Zealand that was escaping the cost of general decline in productivity and income throughout the whole period. When the depression touched New Zealand in 1931 labor was riding high. Its wages never dropped in percentage as low as the national income dropped, so that productive labor was not suffering at all, and that was the wedge that rocked the whole thing.
Representative Ramsfeck. You told us a while ago that New Zealand was not affected by this international situation.
Mrs. Blomfield. I certainly did not intend to say that. I said I was not discussing that, my report had not been brought into the world depression period.
Representative Ramspeck. I understood you to say, in answer to a question I asked, that the situation in New Zealand was not affected by the international situation.
Mrs. Blomfield. No; I did not intend to give that impression. New Zealand was affected at last.
Representative Ramspeck. Then you cannot tell whether the international depression wrecked the system in New Zealand, or whether the system wrecked itself?
Mrs. Blomfield. The system wrecked itself. That is exactly the question. It is important because it did wreck itself.
Representative Ramspeck. What I cannot understand is the effect of the international depression on the system in New Zealand.
Mrs. Blomfield. Senator, it was wrecked before the depression touched New Zealand.
Representative Ramspeck. When did their panic start?
Mrs. Blomfield. The Government Royal Commission and economic committees were appointed late in 1931.
Representative Ramspeck. Then it started 2 years after ours? Ours started in 1929.
Mrs. Blomfield. Well, New Zealand had had a depression of its own since 1925, at the time the United States was at the height of its prosperity. Unemployment was greater after 1926. between 1926 and 1929 in New Zealand than it had been for a tong time, and those were the times when the depression had not touched the world at all.
Representative Ramspeck. Of course, I do not know anything about New Zealand, but I am wondering why, if your theory was correct, reducing wages would bring about more purchasing power, if we had a downward spiral in this country of all figures, the wages, prices, volume of business, national income, from 1929 to 1933; then we passed the N. R. A. and put a stop to that downward spiral, and since then conditions have been improving; how do you account for that?
Mrs. Blomfield. Well, I can only quote the words of former Prime Minister Coates, who said, “The American N. R. A. is a
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poor imitation of what New Zealand has been struggling with for 30 years,” when he was asked an opinion as to what would happen to the American N. R. A.
Representative Ramspeck. We did not pass the N. R. A. until 1933.
Mrs. Blomfield. It must have been 1933 or 1934. It was said probably in one of those years.
The Chairman. Did I understand you to say that unemployment was greater in New Zealand before 1930?
Mrs. Blomfield. Yes.
The Chairman. I understand you to say from 1925 to 1929 unemployment was greater in New Zealand.
Mrs. Blomfield. Than it had been before 1925.
The Chairman. I understood you to say, in response to Mr. Ramspeck’s question, that the panic started in New Zealand long before 1931. We found that unemployment was greater after that than it was before.
Mrs. Blomfield. Yes.
The Chairman. I happen to have the figures before me.
Mrs. Blomfield. Not greater than it was during the world depression time in New Zealand, Senator.
The Chairman. I have the figures before me. For instance, in the year 1929 it shows unemployment, 2,895; in 1930, 5,037; in 1931, 41,430; and in 1932, 51,549.
Mrs. Blomfield. But those are depression unemployment figures; I am quoting Dr. Condliffe’s predepression figures.
The Chairman. I understood you to say that the depression and panic had already started in New Zealand a long time before it happened here in 1929. These figures, taken from a memorandum prepared by Mr. Leon Henderson of labor conditions in New Zealand some time ago, show that the unemployment in 1929, in the entire country, was only 2,895.
Mrs. Blomfield. Of course you have to take the percentages on those, if they are significant at all.
The Chairman. I understand that, but by 1931 they were 41,430. The depression had long since started then, had it not?
Mrs. Blomfield. Are you speaking about the results of New Zealand’s 30 years of State arbitration?
The Chairman. I am speaking of the actual unemployment in New Zealand in 1929, 1930, 1931, and 1932.
Mrs. Blomfield. Well, you are going into the world-depression figures. The year 1931 was the beginning of the world depression in New Zealand, and, of course, that aggravated the whole situation, and was the direct cause of action being taken to overthrow the arbitration system.
The Chairman. What was the population in New Zealand in 1929?
Mrs. Blomfield. About 1¾ millions.
The Chairman. There were 2,895 people out of work at that time, according to the figures on unemployment. Do you think that shows that New Zealand was in a state of utter collapse in regard to employment?
Mrs. Blomfield. I do. because the large numbers of unemployed on public works and Government relief were not rated as unemployed.
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[PAGE 921]
The Chairman. 2,895. You say they had an indebtedness of 1,135 per capita. What year was that?
Mrs. Blomfield. That was in 1932.
The Chairman. Along about that time this report came out from which you quoted copiously and there was a change in government, the Liberals were defeated?
Mrs. Blomfield. Yes.
The Chairman. The other crowd stayed in office how long?
Mrs. Blomfield. I did not hear you, Senator.
The Chairman. How long did these people stay in after they defeated the Liberals, in New Zealand?
Mrs. Blomfield. They did not have another election until 1935.
The Chairman. Then they put them out, the people did?
Mrs. Blomfield. Then the conservative group who had forced the balancing of the budget and had overthrown the arbitration system—they too were liberals, but they were the more conservative of the two—they were displaced and the Labor Government was put in control in 1935.
The Chairman. During that time, you talked about this indebtedness. Tell us now what the people got in the way of public improvements for this indebtedness.
Mrs. Blomfield. They had Government ownership of railroads, telegraph, telephone, light, power, insurance, coal mines, and hospitalization.
The Chairman. How many railroads, or how many miles of railroad, did they have?
Mrs. Blomfield. In the entire country, you mean?
The Chairman. Yes.
Mrs. Blomfield. About 4,000 miles.
The Chairman. Four thousand miles?
Mrs. Blomfieid. Or less than that.
The Chairman. Private industry had never built those railroads?
Mrs. Blomfield. That was started in the earliest stage of the country, before there were any railroads at all.
The Chairman. They also built a large number of houses, did they not, in the country?
Mrs. Blomfield. Government houses.
The Chairman. How many thousands of houses did they build?
Mrs. Blomfield. I do not have the figures, Senator. I think I have them, but not with me. There are many of those that I did not expect to use. I can say, however, that it was considerable. Also, perhaps. I think it should be said that I am quoting economists, because I have said I am not an economist.
The Chairman. What economist are you quoting?
Mrs. Blomfieu). I am quoting Stewart, who was Minister of Finance.
The Chairman. Under what government?
Mrs. Blomfield. Under the coalition government, I think.
The Chairman. You mean the conservative government?
Mrs. Blomfield. Yes; I am quoting also Victor Clarke, who was America’s labor commissioner to New Zealand about 1906, I think; and he brings out the fact that a great deal of the Government house building could have been described as necessitated by the fixed-wage system. Because capital could not obtain from industrial investment
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its desired 6 or 7 percent profit, it turned to housing for that profit. But such rents were too high for cost-of-living wages to afford. Hence the necessity of Government low-cost housing.
The Chairman, How many houses were built?
Mrs. Blomfield. I do not know the number of houses.
The Chairman. How many thousand, do you think?
Mr’s. Blomfield. I should say three or four thousand.
The Chairman. You had some figures given to you after you wrote your article for the New York Times on Sunday, July 12, 1936. against the present administration, did you not? You wrote an article for the New York Times in 1936—July 12—and quoted very copiously from New Zealand’s experience and gave that as one of the reasons against the reelection of the present administration?
Mrs. Blomfieid. I was answering an editorial in the Times that recommended the New Zealand governmental system to America.
The Chairman. You wrote a very lengthy article?
Mrs. Blomfield. Yes.
The Chairman. By whom was the reply written?
Mrs. Blomfield. By Mr. Belshaw.
The Chairman. The dean of the faculty of commerce, Auckland University College?
Mrs. Blomfield. Yes.
The Chairman. He gave you some figures, did he not?
Mrs. Blomfield. Yes.
The Chairman. May I ask you what has been the increased production in New Zealand since the new liberal Government was elected in 1935?
Mrs. Blomfield. Increase in production?
The Chairman. Yes.
Mrs. Blomfield. I haven’t got those figures, Senator.
The Chairman. It is very substantial, is it not?
Mrs. Blomfield. I haven’t attempted to bring my whole story to 1935 and 1936, except to say what the new Labor Government is doing in labor legislation, or was doing in 1936.
The Chairman. I understand. You have drawn a very horrible picture of the conditions in New Zealand. What I want to know is. Do you have any figures there of the actual increase in production?
Mrs. Blomfield. No; I have not.
The Chairman. You do know that there has been a very substantial increase, do you not?
Mrs. Blomfield. Yes; in farming.
The Chairman. In what?
Mrs. Blomfield. In farming; agriculture.
The Chairman. Were the figures given by Dean Belshaw correct in his statement?
Mrs. Blomfield. I forgot what they were.
The Chairman. You went over them?
Mrs. Blomfield. Yes.
The Chairman. If he put incorrect figures in there, you would be able to correct them in the New York Times?
Mrs. Blomfield. I would say yes and no, for this reason: Dean Belshaw has been, I think, and certainly is, pro-Liberal in regard to the Government in New Zealand. I think he is an attach eof the Government.
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The Chairman. Yes.
Mrs. Blomfield. We are so accustomed to having deceptive figures there; they are true on their face, but they are wrongly presented. For instance, there is given in the yearbook and various reports the figures on the private and public wealth of the country-----
The Chairman (interposing). May I ask where you got your figures that you have been quoting, if figures cannot be relied on?
Mrs. Blomfield. I got them from both Government economists and reports and independent economists.
The Chairman. If there had been anything wrong with the dean’s figures, you certainly would have published it in the New York Times and shown that he was not correct?
Mrs. Blomfield. I did not reply for the simple reason that I was perfectly aware of the situation. I read the reply, of course, and discussed the features of it with some of my close friends. A reply could easily be made, but I did not bother to do it.
The Chairman. You said it could have been easily replied, but you just did not bother to do it?
Mrs. Blomfield. Yes; exactly.
The Chairman. You were working for the New York Economic Council?
Mrs. Blomfield. Yes.
The Chairman. Of course that is an organization of big business groups, is it not, of which Mr. Hart is president?
Mrs. Blomfield. I do not think I would say that. Senator. The council is incorporated and has a membership of all classes and kinds of people.
The Chairman. I have it in my office, and I could get it if necessary, but is it not true that the largest business enterprises, that the large business groups in New York contribute to sustain the New York Economic Council?
Mrs. Blomfield. Just as well as the smallest.
The Chairman. The Morgan groups, the Du Pont groups, and so forth?
Mrs. Blomfield. I could not say. I do not know; I am not a member of the council.
The Chairman. It is true also that your organization was out campaigning last year, using these same figures, trying to tell the people ire were on the way toward New Zealand’s horrible experience, did you not?
Mrs. Blomfield. Precisely, economically speaking.
The Chairman. You used that in the campaign of 1936, that if the Democrats got in on the platform they had they were going to drive us up to the New Zealand system?
Mrs. Blomfield. Yes.
The Chairman. Your organization did that, presented figures, made arguments, made radio speeches, all along that line?
Mrs. Blomfield. No.
The Chairman. It did not make radio speeches?
Mrs. Blomfield. The New York State Economic Council is not at all partisan in politics. It is as open, as I understand it, to Democrats and Socialists as to Republicans.
The Chairman. What Socialists?
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Mrs. Blomfield. I did not say on its membership, but as to the people who contribute. All classes and all kinds of people contribute to it. It is not politically active.
The Chairman. I would be very much interested to know if there were wage earners, any workers in it, if you could send us the names.
Mrs. Blomfield. I shall be glad to do that, Senator, because I do know that frequently Mr. Hart called to my attention, personally, letters enclosing $1 or $2, of which there come hundreds into the council, commending the program and enclosing a dollar bill, $5, or $10.
The Chairman. You were thoroughly nonpartisan when you wrote this article for the New York Times in July 1936, on the subject of the New Deal, were you not?
Mrs. Blomfield. No; I do not think I was, but I did not write it for the council. I did not write it for the council; I wrote it in answer to an editorial that had been published in the Topics of the Times, as it was called. In it the editor invited its readers to look at New Zealand, and invited the New Dealers especially, using its own term, to observe New Zealand and be patient. About everything that President Roosevelt was trying to do had been accomplished successfully in New Zealand and that the New Dealers be patient and they would be equally successful. Being highly amused and vitally interested I wrote an answer to the editorial, hut not as a member of the economic council.
The Chairman. You appeared before committees in Albany also ?
Mrs. Blomfield. In Albany; yes, sir; exactly as I am here.
The Chairman. In connection with the opposition to various legislation which would affect wages?
Mrs. Blomfield. But not politically.
The Chairman. The hours?
Mrs. Blomfield. But not politically.
The Chairman. Has not your organization taken a very active part against the child-labor amendment?
Mrs. Blomfield. Yes.
The Chairman. You have written articles against the child-labor amendment?
Mrs. Blomfield. No.
The Chairman. Your organization has?
Mrs. Blomfield. Yes.
The Chairman. Now, I find in the figures given by Dean Belshaw that since the new Liberal government went into effect—that is, in his reply dated July 22, 1936—that the value of production in New Zealand has actually increased from £84,000,000 to £99,000,000.
Mrs. Blomfield. Senator, he did not exactly say it, but that was entirely agricultural, it was absolutely inevitable, normal, and to be expected. That is the primary product of the country.
The Chairman. He also stated that one of the main troubles that had occurred in New Zealand was that its overseas trade had been affected by a fall in the price of exports throughout the world?
Mrs. Blomfield. Certainly.
The Chairman. He also said New Zealand expended from 50 to 60 percent of its national income on overseas trade; is that correct?
Mrs. Blomfield. Yes. I am speaking in my report about manufactures and commerce.
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The Chairman. That is what I am speaking of.
Mrs. Blomfield. The primary product of New Zealand, as I said----
The Chairman (interposing). Let us get the entire picture about this country that seems to have been destroyed. It is true, is it not, that from 1929 to 1932 New Zealand export prices fell over 40 percent?
Mrs. Blomfield. Yes—may I have those dates?
The Chairman. From 1929 to 1932.
Mrs. Blomfield. Yes.
The Chairman. It is true also, is it not, that the economic stringency that had been experienced in New Zealand since your worldwide depression has been less severe and of shorter duration than in many other countries, as shown by the prices of food, production, and wages?
Mrs. Blomfield. I would say that was not true.
The Chairman. You would say that was not true?
Mrs. Blomfield. I would say that was not true, regardless of whether or not it was written by Government economists.
The Chairman. Well, of course, I would not intimate that whom anybody was working for had anything to do with what they were saying about it. I have here the late war and post-war peak of price levels in New Zealand. Do you know how the price levels ranged from 1926 to 1936?
Mrs. Blomfield. I do not have my figures here.
The Chairman. Do you know whether or not they have gone up or down, the price levels for retail prices?
Mrs. Blomfield. No. I have figures on the productivity.
The Chairman. You have figures on productivity?
Mrs. Blomfield. Yes.
The Chairman. I would like to have them.
Mrs. Blomfield. I just quoted them to you. It is in that manuscript that you have there?
The Chairman. For what year?
Mrs. Blomfield. 1900 to 1927.
The Chairman. 1900 to 1927?
Mrs. Blomfield. Yes; during the very center of the effect of State arbitration, fixed wages and hours operations. That, of course, is the feature that I am emphasizing. You must remember that New Zealand is essentially an agricultural country and produces enormous quantities of agriculture which it could not possibly use. The primary products are farming and agriculture. Had it not been so, the planned economy would nave collapsed before it did, because the farmer was not directly involved with the fixed wages and hours system until the disparities became so great that he was automatically involved, and that is what smashed the system and caused its overthrow.
The Chairman. Do you know whether the New York Economic Council has had an income from the Cities Service Security Co.; the Fulton Light, Heat and Power Co.; the Brooklyn Borough Gas Co.; the Binghamton Gas Works; the Cities Service Co. in 1933; the Brooklyn Gas Co.; Cooks Falls Water Co.: Cooks Falls Electric Co.; Brooklyn Borough Gas Co.; the Cooks Falls Water Co.: the Louisiana Power and Light Co.; the Carolina Power and Light Co.?
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Mrs. Blomfield. I do not know, Senator. If it has, it has had equally as many contributions from people who sent in their personal little hand-written letters with the $5 and $10 checks, begging it to carry on its work.
The Chairman. It opposed the Wheeler-Rayburn bill, did it not?
Mrs. Blomfield. I do not know.
The Chairman. It opposed the T. V. A., did it not?
Mrs. Blomfield. I do not know.
The Chairman. I have here a list of the things opposed by the New York State Economic Council. Maybe you can remember some of them here. It opposed the St. Lawrence Waterway; it opposed the Federal child-labor amendment.
Mrs. Blomfield. May I make a reply on that?
The Chairman. Yes.
Mrs. Blomfield. The council’s reason for opposing the Federal child-labor amendment is because it has analyzed it to be what the council calls the youth-control movement. To a large extent I agree. No country has had fairer, quicker, and more drastic legislation in the prevention of child labor than New Zealand. One of the first pieces of labor legislation in New Zealand was the prohibition of any person under 16 working in a factory, with a short rider to the bill saying that a factory was a place where two or more people worked. So I thoroughly believe in the protection of child labor; but I do not believe, nor endorse any law, especially a National or Federal law, that will result in “idlizing” a large part of the youth of the land at the age when he and she very much need encouragement for self-dependence; and I believe that the provisions of the child-labor amendment law offered those serious possibilities, and that it would eventually create greater evils than those it attempted to correct, and the council feels the same.
The Chairman. What amendment to the law did the council suggest to substitute for the child-labor amendment, since they were very strongly in favor of abolishing child labor?
Mrs. Blomfield. I do not know, but I think it did suggest in one of the council letters, that goes out to 17,000 members, clause eliminations as to age to bring the age down to 16. I am saying only “I think”; I am not sure, Senator.
The Chairman. It opposed the labor-disputes bill, the stock-exchange control bill, the reorganization; it thought it would be very dangerous to pass that bill, did it not?
Mrs. Blomfield. I did not know. I have no knowledge as to that.
The Chairman. The Wagner unemployment-insurance bill; it opposed that?
Mrs. Blomfield. I do not know.
The Chairman. I am reading from a report made by them as to what they did oppose.
Mrs. Blomfield. May I say that my association with the council has been since December 1935 only, so that if any of those bills were before that I would not know about it.
The Chairman. It opposed the housing bill; it opposed the communications bill ; it opposed the Wheeler-Rayburn bill, and approved the President’s effort to get the prevailing rate eliminated in the $4,800,000,000 relief bill in 1936. As a matter of fact, that organization has very generally opposed labor legislation, has it not?
Mrs. Blomfield. I do not know, Senator; I could not say.
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[PAGE 927]
The Chairman. I see that Dean Belshaw made this statement, maybe you could state whether or not this was correct at that time, “Nor was the New Zealand of 40 years ago an economic paradise.” That is the time they first passed the labor legislation?
Mrs. Blomfieid. Yes.
The Chairman (reading):
The Chairman. I see that Dean Belshaw made this statement, maybe you could state whether or not this was correct at that time, “Nor was the New Zealand of 40 years ago an economic paradise.” That is the time they first passed the labor legislation?
Mrs. Blomfieid. Yes.
The Chairman (reading):
The Liberal regime, inaugurated by Ballance and Seddon in the early nineties, was a response to an economic situation characterized by poverty, soup kitchens, sweating in industry, industrial strife, and widespread bankruptcies.
Do you know whether or not that was correct?
Mrs. Blomfield. It was very true, Senator. May I explain it?
The Chairman. Will you explain why they had those things?
Mrs. Blomfield. Yes.
The Chairman. Yes; I am sure we would all be interested in that.
Mrs. Blomfield. About 10 years before the period of which you have just spoken New Zealand had what could be called an ordinary depression.
The Chairman. For 10 years?
Mrs. Blomfield. No; about 10 years before that period of which you have just quoted. A man by the name of Vogel, who was National Treasurer of the country, with political ambitions and on fire with new ideas, gave New Zealand its first new deal. He went to England and borrowed tremendous sums of money, and he came back and instituted government ownership of railroads and telephones.
The Chairman. In what year was that?
Mrs. Blomfield. That was in 1880: about 10 years before the period of which Dean Belshaw was speaking. Vogel started all the government-owned institutions at that time. He carried on with the British loans, spending lavishly and recklessly for 7 years, until suddenly there was no money available. The collapse of that experience was the blackest period of New Zealand’s history. For 10 long years the country had soup kitchens and poverty that reduced the people to barter and exchange. The workers were leaving the country for Australia. It was at that time that the workers bound themselves together and addressed a petition to the President of the United Sates begging for assisted immigration to this country, saying, in reference to the collapse of our first new deal:
If this petition fails in its objective to get assistance to go to America, it would at least be a lasting record of the deplorable conditions to which our politicians have brought our country.
That is a part of New Zealand’s history.
The Chairman. Yes.
Mrs. Blomfield. And then it was that a slow political revolution introduced our first Liberal government, a liberal-labor government, aided and abetted by a growing labor party which produced New Zealand’s second new deal in a bigger and better way. From that time on New Zealand has not known a year without the introduction of imported money. It was then that began the greater expansion of government work that gave New Zealand government ownership, more government telegraph, telephone, power, and hospitalization, government ownership of coal mines, and life insurance all operated by the government, and every year a fresh loan with which to carry on these works. That is the reason for the great national debt today.
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Another reason for it is the fact, according to Condliffe, who is a New Zealand economist of unimpeachable reputation, that practically no one of those Government industries paid full-maintenance revenues or taxes. Added to that were the Government imports of tremendous quantities of goods on which it does not pay revenues or tariffs.
So that all those things not only added directly to the national debt but depleted the treasury to pay the deficit of these Government-operated industries. Also, it has added to industry the extra burden of taxation that would have been paid by other industries if the Government-operated industries had been under private enterprise. In other words, .because those great industries were not paying taxes the remaining private enterprises had to carry the double burden.
Those are some of the reasons why New Zealand has its great national debt today. But it was the first New Deal that caused the complete break-down and bankruptcies that Belshaw writes of, the 10 years of misery, as shown by the fact that they appealed to the United States President for assisted immigration. That is what Mr. Belshaw was referring to when he said it was not a paradise. It was not the fault of private enterprise.
The Chairman. As I understand it, you are going back of the statement in the original article?
Mrs. Bwmfield. Yes.
The Chairman. This gentleman is rather familiar with the situation over there, is he not?
Mrs. Blomfield. Yes; I expect so.
The Chairman. He said this:
The staunch young republic found that the gospel for free competition offered no remedy for these and tend to social experimentation as a means of correcting the failures of individualism. The most hard-boiled New Zealand Tory would not revert to the old situation.
He said:
Nor could free competition save the Bank of New Zealand, the largest financial institution in the country, from failure.
Did it fail at that time?
Mrs. Blomfield. It failed for the reasons I just said.
The Chairman. It did not fail?
Mrs. Blomfield. It partly failed.
The Chairman. It partly failed?
Mrs. Blomfield. That is, the Government took over part ownership of it.
The Chairman. It took over the new government. He says: “It took a socialistically inclined government to do that.” He said it took what you call a socialistically inclined government to restore it, and it did restore it, did it not?
Mrs. Blomfield. I said it was stabilized under the law.
The Chairman. How long did it continue to exist?
Mrs. Blomfield. It continued to exist in a semisocialized condition until 1935, and today it is completely socialized. The new government is using the money of the people for providing itself with funds for further subsidies.
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The Chairman. This bank that was about to fail has continued to operate from 1894, when this new government went in, until 1935; that is correct, is it not, as to the New Zealand bank?
Mrs. Bixjmfield. Yes; but it has been completely socialized for the last year, as are all credits and currency in the country.
The Chairman. Practically all the figures you gave in your New York Times article last year against the administration were included in the ones you gave today, the same article?
Mrs. Blomfield. I suppose so, because I was speaking of the same conditions.
The Chairman. I thought I would place in the record the statement of Mr. Belshaw in reply to yours, and if you wish me to do so, I shall be glad to repeat, in your statement to the New York Times, although as I read your statement, or heard your statement today, you read the New York Times statement, and the two are practically identical?
Mrs. Blomheld. Yes; I should like to point out, though, Senator, that the reference which Belshaw makes in that statement which you have just quoted, when he said New Zealand was not a paradise, I would like to have that quotation again that you just gave about the private enterprise not being a panacea.
The Chairman. I will read the paragraph:
Nor was the New Zealand of 40 years ago an economic paradise. The Liberal regime, inaugurated by Ballance and Seddon in the early ninties, was a response to an economic situation characterized by poverty, soup kitchens, sweating in industry, industrial strife, and widespread bankruptcies. The stanch young republic found that the gospel of free competition offered no remedy for these and turned to social experimentation as a means to correcting the failures of individualism. The most hard-boiled New Zealand Tory would not revert to the old situation.
That is the quotation you referred to?
Mrs. Blomfield. That is precisely what I meant, Senator. This is what I meant when I said I had not written an answer to Belshaw’s article for personal reasons. There is so much fallacy in that that you have just quoted, which is very easily answered—which I have just answered—-but just did not bother to answer before. What he refers to as a failure of private enterprise was caused through the waste of public money by the first New Dealers and the cause of the collapse. That was why the bank did nearly collapse, because private investments that were dependent upon Government loans failed when the loans to the Government were stopped. That is what caused the unemployment; that is what caused the bankruptcies and the black depression. It was not the fault of private enterprise, nor free competition. Now, they have the experience of going further and further into state socialism. The economic folly is of lesser importance. It is the devitalization of the youth of New Zealand, which I consider is important, and which transcends all questions of economics, hours, labor, and so forth, and that, I insist, is steadily going on under a rapidly increasing condition of state socialism through too much Government control, too much regimentation of life economically and socialistically.
The Chairman. During the last 40 years?
Mrs. Blomfield. During the last 40 years.
The Chairman. The people who live in New Zealand and who voted have voted in that government which you condemn each time.
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with one single exception, for a period of 2 years; that is correct, is it not?
Mrs. Blomfield. Yes, Senator; but we had an election in the United States in 1936, too.
The Chairman. And you were just as much disturbed with the election in 1936 as you were then, and you are making this hard fight, you and the New York Economic Council and the Liberty League group—honestly, I make no criticism of that—you are honestly fighting just as hard on the ground that it is going to destroy the United States if we pay the laborers enough and give them decent working conditions; that is correct, is it not?
Mrs. Blomfield. My contention, as far as my remarks are related to this particular hearing, is that the fixing of wages and hours is conducive to unemployment and a leveling of productivity and values, human levels, which tendencies are definitely visible in the New Deal. The Chairman. Do you have any employees in the New York State Economic Council up there that work for $12 a week?
Mrs. Blomfield. I do not know; I do not think so.
The Chairman. As a matter or fact, they do not have employees in the New York State Economic Council that do not get much better pay than that, do they?
Mrs. Blomfield. I do not know, Senator.
The Chairman. Thank you very much, Mrs. Blomfield.
(The matter referred to by the chairman is as follows:)
[The New York Times, Sunday, July 26, 1936]
FACTS OMITTED
I have read with some amazement the letter which appeared over the name of Leila M. Blomfield in the New York Times of July 12. In it she takes Topics of the Times to task for recent comments on the New Deal in New Zealand and appears to ascribe the economic difficulties of that country to Interference with the sacred principles of laissez faire.
Her letter states: “Nothing is truer than that it was New Zealand's new deal and its inevitable aftermath that changed New Zealand from the stanch young republic (?) that she was to the socialized, labor-governed state of today, staggering under a per-capita national debt of $1,135.”
When read in conjunction with the rest of the letter, the implication of this statement is that before the era of social experimentation New Zealand was a sort of paradise for stanch and prosperous individualists; but that now the glory is departed and the country is in a woeful mess because of Government interference with the workings of a self-adjusting competitive system. This gloomy interpretation of the history of the Dominion would not be supported by any competent authority. Nor is it assisted by the fact that, prior to the world crisis, with a cost of living lower than in this country, and with wealth much more evenly distributed, the per-caplta income was about $500.
Nor was the New Zealand of 40 years ago an economic paradise. The Liberal regime, inaugurated by Ballance and Seddon in the early nineties, was a response to an economic situation characterized by poverty, soup kitchens, sweating in industry, industrial strife, and widespread bankruptcies. The “stanch young republic’’ found that the gospel of free competition offered no remedy for these and turned to social experimentation as a means of correcting the failures of individualism. The most hard-boiled New Zealand Tory would not revert to the old situation.
Nor could free competition save the Bank of New Zealand, the largest financial institution in the country, from failure. It took a socialistically inclined Government to do that.
It is true that the economic committee of 1932 found that, in the light of the new situation which emerged with the fall in world prices after 1929, development of resources out of loan money had been proceeding somewhat too rapidly.
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Readjustment was made more difficult because loan charges were fixed in terms of money, and with falling prices more exports were required to pay for them; but with the continuance of the precrisis level of prices the burden of public debt could have been carried easily enough. In any case, public over-capitalization was no greater than occurred in private industry, either in New Zealand or the United States. Government and business failed equally in forecasting the fall in world prices, so that on this score criticism attaches equally to both.
Further, the national debt in New Zealand was mainly for development projects which it is not likely that private enterprise would have undertaken on a large enough scale. It is backed by valuable assets in the form of railways, electric power plants, bridges, and extensive areas of developed land, which have enormously increased resources.
The depression in New Zealand cannot, in fairness, be attributed to any considerable extent to internal policy. New Zealand is a country peculiarly dependent on overseas trade, and between 50 and 60 percent of the national income is directly affected by a fall in the prices of exports. Between 1929 and 1982 New Zealand export prices fell over 40 percent. The value of exports fell from £56,000,000 to £35,000,000 and of farm production from £82,000,000 to £49,000,000. The national Income declined from £150,000,000 to about £100,000,000. It is conditions such as these which explain the severity of the depression in New Zealand, and not several decades of Socialist legislation.
The recovery program instituted by the New Zealand Government In 1962 was in line with previous policy in that it involved the recognition that private enterprise was hopelessly incompetent to handle the situation, so that governmental action was necessary. Such action took many unprecedented forms, even to the extent of interfering with private contracts. But it seems to have worked surprisingly well, since few, if any, countries show a greater measure of recovery. Despite a deficit of over £8,000,000 (or over one-third of the normal budget) in the depths of the depression, the national accounts have been balanced for 2 consecutive years. During the past 2 or 3 years the value of production has Increased from £84,000,000 to £99,000,000, wages and salaries paid have increased from £59,000,000 to £65,000,000, and unemployment has declined from over 50,000 to about 32,000. I am far from claiming that these results follow entirely from the recovery program, but it certainly was a very Important contributory factor.
I would agree with Mrs. Blomfield that there is a tendency among New Zealanders to put a premium on mediocrity, be suspicious of brilliancy and doubt originality; but in this I do not know that they are very different from other mainly rural communities.
Mrs. Blomfield would hardly find me convincing if I were to attribute the extreme vagaries of the weather in the United States or the tone of burlesque shows on Broadway to the rugged American individualism which she fears would be endangered by old-age pensions. Might I be permitted to suggest that much of her argument on the New Deal in New Zealand is equally unconvincing?
H. Belshaw,
Dean of Faculty of Commerce, Auckland University College.
Washington, D. C., July 1936.
The Chairman. Is Mr. Hillman here? There was a gentleman here who said he wanted to testify this morning. He was connected with the truck drivers. Is he here?
Mr. Riggles. I do not really represent the truck drivers, but I appear here in the interest of the Maryland roads because of the traffic hazards that are caused by interstate trucks.
The Chairman. What is your business?
Mr. Riggles. I am chairman of the public-utilities committee out here in Maryland, but I was only interested in the fact that some of the truck drivers, I will not say how many, have been arrested in the last 4 or 5 years for being asleep while driving.
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I have taken a little interest in the case and have come to find out what I can about it. They run from Florida to New York and back on a trip, and they were exhausted when they went to sleep on these trucks.
I think the law that you are discussing should, in some way, limit the hours to 40 hours a week. These are interstate trucks that go through our State. There are many of them, because the trucks from the South go to the North and they go through Washington, D. C.
It is a hard industry to limit, for the simple reason that there are many in it, and some of them for certain times of the year are busy for about 3 or 4 months. Those that come from Florida come as far as the Virginia line and then they get telegrams, and if you limit them to 8 or 10 hours a day for driving with two men on the truck they could not get there. It would cause a great hardship.
Our State does not want to do anything that is detrimental to the working people, but they want laws passed that will save the lives of pedestrians and people, and others on the road.
One. driver told me this yesterday, that the truck drivers are safe, we will have to give them credit for that, but they have got a living to make, and this driver said that he was coming along and there was a car in front of him wigwagging, so he slowed down, and the lady that was driving the car turned over in the ditch, and when he found her she was so drunk she could not get up, and she said, “Did you see the truck cut me off ?”
Now, if you regulate the industry, or if you limit the industry to just the big companies, the industry of three or four trucks will be put out of business, because there are some people in the business that just have four trucks, and if one big company gets it all the small company will be without a means of livelihood.
Now, there is another question that comes up, that is vital, and that is in regard to sleeping quarters. Many drivers have to sleep in trucks; they cannot pick up the man that they leave behind; it would be a great expense for them, and they have, as the result, to sleep in the trucks, which have very poor sleeping accommodations, so at times I think they should be limited to 16 hours; you could not make it 40 hours a week. Sometimes they go to Florida, and sometimes to Boston and maybe back there in 40 hours. If you make it 80 hours, or 2 weeks, then .they would get a rest when they get to their home. That is vitally important in our State, because all the trucks go through there from the North or from the South.
The Chairman. All right; thank you very much. I will say that we have here some gentlemen representing the National Association of Credit Jewelers who wish to testify today or tomorrow.
We have a very full docket tomorrow. He is here and wishes to testify.
The Chairman. Will you state your name?
Mr. Newman. My name is J. Frank Newman. I am executive secretary of the National Association of Credit Jewelers, with headquarters in the Columbus Memorial Building, 31 North State Street. Chicago, Ill. This association is composed of members of retail
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jewelers in practically every State in the Union. I am authorized to represent approximately 1,800 jewelers before this committee.
Our concern over this bill arises out of the nature and character of our business. At the outset, I desire to say that we are not concerned with the question of minimum pay, as I feel certain that whatever minimum wage may be determined would be much less than that paid in our industry. We are concerned with the question of maximum hours. In order that you might understand what I intend to convey, it is necessary to give you a very brief statement of our business arid the conditions surrounding it.
There are many retail jewelers who may be classified as doing business in interstate commerce, in that they both buy and sell in interstate commerce as defined in this act. This is particularly true of the larger jewelry concerns and mail-order jewelers. I am assuming that this bill is designed to affect such interests. The jewelry business, by its very nature, is a specialized and seasonal one. A great volume of business is transacted between May 1 and July 1 and November 1 and December 24 of each year. Indeed, between those dates approximately 80 percent of the yearly volume of business is done. Between these dates, particularly between November 1 and December 24, it is necessary that the retail jewelry establishments remain open for business, in most places, from 9 a. m. to 10 p. m., and this has been their custom for many, many years. Also, by reason of the fact that it is a specialized business, it is necessary to have employees who are acquainted with, and indeed specialists in their line. Such employees are of necessity limited in number, and, obviously, high wages are paid during these seasonal operations. It therefore becomes necessary to oppose any legislation that does not definitely and clearly take these facts into consideration. It would be disastrous to our industry if a law should be enacted which might, by construction and application, affect our industry in such a manner as to force us to pay a fixed minimum wage the year around or to establish a maximum workweek of, say, 40 hours. You can see at a glance that between the dates I have mentioned business conditions imperatively demand long hours, good pay, and highly specialized employees. During those seasonal periods we are not concerned in any manner with the minimum-wage provisions of the act, but we are seriously concerned with the maximum-hour provisions of the act.
You may say that we are protected by the provisions of sections 5 (b) (4) and 6 (c) of the act. As we understand those sections, they may be so interpreted and applied by the Labor Standards Board as to give that Board the power to fix minimum wages and maximum hours for our industry the year around. Certainly, the power to investigate, yes, even the duty to investigate, is imposed upon the Board in order to arrive at a determination as to just how our industry should operate with reference to wages and hours of employment. It is just that condition, and power of the Board, which impels us to appear in opposition to legislation which might, by construction of the Board, empowered with the duty of enforcement, be so construed as to impose any conditions or limitations upon the hours of employment in our particular business. We believe that the act should by clear and explicit language exempt retail jewelers from its application. We do not want the Labor Standards Board to be given authority or power over our industry. We fear
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the possibility, even the probability, of the imposition of conditions and limitations which would be ruinous. There can be found no prevailing conditions in our business which warrant or justify either legislative or executive interference with our labor conditions.
In our opinion, if you are desirous of legislating with reference to our business relative to wages and hours we suggest that the only power delegated to the Labor Standards Board should be that of initiating and conducting its own investigation and then by its order determining only one thing, and that is whether or not the retail jewelry business is exempt from the provisions of this bill.
I thank you for your time and consideration.
The Chairman. That is all the witnesses that we have today.
We will recess until 10 o’clock tomorrow.
(Whereupon, at the hour of 4 p. m., the committee recessed until 10 a. m. of the following day. Tuesday, June 15,1937.)
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TUESDAY, JUNE IS, 1837
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, Ricnard J. Welch, Fred A. Hartley, William P. Lambertson, Albert Thomas, Joseph A. Dixon, William F. Allen, and Santiago Iglesias.
The Chairman. Mr. George H. Davis.
Mr. Davis. Yes, sir, Mr. Chairman.
The Chairman. Mr. Davis, you are the president of the United States Chamber of Commerce?
Mr. Davis. Yes, sir.
The Chairman. We will be very glad to hear from you.
Mr. Davis. Mr. Chairman and gentlemen of the committee, my name is George H. Davis. I am president of the Chamber of Commerce of the United States. I am president of the firm of Davis- Noland-Merrill Grain Co. of Kansas City, Mo., and my home is in Kansas City.
The Chamber of Commerce of the United States is an organization of businessmen’s organizations, about 1,500 of them in all parts of the country being members. These organizations determine all of the policies supported by the chamber. As in our organization it takes a majority of two-thirds of the votes cast to reach a decision, our policies represent views strongly predominant throughout the membership. Besides, as no member may have more than 10 votes, and the number of votes is graded down from that point according to membership, the voting strength lies in organizations of moderate and small size. Many organizations are in communities where agricultural interests are uppermost, just as others are in communities where commercial and industrial interests prevail. To aid us we have departments giving their constant attention to questions in the
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different fields, such as banking, taxation, manufacture, wholesale and retail distribution, transportation, natural resources in their various forms, insurance, construction, civic development, agriculture, and foreign trade.
The chamber has not appeared in opposition to any of the measures undertaken by Congress with respect to child labor—the statute of 1916, which attempted to close interstate commerce to products on which the labor of children under 14 was used, the attempted tax of 10 percent on profits of concerns using child labor, or the proposal for a constitutional amendment, and I do not now appear before you respecting the child-labor features of the bills before you.
The question involved has always been considered by the chamber as much more than a business question. It is above all a question of good citizenship. Businessmen’s interests in questions about child labor, certainly as they have been represented in our organization, are primarily the interests of good citizens and not business questions. The bylaws of the chamber limit it to consideration of questions primarily affecting businessmen as businessmen.
This does not mean indifference. The contrary has repeatedly been shown. For in declaring that the predominant part of each industry should be able to reach agreement as to business practices, and free to follow them when they are approved by a Federal agency as in fact in the public interest, the membership has on each occasion insisted that every such agreement should include an undertaking that child labor should not be used by any participant.
Nor could I, if I so desired, appear before you for the chamber as an advocate of anything but fair wages and reasonable hours of work. The organization’s declaration on these subjects have been reiterated over a period of many years, and among the more recent declarations of the membership is insistence that, in such industry agreements as I have mentioned, there should also appear the minimum of wages and the maximum hours per day and per week that are to be observed, always subject to approval or disapproval of an appropriate, independent, Federal agency, charged with the duty of considering the public interest.
Upon looking at the wage and hour provisions of the two bills which you have before you, I have at once been struck by the penalties. There would be enforcement not only through court action to compel compliance, and fine and imprisonment, with offenses multiplied in an extreme way, but hidden taint would be placed on ordinary commodities, and it would be made unlawful for persons who bought these goods in perfect good faith, and without knowledge of the taint, to ship them in interstate commerce. For such shipment he would seem to become liable to penalties; for there seems to be nothing in the penalties about his knowledge, such a provision occurring only in the penalty for false statements and entries.
Injecting such uncertainties and liabilities into commerce would be a most serious thing. I venture to express an opinion that businessmen generally will feel there is injustice to perfectly innocent persons, and a general clog on business, in provisions of this kind. It would seem that if an employee of a manufacturer, without the manufacturer’s knowledge or consent, worked beyond the maximum hours set by a Federal agency for that kind of establishment, the whole product of the manufacturing establishment during the 3
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months would be so tainted that innocent purchasers without notice would commit unlawful acts by reshipping in interstate commerce. If one man in our 10-million bushel elevator at Kansas City worked contrary to the Board’s order applicable to him and perhaps not applicable to other workers in other nearby enterprises with whom he associated, all grain shipped out during the following 90 days would, in the hands of mill purchasers, and possibly in the hands of bakers that bought flour made from the wheat, contain that taint, although none of them, nor I, knew about it. Only the ultimate consumer, who bought the bread to use at home, would be safe from Federal prosecution, unless somewhere along the line the Board purified the grain, or the flour, or the bread, on such terms as it might fix. The taint caused by the bill would seem to disappear only when goods are in the hands of the ultimate consumer.
I cannot believe that you gentlemen intended such a result, and I am confident that, in your further consideration of the bill, you will correct all provisions of this sort.
Turning to the direct provisions regarding wages and hours, I am, of course, conscious that there seems to be a different purpose as to each. The provisions as to maximum hours would seem to affect all workers, skilled and unskilled, in private employment regardless of rates of compensation—in offices, factories, mines, and perhaps even in country stores because they may compete with mail order houses and with department stores which fill orders interstate by parcel post.
The provisions as to minimum wages, however, appear to be intended to relate directly only to such workers receiving the lower rates of pay.
The sweep of these provisions seems well nigh all-inclusive. It would seem they can be applied to agriculture m all of its forms. The message received by Congress when these bills were introduced spoke of those who toil in factories and on farms. The bill in its definitions makes the occupations to which the bill relates coextensive with all gainfull occupations in the United States. The definition of employees affected by the bill excludes—in addition to executive and administrative, supervisory, and professional persons— agricultural laborers, as they may be later defined by the Board. Laborer, it is to be noticed, usually connotes a person without skill. It would accordingly appear to be within the discretion of the Federal Board to apply the wage-and-hour provisions to most of the regular employees of grain farms, dairy farms, the farms which feed com to cattle and hogs which they ship interstate to market, the livestock ranches, and the fruit and vegetable growers that look to markets in other States. According to my own reading of the bill, there can be no other interpretation of the language as it is written. On most farms that are agricultural enterprises in any real sense, the regular employees who hold their places must have skill, and often be skilled in several ways.
If some construction were found for this bill which would prevent its provisions from being applied to agricultural enterprises, and they were confined to industrial production, the measure would still have an important effect upon agriculture in all of its forms in every part of the country. There have been great efforts on the part of the Federal Government, and expenditure of public funds
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running up to $1,900,000,000, for the purpose of bringing agriculture generally up to something like a parity in its economic situation with the economic position in our fields of industry and commerce. This bill would operate, and I believe the intention is it should operate, to increase the costs of industrial production. It seems clear that in the minds of those who support the measure it would be a failure if it did not raise costs. It is unavoidable that increases in such costs would be reflected in price increases in everything the farmers buy. The national advantage which has been obtained through the efforts of the Federal Government toward giving something like economic parity to work in agricultural production with work in industrial production would disappear, and the results of years of endeavor would be wiped out. We would be back where we began, with agriculture in a depressed situation in comparison with the other fields of economic activity in the United States.
Many of us believe that the creation of such inequitable and unfair conditions would have serious effects upon industrial enterprises themselves, and all of their workers. The buying of our agricultural population is by and large essential for the welfare and prosperity of industry and commerce in the United States. Our country has been remarkable among all other countries for its great domestic market. It is this market which our industrial enterprises and our commerce have long predominantly served, and still predominantly serve. The buying power of our farm population, and of the still wider population directly related to the farm population, cannot be impaired without serious economic consequences for everybody.
If the bill contained only provisions as to maximum hours to be applied in all fields of economic activity in the country, the Federal Board’s task would be enormous; for the Board has authority to vary hours up and down according to circumstances. The Board’s decisions would be momentous for the consumers of the country, too. I was told last week, for example, by a man who is in a position to study the data, that a 30-hour week would mean an unavoidable increase of 20 percent in the present prices of agricultural implements. The hour provisions would undoubtedly place us quickly in the present position of France, where a government which went into office a year ago with a pledge to reduce tariffs has so raised labor costs in the country that it is now forced to consider increasing tariffs.
But to the hour provisions, the bill adds wage provisions, with a variety of possible differentials. As chairman of the code authority for the grain trade, I can assure you the men who devoted themselves to administration of codes under N. B. A. can give eloquent testimony to the problems with which they wrestled, although they often had the assistance of State and local committees. Anything like arbitrary action which does not take account of local, regional, and industry conditions will have destructive effects that cannot be anticipated.
During the days of N. R. A. many of the men with most experience insisted that attempts at wage standards by industries were causing serious dislocations in industrial areas, and that the problem was capable of solution only by local areas, regardless of the kinds of industries represented in each area.
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There appears to have been some experience that may be worth, noticing in the course of the administration of the Walsh-Healey Act of last year, relating to Government contracts. I understand that the attempt to use advisory committees in arriving at the minimum wages which may be set under that law has largely failed, because the advisory committees found the determinations prescribed by the act too difficult for accomplishment. Although that act has been in effect for 9 months or more, I believe there has been but one minimum wage order, respecting work clothing, I think.
If we were to assume that all of the other difficulties could be overcome, there is another element which I believe you should most earnestly weigh. I refer to the uncertainty of businessmen about their future costs. Every concern engaged m production must plan ahead, make present contracts for future delivery to keep the plant going now, and to find opportunity for buying more materials and supplies, and hiring more men. Few businesses, and none that give employment in an important way, can proceed on a day-by-day basis. Such a basis would be disastrous for everyone concerned, especially the workers who are most affected by uncertainties in regard to their earnings. The great bulk of our business in the United States is done on very narrow margins, which any increase in costs may more than wipe out, resulting in red figures that help no one, and least of all the Government with its income tax. If businessmen in their planning ahead that makes them businessmen rather than speculators, are threatened by changes in their costs during the future period they must confront, through hour and wage orders from an official board, they are bound to hesitate, and keep their future commitments down to the minimum they think they dare risk. Healthful business activity that gives employment and steady earnings to workers depends upon reasonable certainty as to the future into which businessmen must look.
These would not be the only difficulties. There would remain even greater problems of enforcement. The final test of any such legislation is the extent in which it is enforced. Such comprehensive legislation would require the organization of a very large staff. At anytime this is a serious matter, and it would be so particularly now, when other new agencies of the Federal Government are obviously finding it difficult to assemble and train adequate staffs for their purposes.
Such questions arising respecting the bills before this joint committee may very well make it worth while to recall the expressions of the Supreme Court respecting the power of Congress to regulate interstate commerce. You are familiar with the cases, I know, but as some reference has been made before you to the case about the National Labor Relations Act, decided on April 12, I should like to call to your attention a part of the prevailing opinion which, I believe, was not quoted. Many laymen as well as lawyers have read that opinion, and I am one of those laymen. This is the language of Chief Justice Hughes in the Jones and Laughlin case:
It is asserted that the * * * act has the fundamental purpose of placing under the compulsory supervision of the Federal Government all industrial relations within the Nation * * *.
If this conception of terms and intent were sound, the act would necessarily fall by reason of the limitations upon the Federal power which inhere in the
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constitutional grant, as well as because of the explicit reservation of the tenth amendment. The authority of the Federal Government cannot be pushed to such an extreme as to destroy the distinction which the commerce clause itself establishes, between "commerce among the several States” and the internal concerns of a State. That distinction between what is national and what is local in the activities of commerce is vital to our Federal system.
Judged by any standard, the measure which you have under consideration is extraordinary in character. There would seem to be possible justification for consideration of such legislation only in some extraordinary emergency. I know of no such emergency. I am not able to discover in our membership knowledge of such an emergency, and I have not learned of any other source from which information can be obtained. On the contrary, the emergency which we had has been passing. All of us, I know, have been looking forward to the time when we shall have it well behind us. A committee of the chamber which for a good part of last year studied employment with the assistance of more than 200 member organizations, reached a conclusion early last winter that unemployment measured in any realistic sense was less than the figures given popular circulation, and that the time had come to concentrate on training men and women for employment so that they could advance beyond the class of common laborer. We have gathered much data, but rather than use our own calculations, I wish to call your attention to figures issued by the Department of Agriculture in one of its publications on May 3. Using averages for 1925-29 as 100 percent, the Department of Agriculture placed factory employment in March 1933 at 61 percent, and in March 1937 at 100 percent, industrial production in the 2 months at 54 percent and 108 percent, and pay rolls in terms of real income at 49 percent and 114 percent.
Whatever the merits or faults of N. R. A., it gave a wealth of experience, I should like to call your attention to conclusions placed before the President in February 1937 by the committee which he had asked to review the effects of N. R. A., and which spent many months on that assignment. Among the conclusions were these:
The apparently simple conception of fixing maximum hours and minimum wages * * * developed wholly unexpected degrees of complexity.
An assumption at the outset was that industrial boundaries could be sharply defined. * * * In experience that assumption was not justified.
The maintenance and increase of production, so balanced as to afford reasonable prospects of stability, is the core of any sound concept of prosperity.
The experience with limitations of hours under N. R. A. suggested possibilities of Interference with production which might become more substantial if a similar policy were applied under present conditions—still more, if even greater limitations in hours were adopted.
These are some of the conclusions in a report, made on February 17.1937, to the President and signed by John M. Clark, professor of political economy, Columbia University: William H. Davis, formerly National Compliance Director of N. R. A.; George M. Harrison, chairman, Railway Labor Executive Association: George H. Mead, president, the Mead Corporation. Dayton, Ohio, and formerly chairman, Industrial Advisory Board of N. R. A.
Personally, I am not acquainted with all of these gentlemen, but in view of the studies they have made, with at their disposal a wealth of data not available to anyone else, it would seem appropriate for me to suggest that you avail yourselves of the information which these gentlemen accumulated.
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In this statement I have sought to avoid repetition of discussion of aspects of the two bills which have been covered in other presentations. With many of the points made in these presentations the positions given by the membership to the chamber cause us to be in agreement.
Representative Thomas. I would like to ask Mr. Davis two short questions, Mr. Chairman.
The Chairman. Certainly Mr. Thomas.
Representative Thomas. In reference to your observations referring to the penalties that may be placed upon the innocent holder of substandard goods, that strikes me most forcibly. However, let me point out to you that perhaps some of your fears are unfounded. I have not a copy of the bill before me, but I recall distinctly that the bill specifically provides that the Board shall have authority to excuse and make exceptions where good faith is shown by those who purchase these goods made under substandard conditions.
Mr. Davis. Will you look at section 7 (a)?
Representative Thomas. I do not have a copy of the bill before me, but if you will read it please.
Mr. Davis (reading):
It shall be unlawful for any person directly or indirectly to transport or cause to be transported in interstate commerce, or to aid or assist in transporting—
et cetera, and then at the end—
any unfair goods.
And on page 8, as to what, are unfair goods—
unfair goods means goods in the production of which employees have been employed in any occupation under any substandard labor condition.
Representative Thomas. That is true. Without attempting to put my finger on what I refer to, if you will keep reading the bill, you will find it specifically mentioned in there that the innocent holder of substandard made goods will be excused.
Mr. Davis. Would you also bear with me and look on page 45, under the penalties?
Representative Thomas. I am familiar with that. But you may read it.
Mr. Davis (reading) :
Any person who willfully performs or aids or abets in the performance of any act declared to be unlawful by any provision of this act shall be guilty of a misdemeanor.
That is section 27 (a). “Knowledge” does not appear until we get to 27 (c).
Representative Thomas. You have not read the act very carefully, I see, yet. It is in there where they are excused.
Mr. Davis. It may be like the overcoat in the expense account; we have not been able to find it.
Representative Thomas. Sometime during the day I will pick it out and call your attention to it.
Mr. Davis. Thank you.
Representative Thomas. One further question. The question that you raised dealing with the increased cost of merchandise. That is a very vital question. Suppose that the hours of work decrease 10
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percent, and the pay of any particular industry is increased 10 percent ; does it necessarily follow that the increased cost of production of that particular industry will be 20 percent?
Mr. Davis. I was referring to reduction from 40 hours to 30 hours with the same pay. This friend of mine had made a study and probably based his conclusion on several different things. It would be over 30-percent increase on the direct labor cost. There might not be so large an increase in cost of materials used; because costs in some of the materials might not be affected by this bill. Taking these and other necessary elements into account, as they actually exist in the particular industry, the man whom I quoted arrived at 20 percent. Firms today are going over costs and putting them down to the minimum. With social-security cost added on, and the many different wage advances that have come, most firms are figuring to a margin that is almost infinitesimal.
Representative Thomas. I wonder how your friend arrived at his estimate that ultimately the cost to agricultural workers would be an increase of 25 percent?
Mr. Davis. The figure is 20 percent in the illustration I used. Suppose you are working on a 40-hour schedule now, and suppose you put it down to 30 hours with the same pay. There is a 331/3 percent increase in the direct labor, as I have said. I would be glad to furnish you with that study, which I understand was made, showing the increase with all elements of cost taken into account would be 20 percent. In other words, a corn binder that costs the farmer $200 today would cost him $240. A binder that costs hint $300 today would cost him $360.
Representative Thomas. Of course, you are going on the assumption that the labor cost is 100 percent of the cost of production. As a matter of fact, labor is only one of a half dozen items that go to make up the cost of a product.
Mr. Davis. No; I am not figuring direct labor as the whole cost. If I did the increase would be over 30 percent. We figure direct labor as only a part of total costs. Materials embodying indirect labor costs are also important.
Representative Thomas. On which industry?
Mr. Davis. The agricultural-implement industry.
The Chairman. You are also wholly neglecting the fact that Senator Borah has stated time and time again, in the Senate and other places, that farm implements are operated and sold under a monopolistic plan, and that they have a great deal of watered stock, and that if they could get away from the monopoly in farm implements, they would probably sell them for a great deal less than they do now, even with a 30-hour week.
Mr. Davis. I am not going to argue with you on that. Farm implements are sold on credit, and if they were paid for in cash, of course, they would be cheaper. I am not passing on Senator Borah’s statement, but they would be a lot cheaper if the farmer paid cash instead of paying over a period of years, because the losses have to be included in the prices. But- let "me say this: I do not hold any brief for the agricultural implement manufacturers, because I buy agricultural implements and do not sell them.
The Chairman. You would not believe the statement that anybody made to you, whether he is a friend or not, that he could
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sit down and arbitrarily tell you that to reduce hours a certain amount, that he would figure the hours only, and absolutely fix an arbitrary increase through that, that it was going to cost the public more, because you know from your own experience that the operating expenses and the mass production comes in, as well as the increased employment from shorter hours. And there is also a little water, maybe, that they might get a little less profit on. You just would not believe a statement of a man that an increase of 10 percent in wages and a decrease of 10 percent in the hours would result in an increased cost to the public of 20 or 25 percent?
Mr. Davis. No; I stated 20 percent, and the man I quoted has the figures which I will be glad to secure and submit to you.
The Chairman. Was that the Brookings Institution?
Mr. Davis. No, sir.
The Chairman. It was somebody else?
Mr. Davis. Yes, sir. These are factory costs.
The Chairman. Are there any other questions?
[No response.]
The Chairman. Thank you very much. We had a witness who was to be here yesterday and who is here to testify. I understand that he is here today, and if he is here, I think we should hear him now. Mr. Hillman.
Mr. Chairman, I appear before you to support the measure introduced by Senator Black and Congressman Connery to establish fair labor standards.
For more than 25 years I have worked in the interests of organized labor in this country. In the course of that work I have often had to consider legislative measures affecting the rights and interests of the working men and women. I regard the proposed Black-Connery fair labor standards bill and the Wagner-Connery National Labor Relations Act as companion measures. No more important labor legislation has ever been introduced into the Congress.
It is important not only as a proof of the sincerity of the promises of the Democratic Party and a great President to American labor, it is important as a courageous, pioneer effort to reconcile industrial progress with industrial democracy and to make the machine the servant and benefactor and not the master and destroyer of men. Upon the ultimate success of this effort, modestly and cautiously begun in the Black-Connery bill, may well depend not only the welfare of American labor but the very future of American democracy.
PURPOSE OF THE BLACK-CONNERY BILL
In the last 25 years, due largely to technological improvements, the productivity of the individual worker has increased approximately 75 percent. But with this increase in productivity has come no comparable increase in the standard of living of the average American. And—what is even more disturbing—this great increase in productivity has not brought an increased sense of economic security to the average American, be he industrial employer, worker, or
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farmer. On the contrary, it has brought to all of them a great fear for the future. After 3 years of rising business activity, what do we find? A full one-third of our population ill-nourished, ill-clad, and ill-housed, and millions of workers are unemployed—and everyone uneasy at the thought of the possibility of another depression.
The purpose of the Black-Connery bill, as I understand it, is to speed up the natural but lagging trend of industry to shorten the working day and to increase the worker’s pay, as technological improvements increase the productivity of the individual worker.
I call this a natural trend. Despite overlong hours and woefully short pay in some industries, few, if any, people today would dare to defend a 12-hour day in public as did Judge Gary scarcely 20 years ago.
But I say that this natural trend toward shorter hours and higher pay is lagging and too slow. We waste much of the increased productivity due to the machine because we allow the machine to throw too many workers out of work, instead of insisting that the machine shall lighten the work of men and increase their purchasing power. What we need to do is to increase the pay and shorten the hours of workers and thus permit them to share directly in some of the increased productivity the machine makes possible. Then we will not only absorb a good portion of the unemployed into existing economic enterprises, but we will increase purchasing power at the bottom where purchasing power is needed and where it will be spent. This increased purchasing power will create an effective demand for the goods and services which those now employed, if given half a chance, would be glad to produce. You have had at least one modern manufacturer before you who understood that.
Certainly, as President Roosevelt has said:
Our Nation so richly endowed with natural resources and with a capable and Industrious population should be able to devise ways and means of Insuring to all our able-bodied working men and women a fair day's pay for a fair day’s work.
NONOPPRESSIVE WAGE AND HOUR STANDARDS
There should. I hope, be no real question that Congress should write into the bill some definite bottom floor below which wages should not fall and some definite top ceiling above which hours should not be stretched. That floor and ceiling are provided by section 4 of this bill and I should hope there would lie no question as to what that floor and ceiling should be. Certainly 40 cents an hour is low enough, and certainly 40 hours a week and not more than 8 hours in any 1 day is long enough. It may not be possible to apply these standards immediately to all trades and industries. Some minor administrative relaxation may be necessary in special or exceptional situations just as section 4 provides to prevent temporary dislocations, temporary curtailment of opportunities for employment, or temporary curtailment of earning power. But as the objective toward which we should move in the application of a generally applicable nonoppressive wage or nonoppressive workweek, no wage lower than 40 cents per hour and no workweek longer than 40 hours should be set by tne Congress. As I have said, I
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think such a definite wage figure and hour figure, intended to be of substantially general application, should be written into the bill.
THE PROBLEMS OF DIFFERENTIALS
My own judgment is that there will be little need for differentials or classifications in the application of nonoppressive standards of 40 cents an hour and 40 hours a week. The differences in cost of living, in cost of production, and in other respects are not nearly as great or as marked as many people have been led to believe.
I should be unalterably opposed to the writing into the bill of any rigid requirement of a geographical differential in the nonoppressive hour and wage scale. The Congress simply has not the necessary facilities to enable it to pass upon these questions of fact and write them into legislation in definite terms.
This question of differentials is a matter that depends upon a knowledge of the economics of production in particular instances. Its solution will not be aided by political divisions upon sectional lines. Organized labor is interested in the welfare of labor in the South as well as in the North, in the West as well as in the East. It so happens, for example, that my colleague, Mr. Steve Nance, of Georgia, is as opposed to any geographical differential in respect to wages and hours in the textile industry as I am, because he believes, as I believe, that it would be injurious to the welfare of labor in the South.
With all respect to the Congress, differentials written into the statute cannot be scientific—cannot be based upon the economics of production in particular instances.
But findings of an expert board, after examination and hearings, as provided in section 5 of this bill, are something else. There is no reason why those of us who oppose differentials as well as those who favor them should not be willing to abide by the judgment of an impartial and informed board of experts.
THE IMPORTANCE OF SECTION 5
There has been considerable discussion before this joint committee as to the need or the wisdom of the Congress in attempting to enforce any standard above the nonoppressive wage and hours standards set in section 4. It has even been suggested that section 5 be omitted entirely. Section 5 is the section which provides for the establishment of the shorter hours and higher wages in any particular industry where the facts are found to justify the establishment of such higher standards and the processes of collective bargaining have proved inadequate to establish such standards throughout that industry.
The omission of section 5 would, in my judgment, go far to emasculate the bill and to deprive it of many of its most valuable features.
I do not think that the Congress will have begun to meet its obligations to the submerger third of our working population by merely providing a 40-hour week, which will give them, if they are lucky enough to be fully employed, an income of not more than $800 a year, or by providing a 35-hour week which will give them an income of not more than $700 a year. It would be practically impossible to
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attempt a shorter workweek than 40 hours in any industry, however urgently needed if the result of such an attempt is to reduce the income of the workers from $800 to $700. I understand the Chief of the Statistical Bureau of the Department of Labor testified before you last week to show how low a standard of living even $1,200 a year represents.
Now, it should be borne in mind that section 5 does not give the Board power to fix a minimum wage which will yield an income in excess of $1,200 a year. That top limit means in the case of a worker who has employment 50 weeks in the year, 60 cents an hour for a 40- hour week, or 80 cents an hour for a 30-hour week. In other words, section 5 applies only to those workers, organized and unorganized, who obviously have so little to spare and to save over the necessities of life that they are not economically strong enough to protect their own interests in a struggle with their employers.
The provisions of section 5 are so worded that they will aid and not retard the process of collective bargaining. The Board may act under this section only if it finds that the facilities for collective bargaining have proved inadequate or ineffective. I have no worry that the Board cannot effectively make and apply such a finding.
If the Board should fix a wage in an industry below that which some employers in the industry have promised to pay under collective bargaining agreements, the workers would be entitled under the terms of the bill to continue to obtain from such employers the higher wages specified under the collective bargaining agreements. Nor is there anything in the bill which impairs the rights of the workers to strike for higher wages or shorter hours than those fixed by the Board. I believe that these rights of labor are now fully safeguarded under the bill, but if there should be any doubt, of course, language to dispel this doubt can and should be added to the bill.
But section 5 would be helpful in the process of collective bargaining. Although in those industries which are completely covered by national collective bargaining agreements, there may be no need or occasion for the use of section 5, none the less, in those industries with which I have had to deal, where plants may migrate more readily than labor, where new units are not infrequently deliberately established in places most difficult for the unions to reach effectively, it is vitally necessary that the law should recognize and protect fair labor standards. And the law certainly should not stop short when the worker’s income reaches $800 a year. I do not think that a top limit of $800 a year keeps the Democratic Party’s pledges to working men and women in the last election.
It is difficult to induce employers to enter into collective bargaining agreements when the unions are not in position to protect the employers from the undercutting of labor costs in other areas. Even when collective agreements are made, the unions do not want to see those employers, who have been decent enough to cooperate with them, suffer in the competitive markets because of the piratical sabotaging of labor standards by their socially irresponsible competitors. If section 5 were omitted from the bill, efforts to make collective bargaining effective among the lowest-paid workers in many industries might continue to be frustrated to the great disadvantage, not only of the workers, but of those employers who graciously or grudgingly participate in the collective bargaining arrangements.
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It is important to bear in mind that if the Board is deprived of the power to fix labor standards under section 5, the Board will be unable to protect employers from unfair competition under sections 8, 9, and 10 of the bill except against goods produced under conditions so bad as to offend against the relatively low nonoppressive standards set in section 4. For goods are not unfair or substandard under the bill unless they are produced under standards lower than those fixed by the Board; and consequently, if section 5 is eliminated, sections 8, 9, and 10 will apply only to goods produced under even poorer conditions than 40 cents an hour and 40 hours a week.
Therefore I regard section 5 not as a threat but as an aid to collective bargaining. As a leader of organized labor, I welcome the efforts of the Government to bolster up labor standards for those poorly paid and overworked, whether they be organized or unorganized, whether they are earning $800 a year or $1,200 a year. It is not easy to support a family in health and decency on an income less than $1,200 a year. The appeal of organized labor to American workers is not merely an appeal for the improvement of the wage, hour, and other working conditions, but it is an appeal of a democratic movement to the workers’ sense of self-respect and self-responsibility. And the standard of living that organized labor is seeking to obtain does not stop at $1,200 a year.
CONCLUSION
I have had experience with labor legislation. I have had considerable experience in the administration of the labor provisions of N. R. A. Although I am no lawyer and can not pass upon the refinement of legislative draftsmanship, I have some idea of the practical and administrative problems a labor statute must meet.
I do not say that the proposed bill is perfect or that it cannot be improved. But it appears to be an unusually carefully prepared piece of legislation. It is not excessively rigid, but whenever administrative discretion is allowed, that discretion is carefully circumscribed. It lays down a rule where a rule is needed and it allows administrative flexibility where administrative flexibility is needed. And considering the nature and extent of the subject matter which it covers, I am surprised to find that it is as simple and as little complicated as it is.
It is fair to American labor and it is fair to American industry. The bill is a well constructed unified whole, and I hope that the committee will scrutinize with exacting care any amendments which may be offered, to make certain that they will not weaken the effectiveness or impair the administration of this great constructive legislative measure.
American labor has for years waited for this legislation, which has been overlong delayed. Economic distress may be over for those who are worried about how they can reduce or avoid their income and surplus profit taxes, but economic distress is not over for those who do not earn enough to pay even the normal income tax and who have to worry how they are going to pay the grocer, the butcher, and the doctor. If we want to avert or even alleviate the catastrophe of another depression, it is high time that we set up machinery to protect the minimum-wage and maximum-hour standards from the onslaughts of such an economic recession. Those who talk about
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reserves for a rainy day forget that the average workingman has no reserves.
I, therefore, respectfully suggest that the Congress should see that the carefully devised administrative machinery provided by the proposed bill is set up without a moment’s unnecessary delay, so that we shall be able to acquire additional experience and knowledge in handling that machinery before it must bear the full impact of an economic recession, if it should come. Those who complain that the country is being subject to too much legislation at this time should remember that this congestion, if it be congestion, is due to the fact that for 12 long years we allowed our economic problems to be the subject only of procrastinating study and innocuous investigation. The American people have a right to look to the Congress for prompt action this session on this important legislation. The American people will not regard those who play for delay as friends of the American workers or as supporters of progressive labor legislation.
Senator La Follette. Mr. Hillman, your testimony appears to be in direct conflict with that of Mr. John Lewis with regard to the fair labor standards with respect to wages and hours to be found on page 13, section 5, and following of the bill. Do you care to make any comment on that situation?
Mr. Hillman. Senator, I think if there is any difference, it is because of our experience. I believe that John Lewis’ experience is mostly derived from those basic industries such as coal, where there is a national agreement; and, furthermore, there is really no necessity for that kind of provision by the industries who provide, as a matter of fact, a much higher wage than 60 cents or 80 cents an hour.
I am speaking from my experience of the many industries employing millions of workers, such as the garment industry, the shoe industry, textiles, and others. From that experience also and all that I have seen during the time that I have spent as a member of the Labor Advisory Board during the N. R. A. and a member of the National Recovery Board. I feel that section 5 is absolutely essential to bring about the stability that we are looking forward to on the enactment into law of this bill.
Senator La Follette. You see no danger in section 5 that the Government is to set wages and therefore take over the field covered by genuine and effective collective bargaining?
Mr. Hillman. Why, Senator, all we would do, if this bill is enacted into law, is to provide a bottom where collective bargaining would start. As I have stated in my presentation, collective bargaining, especially in those industries like textiles, garments, shoes, and a number of others, by the nature of it, cannot cover the whole industry; by the time labor is organized effectively throughout the whole industry—a great number of employers under contract, find themselves out of business. Therefore, this law will give support not merely to labor, but it will also give support to the fair and decent employer. It will protect communities from the terrible disaster of the liquidation of companies, and prevent all of the effects of liquidation on real estate, banking, and general retail trade and all of the activities in that community.
Senator Ellender. Mr. Hillman, do you think there should be a difference in the per-hour rate, whatever is fixed in this bill, in various parts of the country?
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Mr. Hillman. May I ask, in the nonoppressive wage or in the fair wage?
Senator Ellender. I mean as a minimum. Suppose we agreed to fix a minimum in this bill, say at 40 cents an hour. Do you think that sum should prevail in all parts of the country, or should there be a difference in some sections?
Mr. Hillman. From my knowledge of industry, I should say that there should be no differential, but I am open-minded enough to say that if an investigation should justify a differential, then the Board should so act upon it. But those things are matters of fact and not merely of a conception of legislative action for differentials—for any particular part of the country.
Senator Ellender. Do you think the Board itself should have the discretion in that, or do you think that should be carried on by collective bargaining? What would be your suggestion on that?
Mr. Hillmen. Obviously, collective bargaining is preferable to legislation. The legislative support, is merely for those industries where collective bargaining is not effective enough, and I would say that that kind of a bill would help industry in every part of the country. People are very much misled by not merely propaganda, but lack of information as to the geographical conditions in the country. You will find as much cutthroat and unfair competition within the South, and by one part of the South against another; even in the same State in the South you will find some people who will break down standards and therefore make it impossible for the well established companies or corporations to conduct their business on that kind of a basis. In the textile industry within the last few weeks I have signed agreements reducing hours from 55 hours to 40. Mind you, the N. R. A. hours were just 40 hours, and this was, in my judgment, too much for those industries. In this short period of time we found a plant employing a thousand people in an industry where a thousand people in a plant is quite a substantial plant, and to our amazement—this is not in the South but right in the great Empire State of New York—we found this 55-hour schedule as against the 40 which had existed during the N. R. A.
There is no such thing as determining standards geographically. The idea grows purely out of a great deal of propaganda and misinformation which has settled down in the minds of the people. The plant I referred to was in Fulton County, N. Y.; its work schedule was 55 hours per week, in the silk industry. I would say that in most of the plants in the silk industry that are located in the North, wages and hours are less favorable to labor today than in the decent parts of the South.
Senator Walsh. Wouldn’t you say except in the case of women and children? Do not more of the States in the North have rather strict laws about the hours for women and children?
Mr. Hillman. Well, of course, as a general conception, yes; but there is sufficient chiseling found in them, too. But I would say, generally, yes, Senator.
Senator Ellender. Mr. Hillman, as I understand, your organization deals principally with garment workers?
Mr, Hillman. And textiles.
Senator Ellender. And textiles. Would you be able to tell us what the average minimum wage is today in the textile industry? Will you do it by sections, if you can ?
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Mr. Hillman. If it is desirable—I have not got the information before me, but I will be glad to supply it. But we will find that in the South in one State—that is not Mississippi—the average wage is now 25 cents an hour, where 30 cents an hour was the code minimum for textiles. Now, we can see how North Carolina, right in the South, or Georgia, are affected by an average of 25 cents an hour, which probably means a minimum wage of 15 cents an hour in another Southern State.
Senator Ellender. What is the lowest wage, to your knowledge, that is being paid by any particular factory, let us say in the South, in the textile industry?
Mr. Hillman. Well, I would say from my knowledge that they have gone down again to about, in some instances, $8 or $9 a week, if not lower.
Senator Ellender. And how many hours per week?
Mr. Hillman. Well, it is very hard to state generalities. I would say that, generally speaking, the responsible employers have tried to hold onto the 40 hours a week, but they are working under the pressure of a larger and larger minority that will make it impossible for them to even maintain the 40 hours a week. Here 55 hours came to my knowledge and attention, and there 60 hours. But there is a 55-hour week that less than 3 weeks ago we have reduced to 40 hours by contract, and that right in the North. So, it is easy to see what is happening throughout the country.
Senator Ellender. Would you object to any interference at all by this Board with your association, should your association establish standards above the minimum fixed in this bill?
Mr. Hillman. Well, of course. I do not believe, as I understand it, that the purpose of the bill is to establish anything other than minima. These minima will make it less difficult, in my judgment, for labor organizations to establish a decent standard of living which will give us purchasing power and which, by the way. will reduce labor costs instead of increasing labor costs. I am going beyond just the limitation of your question, however.
Senator Ellender. You do not see any danger then, if this bill is passed, of its superseding the present Wagner Act?
Mr. Hillman. No. The Wagner Act sets up the National Labor Relations Board, dealing with labor relations; this bill is to establish minima and limit wages and hours, and as I see it, the two of them go together. There is no interference at all that I can see, and I think it is rather wise to have two agencies to administer these parts of the labor fields.
Representative Wood. Mr. Hillman, as a matter of fact, that factory you spoke of in the North where you recently negotiated a wage agreement lowering the hours from 55 to 40 a week, what was the weekly hourly schedule during the N. R. A.?
Mr. Hillman. Forty hours a week.
Representative Wood. They raised the workweek from 40 to 55, the 40 having been established by the N. R. A.?
Mr. Hillman. Exactly.
Senator Walsh. Mr. Hillman, last Monday I was invited, when in Boston, to drop in to a meeting of the Textile Manufacturers of New England, and they asked me some questions about this bill and some other bills. And one of the manufacturers asserted that he had mills in both the North and the South, and that there was no differential
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in wages. He claims that the low rentals for tenants offset whatever difference there appeared to be in the pay envelopes between the North and the South for the same kind of work. None of the others seemed to question or dispute that statement. What do you say about that?
Mr. Hillman. I would say that as far as textiles are concerned, the information I have on hand and have checked with industrialists in the South is that there is no question that the South if anything has an advantage over the North, even with having exactly the same wage rates.
Senator Walsh. That they have an advantage?
Mr. Hillman. That they nave an advantage. They have several considerable advantages, and I do not believe that part of the textile industry in the South needs any protection against the North. I would say that in most of the cases they are considered more efficient plants than the northern plants, and those who talk about southern labor as inefficient labor either have no information or are indulging in a kind of propaganda that is harmful and which the southern labor has a right to resent. I can speak right now for the southern organized and unorganized labor. Speaking for an organization that is represented there with over 150 officers, we do not consider that southern labor is less efficient than the northern. Of course, the textile industry is well enough and long enough established there, and, if anything, is probably more efficient. Because they have the latest machinery, and all of these things, they need no protection from the nonoppressive wage level.
Senator Walsh. My investigation confirms your judgment in that matter.
Mr. Hillman. Senator, I think I can go much further than that in the situation. The fact is that the textile industry in the North has lost from 350,000 workers employed in 1925 or somewhere about that, to 75,000 in 1935.
Senator Walsh. And the fact that in the North the textile workers are mostly from the children of or actually immigrants from Europe, and assumed to be a stronger and sturdier race, has been dissipated by proof that the old stock in the South is able to do just as good a day’s work.
Mr. Hillman. Senator, I am rather surprised when people publicly take the position that the children of immigrants are more capable and more efficient than the old American stock.
Senator Walsh. The South has proved that unquestionably, that they are just as strong and just as sturdy, and just as efficient as those children of immigrant stock.
Mr. Hillman. Of course.
Representative Ramspeck. I am very much interested in this discussion since I happen to be from Georgia. I agree with the statement of the Senator. I do not think that labor in the South is any less efficient than in the North. There may have been a time a great many years ago when health conditions were not as good as they are now in the South, and there may have been some justification, Senator, for that statement; but I do not think it is true; and I personally do not want to see my people make any less money than the Senator’s people in Massachusetts. I was interested in your discussion of section 5, and as I understand your statement, it is any
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manufacturer, anywhere in the country, not simply on geographical lines but anywhere wherever he may be located, if he can show to the Board sufficient facts to justify a difference, then he is entitled to have that difference put into effect. As I understand it, that is your position?
Mr. Hillman. No question about it. This bill should not put anyone out of business. It should make it possible for all people to enjoy greater prosperity in business, and by stabilizing labor conditions, it will be beneficial to every part of the country. I have enough confidence to submit to an impartial, and I take it. an able. Board, as provided in this bill, the question of what is a fair wage under the conditions as they find them, and I am willing to abide by the result of that investigation.
Representative Ramspeck. As a matter of fact, all labor organizations in negotiating collective agreements recognize the facts existing in a particular plant and make differentials themselves. don’t they?
Mr. Hillman. If the facts call for it. An intelligent labor organization is guided by facts and not merely by concepts.
Representative Ramspeck. Now, with reference to the other provisions of section 5, as I understand it, your view of it is this, that, for instance: take the cotton-textile industry. You are now trying to organize it. Suppose you get 90 percent of it organized and the other 10 percent of it is paying a lower wage. Then you have no protection without section 5 for the 90 percent which has made agreements with your organization.
Mr. Hillman. That is it exactly. Not only do we have no protection but the employers in the industry have no protection. Why should we encourage unfair competition? The bill only limits it to 60 or 80 cents an hour if it is a 30-hour week. Obviously it is just a minimum, a measure of support for the workers and the decent employers in the industry.
Representative Ramspeck. There is another thing, Mr. Chairman. I want to say to Mr. Hillman that I think that in selecting Mr. Nance for your southern representative, that you have made as good a selection as could have been made in the South, and I hope you will leave that problem in his hands. I think it is in good hands.
Mr. Hillman. I appreciate that very much, and I will say to you that in selecting people in the South, we have tried to select people who will know the conditions in the South and will work for the welfare of the South as well as for the industry in the North.
Representative Wood. Mr. Hillman, what is the hourly workweek of the membership in your organization?
Mr. Hillman. In the clothing industry, it is 36 hours a week.
Representative Wood. And what proportion of the clothing industry is covered by your collective agreements, your collective bargaining agreements?
Mr. Hillman. Over 95 percent of the industry at this time.
Representative Wood. How do you account for the ability of the manufacturers who deal with you in collective bargaining and agree to a 36-hour week, how do you account for his ability to compete with the lower wage or longer hours of manufacture?
Mr. Hillman. The 36-hour week was brought about during the N. R. A. and covered the whole industry. Fortunately for the industry, both employers and workers, our organization is sufficiently
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effective that even the nonunion employers dare not violate the provisions, for good and obvious reasons. When you have as an effective organization as we have, with the support of the law, even the nonunion part of the industry will not be a really disastrous competition.
Representative Wood. It is encouraging clothing manufacturers to deal with you, and to adopt more modern methods of production?
Mr. Hillman. Of course.
Representative Wood. The shorter workweek has caused the employee to be capable of producing more; has it not?
Mr. Hillman. I would say that both the employers and the workers in our industry are very happy about the introduction of the 36-hour week, and have cooperated to maintain the 36-hour week. It has given greater employment, put most of the employers out of the red and into the black, and it is a much happier situation since that minimum wage and maximum hours was put in in the N. R. A. code, which, of course, were more favorable to labor than in 90 percent of the industries covered by codes.
Representative Wood. Is it a fact that employers can produce more by working 36 hours a week, with less fatigue, than they could working 50 or more hours a week?
Mr. Hillman. Of course. The productivity of a person during the last 20 years, since the time when the industry was on a 54-hour week, has almost doubled although today they are on a 36-hour week. That is the problem that is facing American industry everywhere.
Representative Wood. And that has not been reflected in the retail price of clothing?
Mr. Hillman. As a matter of fact, a depression adds more to the retail price to the consumer than all of the labor costs involved in it. There are the definite costs of overhead, plant equipment, interest charges, and so forth. If that is carried, of course, it goes to the consumer, unless the industry is in bankruptcy, and, of course, the consumer pays for it ultimately even then. You will find that with a proper flow of production a higher labor wage in all industry, and a wage which would supply purchasing power to the American people would reduce costs—with the exception of those industries where they have monopolistic powers to raise prices regardless of what takes place in the cost of production or from any other legitimate cause.
Representative Wood. Don’t you think it costs more to keep machinery in repair during the periods that the factories are closed than it does while they are running?
Mr. Hillman. There is complete deterioration. As a matter of fact, a plant closed up for a year, the machinery becomes almost valueless.
Representative Smith. Mr. Hillman, do you feel sure that a man and wife with two or three children can support his family comfortably with a $16 minimum wage?
Mr. Hillman. No ; I don’t believe they can. Of course, you know, if there are three members of the family working, that is different. Also, when you discuss about $800 a year minimum, that is merely a theoretical figure. Most of industry gives less than 9 months a year of work, and those industries that I am speaking of surely not more than 9 months a year, to the labor that it employs. So that you will
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cut the oppressive wage minimum down closer to $500 to $600 a year than to $700 or $800 a year. Of course, the question is of what kind of a standard of living are we speaking? If we are going to employ a great number of our people in the manufacture of automobiles, we must have a much higher standard of living than the minimum wage if we are to buy back the automobiles we produce. And so it holds all the way through.
After all, I can only see real prosperity for the country, which means employment, if the standard of living of the American labor and the American people is constantly on a rising level. Of course, it must not go further than we can afford to give them at any particular time, but there must be an increase in the standard of living if we are to keep our working population employed and all business engaged in their activities. Because all of our market, after all, comes right from the millions of people who do the buying of our consumer goods.
Representative Smith. You have already stated—that was my next question—that statistics showed that the full-time worker actually labors about 42 weeks in a year.
Mr. Hillman. That is right.
Representative Smith. And on a minimum wage, he would receive from $600 to $650?
Mr. Hillman. Yes.
Representative Smith. Now, has the time come, or do you expect it to come, when we cannot afford, as you now state, to pay that man a fair wage?
Mr. Hillman. I believe that we cannot afford not to pay him.
Representative Smith. I beg your pardon; I did not get your answer.
Mr. Hillman. I say, we cannot afford not to pay him a decent wage. When we stop paying to American labor a fair wage, it means an ultimate industrial collapse.
Representative Smith. Right.
Mr. Hillman. There are no two ways out of it, and any person, even those spending time in the Brookings Institution, would say that.
Representative Smith. Then why do you not advocate a better wage than $16?
Mr. Hillman. Because, Senator, I believe that progress must be made slowly. I believe that we ought to move very cautiously. It is, after all, a field that we have not got sufficient administrative experience in. During the N. R. A. we were in a great emergency, and because of that we were compelled to do things that have shown themselves ultimately as unwise. Now, if we start in with something, in my judgment, we ought to go slowly.
The next thing is, I do not believe we can get a higher wage from you gentlemen, and I would rather advocate something with the hope of getting it than put myself on record for a much higher minimum wage and walk out with nothing in the situation.
I think that what is necessary is to lay as a foundation the principle that we are going to guarantee American labor a minimum. Time will show if our minimum is too low, and if it is we will then come back to you, or industry itself will agree to pay more.
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Senator Ellender. Mr. Hillman, one more question. Do you believe that if we should establish a maximum of 40 hours and a minimum of, say, 40 cents an hour, that it will increase the cost of the goods to such an extent that we will need added protection from goods of the foreign manufacturers?
Mr. Hillman. I disagree with the contention that there will be added expenses; I am in total disagreement with it. I believe if the textile industry can be kept running full, and if this legislation has that result—as I believe it will—I think it will reduce costs. Again, those of you who are acquainted with what is going on in industry, know that in the textile industry in the last year and a half, or up until 6 months ago, when there began to be more of a seller’s market—costs went up regardless of the fact that wages were low. Now, the question on the tariff, of course, is an entirely different field, and I do not believe that I should get into that; but if you desire, I will be glad to say something on the subject.
Senator Ellender. I am sure we would like to know what steps we would have to take to protect the employer should this bill go through and cause commodity prices to go up ? I do not mean only textiles now. This will affect every commodity that is used by the American people.
Mr. Hillman. I think we have a serious problem with foreign competition, not merely because of wage-level differentials between this country and other countries—and I should not name them at this time. A greater danger which appears to me is that from those countries which have today a national policy which dictates to them—regardless of labor costs and regardless of any costs—to get a certain amount of exchange. I am not an expert on the matter, but I believe that to protect American labor and American industry we may have to come, if my understanding is correct, to have a quota system, in spite of the desirability of international trade. In other words, for international exchange you need cooperation from countries who are all engaging in free trade, and when you have countries who will dump their products in order to get exchange for whatever purposes they need, whether to arm themselves or what not, there is danger that we may become the dumping ground. While under ordinary conditions I would be as much as anybody in favor of any reasonable way to encourage the free exchange of commodities, I do not believe that it is possible at this time.
I have seen during the N. R. A. the possibilities of some countries almost flooding certain parts of the textile industry, and making it impossible for the industry here to compete on any terms, because it does not make any difference how high we will raise the tariff, their economic necessities and national policy appears to them to demand a certain amount of goods sold outside their own country. And so I am questioning whether the tariff can meet that situation. I do not believe it has got much to do with the question of the wage level. That is talking m terms of the pre-war days when, as a matter of fact, everything has changed, especially abroad, since the war.
Senator Ellender. So lower wages and longer hours alone----
Mr. Hillman (interposing). Will not meet that situation at all.
The Chairman. Mr. Hillman, I want to ask you one or two questions. You are familiar with the book that was written, and with the
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statement at the end that it had proven that short hours and high wages meant a scarcity of goods for the people of America, by the Brookings Institution.
Mr. Hillman. I have read so much of the publications of the Brookings Institution in the early stages that I have given up reading their latest productions, because I know they prove just one thing. Of course, even on their own statement, on their own investigation of 1929, 20 percent of the facilities of the country was not made available for production, which shows that long hours does not mean increase of .production. Anyone who reads a greater record, the more complete record, that has been worked up for the country in the depression years of 1930, 1931, 1932, and the early part of 1933. where goods were sold for almost nothing—consumer goods, not the monopolistic industries—will know that long hours and low wages have made for unemployment. They have made for the greatest catastrophe that we have seen in our lifetime.
The Chairman. What I was getting at was this: I am inclined to think that, following that argument and that proof, that probably we have a great scarcity in clothing in America today because I learned from that book that short hours and good wages brings on a scarcity of production in industry. Did I not understand you to say that the clothing manufacturers, 90 percent of them, are organized?
Mr. Hillman. Yes, sir.
The Chairman. And that 90 percent of them are working on a 36-hour week?
Mr. Hillman. And we have not got 52 weeks of work a year even at that.
The Chairman. Then do we have at the present time or do most of us who need to buy clothes need to rush out to the market now to buy some for fear that we are going to have a great scarcity and cannot buy any?
Mr. Hillman. Senator, we will supply you with all of the clothes you need. What we have is a scarcity of people who are able to buy clothes, and we had that in 1929.
The Chairman. Do you mean with a 36-hour week and good wages that yon are going to run counter to the Brookings law, that these short hours and high wages necessarily mean a low production, and that we are coming into the economic scarcity on clothing?
Mr. Hillman. Senator, if it is necessary to refute the so-called scientific investigations of the Brookings Institution----
The Chairman (interposing). You mean the Brookings law.
Mr. Hillman. Well, there are so many laws that are not passed by Congress and which try to pass as the natural laws. Let us take the clothing industry where you have got right from 1910 through organization a gradual reduction in hours, and where we had a 44-hour week for 70 percent of the industry even before N. R. A. Then we had in 1929 a very high wage level, and it all meant- greater efficiency, greater productivity. Our trouble was that even in the prosperous year of 1929, only two-thirds of a suit of clothes per man was manufactured for the American people, because the others did not have the money to buy it with. When people talk about a scarcity—the real fact of the matter is that we have not a scarcity of goods, but a scarcity of purchasers for the goods.
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The Chairman. Do you mean that there is not enough clothing in America today for the people?
Mr. Hillman. No; there is enough clothing. We can produce it, and we can keep the mills in New England, in the South and North commercially going full time and employing more people, because, after all, there are from 500,000 to 750.000 people every year coming into the market that are employable, if there would be purchasing power for the production. We are engaged in producing.
Now, there ought to be no question today, outside of those who have spent their lifetime in books and charts, some of whom cannot see the realities of life. You give us purchasing power and we will give you all the clothes, and we will employ more people, and that is what we need.
During the N. R. A. days, when people asked for longer hours, I told General Johnson, time and again, “Let us look for a time when people will come and ask for longer hours because we cannot produce enough. Let us employ our people.” Of course, the people profit by all tnis tremendous technological development and greater efficiency. We are not only improving the machiue, but we are also becoming steadily more efficient.
The Chairman. Let me ask you another question. Since you adopted the 36-hour week—how many hours per day is that?
Mr. Hillman. This is 7 hours and 20 minutes, you know.
The Chairman. Have you lost more of your men on account of the riotous living and dissipation because they have more Mme to dissipate since they have a snorter workday?
Mr. Hillman. Senator, before we had the 36-hour week and the legislation of the N. R. A. the people employed in that particular branch of the industry were close to 160,000 and we came down to 92,000 employees. Most of them were employed on 26 hours a week because there was no purchasing power in the country. In the 36 hours we have taken back all the people that we lost, or at least given them employment. If the other industries will give employment to their people we ought to put in an additional 25,000 to 40,000 of the younger people, train them and put them to work.
The Chairman. Have you not destroyed the morals of the members of this organization by reducing their hours to 36 per week? Are they still able to work each week?
Mr. Hillman. They are able to work and they are better citizens today than any time before, and they are thought of better in the community than at the time they were sweated by the law of the Brookings Institution.
The Chairman. May I ask you another question about differentials and a study of different conditions. Have you made any study of the freight-rate system in the country?
Mr. Hillman. Senator, I understand that the South has a great grievance against the North on the freight rates. I am not an expert but I have been told sufficiently about it to believe that there is probably a real wrong unnecessarily done to the South in giving them unfair freight rates, but, of course, I am not an expert.
The Chairman. That hurts labor wherever it goes on, does it not?
Mr. Hillman. You see, Senator, if the textile industry had shown an increase in wages a year and a half ago when the textile industry was running on a very profitable basis I would say that if they would get improved freight rates they would increase wages. But the
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record shows that they would just put it into profits. Now, I do not think that should be. I do not think they ought to be discriminated against, if there is discrimination, but, I ao not believe you can leave that subject just to the free dealings between the large employer and individual worker and get fairness. When I was m the N. R. A. and we investigated the automobile industry—Dr. Henderson is here, he would remember better—it looked at that time as though we could double the wages of the people and still leave to the industry a very large profit. Of course, you know it was not done, because the people were not organized to insist that they participate in the income of these most profitable industries. Those industries were established in this country by the country itself. They could not go to China and get mass production. After all. you know it is the country that makes it possible for an industry to be prosperous.
So 1 do not believe that the changing of something that is wrong, that ought to be changed, would affect the wage levels. I believe that part of an improved standard of living for American labor will be put in immediately by this law, affecting the millions of people who are not covered by organization, and the real American standard of living will be established in the country through collective bargaining by organized labor.
The Chairman. Yesterday a representative of the Coal Owners Association—I do not remember the exact name----
Senator La Follette. The National Coal Association.
Senator Davis. The National Coal Association.
The Chairman. He testified, as I recall it, that this bill was likely to destroy organized labor by doing away with collective bargaining. He expressed grave apprehension and fears. He seemed to be of the opinion that this bill, if it passed, would absolutely destroy collective bargaining in America. He thought it would be a great catastrophe, and expressed himself in that light. Do you believe that?
Mr. Hillman. Being closely attached to the labor groups, and knowing something about the United Mine Workers of America, I think the gentleman is stretching his imagination even much further than should reasonably be expected from any man.
The Chairman. That is all I have. Thank you very much, Mr. Hillman. The next witness is Mr. A. W. Sulzer, of the Industrial Management Council of Rochester.
The Chairman. Is this Mr. A. F. Sulzer?
Mr. Crockett. This is Mr. Crockett—A. E. Crockett.
The Chairman. Do you represent the Industrial Management Council of Rochester?
Mr. Crockett. Yes, sir.
The Chairman. What is that organization, Mr. Crockett?
Mr. Crockett. It is an organization of manufacturers employing probably 75 percent of the manufacturing employees of the city.
The Chairman. Of Rochester?
Mr. Crockett. Yes, sir; a city of 330,000.
The Chairman. Is it independent of the chamber of commerce?
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Mr. Crockett. Yes; but it is in the chamber of commerce—but autonomous.
The Chairman. Are you with that organization?
Mr. Crockett. Yes, sir; as the manager.
Mr. Chairman, I will present the telegram sent to you and to Mr. Connery.
Industrial Management Council of Rochester favors principle of Black- Connery bill. We feel Federal law establishing minimum wage and maximum- hour week would be wholesome. The many employers already committed to principle of fair wage and a fair workweek would be helped competitively by such legislation. We recommend, however, that bill specifically set forth true minimum wage of definite figure and maximum workweek, such as 40 hours per week, with appropriate allowance for overtime. With such definite legislation no new board is required and expense could be avoided. We also believe all reference to labor disputes should be removed from bill and its scope confined to regulation of wages, hours, and child labor. Right of collective bargaining is already amply protected by Wagner Act. Respectfully request opportunity to be heard personally by your committee is possible.
Then the following letter, sir, was sent to you and to Representative Connery:
This letter supplements the telegram sent to you on June 10 (copy attached) by the Industrial Management Council of Rochester, presenting its views on the Black-Connery wage and hour bill.
The membership of the council is composed of companies employing more than 75 percent of the industrial employees in this city of 330,000 persons.
The council favors the principle of national hour and wage legislation. We believe the country at large would support such a measure and that the adoption of it would help the large number of employers who are already endeavoring to establish a fair wage and a fair work week. We are opposed, however, to many of the provisions of the bill as introduced. We believe that a National Fair Labor Standards Act should merely set up a standard maximum work week of 40 hours, with allowances for overtime of time and one-half, and a minimum wage of a definite amount, and a provision against the sale of goods in interstate commerce made by child labor. The inclusion of references to trade disputes and labor relations we believe only tends to confuse the purpose of the bill, and that these matters are already amply covered by the Wagner Act.
We do not believe that Congress should delegate the power to fix minimum wages and maximum hours to any board or give to any board the power, as this bill does, to make wide differentials between different communities in the same State, and indeed in the same city. The result of this, we feel, would be endless confusion and lack of understanding and support upon the part of the public. While it may be presumed that the board would confine itself only to major differentials made necessary by specific situations, yet the very power to make differentials would lead to a great number of petitions to the board, all of which would have to be acted upon, with resulting confusion and uncertainty in the industries affected.
We do not believe that any differentials in minimum wage are necessary, except possibly one differential between the North and South. If this is decided upon, such differential should be set forth in the bill.
The only Justification of action by Congress in this field is, we believe, the need of a national rule or standard in order to take account of the close competitive relationship between industries in different parts of the country. For Congress, therefore, to enact a measure which would give a board power to establish different standards all over the country, would, we feel, defeat that purpose.
Finally, if a bill of this simple character were enacted no new board would be necessary. Any administration required could readily be taken care of by some existing agency, such as the Labor Department.
It will be noted that we are objecting to the creation of a board with wide powers, as contemplated by this bill, not on any grounds of unconstitutional delegation of power (which we know will be argued before you by those better qualified than we), but upon the practical grounds that such a provision would tend to defeat the main purpose of the bill, and that if a simple wage and hour bill were enacted as above described, the creation of such a board would be a needless expense to the taxpayers.
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We also feel, Mr. Chairman, that there is no reason why there should be a limitation on the number of employees of any given employer to come under this bill, or the act, if the bill is enacted. We see no reason, for instance, why the employees of an employer with 19 employees should be on a different basis than the employer with 20 employees.
We see no reason why the employee of the employer with 14 employees should be on a different basis than the employees of one with 15 employees, if the number in the bill, or the act. is set at 15.
This bill, as we understand it, is proposed to help the employee. Why should there be a differential between employee and employee ?
Looking over the figures of the manufacturing census of New York State Department of Labor, one finds by their census of 1932 that 75.6 percent of the employers of the State employ less than 24 people each. I do not have at hand the figures of the number of employees involved but they are easily obtainable.
Senator Walsh. What is that State?
Mr. Crockett. New York State.
Senator Walsh. What was that percentage?
Mr. Crockett. Seventy-five and six-tenths percent of the manufacturing employers in New York State were in 1932, according to the manufacturers census of the State of New York Department or Labor, employing less than 24 people.
Senator Walsh. Eighty-five percent of all the industries in this country, of all the establishments, employ less than 15 people?
Mr. Crockett. Yes. I think you would find, Senator Walsh, that in the groups of employees covered by the bill, other than manufacturing, that the number of employers, rather the number of employees of employers exempted, would be even in a larger proportion than in manufacturing—would lie above 75 percent. That concludes my statement, Senator.
The Chairman. Are there any questions?
Senator Walsh. As I understand your testimony about some of the features of the bill, you favor the incorporation in this bill of any definite minimum wage applicable to all employees?
Mr. Crockett. Yes.
Senator Walsh. What do you think of this suggestion: A good many business concerns are, "frankly, disturbed over the giving of extensive authority to the board, and they have all the fears and imaginative difficulties that come from the thought that they have got to deal with a Federal bureau. What is your view as to incorporating in this bill nothing but the minimum hours and giving to the board 1 year to make an examination of all industries of the country and reporting to the next Congress recommendations for a minimum wage, varying in various industries, and that Congress then enact a law similar to its tariff law fixing a minimum scheduled wage in every industry in the country? That would do away with any discretionary power after the examination was made by the board.
Mr. Crockett. I think I would answer that in this way, Senator: We do not believe a board is necessary.
Senator Walsh. Of course, I agree, with you if the $16 minimum wage is altogether too little, but yet we are faced with the situation, oh, we will say, employees in laundries that do not happen to be
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interstate in character but had some place along the waterfront, where we have a large number of employees, and, unfortunately, in many cases colored people that are discriminated against in the wage, getting $7, $8, and $9 a week; now, the Congress would be disturbed about jumping immediately to a $16 minimum wage and put a large number of these small industries out of commission. As a matter of fact, the textile people are satisfied with a minimum wage of $16 a week. Now, haven’t we got to take into consideration the possibility that a lot of unorganized industries, with a small number of employees, have a wage that is too low and if they jump to the minimum of $16 a week, or thereabouts, it would be too great a burden for that industry?
Mr. Crockett. Senator, that was why we, in this communication to the committee, did not set a definite figure as to a wage. We did not say 40 cents an hour, although the concerns for whom I speak would not be worried a moment by a 40-hour limitation.
Senator Walsh. You have given power to this board to fix it, haven’t you?
Mr. Crockett. Each Congress, in its wisdom, and hearing the representatives from all over this country, could set a minimum wage above the figure that you speak of and the country and labor would be benefitted. As Congress comes into session year after year it would not be held to any minimum wage that it might set in 1937.
Senator Walsh. Haven’t you in mind very much the industries in your own city of Rochester that are well established, that are manufacturing heavier goods than the industries handle in my home town, such as a pocketbook factory, and a few more factories of that kind, where the wages for girls are between $8 and $12? What is going to happen to those industries when we put them on a uniform basis of $16 a week?
Mr. Crockett. I think Mr. Hillman has given a very clear answer on that. According to our statement, those concerns would go on a 40-hour week basis with time and one-half for overtime. That automatically would take care of your hours of work. You do not have to go to 40 cents an hour unless you wish to. You could fix the minimum either above or below 40 cents an hour.
Senator Walsh. In your opinion, the industries I have described, small business concerns that I have described, would be able to survive a sudden jump to 40 hours and the $16 minimum?
Mr. Crockett. That is exactly why we did not put a definite figure in our recommendations.
Senator Walsh. Somebody has got to do it. You do not seem to want the board to do it. We have got to do it. If we do it for one, we have got to do it for all, as to a suggested uniform rate, a suggested schedule of rates.
Mr. Crockett. That, I am afraid, Senator, would lead to terrible confusion
.Senator Walsh. Thank you.
Representative Ramspeck. How long have you been with this organization?
Mr. Crockett. Fifteen years.
Representative Ramspeck. Have you any men’s clothing factories in Rochester?
Mr. Crockett. Yes, sir.
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Representative Ramspeck. What are they?
Senator Walsh, Hickey andFreeman.
Mr. Crockett. Yes; Hickey and Freeman, Levy Bros., and Michaels Stern, Fashion Park, Bond Clothing—a number of leading manufacturers of men’s clothing in the country.
Representative Ramspeck. They make high-grade men’s suits and overcoats?
Mr. Crockett. Yes.
Representative Ramspeck. What was their condition in May 1933?
Mr. Crockett. Their condition?
Representative Ramspeck. Yes.
Mr. .Crockett. I am not as competent to speak on the clothing industry as I am on other industries m the city of Rochester.
Representative Ramspeck. Is not it a matter of general knowledge that they were about to be put out of business by people manufacturing cheaper lines of clothing, working long hours and paying short wages?
Mr. Crockett. The clothing industry of Rochester has maintained itself on a very high standard of goods, and I do not think it competes with the lower grades of goods manufactured in other centers. It is a high-class clothing market and is proud of the fact that it is a high-grade clothing market.
Representative Ramspeck. Well, I remember very definitely a representative of Hickey and Freeman appearing before the House Committee on Labor on the 30-hour bill m May 1933, and he stated that they were faced with elimination from the business picture by competition of employers who were paying very low wages and working long hours. They could do either one of two things. They either had to go out of business or they had to deviate from their previous policy of making high-quality merchandise. Do you know anything about that situation?
Mr. Crockett. Well, fortunately prosperity has come back with increasing force, and I think that problem of competition from other markets is not bothering them to the same extent today.
Senator Walsh. I know it is not, but I was wondering whether you knew anything about the situation at the time.
Mr. Crockett. I think Hickey-Freeman were in the same position as industry was all over the country in 1933.
Senator Walsh. They were faced with what they considered unfair competition, were they not, by people paying low wages and working long hours?
Mr. Crockett. Hickey-Freeman have always been at the top in the quality of their goods: they are not in competition with manufacturers of low-price clothing made by long hours and small wage.
Senator Walsh. I agree with you. I want you to answer the question, if you know. If you do not know, say so. Were they faced with that sort of competition in 1933?
Mr. Crockett. I agree, of course, that they were faced with that competition in 1933, under depression conditions and because of the depression.
Senator Walsh. We had a witness here yesterday who contended that the way to create buying power and bring prosperity was to reduce wages. Do you agree with that theory?
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Mr. Crockett. We have not proposed that in Rochester. Our wages have been going up all the time.
Senator Walsh. You think the way to bring about prosperity is to have reasonable working hours and fair wages?
Mr. Crockett. Yes; absolutely.
Senator Walsh. That is all.
The Chairman. Thank you very much, Mr. Crockett. We appreciate your appearing here.
Mr. Ervin Feldman, of the National Association of House Dress Manufacturers. Is Mr. Feldman here? Is any representative of the National Association of House Dress Manufacturers here?
(No response.)
The Chairman. Mr. Wilson Compton, of the National Lumber Manufacturers Association stated that he did not wish to appear but wanted to have a statement placed in the record.
Statement or Dr. Wilson Compton, National Lumber Manufacturers Association
To the Joint Committee of the Senate and House:
I speak here for the lumber and timber products industries of the United States, represented by the National Lumber Manufacturers Association, a federation of 16 associations, including every region of lumber production. Lumber is a predominant factor in the industry of 5 States, a large factor in 7 others, and of commercial importance in more than 30 States. The forest-products industries probably will be affected as much as any other industry by such legislation as is now proposed.
My comment is directed to four specific features of this bill which, if enacted, will in our judgment affect the forest-products industries in a peculiar way, or to an extent greater than industry generally:
1. The proposed establishment of a class of exempt employers;
2. Industry advisory committees and hearings of industry;
3. Foreign competition; and
4. The effect on forest conservation.
First, as to the exemption of small employers proposed In section 6 (a). I have here and, with your consent, will leave for your examination, an analysis showing the extent to which this provision would exempt production and producing units in the lumber industry In 18 of the principal timber States, and in the United States as a whole.
This is based on the assumption of an exemption limit of 25 employees which, I understand, was originally contemplated by sponsors of this proposed legislation. If and to the extent that a lower limit is assumed, the resulting exemptions of lumber production and mills would be reduced in about ratable proportion. This provision applied to the lumber industry in the United States as a whole would exempt between 20 and 22 percent of the total production of the industry, and between 86 and 88 percent of the operating mills. In the southern-pine region it would exempt 27 percent of the product and between 82 and 86 percent of the mills; in the western-pine region between 9 and 12 percent of the product, and between 74 and 80 percent of the mills; in the Douglas-fir region 7 percent of the product and 67 percent of the mills; and in the southern hardwood region about 36 percent of the production and 90 percent of the individual mills.
This is based on the most complete available reports of the Census Bureau and the Bureau of Labor Statistics covering lumber production, average hours of employment, and average output per employee. The Census reports are for the years 1929 and 1932, the latest available which show the classification between the large and small mills, and the publications of the Department of Labor during the past 12 months.
In 1929 a 25-employee limit would, in the State of Georgia, have exempted 52 percent of the lumber production, 63 percent In Virginia, 89 percent in
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Alabama. 11 percent in Montana, 48 percent in North Carolina, 42 percent in Tennessee, 19 percent in West Virginia; and in percentage of producing units the exemptions in 1929 would have ranged between 45 percent in Louisiana, 61 percent in California, 92 percent in Tennessee. The same provision in 1932 would, in the southern-pine region, have exempted total lumber production to the extent of 11 percent in Louisiana, 18 percent in Mississippi, 39 percent iu Alabama, 65 percent in Virginia; in the southern hardwood region, amounts ranging between 26 percent in Arkansas and 52 percent in North Carolina: in the western-pine region, between 7 percent in California and 26 percent in New Mexico; and in the Douglas-fir region, 6 percent in Washington and 9 percent in Oregon. These percentages of exemption, in most regions, can be much increased by the easy device of contracting and subcontracting of both logging and milling.
There is comparatively little difference between these percentages in the active year of 1929, when the national lumber production was over 36 billion feet, and in the stagnant year of 1932, when the production was barely 10 billion feet. It may be fairly assumed that these same proportionate exemptions, within moderate margin of error, would result today when the national lumber production is at the rate of about 25 billion feet annually.
If you conclude the deal with this matter as proposed in section 6 (a), you should at least know what its consequences will be as applied to one of the most difficult industries, and accordingly determine for yourselves what likelihood there may then be of a fair and impartial application of any proposed labor standards to competitors in this industry. If standards are to be applied, no competitor should be exempt.
Second, the pending bill defines “oppressive wage” and the “substandard wage.” In section 4 (c) it proposes to authorize a labor standards board to vary the minimum wage standard “upward and downward” as the board finds “necessary or appropriate.” Then under section 5 (a) it is proposed that the board be empowered under certain conditions to fix a “minimum fair wage” higher than the “minimum wage standard” established by section 2 (a) 10. Further, section 14 authorizes the board, before issuing an order fixing a “minimum fair wage” under section 5, to consult with an “advisory committee” for the industry in question. This same provision apparently does not apply to the determination of minimum wage standards or to administrative modifications under section 4 (c). We hope that if you conclude to recommend to the Congress the establishment of a labor standards board and the grant to such board of powers as proposed in this bill, that you will recommend, also, that such board be not only authorized but required to consult with the affected industry and to give it a hearing before the board issues any order, either to establish a “minimum fair wage” under section 5, or a “minimum wage standard” under section 4 (c).
We suggest also, that the proposed board, if established should, upon appropriate application of any industry, be required to give hearing and due consideration to any facts which the applicant industry may submit in support of request for modification of the "minimum-wage standard” as it may lie established by section 2 (a) 10. The landing bill is deficient in this respect; every subject industry should be entitled as a matter of right, and not merely of convenience or discretion of the Labor Standards Board, to make application with respect both to “minimum-wage standard” and “fair-wage standard”, and to have appropriate hearing on such application.
Third, as to foreign competition: Our American-lumber industry is naturally and normally an export industry. We say so and the State Department says so. We are having a hard time maintaining that status. Eight years ago we were in first rank in volume of world-lumber exports. Now we are in fifth. Legislation of the kind here proposed will obviously make our export trade more difficult. Direct labor costs average about 40 percent of total production costs. In various regions this percentage varies from 30 to 50 percent. This bill, if enacted, would result in substantial increases in cost. This will further handicap the much-needed recovery of our foreign lumber trade and will further accentuate our dependence upon our domestic markers. The moderate protection afforded in existing tariffs has been reduced by one-half in foreign-trade agreements during the past year and a half. A tariff hardly more than nominal now separates us from the competition of lower- cost foreign lumber. Last year our lumber imports increased 50 percent and
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our lumber exports declined 2 percent. We are merely facing the plain fact when we say that legislation such as proposed in this bill will retard our foreign trade and will substantially increase the need and the justification for more effective and more dependable protection in domestic markets. If Congress enacts such legislation as this, you cannot expect us to eat our cake and have it too.
Fourth, lumber manufacture probably can be decentralized as readily as any other American Industry. This is an industry typically of small or moderate-sized units. There are no huge single lumber manufacturing enterprises. The nature of the industry does not lend itself to concentration. There is an important place for small lumber enterprises. But their place should be determined naturally by their efficiency and by their local advantages, and not by statutory preferences or exemptions set up by Federal law. If, by statute, you force decentralization into small operating units you will within a few years have nullified most of the progress which, In the past quarter century, has been made toward forest conservation and substained- yield management of forest lands. Without that there will be little permanent forest industry and even less of permanent sources of employment.
No country in the world has solved its problem of forest conservation by forcing or even encouraging exceedingly small forest ownerships or small producing units. In general, permanent forest industry, permanent communities, and permanent employment, are dependent upon substantial ownership of forest lands. For reasons of economy and efficiency, this requires producing units of substantial size. If, by a legislative policy, you put the larger and moderate-sized mills under a substantial competitive handicap, you will retard the progress of forest conservation at the very time when our industry, in cooperation with public agencies, is showing more symptoms of progress toward forest conservation than at any time heretofore.
My sole purpose here is to ask your fair consideration of these facts. If you regard them as important and conclusive, you will readily find the means, in any legislation which you may recommend, of avoiding the creation of exempted classes of competitors, of assuring fair protections against lower-cost foreign competition, and of safeguarding such progress as we have already made and are making toward forest conservation.
This statement is not to be understood as signifying approval of this legislation as a whole. Many groups in this industry, notably the southern manufacturers, are totally opposed to it. Most lumber manufacturers believe that in proposing to go beyond a simple minimum wage “floor” and a simple maximum hours “ceiling” for each industry or each region, it attempts too much, too fast. Many believe that it does not sufficiently insure fair differentials between competing regions and industries or consideration of seasonal limitations. All regard the vague definitions and the proposed vast discretions as leaving the way open for endless confusions, misunderstandings, and frictions. All are fearful that, if enacted, it cannot be and will not lie applied uniformly to all competitors, and impartially enforced. Whatever else may be said for or against this or any other legislation for similar purposes, we think that laws should not arbitrarily take, or authorize the taking away from one industry or one competitor and giving it to another: and that Congress should not pass any law which the Government cannot administer and cannot enforce promptly, impartially, and uniformly.
Respectfully submitted.
Wilson Compton.
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Representative Ramspeck. Mr. Chairman, while you are doing that, I want to put in the record a statement of people interested in the process of canning perishable agricultural products and fishery products; also a letter from the Civil Service Commission with reference to the employment measures in the bill.
The Chairman. All right.
(The statements referred to are as follows:)
Griffin, Ga., June 14, 1937.
Hon. Robert Ramspeck,
House of Representatives, Washington, D. C.
My Dear Mr. Ramspeck: Enclosed please find amendments which I promised to forward to you Saturday. In each case you will observe that I have set forth the amendment with an explanatory comment. The first and most important is, of course, that relating to perishable agricultural commodities. It is my understanding that you are going to introduce the subject matter of these amendments in a formal statement for the hearing record.
If there is any further information that I can supply, please do not hesitate to call upon me. I can be reached at Griffin, Ga.
Thanking you for your interest and courtesy, and with best regards, I am,
Very sincerely yours,
Walter S. Graefe.
REQUESTED AMENDMENTS TO H. R. 7200 CONCERNING PERISHABLE AGRICULTURAL AND FISHERY PRODUCTS
Amendments requested.—Section 4 (b), page 12, line 17, add the following:
“The provisions of this subsection shall not apply to employees engaged in processing or packing perishable agricultural or fishery products during the harvesting or catching season.”
Section 5 (b), page 16, line 19, add the following:
“The provisions of this subsection shall not apply to employees engaged in processing or packing perishable agricultural or fishery products during the harvesting or catching season.”
Comment.—The purpose of these suggested amendments, as may be seen from their language, is to prevent the application of rigid daily or weekly restrictions on necessary hours for the processing or packing of perishable agricultural or fishery products during the harvesting or catching season which would result in restricting the production or marketing of farm or fishery products and in reducing the return to farmers and producers. These amendments in no way would affect the application to such employees of the provisions of the bill in respect to minimum or reasonable wages, the prohibition of child labor, or the prohibition of oppressive labor practices. Nor would they in any way affect the application of the hours provisions to nonperishable, unseasonal agricultural or fishery products.
Throughout the consideration during the past 5 years of proposed legislation regulating hours and wages, it has always been recognized that the flow of raw commodities in the processing of perishable agricultural and fishery products is wholly dependent upon crop sequence, rainfall, temperature, humidity, wind, tide, and other climatic or natural conditions beyond the control of either the farmer, the fisherman, or the person engaged in packing such perishable commodities. Because the commodity is highly perishable means that holding it will result in loss or deterioration and in loss to the farmer or other producer. Abundant testimony detailing in full the character of operations upon perishable agricultural commodities, such as peas, tomatoes, sweet corn, green and wax beans, peaches, berries, etc., and upon perishable sea foods, such as salmon, sardines, mackerel, etc., was presented during the Seventy-third Congress to the Committee on Labor. (See hearings before House Committee on Labor on S. 158 and H. R. 4557, 73d Cong., 1st sess., pp. 34. 51, 432, 445.) When in 1933 the Senate passed the Black 30-hour bill, S. 158, it was provided:
“That this section shall not apply to commodities which a cannery or manufacturing plant produces by canning or preparing for market or commerce fish, sea food, fruits, or vegetables of a perishable character."
Similar provision was made In the bill as reported to the House of Representatives.
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During the period of the N. R. A., comprehensive investigations were made of this necessity for protecting the farmers producing such perishable agricultural commodities, sometimes known as specialty crops. The various applicable codes invariably permitted employment during the hours “necessary to the handling and/or packing of perishable products during the packing season for such products, when the physical conditions of the perishable product, crop sequence, temperature, humidity, climatic, or other circumstances beyond the control of the employer would result in loss or deterioration or loss to the producers of raw commodities.”
In view of this congressional familiarity with and recognition of these agricultural requirements, it is not necessary to do more than briefly summarize the detailed information already presented to Congress:
1. Harvesting periods for perishable agricultural commodities wholly dependent upon weather conditions.—Despite spaced plantings, the total period in which perishable agricultural commodities may be harvested is limited by the seasonal factors of spring frosts, summer heat, humidity, rainfall, relative daytime and night temperatures, etc. In many cases the total harvesting period can cover only a few hundred hours. Cool weather retards and a hot spell accelerates the tonnage which will ripen on a given day. When the fruit or vegetable has reached proper maturity, the farmer, in order to obtain the maximum economic return, must harvest it at full ripeness and maturity before rapid deterioration sets in. The old maxim that “one must make hay while the sun shines" applies fully to the growing and harvesting of perishable agricultural commodities. Products such as peas or sweet com must be harvested or processed within a few hours or else deterioration causes either a substantial reduction in value or complete loss. Even if the farmer or processor could retard nature for 1 day, it would still be necessary to make way for the next day’s harvest. In addition, the high and low points of tonnage harvested and delivered by the farmer are intermittent. Sometimes a period of cool weather will result in complete retardation of maturity and permit the harvesting of only enough raw commodity to permit a few hours' daily work. A period of hot weather will produce a glut requiring fairly long hours. This may be followed by a cool period, or it may be followed l»y continued hot weather requiring successive peak days. It is necessary for the farmers’ protection and to prevent loss through deterioration to process such perishable commodities when harvested.
2. Yields per acre are variable, dependent upon temperature, rainfall, drought, insect pests, etc.—It is hardly necessary to elaborate the fact that the yield per acre of perishable agricultural commodities is dependent upon prevalent growing conditions—upon rainfall, temperature, humidity, presence or absence of insect pests, and the like. The usual contract with the farmer permits him to deliver whatever he can produce on a specified number of acres at the time it is ripe for harvesting. The tonnage which may be harvested and delivered is, of course, highly variable—it may be negligible, it may be a theoretical average yield, or it may even be twice as much. If the processor cannot handle what the farmer delivers, it is obvious that he cannot agree to take it, and any resultant loss will, of course, be reflected back to the agricultural producer.
3. Location of plants for processing perishable agricultural commodities and variations in daily tonnages delivered by farmers make multiple-shift operations impossible.—Because of the necessity for immediate processing, requiring that packing plants be located right amidst the acreage producing the raw commodity, such plants are usually not large and are necessarily located in small agricultural communities. The proportion of processing plants in communities of less than 5,000 ranges from 58.8 percent in Washington to 97.2 in Virginia. The proportion in towns of less than 500 population ranges from 16.3 in New Jersey to 81.1 in Virginia. Even in a State as highly industrialized as New York over half are in towns of less than 2.000. To a considerable extent, the seasonal employment they afford represents supplementary cash income to farmers’ wives and families, vacation earnings of students, etc. In many instances there is virtually no line between the farming and packing operation, as, for example, where the threshing and vining operations on peas are conducted in the pea fields. Because of the variation in daily tonnages harvested, which cause intermittent periods of very short days and fairly long days, it. is obvious that the maintenance of two shifts would be impossible. because there would for long periods of time not be enough work for one shift, and it is impossible to tell at what time and how much additional
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work will be necessary to prevent crop loss. In addition, in many agricultural communities housing facilities for imported occasional labor do not exist.
4. Tonnage of sea foods dependent upon run of fish and conservation regulation.—In the case of fishery products a like situation exists for substantially similar reasons. In the first place, in the major fishing areas such as Alaska and the west coast, conservation regulations by the State and Federal Governments specify certain limited periods—usually about 4 days a week—in which fishing may take place, and further require complete cessation of fishing if certain natural escapement does not occur. During the permitted days for fishing it is completely a matter of chance whether there will be any run of fish— either large or small. On some days there may be merely a nominal catch; on others, a substantial surplus. It is not necessary to discuss the rapidity with which sea-food products deteriorate upon removal from the water or the necessity for immediate processing. Many of the major fisheries operate in isolated areas to which all labor must be brought. The fishermen are semi-independent contractors paid on the basis of their catch. If what they catch cannot be handled, the loss falls upon them. Obviously, it is not feasible to transport, house and maintain two full crews where for long periods there may be insufficient work for one.
REQUESTED AMENDMENTS TO H. B. 7200 TO FACILITATE THE FUNCTIONING OF THE LABOR STANDARDS BOARD
The following amendments are submitted in the belief that they are reasonably designed to permit of more efficient functioning of the Labor Standards Board, and to remedy a number of inadvertent discriminations appearing in H. R. 7200 as drafted.
Amendment requested.—Section 13, page 27, line 18, insert after the words “labor organization”, the following: ", or any business association".
In the same section, in line 19, delete the words “(as defined by the Board)".
Comment.—As drafted, section 13 requires the Board to hold a hearing upon the complaint of any labor organization. It does not permit a hearing to be held at the request of any representative trade or business association. It seems only proper that, in addition to persons having a specific interest, the Board should hold hearings at the request of either an employee organization or an employer organization. It likewise seems proper that the determination of who is an interested person and what constitutes either an employer or employee organization should be made by the Board pursuant to its own regulations. If the words suggested to be deleted in line 19 are deleted, there will be no question about the power of the Board to make such generally applicable regulations in all three cases. See section 19.
Amendment requested.—Section 25 (a), page 42, line 8, insert, after the word “evidence”, the following: “adduced at a public hearing”.
Comment.—Inasmuch as the findings of fact by the Board are made conclusive upon review in court, it seems only fair that the evidence upon which the Board makes its findings shall be presented at a public hearing so that interested persons may have an opportunity to consider it and bring to the attention of the Board any other evidence throwing light upon the inquiry. Obviously, if the Board is to issue orders affecting interested individuals who will not know upon what evidence the Board bases its findings, the possibilities of error will be multiplied. The suggested amendment will not in any way impede the work of the Board. Any information secured in its investigations can be presented in public hearing and clearly should be.
Amendment requested.—Section 12 (5), page 20, lines 8-9, delete the words “the number of employees employed" and delete the words “and volume” in line 9.
Comment.—It is submitted that in determining what is an oppressive wage or an oppressive workweek, there is no legitimate basis for distinguishing between factories on the basis of the number of employee's or the volume produced. If the purpose of the bill is to safeguard the interests of the employees and afford to them protection in the matter of low wages and excessively long hours, it is somewhat difficult to see the bearing of the volume of goods produced in a particular factory or the number of employees there employed. The subsection permits the Board to classify employers, employees, and employments on the basis of geographical localities, population, and other related differentiating circumstances. To permit the Board to consider the number of employees employed in a particular factory or the relative, volume of goods produced in such factory would authorize it to make industrial adjustments
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unrelated to the purposes of the bill and would probably throw grave constitutional doubts upon the validity of its order.
Amendment requested.—Section 2 (13), page 6, line 19, insert after the word “order” the words “after hearing."
Comment.—It is submitted that the determination of what constitutes a particular hazardous occupation should be made only after a public hearing at which all interested parties are permitted to present information for the consideration of the administrative officer making such determination. This will not only lend support to the order but prevent abuse through individual exceptions and arbitrary changes informally allowed without hearing.
Amendment requested.—Section 18. page 34, lines 9-12, delete the remainder of the sentence after the word “Board” in line 9.
Comment.—Under section 17 the Board is given wide and virtually unlimited powers of investigation, and every employer is required to afford access to its representatives, to furnish information, etc. Section 18 permits the Board to make such investigations through the Secretary of Labor, and the language proposed to be deleted would permit the Secretary in turn to delegate these powers to any State or local agency. It is submitted that this language would permit too many abuses. A great many “local agencies”, serving without compensation, afford a cloak for various interested individuals and groups to obtain their own ends. If the full power of the Federal Government is to be delegated and subdelegated to such voluntary local agencies, the possibilities of abuse of the unlimited investigatory powers of the Board will be very great. The history of the N. R. A. lends support to these apprehensions and to the view that only an authorized, sworn employee of the Federal Government should exercise the police powers of the Federal Government. There should be no possibility of wide and haphazard delegation to voluntary agencies.
Amendment requested.—Section 19. page 34, lines 22-23, delete the words “and such orders.”
Comment.—While the Board should have all necessary power to make regulations, it is submitted that the power to issue orders affecting particular individuals should be surrounded with the safeguards afforded by section 12. No general orders should be permitted except as provided in that section.
Amendment requested.—Section 19, page 35, line 19, delete the period after the word “act”, and insert the following: “so that information necessary or appropriate to aid in the enforcement of the act may be readily ascertained.”
Comment.—The power to require labor insignia is specified in section 17 (b) in detail. The repetition of this authority in section 19 in more general terms may lead to difficulty. It is believed that the use of insignia should be limited to the purposes of this act, and the power to require labeling of products should be no broader than is necessary for that purpose.
_________________________
United States Civil Service: Commission,
Washington, D. C., June H. 1.937.
Hon. Robert Ramspeck,
Chairman, Committee on the Civil Service.
House of Representatives.
Dear Mr. Ramspeck: The Commission refers to H. R. 7200 introduced by Hon. William P. Connery, Jr., and referred to the Committee on Labor, which provides for the establishment of fair labor standards in employments in and affecting interstate commerce.
The following personnel provision is quoted from the bill, being section 3(d):
“The Board may select, employ, and fix the compensation of an executive secretary and such attorneys, examiners, regional directors, special consultants, and experts as it deems necessary to carry out the functions and duties of the Board, without regard to the provisions of other laws applicable to the employment and compensation of officers and employees of the United States. The Board may, subject to the civil-service laws, appoint such other employees as it deems necessary to carry out the functions and duties of the Board and shall fix their salaries in accordance with the Classification Act of 1923, as amended. The Board may establish and utilize such regional, local, or other agencies, and utilize such voluntary and uncompensated services, as may from time to time be needed. Attorneys appointed under this section may at the direction of the Board appear for and represent the Board tn any case in court. In the appointment, selection, classification, and promotion of officers and employees of the Board, no political test or qualification shall be
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permitted or given consideration, but all such appointments and promotions shall be given and made on the basis of merit and efficiency.”
The Commission notes that no positions of any consequence are included within the merit system and that all of the principal and even minor supervisory positions are exempted from the provisions of the Civil Service Act and of the Classification Act of 1923, as amended.
If these appointments are made in accordance with the Civil Service Act and rules, the qualifications of persons appointed will have opportunity to compete for the positions, those who show the best qualifications being the ones first considered for employment.
A very important part of the merit system is the authority appearing in the Civil Service Act for the President to make any necessary exceptions, so that if this bill were amended to provide simply for the employment of personnel, the regular provisions of the Civil Service Act and rules would apply. The Civil Service Commission and the Labor Standards Board would then hold conferences to determine what positions should properly be exempt from competition, and make joint recommendation to the President for approval. Such exemptions already appear in schedules A and B of the current civil- service rules.
As this personnel provision which now appears in the bill is contrary to good business administration and also operates against the establishment of any career service in the Federal Government, so far as concerns the Labor Standards Board, the Commission urges that H. R. 7200 be amended by eliminating any language exempting appointments of personnel from the requirements of the civil-service law and the Classification Act of 1923, as amended.
By direction of the Commission.
Very respectfully,
Lucille Foster McMillin,
Acting President.
Representative Welch. Mr. Chairman, at this time I desire to make part of the record a letter addressed to me from the California State Chamber of Commerce, with an attached statement with reference to wages of agricultural labor: also, a statement with reference to hourly wage rates paid for selected occupations on W. P. A. projects in certain cities as of December 31,1936.
The Chairman. That will be inserted in the record.
(The statement referred to is as follows:)
California State Chamber of Commerce,
San Francisco, May 26, 1931.
AGRICULTURE A’ND INDUSTRY
Hon. Richard J. Welch, M. C.,
Washington, D. C.
Mr Dear Mr. Welch: In the enactment of Federal legislation, as recently recommended by the President, to set minimum wages and maximum hours for all businesses engaged in interstate commerce, we strongly urge that you oppose all attempts to establish regional differentials and insist that the same requirements be imposed upon every section of the United States.
As you well know, California employers have consistently paid their labor relatively higher wages than paid by employers in other States with whom we are in direct competition. In our opinion, there would be no justification for permitting employers in any State to operate at a competitive advantage at the expense of their labor through the payment of substandard wages, and that any law enacted should seek to eliminate and not aggravate this disparity.
Attached herewith are tables showing wage comparisons for common industrial labor in 27 major cities and agricultural wages in all States. In view of the facts that our agricultural labor is paid approximately twice the national rate and that our common labor in industry is paid well above the
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average for major cities, it is our hope that we may count upon yon to work unceasingly against all amendments which may be proposed granting employers in certain States wage concessions below a uniform minimum.
We should greatly appreciate word from you in this connection.
Very truly yours,
Preston Hotchkis.
Chairman, Labor Relations Committee.
TABLE
The Chairman. The request was also made that a statement prepared by the American Mining Congress be inserted in the record. That may be done.
(The statement referred to is as follows:)
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The American Mining Congress, representing the mineral-producing industries of the United States, respectfully protests the enactment of S. 2475 and H. R. 7200, known as the Fair Labor Standards Act of 1937.
As a general statement of our position, we should like to quote the following from the declaration of policy adopted by our Denver convention, October 1, 1936:
The establishment of wage levels by legislation or flat of governmental authority is contrary to sound economic principle. Wages ultimately are paid from income; income results only from production and is not created by law.
The mining Industry as a whole recognizes its responsibility to its employees and to the communities where it operates and has met that responsibility by maintaining extensive employment all during the depression. It has established its operations on the basis of fair and reasonable daily and weekly working hours, which compare most favorably with those in other Industries, and which have permitted maximum efficiency, safety, and satisfaction to all concerned. We oppose any proposals to further restrict working time by legislative action.
We believe in the best possible working conditions for the employees in the mining industry and approve all reasonable and proper measures for promoting their health and safety.
The primary objective of the legislation now before your committees is evidently the correction of certain abuses in the employment of labor, notably child labor and sweatshop conditions.
The mines of this country do not, so far as we have any knowledge, employ children; we can say definitely that in the mining industries child labor is not a problem. Sweatshop conditions, with oppressively long hours or low wages, likewise do not exist in mining. Wages of mine employees are substantially in excess of the statutory minimum contemplated in these bills. We are in full sympathy with the praiseworthy purpose of eliminating child and “sweated” labor, but we respectfully submit that this objective may be achieved without the necessity of a law which would provide centralized, bureaucratic regulation of all lines of productive enterprise, and which would hinder the creation of new wealth from our mineral resources.
Specifically we oppose these bills for the following reasons:
1. They would impose upon the mining industry arbitrary regulation contrary to natural economic forces. The producer of basic raw materials, such as minerals and metals, must sell his product in a broad competitive market in which prices are determined by world conditions. His income is derived from the sale of his product, and wages can be paid only from such income. The history of the mining industries shows that mine workmen have consistently received the benefit of higher prices for the product in the form of higher wages. Conversely, when prices recede, either wages must, be lowered to correspond or the mines must close down, with consequent unemployment. Imposition of uneconomic wage and hour levels by a Federal board, under the sweeping powers conferred in these bills, would inevitably bring the latter result.
2. Reduction of working hours, as contemplated in these bills, would seriously interfere with the operation of many mines.
In the metal mine operations the standard working day is 8 hours; in coal mines it is 7 hours. However, the 7-hour day in coal mining
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applies to actual hours of work at the working place, whereas in metal mining the 8-hour day includes time consumed in traveling from the surface to the working place, or in returning to the surface at the close of the shift, or both, as well as time required for lunch, and actual working time is usually less than 7 hours. During each shift a complete cycle of mining operations must be performed— including barring down loose rock, mucking out for set-up, setting up the drill, drilling a round of holes, tearing down, charging the holes and blasting—all of which must be completed during the shift in order that the interval between shifts may be utilized for clearing out the toxic gases which are produced in blasting. Shortening of the workday would prevent the completion of this cycle, necessitating the use of split shifts, an extremely dangerous and impractical procedure.
Reduction in the number of days per week would be equally objectionable. The present increased demand for many mineral products requires full-time operation of both mines and treatment plants, which m many cases is not possible with a 5-day workweek. Many of our largest mines are in localities remote from populous centers, and housing facilities are not sufficient to care for the additional personnel that would be required if workers were limited to 5 days per week; in addition the limited life of certain mines would preclude additional investment in housing. Isolated mining camps find that they cannot secure qualified workers if the men are not permitted to work more than 5 days per week; good miners will not work in such camps except on a continuous basis for a number of weeks, with occasional lay-offs of several days to go home or to the city. In many cases, also, rigorous winter conditions limit operations to the summer months, and it is highly important that the workmen be permitted to work as many days as practical during the working season.
In most mining districts there is no additional supply of competent mine labor, such as would be needed with a 5-day maximum week. On the contrary there is today a shortage of competent mine workers. Untrained labor cannot be put to work in a mine as in agriculture or in some easily supervised manufacturing enterprise; careful training is necessary, for reasons of safety, and such training takes time. In certain States prospective miners are required to work 2 years under an experienced miner before they are permitted to work independently.
In some cases physical conditions of the mine workings, such as caving ground which requires close timbering, makes operation at least 6 days per week essential, by men familiar with the particular ground conditions who can thus work safely and efficiently.
Under all these conditions, limitation of present working schedules by a board having the autocratic powers contemplated by these bills would inevitably create hardship and injustice. No matter how flexible the law might be in theory, experience with similar boards in the past demonstrates that they cannot avoid fixation of general standards which are not suited to large portions of the mining industry.
3. Imposition of onerous conditions through the operation of these bills would undoubtedly force cessation of production in many low-grade and marginal mining properties, which in the aggregate supply a large portion of the country’s needs for minerals and metals,
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and which employ many thousands of men. Increasing costs of supplies, insurance, taxes, and so forth, have already brought many such properties close to the breaking point. In gold mining, particularly, where the price is fixed and cannot move up with the general level of commodity prices, the situation of many mines is already precarious.
4. Enactment of this bill would similarly tend to discourage prospecting and the development of new mineral deposits upon which the continuation of the mining industry depends. If the developer of a new mine is to be faced with the increased costs and harassment of bureaucratic regulation, the incentive for the necessary exertion and sacrifice is seriously diminished; the normal hazards of new mineral developments are great enough without this extra burden.
5. These bills would repose in a political board the power of life and death over American industries in all sections of the country. No board composed of fallible human beings should, in our opinion, have such drastic and potentially dangerous power's entrusted to it.
6. Adequate enforcement of the provisions of these bills would, in our judgment, be impossible. This statement is fully supported by the record of N. R. A. The compliance machinery of that agency had broken down long before the act was declared unconstitutional. Even though a huge administrative organization be set up to enforce the present proposed legislation, the same conditions which caused failure of the N. R. A. would inevitably cause failure in this instance.
We believe that S. 2475 and H. R. 7200 would be unwise, unduly burdensome, and distinctly harmful not only to the mineral industries but to the economic structure of our country, and we urge that your committees reject these bills.
The Chairman. Mr. Dulany, who was to appear, sent word that he did not desire to appear.
Mr. L. C. Painter, of the Association for Progressive Political Action.
Mr. Painter. Mr. Chairman, I must say that I did not get this notice that I was expected to speak today until last night, and I had very little time to make a prepared statement. I know pretty well what I am going to say, however. I will read the first part of what I have to say, and then I will have to speak the latter part extemporaneously.
The Chairman. Very well.
Mr. Painter. Whether or not I approve or oppose this statute will naturally depend upon whether or not I believe it will be beneficial or injurious to the country as a whole. If its benefits to some are offset by its injuries to others, naturally I would be opposed to it. I assume this committee is not interested simply as to whether I approve, but as to why I approve or condemn. Legislative bodies very frequently remind me of a group of physicians who have been called into consultation with the distinct understanding that they are not to properly diagnose the case but can give any finding they like so long as it be not the truth. I believe I am justified in
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believing that such is not the attitude of this committee, but that you are willing to follow truth wherever she may lead. One of the Senators on the committee asked one of the witnesses a few days ago what he would suggest in place of this bill to raise wages above their present pitifully low scale so I also assume that the committee is interested in alternative measures, provided there might be some other method that might produce equal or better results.
I differ profoundly and fundamentally with those who hold that with the rate of wages the State has no concern. I believe with those who think the increase of wages is a legitimate purpose of public policy. To raise and maintain wages is the great object that all who live by wages ought to seek, and both labor and capital are right in supporting any measure that will actually attain that result. In supporting such a measure labor is not acting selfishly, for while the question of wages is of primary importance to laborers, it is also the most important question that confronts the world at large, for whatever improves the condition of the lowest and broadest stratum of society must promote the true welfare of all.
Where the wages of common labor are high, prosperity will be general, where wages are highest there will be the greatest production and most equitable distribution of wealth. There will be the greatest comfort, the highest education, the purest morals, and the truest patriotism.
If we would have a healthy, a happy, an enlightened, and a virtuous people, if we would have a pure Government, firmly based upon the popular will, under the law, and quickly responsive to it, under the law, we must strike to raise wages and to keep them high. That after all is the only legitimate function of government, and where a government fails in that it has failed in everything that gives it an excuse for being. I will go further; I will state it as a fact in which history will bear me out that any government that has allowed wages to tall so low that the people were reduced to a condition little better than that of animals, that government has invariably been destroyed. I accept as good and praiseworthy the ends sought by the proponents of this bill, and I propose to inquire as to whether this bill is really conducive to those ends.
To do this thoroughly, in order that we may arrive at a conclusion about which there can be no question, I am going to ask you to go back with me for a few minutes to the beginning of this Government, and see what manner of government our forefathers intended to institute, what their aims were, their reasons for these aims, and whether they were justified in these aims, in order that we may either follow or flee their footsteps.
I take it to be a commonly accepted fact that our fathers intended to set up a government democratic not only in name but in fact. It is not necessary to discuss the difference between democracy and monarchy, the form of government prevailing at the time our Government was founded, but it is very pertinent that we should draw a sharp line of demarcation between democracy and a principle of government that has come to the front and has been widely accepted by the peoples of the world in recent years. I speak of communism. An inescapable conflict confronts the world today. The fight between democracy and communism is already joined. Democracy is a principle, communism is a principle, but they are mutually antagonistic
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and destructive principles, that cannot live together. If one lives the other must die, for the breath of liberty which is necessary to the life of democracy is fatal to communism. If this bill lie democratic I am for it, but if it be communistic, I am against it.
But before we can decide which it is we must know what principles are democratic and what are not. A Democrat is one who believes in and supports democratic principles of government. He is an individualist. He believes in the supremacy of the individual. He believes all rights inhere in the individual, that the Government is an agent and servant and in no sense a ruler or master. He believes that the individual is in the words of the Declaration of Independence, “Born with certain unalienable rights” which no show of hands of the majority gives them the right to invade. He believes in other words that right is always right. The Democrat believes in the rule of the majority in public matters, but not in private matters. He believes that government business is public business as sharply differentiated from private business. The democrat believes in the rule of the majority in only certain things, that is, public things. He says that only public questions are debatable and that there are certain private personal rights that are not a matter of debate or compromise, not a matter of haggling and logrolling and vote counting, that you either get these rights as rights or you don’t. The Democrat says that the Government has no rights, only duties, certain public services to render to the public in return for wages paid by the public. He says that public servants carry with them into office only the private individual rights they possessed as human beings before taking office, just as a cook has no more rights after we hire him than he had before. The Democrat believes in the rule of the majority in only those things which concern all the people, and the private business of the individual does not concern ail the people.
In sharp contrast to the democrat the communist says that society is the unit and not the individual, and that, therefore, all rights inhere in society, in the majority, that the individual has no rights which the majority is bound to respect. He says that the individual has certain privileges granted to him by the majority, which since they are only privileges society is in no way bound to respect but has a perfect right at any time by a show of hands to take these privileges away. In other words, there is no such thing as law except as it is passed by man and we therefore have a rule of men and not a rule of law. With the Communist might is right, the might of the majority. There is no such thing as essential right, no fixed and eternal principles of justice which can be settled once and for all and to which we can refer for guidance. There is no way to tell what is right except by counting the hands. Right changes from day to day with the will or whim of the majority. If the majority decides today that a certain thing is right, then today it is right, but if the majority decides tomorrow that the same thing is wrong, then perforce it is wrong. In other words, there is no law until the majority makes it. The Communist says that all business is public business if the majority chooses to make it so. The difference between communism and democracy hinges upon the recognition of or the denial of private right. There is no other difference. If the Government is by any right a ruler then it has a right to rule and to tell the people what they must and must not do. But servants have no right
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to rule. George Washington always signed himself “your most obedient servant G. Washington.” 1 find it hard to imagine certain people in public office today signing themselves “Your most obedient servant.”
Representative Allen. To what officials of the Government at this particular time do you allude, that would not sign his name as “Your obedient servant”?
Mr. Painter. I think I might be pardoned if I do not name some specific ones. I think perhaps the Senator can think of some, too.
Representative Allen. I think the committee would be more enlightened if you name the person to whom you allude.
Mr. Painter. To be perfectly frank, I can hardly imagine the President of the United States signing himself that way.
Representative Allen. That is what I had thought you had in mind.
Mr. Painter. To exactly the extent that any Government meddles in private affairs it is communistic. Any statute that attempts in any way to regulate your private life, to dictate in your private affairs, to meddle in the way you run your store, your factory, your mill, is communistic. Any statute that in its enforcement contemplates any inquiry into your private business, your private morals, your private religion, is communistic. It is making communal or common matters out of What are properly private matters.
Any statute that would dictate what you must or must not do in your own home, in your own private business or with, your own private money, is communistic. It makes no difference who passes that statute. If Stalin passes a statute interfering with private rights it is Communistic, and if the Congress of the United States passes a statute interfering with private right it is equally communistic.
It is necessary to distinguish between law, real law, and statute. Law is the way Nature acts. Whether we like it or not, whether we know it or not, we are under the reign of laws. Every happening, every event that you see happens in accordance with fixed, eternal, unalterable law that man is utterly powerless to change. Law is. It does not have to be enacted by man. It has already been enacted by the decrees of Nature, and man can neither alter nor abridge, neither extend nor abrogate nor violate any law. Law cannot be disobeyed. It may be defied, but when we defy it we take the consequences. Man enacts statutes, and the only legitimate aim of any statute is to make us recognize natural law so that we will not defy it and take the consequences. We can legislate ourselves black in the face that the law of gravity is abrogated, but try walking out of the Washington Monument. and see if it is abrogated. Some years ago the State Legislature of Arkansas passed a statute that pi, the ratio of the diameter of a circle to the circumference, instead of being 3.1416 Was to be 3. They were going to simplify matters by changing a fraction into a whole number, so you could multiply and divide easier. Does that mean that in the Commonwealth of Arkansas this ratio had actually been changed or did this enactment simply show the stupidity of man?
The Chairman. When was that law passed?
Mr. Painter. I do not know how many years ago. I have seen it stated on a number of occasions.
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The Chairman. Can you give us a reference to that law?
Mr. Painter. Beg pardon?
The Chairman. Can you give us a reference as to where we can find that law?
Mr. Painter. I cannot at the moment. I have seen the statement on a number of occasions.
The Chairman. Where did you see it?
Mr. Painter. I have seen it in the newspapers on a number of occasions, and, of course, I always believe everything I see in the newspaper.
The Chairman. Which newspapers?
Mr. Painter. I do not recall at the moment, Senator.
The Chairman. You made the statement that a State passed a law that is utterly ridiculous.
Mr. Painter. I have seen the statement made.
The Chairman. You vouch for it?
Mr. Painter. No; I do not vouch for it, though I have known other laws equally foolish to be passed.
The Chairman. You are talking now about specific laws, and you make a statement here that a State passed a law that you think you read in some paper.
Mr. Painter. I do not think I read it: I know I read it.
The Chairman. Well, what paper did you read it in?
Mr. Painter. I told you I cannot tell you just what paper I read it in. I read a great many papers, and I do not recall, but I have seen that statement more than once.
The Chairman. When did you read it?
Mr. Painter. Well, it is probably a year or so ago that I saw it; the last time I saw it; yes.
The Chairman. Did you write down to Arkansas to find out if it was true?
Mr. Painter. No ; I did not.
Representative Schneider. I would like to ask the witness something in connection with the bill. Of course, we would like to get some information on the bill.
Mr. Painter. All right, sir. I think that this is germane.
Representative Schneider. Well, it is your line of philosophy and probably would apply in opposition to the whole bill than most of the laws of our Government at the present time.
Mr. Painter. A good many of them.
Representative Schneider. I just wanted to know your position on child labor.
Mr. Painter. I am utterly opposed to child labor.
Representative Schneider. You are in favor of the regulation, the control of, and the abolition of the exploitation of children?
Mr. Painter. I am not in favor of any outside regulation or control, because it has exactly the same bearing upon the case that a statute to prevent or to raise the height of the tides would have.
Representative Schneider. How would you control child labor?
Mr. Painter. I will come to that presently, if you give me time.
The Chairman. How much time? We are interested in the length of time.
Mr. Painter. A few minutes.
The Chairman. You are discussing a philosophy, and people differ in their philosophy.
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Mr. Painter. People differ as to the desirability of communism. I believe.
The Chairman. We would like to have you discuss the bill.
Mr. Painter. Bag; pardon?
he Chairman. We would like to have you come to the discussion of the bill, because we have some other witnesses.
Mr. Painter. All right, sir. I will come down to that in a few minutes.
The object of this bill is to increase wages. Now, the laws of Nature are fixed. Either we have some rule that will guide us in economic matters or we have not. Either economics is a science or it is not. If economics is a science, then we have some fixed and dependable rules of procedure that we can follow. If economics is not a science, then even experience itself is no guide, because the fact that anything works today is no proof that it will work tomorrow, provided there are no dependable rules by which we can reason from cause to effect.
Now, I think all the Senators will agree with me that production has increased. Every advance of society is brought about by increased production of goods, good things, things that we want, things that we work for, strive for, sweat for; but wages have not tended to increase, and neither have interest rates tended to increase. If you will go back 100 years, you will find that common rates of interest ran very much higher than they do today.
The Chairman. Where?
Mr. Painter. In this country.
The Chairman. Go back 500 years and you will find rates of interest in many of the countries were as low as 2 and 3 percent.
Mr. Painter. In the old countries, yes: in Europe, but in this country, in California, in the early days, the common bank rates of interest were 25 percent per annum. Money was plentiful, you could borrow all you wanted, credit was easy, out the rates were high, and at the same time wages were high.
Representative Wood. What period was .that when wages were high and interest in banking was 25 percent?
Mr. Painter. In California during the early days. In 1855 and 1860, anywhere in the early days, just as soon as California’s gold rush started, interest rates were high; in spite of the fact that gold was plentiful, interest rates were high and wages were high.
Representative Wood. Were wages high in 1860?
Mr. Painter. In California; yes, sir.
Representative Wood. I mean, in the Nation.
Mr. Painter. They were always high out on the fringes; they were always higher there than in the well-settled regions.
Representative Wood. What were the wages then?
Mr. Painter. What were the wages?
Representative Wood. I am talking about the purchasing power.
Mr. Painter. What were the wages?
Representative Wood. Yes.
Mr. Painter. I have studied the question from the standpoint of purchasing power rather than so many dollars and so many cents.
Representative Wood. What would it cost for a suit of clothes? What was the daily wage in California?
Mr. Painter. Common labor was $10 a day in California. Commodities were high.
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Representative Wood. What kind of common labor?
Mr. Painter. Any kind of common labor. What is your definition of common labor? I think it is probably the same as mine. The wages of common labor were $10 a day in California for many years.
Representative Wood. What occupation are you talking about being paid $10 a day?
Mr. Painter. I am talking about any occupation.
Representative Wood. About all of them?
Mr. Painter. Yes.
Representative Wood. The common labor was $10 a day?
Mr. Painter. Practically all common labor; yes, sir. At that time people had free access to the land and common-labor wages were high—but I am getting off the point.
Representative Wood. Have you any record to submit on that? I would like the gentleman, if he can, submit us some records on that, as to the wage for common labor in California.
Mr. Painter. I think I can do that.
Representative Wood. That is a revelation to me.
Mr. Painter. You will agree to this, that wages in this country, wages in all new countries are consistently higher than in old countries. Although society is less settled, the relative production of wealth in proportion to the amount of labor expended is less in new countries, as a rule, than in old countries. Production is better in New York and Philadelphia than it was in 1860 further west, because business was better organized.
Representative Wood. What was the price of a pound of meat or a suit of clothes in California at that time, do you know?
Mr. Painter. No; I do not know.
Representative Wood. Do you know the price of any commodity at that time? Have you any figures on that?
Mr. Painter. I know some little bit about prices of commodities up in Alaska at certain times.
Representative Wood. I am talking about California in 1860.
Mr. Painter. I know that commodity prices were high.
Representative Wood. What did they pay for flour, for 100 pounds of flour?
Mr. Painter. I do not know, but I know that all commodity prices were high.
Representative Wood. We would like to have some figures. I would like to have submitted to the committee some figures on what a pound of meat cost in California, how much 100 pounds of flour cost, how much you could buy a suit of clothes for, and a pair of shoes for.
Mr. Painter. All right, sir.
Representative Wood. I would like to know the commodity prices at that time.
The Chairman. Now, proceed with your essay.
Mr. Painter. All right, sir. Just as we cannot violate the laws of chemistry, the laws of physics, and the laws of mathematics so we cannot violate the laws of economics. It does not depend on a man’s intelligence, or his recognition of the law or the statutory enactment. Now, this bill, if I interpret it correctly, is based upon the theory that labor and capital are natural enemies, that labor is being denied
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that to which it is entitled by capitalistic employers, and that they cannot get that to which they are entitled, from capital except by having the Government step m and see that they get it.
Before we can say that any given thing is the cause of any given condition we must first determine whether there may not he some other cause for that given condition.
Now, it is universal history that wages and interest always rise together and always fall together. There has never been an exception and there never will be an exception, because that is the law of nature.
Now, labor has a fight—but not with capital—and capital has a fight. We are speaking as though capital were fighting labor, but if Roger Babson is correct, 95 percent of all the capitalistic enterprises that ever opened their doors in America have at one time or another, gone through bankruptcy and had to reorganize and. refinance.
Now, to give you gentlemen some idea of my views as to just what is wrong and what will remedy the condition I am going to ask you to give your attention to a particular spot here in Washington. If you will go up here to the corner of Fourteenth and New York Avenue you will find that Liggett has a drug store. Liggett rents there. He pays for every advantage of location in rent, as everyone does, always, everywhere. How much does he pay ? He pays what is known as the gross rent which, on the average, will be 8 percent of the assessed value, and at least 95 percent that he pays is true rent for the location and perhaps 5 percent is for the four walls that lie occupies. He pays that to the owner of the ground.
Now, what is it that creates that value of location? It is the public services rendered to that location. There are three sets of them. First, public services, publicly rendered, such as street lights, sewerage, police protection, fire protection, and schools; second, public services, privately rendered, by the public-service corporations, such as electric lights, street-car lines, bus lines, taxicabs, telephone service; then there are private services, privately rendered, in that neighborhood, such as Garfinkels, the Willard Hotel, the National Press Building, Loew’s Fox, the Earle Theater, and all around scores of Government buildings from which people walk past those corners. Altogether those activities of society in that neighborhood create a value which society decides is worth 8 percent of the assessed value.
But how much does the owner of the ground contribute toward furnishing the services that are worth 8 percent? He contributes the tax rate upon the land, which in the District of Columbia is 1.5 percent of the assessed value, and the owner subtracts the taxes from the gross rent and pockets 6.5 percent net rent, which represents the loss at which society does business with the owner of that ground, as a landlord, furnishing services worth 8 percent of the assessed value and for which he collects 8 percent of the assessed value, but for which he pays only 1.5 percent of the assessed value, and he pockets the difference—6.5 percent net rent—which represents the loss, a loss which must be recouped.
How does the Government recoup that loss? It comes along and it levies a tax upon Mr. Liggett’s business in the form of a license to do business, a license to sell drugs, one to sell narcotics, one to sell whiskey, one to sell tobacco. It taxes his home, his income, his money
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in the bank, his food, his cradle and his coffin, and that of every laborer and of every capitalist in America to make up what the owner pockets in ground rent.
Now, civilization is based upon trade. Show me a man that does not trade and I will show you a naked savage. The more we trade the higher the civilization.
The Chairman. Have you ever read Henry George?
Mr. Painter. I have read Henry George; yes, indeed.
The Chairman. You have read his book a great deal, haven’t you?
Mr. Painter. No; I cannot say that I have. I have read it considerably. Has the Senator?
The Chairman. Yes; I have read it. I thought I’ recognized it.
Mr. Painter. If you read it from cover to cover you would recognize it.
The Chairman. He writes well. You have had 35 minutes, and I am sure we want you to discuss the bill, but our time is limited. I would appreciate it if you would discuss the bill.
Mr. Painter. Now. the point is that this bill will not have the desired effect. The bill will complicate matters. It will still further befuddle the public, because while it will tend for a while to have the desired effect of raising the wages per hour and per diem in the lower brackets the tendency will be for the minimum wage to become also the maximum wage. It will fix wages per hour and per diem, but it will not fix wages per year, which is what counts for the average man.
Instead of taking from capital to pay labor more wages what we have got to do is to stop the robbery of both labor and capital by the landlord class, which last year collected roughly one-third of the total national income in ground rent, an amount which had to be equaled by the Government’s levying that much tax upon industry—that is, labor and capital—a tax, which, of necessity, entered into the cost of production.
Now, if you will apply that rule to cigarettes, I can go to a cut-rate place and buy two packages of cigarettes for a quarter, and every package is taxed. A Government bulletin last year called attention to the fact that in 1935 the average net income per acre to the tobacco farmer was $10. I assume the figures are correct. They also call attention to the fact that the tax on tobacco in the same year averaged $1,100 per acre of tobacco planted—that is, the taxes upon the processing, and so on, of tobacco, or 110 times as much as the farmer got for raising it.
The question was asked a while ago as to the relationship between the tariff and wages. If I might have just about 5 or 6 more minutes to show you the true relation between wages and tariffs I would like to do so.
If we go back to 1850, England had high tariffs, and under the high tariffs the British workmen were starving to death.
The Chairman. Have you read Mr. George’s book on the tariff?
Mr. Painter. Yes, sir; I have.
The Chairman. That is a good one, too.
Mr. Painter. Yes, sir. Has the Senator profited by it as much as I have?
The Chairman. I have read it. I do not know how much I have profited, but I have read it. We really haven’t-time to go into the discussion of that now. I have read all of his books and I enjoyed
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them very much. Would you mind telling us now just what your position on this particular bill is?
Mr. Painter. My position on the bill is that I oppose it as simply another link in the chain from the Communistic forge that is being welded about the necks of the American people, interfering still more in private business, interfering with the natural and free operation of business, which inevitably will still further depress business instead of encouraging it.
The Chairman. I think we understand that.
Representative Schneider. I would like the witness to explain how he would adjust the matter of preventing the exploitation of children in industry.
Mr. Painter. The way to prevent the exploitation of children in industry is to enable parents to make a wage so high that they will not feel that they need the labor of their children to contribute to the family budget. That is the only way that child labor can be prevented. People do not work their children because they like to work them, but because they feel that the injury of deprivation that results through not working is greater than the injury of the work.
Representative Schneider. You are not talking about this bill.
Mr. Painter. Yes; I am talking about the bill.
Representative Schneider. You are talking about a Utopia that is far off. We are talking about the bill.
Mr. Painter. There is only one way that it can be done and that is to take the taxes off of labor and capital so that labor and capital can function.
Representative Schneider. Well, you do not give this committee much information with reference to meeting this situation.
Mr. Painter. Well, I haven’t had much opportunity, to be perfectly frank.
Representative Schneider. You have not had much opportunity?
Mr. Painter. I have been questioned so often that my talk has been interrupted and it has been very hard for me to speak coherently. I think you will agree with me on that.
Representative Schneider. That is all.
Representative Wood. Mr. Chairman, I would like to ask the gentleman about his association, about the personnel of his Association for Progressive Political Action. Who belongs to that association?
Mr. Painter. Well, it is so named. I will be perfectly frank, it is simply an organization----
Representative Wood (interposing). Who belongs to it? Who are the members? Can you mention anyone in Alexandria, a business man or a working man who belongs to it? Are they farmers that belong to it, or business men and working men?
Mr. Painter. Most of them are working men and farmers; yes, sir.
Representative Wood. Any business men?
Mr. Painter. Some of them; yes, sir.
Representative Wood. Can you give us some of the names? How many have you in the membership?
Mr. Painter. It is not a large membership, as a matter of fact----
Representative Wood. What is your membership, approximately?
Mr. Painter. What is the membership?
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Representative Wood. Yes.
Mr. Painter. The membership is not large.
Representative Wood. What is it, approximately?
Mr. Painter. It is probably 50, something like that. It is a very small organization. 1 do not see that that has any effect, however, upon the principles involved.
Representative Wood. How many business men in that 50?
Mr. Painter. I could not tell you as to that, and I really do not see that that has any effect upon the merits of the case.
Representative Wood. How many?
Mr. Painter. Approximately, I would say, about one-third of them.
Representative Wood. Who are the others?
Mr. Painter. Working men, some carpenters, just the same cross section of a community that you would ordinarily hit if you picked out the first 25 men that you met when you walk down the street.
Representative Wood. Who organized your association?
Mr. Painter. A half a dozen of- us that got together.
Representative Wood. Who?
Mr. Painter. Myself, and the names of the others are on the executive committee; but what bearing has that upon the questions involved?
Representative Wood. Can you mention any other member of the association?
Mr. Painter. Any other members?
Representative Wood. Yes.
Mr. Painter. Herbert Fund, Bill Trent—we formed the organization a few years ago.
Representative Wood. What do you call “progressive political action”?
Mr. Painter. Something that is really progressive; something that does not) befog the issues and mislead the people as to what is the matter.
Representative Wood. What political action do you speak of? Electing people to office, or what?
Mr. Painter. That is what we thought at that time. As a matter of fact, Senator, there was a time when I, together with some of my friends, thought you could change economic conditions by political means. We have become wiser now. We know it takes adherence to economic principles, which can be brought about only by education and not by statute.
Representative Wood. How long is it since you organized the association, approximately?
Mr. Painter. About 10 years ago.
Representative Wood. Ten years ago?
Mr. Painter. Twelve years ago, maybe.
Representative Wood. Right during the peak of the prosperous times, so-called, was it not?
Mr. Painter. Yes; it was, if you can call it prosperous when, in the year of our greatest production, 1929, every man above 18 years of age had three-quarters of one suit of clothes a year.
Representative Wood. Is it your intention then to elect people to office, or use your efforts to elect them to office?
Mr. Painter. I can fix the date of it. We organized this association to work for Senator La Follette when he was running for
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President because at that time we believed he was right, because he had been, all his life, a friend of labor, and I think still that Senator La Follette was thoroughly conscientious, thoroughly sincere, but I do not think he was right.
Representative Wood. You are speaking for your association, are you?
Mr. Painter. I am speaking for myself now.
Representative Wood. Your association is opposed to the bill, is it?
Mr. Painter. Beg pardon?
Representative Wood. Is your association opposed to this bill?
Mr. Painter. Some of the members are, and some of them I do not really know.
The Chairman. What business are you engaged in, Mr. Painter?
Mr. Painter. Well, I was educated as a chemical engineer; I graduated from the University of Virginia.
The Chairman. What business are you engaged in?
Mr. Painter. At the present time I am located in Washington in the financial business.
The Chairman. What financial business?
Mr. Painter. I am with what is known as the Income Estates of America. We have a financial plan for the average man. It has the same object as annuities, or building and loans, car savings banks, or anything that will make a man save for the future.
The Chairman. What is the capital stock of the organization?
Mr. Painter. It has no capital stock. It is just a mutual fund where a great many people have put their money to get the benefit of trust management and investment counsel.
The Chairman. Where is its office?
Mr. Painter. The home office is in the Lewis Tower Building, Philadelphia, and our local office is at 437 Woodward Building.
The Chairman. You are the manager?
Mr. Painter. No; I am not the manager.
The Chairman. What position do you hold?
Mr. Painter. I am simply a salesman, if that is what you would call me, sir.
The Chairman. Thank you very much, Mr. Painter.
We have two other witnesses and we have also a representative of the Epic Society, who perhaps will discuss this matter from another angle.
Is there a representative here of the United States Government Employees, Inc.?
Mr. Brown. Yes, sir.
The Chairman. A request was made for you to testify.
Mr. Brown. My name is Edgar G. Brown. I am president of the United Government Employees, Inc.
The expanding principles and objectives of the New Deal’s security program set forth by the President in his recent recommendations to Congress and as translated by Senator Black and Representative Connery in the minimum-wage and maximum-hour legislation now before this joint committee, generally, I believe, are approved by
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the majority of colored people. They have abiding faith and confidence in President Roosevelt and the well-rounded and genuinely progressive record of this administration and the Congress. The social gains to the Nation to date are indisputable. This legislation I firmly believe is the next logical step toward the fulfillment of the more abundant life for the underprivileged and forgotten men, women, and children of America, on the farm and in the city, regardless of race, creed, color, previous condition, tradition, or depth of the depression. It might well be heralded as the economic emancipation of the workers envisioned by Thomas Jefferson in the Declaration of Independence and translated by this administration into a living gospel.
The Black-Connery wage legislation augurs for the country’s lowest-paid workers and their families a more abiding security. We join with them in urging the passage of this legislation now and that it be inclusive of all workers in the smallest as well as the largest industrial plants and commercial establishments.
We are confident this Congress and the President desire to do everything possible to protect American working men, women, and children, regardless of race, creed, color, previous condition, or tradition.
We, therefore, express the profound hope that this committee will see fit to write in such additional and clarifying language into the body of this minimum wage and maximum hour law as will assure all citizens their constitutional rights and guaranties.
On page 3 of H. R. 7200, under the title “Definitions”, we respectfully recommend that the following additional language be inserted in the appropriate place, “person”, “employee”, “labor organization”, “oppressive wage”, “oppressive workweek”, “oppressive labor practices”, “oppressive child labor”, “a fair wage”, “a reasonable workweek”, “substandard wage”, “substandard workweek”, “substandard labor condition”, “fair labor standard”, “labor standard order”, and all other terms in the quotations herein set forth and defined shall include the language “regardless of race, creed, color, or previous Condition.”
On page 9 of H. R. 7200, line 20, under the heading “Labor Standards Board”, after the word “chairman” strike out the period and insert comma and this language “and the President is authorized to review before final action all differentials.”
On page 10 of H. R. 7200, line 20, strike out the period after United States and insert comma and the language, “and without regard to race, creed, or color.”
I notice the chairman of the Civil Service Committee of the House is sitting here, Mr. Congressman Ramspeck. The reason to him for this language is obvious. I noted a few moments ago that he introduced a resolution on civil service. Civil service as outlined under the Classification Act is not recommended in this bill for the most part, and we merely desire language included here so no citizen will be discriminated against in the matter of employment.
On page 11, H. R. 7200, line 2, after the word “needed”, strike out the period and insert comma and the language, “without regard to race, creed, or color.”
On page 11, line 9, strike out period after “efficiency” and insert comma, to read “without regard to race, creed, or color.”
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On page 28, H. R. 7200, line 18, under the heading “Advisory committees on fair labor standards with respect to wages and hours”, after the word “public” strike out comma and insert the language, “including one Negro citizen.” On the same page, line 22, strike out the period following “occupation”, insert comma and add the language, “without regard to race, creed, color, or previous condition.”
On page 34, H. R. 7200, line 25, under the title “Regulations: orders”, insert after the word “regulations” this language in parenthesis “(except those relating to race, creed, or color which are unalterable by the Board).”
On page 35, H. R. 7200, under the title “Regulations; orders”, line 22, after the word “matters” strike out period and insert comma and the language “except in regard to distinction and differences based solely on race, creed, color, or previous conditions.”
On page 37, H. R. 7200, under the title “Reparation; release of goods”, line 7, after “employer” strike out period and insert comma and the language “regardless of race, creed, color, or previous condition.” On this same page (37), line 17, under the same title, after the word “condition” insert comma and add the language, “regardless of race, creed, or color.”
On page 40, H. R. 7200, under the title, “Rights of Employees Protected”, on line 18 after the word “employees” insert the language “regardless of race, creed, color, or previous conditions”.
Finally, on page 46, H. R. 7200, under the title, “Penalties” on line 7 after the word “employee”, insert the language “regardless of race, creed or color”.
I might respectfully call attention to the language on page 9 under the title “Labor Standards Board”, section 3 (a). There is hereby created a board, etc., further “in such appointment industrial and geographic regions shall be given consideration”. I would suggest language including consideration further as to race and even sex since a large percentage, particularly of those affected in this group receiving less than $1,200 per year are Negro work men and women. In other words, it might be well to have a board of seven instead of five to meet the situation from a representative point of view as well as the volume of its work.
Of course, if there was nothing more than the elimination of child labor in this legislation now before you gentlemen of the Congress, the Nation would ever be your debtors by its enactment into public law.
Thank you for your gracious interest and consideration.
The Chairman. Thank you. Mr. Mayer.
Mr. Chairman and gentlemen, I appear particularly for the Epic Society, with widespread membership, whose program is production for mutual use and mutual profit rather than for monopoly profit.
I would like to quote some Supreme Court references to labor. Less than an adequate wage is the “essence of slavery.” This appears to be the Supreme Court dictum in its decision dealing with a Chinaman in Yick Wo v. Hopkins (118 U. S. 356). The Court said:
* * * the very idea that one man be compelled to hold his life or the means of living or any material right essential to the enjoyment of life, at the mere
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will of another, seems to be Intolerable In any country where freedom prevails, as being the essence of slavery itself.
Our wage and money regulation system has a been a monopoly system, “the essence of slavery itself.” Too many millions of Americans are too often subjugated to a Chinese-coolie level of living.
Regarding human rights secured by constitutional law the same Supreme Court decision said:
The fundamental right to life, liberty, and the pursuit of happiness considered as individual possessions * * * secured by those maxims of constitutional law * * * are the monuments showing the victorious progress of the race in securing to men the blessings of civilization under the reign of just and equal laws.
These brief quotations refer to just, equal, and cooperative collective arrangements between wage earners and employers.
The Supreme Court further ruled favorably for the rights of labor and its economic value:
* * * dependent ordinarily on his daily wage for the maintenance of himself and family * * * opportunity to deal on equality with their employer * * * in a lawful economic struggle or competition between employer and employees as to the share or division between them of the joint product of labor and capital.
At another time the Court said:
The legality of collective action on the part of employees in order to safeguard their property interests * * * has long been recognized * * * securing the redress of grievances and to promote agreements with employers relating to rates of pay and conditions of work.
Then the Court goes on further to say:
Thus the prohibition by Congress of interference with the selection of representatives for the purpose of negotiation and conference between employers and employees, instead of being an invasion of the constitutional rights of either, was based on the recognition of the rights of both.
Mr. Chairman, you have complained of a “dominant five-judge economic and social philosophy becoming a part of our Constitution * * * by decisions of lifetime judges.”
Without blaming Congress for failure to regulate money you stressed the point that “this philosophy led us to business chaos and in the direction of social and political disintegration.” Unregulated, unconstitutional money controls by private operators of a falsely named and fraudulently manipulated money system, the Federal Reserve, are responsible instead of the philosophy you mention in giving us “starvation wages, health-breaking long hours of work, child labor in mills, business bankruptcy, and farmers’ crushing mortgages that could not be met with 5-cent cotton, 10-cent corn, 20- cent wheat, and other farm prices in proportion.”
You said “our democracy can work out its own problems within our Constitution if the rights of human being as human beings are given first importance * * * Yes; provided Congress becomes constitutional by regulating money as of first importance ahead of the regulation of commerce or wages, both dependent on money regulation.
Money regulation only can unshackle our circumscribed democratic processes and prevent the economic fluctuations that cause panics and depressions. Wage regulations will be of no avail without money regulation. Congress cannot regulate the natural economic laws of supply and demand. But Congress can regulate the
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supply of money to provide buying power for all workers so that constantly increasing numbers may absorb the surplus of our machines and our inhumanly regulated “speed up” production.
In this bill we have a skeletonized framework on which to rebuild our economic order of free enterprise, competitive industry, and individual initiative. This is a patent-medicine imaginary remedy for economic ills. It is another cart-before-the-horse measure. It summarily deals with the correction of economic and social conditions that Congress has surrendered, unconstitutionally, to the keeping of monopoly manipulators of money, the robber barons of commerce. These economic tyrants and royalists not only create and issue our money, they also regulate the value of money and regulate all the ramifications of commerce—two all-important life and death economic powers mandated only to Congress.
It is generally agreed that adequate wages are fundamental necessities.
In respect of this matter, the Supreme Court has recently reversed its nullification for 42 years of the sovereign rights of a sovereign people to regulate the flow of interstate commerce. Also wage and labor regulations are now validated. These are some sovereign constitutional rights and principles the Supreme Court has so long usurped. Millions of worthy men have been reduced to conditions, “the essence of ‘slavery itself”, in complete denial of constitutional rights.
Economic subjugation and economic slavery have reached a breaking point. To save our precious representative form of Government, agents of the people in Congress are compelled to begin to regulate economic welfare conditions and wages in interstate commerce in some manner necessarily, by regulating the supply and the buying power or value of money.
Commerce and wages cannot be regulated unless and until our fraudulent monopoly money controls are regulated. At long last, at least, the Black-Connery bill suggests a beginning which must lock step with a twin brother, the power to regulate money. At last our Government is driven to respect and exercise the control over these two most vital powers of the Constitution. These all-important powers cannot safely be corrected without a surgical operation upon and reconstruction of our money system.
The pending measure makes no provision for the 10 million unemployed, more or less, almost hopelessly disfranchised economically, and the many other uncounted millions in the other groups I speak for. The power to regulate wages and commerce in conjunction with the power to regulate money is the heart of the pending bill. To rehabilitate economically tens of millions of distressed and discarded citizens, betrayed and robbed by denial of their constitutional rights,
Congress must contrive to pass collateral measures or to incorporate with the regulation of wages and commerce the more important and controlling power to regulate money. Congress itself has infringed the Constitution and the fundamental rights of all our citizens by contravening continuously for many decades the power to create and regulate money. Deliberate repudiation or nullification of the fundamental money power by anyone is treason that is more assailable than the treason of Benedict Arnold. This bill will not succor the 25 million wage earners it aims to
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benefit without reasonable regulation of the money power. Nor does it aim to redress or amend the wrongs of another 25 million workers beyond or outside its provisions.
Because there is no congressional regulation of the existing fraudulently manipulated money system, this bill may become useless and bureaucratically dangerous, provided there is no fundamental correction in exercising the power of Congress over money.
To regulate wages and hours, the cost of living must be harmonized and automatically adjusted by monetary measures. Otherwise false hopes impossible of achievement will be aroused.
The wage scale and the wage income can best be adjusted by regulating the buying power or the purchasing power of the wage scales that will permit Americans to live on a subsistence level. This refers equally to all workers, farmers, and all those in debt, H. O. L. C. home owners, and others.
Wage scales become entirely disjointed and their regulation falls to the ground when the cost of living runs away from income levels. Price levels of bread-basket commodities must be automatically regulated by Congress’ control of the money system. A constant supply of money must be in reach for all workers to earn, cooperatively or otherwise, on a self-supporting basis.
To assist the committee in a reasonable appraisal of the most vital principles that govern the regulation of prices, I append below a selection of quotations from the best authorities extant.
These convictions of some of the ablest students of economic necessities deal with a stabilized price level or a reasonably regulated price level. They deal with the virtues and necessities of a constantly adequate supply of money and Congress’ jealous control of money constitutionally.
Congressman Wood tells us “There must be a market before people can be put back to work.” This, then, is the real problem. Congress must find the means and work to enable all worthy unemployed to earn their keep when industry is unable to supply jobs. As fast as money is withdrawn from or reduced in circulation Congress must- increase and regulate the supply and flow of money on a stable basis.
Carl Strover, a recognized authority, says:
Efforts thus far made toward rectification of our economic condition have not even recognized that the business depression and unemployment of the last 7 years (now 8) were the natural result of deflation * * * they have put into effect, without necessity, measures tending to upset and jeopardize may of the sound fundamentals of our institutions and of established American practice, but have failed adequately to correct our general price structure.
UPHOLDING THIEVERY
Yielding to the deflationists and to popular prejudice against rising prices, our Government still is upholding to a large extent the villainous thievery that was stealthily committed, under the forms of law, against our producing and borrowing classes through the outrageous raising of the value of our money.
Likewise, by making the new gold dollar our standard of value, our Government has again tied us to the vagaries of the value of gold and again has foisted upon us a sham stabilization.
In the last 2 years the Supreme Court has twice ruled that gold as a value of money has “congenital infirmities”, therefore gold is a false standard of value and is wholly unfit to serve as a single commodity basis for money.
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Millions of our people, including large numbers of the banks themselves, have had their fortunes demolished, and millions upon millions of our workers have been deprived of employment. As the result of widespread calling of loans by the banks * * * the absolute loss entailed upon us by curtailment of production, not counting the vast losses that were caused by devaluations of property during the business depression from which we have suffered since 1929, thus far has come to more than $150,000,000,000. (In 7 years, over 20 billions annually. There is your wage-scale regulation, Mr. Chairman, with a vengeance.)
Similar damage was done by deflation during every previous business depression. Similar damage will be done again and again by deflation unless effective measures are taken to keep our domestic average wholesale commodity price stable * * *.
SHRINKAGE OF WAGE SCALE AND NATIONAL INCOME
Total national annual income which in 1928 amounted to about $85,000,000,000 dollars, with about $20,000,000,000 thereof required for interest and taxes, during 1932 was running at the rate of about $40,000,000,000 while annual requirements for interest payments and taxes still amounted to about 20 billion * * *. Of this loss in income the earners of wages and salaries bore approximately two-thirds, or something over $20,000,000,000.
Impossible to offset even by taxing three times the “$7,000,000,000 received in 1935 by persons whose income was in excess of $5,000.”
Almost no one “stresses the need of a great increase of our production”, entirely dependent on money regulation. “Reduction of our national production and income since 1929 was, and is chiefly, almost wholly, due “to Congress’ failure to regulate money.”
Because Congress has failed to regulate money, wage earners and others among “millions of families have lost their savings, their insurance, their homes, their furniture, and their tools; more millions have had their spirit broken, have been forced, for the first time in their lives, to accept private or public charity, and have been taught to look for a living to the provisions of Government rather than to their own initiative and ingenuity; the dodging of taxes has been made respectable; reduction of productivity and output has been changed from its proper status as an economic folly into a pseudogospel of salvation (this refers to A. A. A.); millions of young men and young women have become, in their formative years, after leaving school, inured to idleness and impotence rather than to cheerful work and self-reliance; and our entire economic and governmental scheme, based upon personal initiative, essential freedom of enterprise, and limitation or governmental power, has undeservedly been brought into disrepute—not because of inherent inferiority, but simply ecause of wrong and incompetent management of our monetary affairs.”
H. W. Mabie, editor of Harper’s years ago, said:
We sit in the sublime theater in which the drama of human life is being enacted, unconscious of the reality of forces and powers that are intangible.
Because intangible they don’t appeal. Unconstitutional delegation of the money power of Congress makes its operations intangible. Private monopoly control of money is a blindly operating despotic power.
Hilaire Belloc, British writer, says:
Delegation destroys freedom. Ownership by delegation is contradictory in terms. * * * Parliaments have proved irreconcilable [in Europe] with democracy. They are not the people. * * * They are cliques of professional
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politicians [at least In the British House of Lords, dominated by International bankers].
America’s economic royalists, a plutocracy of economic monopoly masters of money, “hold the throttle valve of the whole economic machine.” They destroy freedom and are responsible for “the twin evils of insecurity and insufficiency.”
Enough money in circulation stabilizes employment and prices. A short supply of money necessarily causes less purchasing or buying power. A short supply also causes a drop in prices for both commodities and services of all kinds.
“Everything depends on one major problem today. That problem is the regulation [supply] and adjustment of the value or purchasing power of the dollar bill [the buying power of legal tender greenback dollars] * * * to keep step with steady wages.”
Europe’s Dark Ages resulted from failure of money to circulate. “History records no such disaster. * * * The entire breaking down of the framework of society * * * coincident with a shrinkage in the volume of money. * * * The crumbling of institutions kept even pace with the shrinkage in the stock of money and the falling of prices.”
“Steadiness in prices is essential to prosperity.”
“No institution of civilization is of greater importance than money.”
“Money is the great instrument of industry, the protoplasm of civilization, and as essential to its existence as oxygen is to animal life. Without money, civilization could not have had a beginning; with a diminishing supply, it must languish and unless relieved finally perish.”
The Constitution provided for the coinage and regulation of money “to be a complete Government monopoly.” It now is a bankers’ monopoly.
“The authority in control of the issuance of money can make money scarce or plentiful; hence, can make prices high or low * * * by the amount of money in circulation.”
“Governments refusing and failing to adjust their monetary systems to conditions confronting their peoples have been changed or destroyed.”
The Constitution provides:
No State shall coin money, emit bills of credit * * *.
Congress shall—
coin money, regulate the value thereof * * * no person shall be deprived of life, liberty, or property, without due process of law * * *.
The bill will—
* * * enable banks of the country to Inflate or contract the currency at will [and confiscate property without due process and against the law of the land].— Senator Borah, in 1913, discussing the present Federal Reserve Act.
Because of Constitution violations relief by wage regimentation is now proposed. Unconstitutional money acts confer upon private parties and corporations the power to “emit bills of credit”—denied to our States which alone can give life to private corporations that thus operate unconstitutionally. Acts of Congress permit private parties to
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unconstitutionally regulate the value of money, “emit bills of credit”, by enabling banks “to inflate or contract the currency at will.”
Here we have a complete contradiction of the Constitution— usurpation and nullification. As a result we have financial, commercial, industrial concentration and control that today disrupts and extensively tends to destroy our civilization. Impossible remedies by wage regulation are offered to correct destructive conditions that call for money controls by Congress only.
J. P. Morgan, Sr., and George Baker, Wall Street’s predominant bosses, told Congress 24 years ago concentration had gone far enough. In bad hands “it would be very bad”. (Testimony before Samuel Untermyer, counsel for Pujo committee’s money trust investigation.)
Mr. President, the last 20 years have been portentous years in the history of the Republic. Centralization of industry, centralization of commerce, centralization of banking, centralization of credit, and all in private hands, and the Government yielding to them little by little from time to time its sovereign powers and duties * * * at variance with self-reliant, self-respecting, free and Independent citizenship.—Senator Borah, in 1913.
“The money trust today is 10 times as powerful as 20 years ago”, Samuel Untermyer is reported to have told alumni of the University of Southern California February 23, 1933. The New York Times, March 8, 1933, page 8, quotes Untermyer as saying the New York Stock Exchange is “the most powerful and despotic institution on earth”.
After 21 years, during which inconceivable havoc was created by these unlawful * * * practices of banking institutions, “* * * national banks were permitted to engage in the wildest sort of speculation”, said Untermyer5 May 28, 1933, through their affiliates and illegal agents superimposed upon unconstitutional privileges “to inflate or contract the currency at will”—last -quoted words are from Senator Borah.
Mr. Untermyer disclosed suppression, under President Taft and Attorney General Wickersham, of decisions regarding inconceivable illegal operations of national banks (Assistant Attorney General Lehman’s opinions):
Under such unspeakable conditions and living in such an atmosphere, one begins to understand why the great financial institutions of this country were permitted to run riot and to rob the people of billions of dollars.
It was through the same influences of high finance that amendment after amendment of the Federal Reserve Act. was secured until its efficiency was so far impaired * * *.—Samuel Untermyer. in a four-column statement in the New York Times, May 29, 1933.
“The Concentration of the Control of Money and Credit”, the basis of the investigation by the Pujo committee of the House in 1913, by usurping the powers of Congress and the Constitution, gained its initial momentum through “payable in gold” and coins legislation dictated to Lincoln in the midst of the Civil War,
With Lincoln helpless to prevent, the constitutional legal-tender greenback dollar unit of established money was demonetized and the single commodity unit of gold was enthroned in economic power over all the people by the Rothschild-British-American banker monopoly controllers and international manipulators of a single commodity, gold.
Slavery became nationalized.
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We are careful to conceal the ugly fact that by our iniquitous money system we hare nationalised a system of oppression more refined, but nonetheless cruel, than the old system of chattel slavery.—Horace Greeley.
Treasury Secretary Salmon P. Chase confessed—
The National Banking Act was the mistake of my life * * * has built up a monopoly * * *.
Lincoln foresaw—
A crisis * * * the money power * * * prolong its reign * * * until the wealth is aggregated in a few hands and the Republic is destroyed.
Economically the people are largely enslaved with over 250 billions of debt; inflation and deflation have despoiled society; foreclosed millions have lost their homes; independence is “a phantom” through “debt-funding schemes and hazardous banking systems”, as William Pitt predicted.
If a government contracted a debt with a certain amount of money in circulation and then contracted the money volume before the debt was paid, it Is the most heinous crime that a government could commit against its people.— Abraham Lincoln.
There have been considerably more than 200 billions of dollar values and dollar substitutes contracted, deflated, and withdrawn from circulation in recent years to collapse values and confiscate the economic welfare, possession, and wealth of the multitude by the Money Trust monopoly, manipulators of credit, and money regulation. (See itemized statements, pp. 789. 790, 799, 800, Banking Act hearings 1935, H. R. 5357, and p. 8143, Congression Record, May 27, 1936.)
Senator George Norris, February 23, 1934, told the Senate “We are just slaves at the mercy of this Money Trust”, explaining his spiderweb chart of Wall Street hung on the Senate wall.
Later in the year Senator Norris wired Senator Elmer Thomas:
I am of the opinion that Inflation of the currency is necessary. We must make it possible for those in debt to pay what they owe.
answering the proposal to reflate the currency, cheapen the dollar’s purchasing power, boost commodity prices, and level the mountain of debt hanging over the people.
Senator Borah, discussing the Federal Reserve 24 years ago, said:
* * * It is unwarranted practice for the Government to loan its name and give its authority and its prestige to private corporations to establish credit * * *. That is special privilege Nation wide, and in the end, if allowed to go on, Nation wrecking.
Thomas Jefferson, bitter foe of special privileges and of allowing “private banks to control the issue of their currency, first by inflation and then by deflation * * * deprive the people of all property”, also remarked:
“Carthago delanda est”—bank paper must be suppressed and the circulating medium must be restored to the Nation, to whom it belongs. Let banks continue if they please, but let them discount for cash alone or for United States notes.
Henry Clay opposed the “anti-American, * * * British institution” of banking and any concentrated power over the purse.
Andrew Jackson scorned bank manipulators as “vipers”, and Daniel Webster decried “allowing a banking corporation to issue a substitute for money as one of the greatest political evils and a contrivance for cheating the laboring classes of mankind.”
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Prof. Irving Fisher today declares:
A commercial bank, insofar as it creates checkable credit, is virtually a private mint in contravention of article I, section 8, of the American Constitution.
Don’t these statements prove repudiation of the Constitution?
What good will wage regulation do unless Congress constitutionally regulates money? The Constitution mandates and obligates Congress to do the job of regulating money.
The Chairman. All right, thank you very much, Mr. Mayer. The committee will recess until Thursday morning at 10 o’clock.
(Whereupon, at the hour of 1 p. m., the committee recessed until Thursday, June 17,1937, at 10 a. m.)
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